EU Referendum and EU Reform (EUC Report)

15 June 2016

Motion to Take Note

Moved by Lord Boswell of Aynho

That this House takes note of the Report from the European Union Committee The EU referendum and EU reform

Lord Bilimoria:

My Lords, there is a great deal I do not like about the European Union. No one knows who their MEP is. MEPs have no connection with the people they represent and are not accountable or representative. The EU Parliament moving from Brussels to Strasbourg every month for a week is a ridiculous waste of time and money. The euro is a complete failure—one size will never fit all. It is surviving ​only because it is more difficult to dismantle than keep together. I used to think we lost out on tourism and business visitors by not being in Schengen; now we are fortunate, given the migration crisis and security concerns, not to be in Schengen. I am a true Eurosceptic.

However, given a choice, I have no hesitation in saying that we should remain in the EU. I thank the noble Lord, Lord Boswell, and his committee for producing their reports. I came to this county from India as a 19 year-old student and I have seen the immense change in this country from the time I arrived in the early 1980s, when it was the sick man of Europe, to today being the envy of Europe. The transformation is remarkable. Back in the 1980s, this country had a glass ceiling. Today it is a country of aspiration and opportunity where anyone can get to the top, regardless of race, religion or background. We have seen the highest cumulative GDP growth rate in the European Union since the single market began in 1993. For the United Kingdom it is 62% versus Germany, for example, at 35%. On this point alone, the well-known economist David Smith said in the Sunday Times:

“Britain succeeds in the EU: we’d be daft to leave it”.

This country, with its flexible labour market and open economy, has given me the opportunity to build Cobra Beer from scratch. When we first exported Cobra we chose European Union countries to export to because it was so easy. Now we have exported to more than 40 countries.

I cannot believe that Vote Leave could put out a TV advertisement that states the UK pays £350 million into Europe every week, and then states the purported health spending that this could result in. This is complete nonsense. It should have been taken down by the Advertising Standards Authority. The Vote Leave campaign cannot even get its sums right. We get a rebate from Europe that brings it down to about £150 million a week. If we leave, our current growth rate of 2% a year might flatline or even go into recession. That would be a drop of well over £30 billion —four times our net contribution to the EU.

This country has to wake up and smell the coffee. The Vote Leave campaign is based on a number of bogus claims. Brexit bogus claim number one is about loss of sovereignty. What loss of sovereignty? We are in the EU, but not in the euro; we are in the EU, but not part of Schengen; we are in the EU, but we drink our beer in pints not litres; we are in the EU, but measure our roads in miles not kilometres. No one can tell this country what to do. We have total sovereignty.

Brexit bogus claim number two concerns the lack of democracy. There are elected Members of the EU Parliament. The EU Commission is appointed by elected representatives from each country. We are having a referendum on EU membership right now and we can pull out of the EU whenever we want. Where is the lack of democracy?

Brexit bogus claim number three: Vote Leave says EU regulations cost British businesses £600 million a week. Where has this figure come from? It is completely subjective to try to quantify the impact of red tape. The claims are made by people who have never run a business in their life. Of course there are unpopular regulations, but there are good regulations that protect ​workers’ rights. I can assure noble Lords that when you run a global business, as I have, you do not thinking about EU red tape, you just get on with it. The biggest barriers to business are the UK’s own overly complex, vast and continually increasing taxation, housing and planning laws. These are self-inflicted by the Government of the day and are nothing to do with the European Union whatever.

Brexit bogus claim number four concerns migration. Immigration has benefited this country over the decades. EU immigration has been continually demeaned and vilified by Brexiteers. There are 3 million EU migrants working in the UK. This has built up over a number of years and we know how hard-working they are. For example, surveys show that the Polish community is respected and appreciated by the British public and seen as contributing to our country. We have one of the highest levels of employment on record. We have one of the lowest unemployment levels ever seen—in fact, in practical terms we have full employment, despite 3 million EU migrants. Where is the problem? There are a few bad apples trying to take advantage of our welfare state, but, on the whole, EU migrants have helped us to become the fastest growing country in the EU and they contribute to this economy five times more than they take out.

