Speaking in the House of Lords, Lord Bilimoria celebrated the rise of entrepreneurship in the UK since his arrival as a student in the 1980’s. He noted the thriving industries which are often overlooked and taken for granted in Britain, and welcomed the foreign investment that the UK continues to attract, while outlining the action that is needed to improve the UK’s flagging productivity.
My Lords, I congratulate the noble Lord, Lord Maude, on his excellent maiden speech. It was a very balanced and frank speech and we look forward to much more of the same. I was privileged to interact with him in his role as Paymaster-General when I was a commissioner for six years at the Royal Hospital Chelsea—the Chelsea Pensioners—where he used to come regularly. Other interactions included going round the Rolls-Royce factory in Goodwood, where he showed a huge interest in British manufacturing.
When I came to this country from India in the 1980s, entrepreneurship was struggling to shake off a very negative image. The word used to conjure up images of dodgy second-hand car salesmen and people wanting to cut and run. There certainly were people wanting to break through the glass ceiling then but they were held back by attitudes including excessive regulation. Our business climate did not help. We made cars that no one wanted to drive, we mined coal that no one wanted to burn and we owned businesses that no international company wanted anything to do with. In this environment, when I decided to set up Cobra Beer, my father, who was commander-in-chief of the central army in India from the Gurkha regiment—last week I was privileged to lead a debate on the 200th anniversary of the Gurkhas—and had 350,000 troops under his command, said, “What are you doing with all this education? You’re becoming an import/export wallah”.
His words would have been echoed by the parents of many other prospective entrepreneurs—but just look at how present-day Britain is and how the world has changed. Entrepreneurship is cool and we have a society where anyone can get anywhere, regardless of race, religion or background. More importantly, we have a society in which we can encourage people to come to the United Kingdom to make their way in the world, and in which we enjoy a huge level of entrepreneurial talent. In fact, London leads New York and Hong Kong in terms of highly skilled, knowledge-based jobs—there are 1.5 million of them—and a recent report showed that London is one of the top two cities in Europe for entrepreneurship.
The Minister and the noble Lord, Lord Popat, mentioned infrastructure. We have some great infrastructure projects. Crossrail is being built beneath our feet. It is a £15 billion project and the estimated economic benefit is almost £50 billion. We will see huge effects, with thousands of jobs and world-class infrastructure.
Our universities have not been spoken about enough in this debate. In the QS university rankings, London had more top-rated universities than any other city in the world. The success is not confined to London. I am proud to have been installed recently as the seventh chancellor of the University of Birmingham. We, too, were in the top 100. Along with America, we have the finest universities in the world—and, talking about Americans, in 1758 American statesman Benjamin Franklin wrote:
“An investment in knowledge pays the best interest”.
That is a statement that I hope more countries will emulate.
Of course, education is an export that this country should be proud of. We have amazing strengths. The Minister spoke of inward investment. We are number two in the world in inward investment after the United States—a country that is more than six times bigger than we are. For such a tiny island, we really do, as noble Lords have said before, punch above our weight. We have 1% of the world’s population.
Since coming to England as a 19 year-old in the early 1980s, I have seen Britain transformed from the sick man of Europe to a country that is now the number five economy in the world. We enjoy one of the most open and free business climates in the world and we are a country where entrepreneurship is admired and celebrated. In spite of our tininess, we are right at the top table: a member of the G8, the G20 and NATO, and with a permanent seat on the UN Security Council. Our tourism industry alone brings in nearly £100 billion and we have the most respected royal family in the world.
We have world-class capabilities in every field, including advanced engineering, aerospace, automobiles, beer, architecture, design, fashion, literature, music, film, sciences, universities, museums, theatre, opera, ballet, law, accountancy, advertising—and sport. Britain came third in the Olympics and the Paralympics, with 1% of the world’s population.
This is brilliant. This is absolutely amazing. In our automobile industry, Tata Motors, run by a fellow Zoroastrian Parsee, took over Jaguar Land Rover in 2008. I spent a whole day there in 2008, soon after the takeover. I believe that I am due another visit, because my visit is completely outdated. Jaguar Land Rover is now making more profits than the Tata group paid for the company that it took over in 2008—a company that nobody wanted to buy. The automotive industry is a great British success story. Last year, Bentley announced that it was moving the manufacture of its 12-cylinder engines from the Volkswagen plant in Germany to Crewe in the UK.
It is often said that Mrs Thatcher destroyed manufacturing in the United Kingdom. The reality is that we produced more in 1990 when she left office than in 1979. The car manufacturing industry is, if anything, riding higher than ever. These are companies with British workers and British premises and British sales exported throughout the world. With a little help from India, we have the best-quality cars in the world—I am proud to drive one—being manufactured here in Britain. What a contrast with the bad old days of Rover and Morris Minor.
I could go on. Automobiles are just one example. Hitachi recently announced that it planned to move its rail business headquarters from Japan to the UK. Companies from Japan, India, Germany—pinnacles of high-tech manufacturing—are moving to the UK. This is fantastic and brings more jobs over here.
Not enough has been said about partnering. Last year, we were told the amazing news about India’s “Mangalyaan”, which successfully entered Martian orbit for just over a tenth of the price of the latest NASA voyage to the red planet. Indeed, for less than the cost of the film “Gravity” the Indian space programme was able to do something that very few nations in the world have managed. Last year the Chancellor announced that £80 million would go towards funding joint space missions with India, and the UK Space Agency is doing so much to promote foreign investment in scientific research. If India can reach Mars, just imagine what we can do if we work together.
The pace of change of foreign investment in the UK is accelerating. The talent that we are attracting continues to grow. My joint venture partner Molson Coors owns the largest brewery in the world in Colorado, but it also owns the largest brewery in Britain, in Burton-on-Trent in the Midlands, where Cobra beer is brewed. The Prime Minister visited the brewery last year.
It is an American-Canadian firm that is increasing inward investment over here. It plans to invest £75 million in its brewing operations in Burton-on-Trent over the next five years. Once again, high-tech manufacturing and chemical engineering are just the sorts of things we need.
The UKTI’s Sirius programme, which I was proud to champion and launch, is a brilliant programme encouraging young entrepreneurs from across the globe to set up business in the UK via its 12-month support programme. It is amazing. UKTI calls it, “the richest package of its kind in Europe”.
In its first 12 months, thousands of young graduates from around the world, from almost 100 countries, applied to join the Sirius programme to start up their businesses right here.
On the other hand, I have been very outspoken in my belief that the coalition Government’s immigration policy—which, unfortunately, the current Government seem to be continuing—was very damaging for business and sent out the wrong signals to our universities and academics and in terms of attracting investment and business. We should change our immigration rhetoric and, for a start, stop including international students in the immigration figures.
Inward investment in the UK is one of the genuine success stories to have emerged from the financial crisis. In every way, foreign investment is helping to transform Britain and the world for the better. On the other hand, the Minister, in his very frank speech, said that our exports are lagging. In the three months to April 2015, the UK’s deficit on trade in goods and services was estimated to be £7.2 billion, widening by £1.6 billion from the three months to January 2015. Our GDP growth is good, but our GDP per capita could and should be much higher. Our inflation is zero, which is brilliant, and our employment rate is fantastic—at 73.4% in December 2014 to February 2105, it was the highest rate since comparable records began in 1971. This is marvellous. At the close of trade on 8 May, the FTSE was 2.3% higher and the pound experienced the largest one-day rise against the dollar since the previous general election in 2010.
Noble Lords, including the noble Lord, Lord Davies, have spoken about productivity. It is one of the most important factors in the success of a country. The more efficient an economy is, the more that can be produced in a sustainable fashion. High productivity growth leads to a higher growth rate in the economy. The reality is that in 2013, based on GDP per hour, the UK came sixth of the G7 countries and productivity was 16 percentage points lower than the G7 average, which is the widest productivity gap since 1991. Does the Minister agree that this is a huge challenge that we have to address?
We have heard about a balanced economy. Manufacturing industry used to be much bigger than it is today. Today it employs 2.6 million people and accounts for 10% of our GDP. Almost 70% of our R&D investment goes into the manufacturing sector and, as we have heard, goods produced in the sector account for 45% of all exports. As a percentage, however, we underinvest by miles in R&D and innovation compared with the OECD, EU and American average. Will the Minister acknowledge that?
When it comes to all the great coalition Government initiatives for manufacturing—the catapult centres, the advanced manufacturing supply initiatives and so on—the Government still have not set a specific target of increasing manufacturing as a percentage of GDP. The Indian Government on the other hand have said that they want manufacturing as a percentage of GDP to reach 25%. Will the Minister agree that we should set a target for manufacturing as a percentage of GDP? It has dropped from 30% to 10% of GDP since the early 1970s, and we must arrest this decline. Investment in manufacturing was £26.2 billion—23% of total investment in business—and that has fallen once again.
Before I conclude, I emphasise that the Government have the right intentions. The Chancellor of the Exchequer said:
“We want the words: ‘Made in Britain’, ‘Created in Britain’, ‘Designed in Britain’ and ‘Invented in Britain’ to drive our nation forward”.—[Official Report, Commons, 23/3/2011; col. 966.]
Well, let us now walk the talk.
Not much mention is made of UK Trade and Investment. I have been privileged as a founding chairman of the UK India Business Council to work with that body, and I think that it does a great job. Could the Minister reassure us about support for UKTI going forward? The High Commission of India has been amazing. What are we going to do to encourage businesses to use its services more? In India, they have been fantastic. Now an Indian beer, Cobra, is being brewed in Burton-on-Trent, where IPA was brewed to send out to the troops in India. The Indian high commission helped us to launch Carling beer, a British joint-venture product of ours, in India. This is marvellous. The Minister said that the EU-India free trade agreement should be vitalised. Will the Minister tell us when that will be concluded? As for Europe, I was privileged to speak at the annual meeting of the Council of British Chambers of Commerce in Europe. What support has been given to these excellent initiatives around Europe and around the world, including the British Business Group in India?
The noble Lord, Lord Stoneham, said that we should really be committing more to defence. I have asked the Government many times whether we will commit to spending 2% of GDP, the NATO target. Our hard power and soft power is what makes us strong.
The noble Lord, Lord Clement-Jones, spoke about the Magna Carta. What an auspicious day on which to make your maiden speech, on 15 June 2015, 800 years after the Magna Carta. Let us think of Britain’s influence, reputation and respect from that one document 800 years ago, and how it has influenced the whole world. This is what we underestimate.
I conclude by saying what a brilliant campaign is the GREAT campaign, again not mentioned so far in this debate. I urge the Government to get even more behind it. When I spoke at the Milan Expo, along with Dominic Jermey, the head of UKTI, I visited our British pavilion, the “beehive”, which was the most innovative, creative and different by miles. We stole the show, and we are going to do that until December. In Germany, which people talk about being the most powerful economy in Europe, who built the German Parliament, the Reichstag, but our own Lord Foster?
In design, we are the best in the world. The UK is the epicentre of trading—we have been a trading centre for ever—and the epicentre of truth, justice, fairness and openness.
The Minister and I visited the Rolls-Royce factory, where you see this acronym everywhere: PRIDE. We should have pride in our abilities as the best trading nation and inward investment nation in the world.