People talk about a drain on public services. If we need 3 million people to boost our economy, our Government have failed if they have not been able to provide the necessary accompanying public services. In fact, our public services would collapse without the contribution of those 3 million people. Our country needs migration due to our ageing population. Misleading nonsense is proliferating from the Vote Leave campaign about immigration, which states that if we leave the EU we will be able to take in immigrants from elsewhere. Michael Gove has said that he wants to bring net migration down to the tens of thousands. We have net migration of 330,000 now, of which half—about 180,000—is from outside the EU. Even if EU immigration stops dead on Brexit, we still have well over the tens of thousands. Their argument is illogical and the public should not fall for it.

Brexit bogus claim number five is that we could negotiate more trade deals with other countries and we would be in control of our destiny if we left the EU—that we could engage in trade deals with India and America. We are the second-largest recipient of inward investment in Europe. Some 60% of companies operating in the EU have their headquarters in the UK. Would they continue to if we leave? Of course not. Our inward investment would dry up and London would no longer be the number one financial centre in the world. Other countries see the UK as the gateway to Europe. As a professor from the Harvard Business School, of which I am an alumnus, said, we would be mad to leave the EU. If we were to have a deal like those of Switzerland or Norway, we would still have to agree to free movement of people and we would still have to contribute—maybe not £8 billion, but maybe £4 billion.

The Brexiteers tell us that those advising against leaving the EU should not be listened to: “Who are they to tell us? They’ve been wrong in the past”. We do ​not live in a vacuum. We are an integrated member of the global economy. We are not a superpower, but a global power—we sit at the top table of the world: the UN Security Council, the G7, G8, G20, NATO and the EU. If we leave, we jeopardise our standing in the world and our future investment. I did not think I would ever quote the Prime Minister’s wife, but she said:

“I want my children growing up with the advantage of starting their careers in a country that is a big fish in a big pond, leading the way in Europe”.

If we leave the EU we will be a tiddler in an ocean.

Brexit bogus claim number six is that the EU is in a mess and our share of trade with it has been falling. That is quite obvious because we are trading more with emerging markets, but the EU still accounts for 44% of our exports and 55% of our imports. It is too big to jeopardise.

Brexit bogus claim number seven is that there will be further integration, leading to a superstate, and we will be dragged into EU bailouts. There will never be a united states of Europe. I come from India, a country that is a true federal state. Europe will never look like that. The Prime Minister’s negotiations have ensured that we are not committed to further unification and bailouts in the future.

Brexit bogus claim number eight is that there will be an EU army that will subsume the British Army. This is complete fantasy. This will never ever happen. It is also claimed that peace in Europe has been brought about by NATO. It has been brought about by NATO and the European Union.

Brexit bogus claim number nine is that Turkey will become a member of the EU and we will not be able to stop 75 million people coming here. Turkey is light years away from joining the European Union—this is scaremongering.

Lastly, Brexit bogus claim number 10 is that the EU is an economic mess, with youth unemployment up to 50% in countries such as Spain, Italy and France. These countries have been in a mess since 2008-09, when the financial crisis began. We, on the other hand, because of our flexibility and control of our destiny, have thrived. The fate of these EU countries has not prevented us succeeding and getting our economy back on track. Even if the economies of Europe absolutely implode and Europe breaks up, I would rather we were at that table trying to help out and knowing what is going on. As has been said, I do not want to jeopardise our own United Kingdom in a Brexit situation, where Scotland might want to leave. Then there is the huge number of years it has taken to get to the present Northern Ireland situation, which would be jeopardised.

Brexiteers try to say that they are the ones who are proud of Britain. I am proud of Britain—a country that has given me everything, that is not isolationist, selfish or blinkered. What speaks more about a country than anything else is its spirit and values. British people are respected around the world for their values. If we Brexit, we will be sleep-walking over the cliffs of Dover into huge uncertainty and instability. Even Brexiteers are saying that it will take years to renegotiate our position with Europe. A protracted period of ​negotiations, a possible recession, the loss of jobs—we have a fragile recovery and huge debt. We have a current account deficit and a budget deficit. Why risk all this when we do not have to? It is far wiser and far more productive for us to try to reform the EU from within. Why destroy the growth we have achieved? Why risk our standing as the fifth largest economy, with the highest growth rate in the EU and the largest amount of investment in the EU?

There is an African proverb: “If you want to go fast, go alone; if you want to go far, go together”. We are in control of our destiny and we have our sovereignty. I conclude with a very short poem—my favourite poem—written by the Indian Nobel laureate Rabindranath Tagore, which is so pertinent to what we are speaking about:

“Where the mind is without fear and the head is held high

Where knowledge is free

Where the world has not been broken up into fragments

By narrow domestic walls

Where words come out from the depth of truth

Where tireless striving stretches its arms towards perfection

Where the clear stream of reason has not lost its way

Into the dreary desert sand of dead habit

Where the mind is led forward by thee

Into ever-widening thought and action

Into that heaven of freedom, my Father, let my country awake”.

Black and Minority Ethnic People:

 Motion to Take Note

 Moved by Baroness Neville-Rolfe

 That this House takes note of the issues faced by black and minority ethnic people in the workplace in Britain.

 

Lord Bilimoria:

My Lords, one of the top two issues in the forthcoming EU referendum is immigration. Sadly, it is immigration in a negative way. Four years ago, I was proud to lead a debate in this House entitled Minority Ethnic and Religious Communities: Cultural and Economic Contribution. There were 26 speakers in that debate.

 

I am proud to be the first Zoroastrian Parsee to sit in your Lordships’ House. Before I made my maiden speech, the first thing I did was read the maiden speech of the first Member of Parliament from an ethnic minority. Dadabhai Naoroji, a Liberal, entered the House of Commons in 1892, against all odds. In fact, the then Prime Minister, Lord Salisbury, said that no British person would ever accept a black man as an MP. Just three years later, in 1895, the second Indian, Sir Mancherjee Bhownagree, a Conservative, was elected. The third—and the only one of the three Indians elected to the House of Commons before India’s ​independence—was Shapurji Saklatvala, or Comrade Sak, who was elected as a Communist with Labour support. All three were Zoroastrian Parsees—one a Liberal, one a Conservative and one Labour. I now sit, as a Zoroastrian Parsee, as an independent Cross-Bench Peer, squaring the circle. There was one ethnic minority Peer before India’s independence, and that was Lord Sinha.

 

When I came to this country for my higher education, as a 19 year-old in the early 1980s, I was told by my family and friends in India, “If you decide to stay on and work after your studies you will never get to the top. You will not be allowed to because, as a foreigner, there will be a glass ceiling”. I am sorry to say that, 35 years ago, they were absolutely right. In spite of what my noble friend Lord Adebowale said, I think that glass ceiling has been well and truly shattered. Minority ethnic and religious communities are now reaching the top in every field: sport, academia, the Civil Service and politics. Just look around this Chamber.

 

The day before I led that debate four years ago, we had a photograph taken on the steps of Westminster Hall to celebrate 25 years since the first four ethnic minority MPs were elected to the House of Commons in 1987. I was at Cambridge University at the time when one of them, Keith Vaz, was elected. Four years ago, there were 69 of us on those steps. Today, there are 92 ethnic minority MPs and Peers. We are making progress and I would go so far as to say that immigrants from all ethnic minorities and religions have been the making of the “Great” in Great Britain. They have been crucial to Britain’s success, contributing enormously to the economic and cultural life of Britain and enriching it in every way, often punching well above their weight.

 

The Asian community makes up 4% of the population of Britain yet contributes more than double that percentage to the economy, but the Government’s immigration policy has been affecting this country and our businesses. My own business, Cobra Beer, supplies over 98% of the curry restaurants—the so-called Indian restaurants—in this country. Well over two-thirds of them are actually owned and run by Bangladeshis, and the Bangladesh Caterers Association does tremendous work supporting them. Yet the Government do not listen and there is a skills shortage. We cannot bring in the chefs the industry needs because of the Immigration Rules, yet it is the nation’s favourite food. This industry has been an inspiration to me. It is made up of pioneering entrepreneurs who have come to this country as complete strangers, gone to every corner of Great Britain, to every high street, made friends, won customers and—most importantly—put back into their local communities.

 

I am often asked to express what Asian values are and I summarise them as the importance of hard work, family and education. Britain prides itself on being an open country and an open economy; a country that is secular, multicultural and plural, where all religions are allowed to be practised and where all races, communities and cultures exist side by side.

 

There is one word I do not like. We are not a “tolerant” nation. This diversity should not be tolerated but celebrated. We are renowned as a country with a ​sense of fairness where there is opportunity for all. That has allowed ethnic minorities to succeed and allowed this little country, with 1% of the world’s population, to be one of the five largest economies in the world.

 

I thank the Minister very much for initiating this debate. She spoke about integration. The Nobel laureate, and my friend, Professor Amartya Sen speaks about identity. He says that most of us have several identities, whether religious, ethnic, professional or national.

 

When I came to study here, my father, the late Lieutenant-General Bilimoria, said, “Son, you’re going to study abroad. You may stay in Britain, you may live in another part of the world, but wherever you live, integrate with the community you are in to the best of your ability, but never, ever, forget your roots”. I am proud to be a Zoroastrian Parsee. I am proud to be an Indian, I am proud to be an Asian in Britain and, most importantly, I am very, very proud to be British.

 

The noble Lord, Lord Dholakia, speaking in this debate four years ago, said:

 

“We should be proud of Britain’s record in race and community relations”.

 

He mentioned the Race Relations Act 1965 and said:

 

“We have been at the forefront of legislative and other machinery to establish equality of opportunity for all our citizens with a strong emphasis on disability, gender, age, faith and sexual orientation”,

 

but he said:

 

“We now need to move to the next stage. We need to examine changing patterns within all our communities. True multiculturalism is proactive and means that equality and diversity is at the core of everything we do, from government to individual responsibility. We need to take a much more pro-active stance towards combating racism and discrimination, really tackling inequality in all aspects of our society in social and economic matters and in civic participation, positively valuing—not merely tolerating—the contribution of different cultures and perspectives, and treating them with respect”.—[Official Report, 24/5/12; col. 873.]

 

Those are very wise words.

 

The noble Lord, Lord Kakkar, pointed out in that debate:

 

“We should not forget that some 44,000 out of 240,000 registered doctors in the United Kingdom declare themselves Asian or British Asian”.—[Official Report, 24/5/12; col. 879.]

 

That is nearly 20%. Where would we be without them? The noble Lord, Lord Ahmad of Wimbledon, said that,

 

“if you glance at the list of speakers, you will see that there are speakers not just from some defined minority communities but from all communities. That is what Britain represents today”.—[Official Report, 24/5/12; col. 880.]

 

He said that the strength of our diversity is visible and relevant. The noble Lord, Lord Alton, said it was a time,

 

“for celebrating our nation’s diversity—the whole world in one country. It is an important moment to insist that along with respect for difference and minorities must come a commitment by us all to do all we can, using all our energy, to promote the unity, democracy, freedom and justice that we treasure in this nation”.—[Official Report, 24/5/12; col. 889.]

 

One in seven companies are started by ethnic minority immigrant entrepreneurs, yet I faced prejudice 26 years ago when I started Cobra Beer. I would go to see buyers for big supermarket chains and big customers and they would say, “Indian beer?”, and turn their noses up at it. Well, I have got my own back. Cobra Beer has won 83 gold medals in the Monde Selection ​world quality awards. It is one of the beers with the most awards in the world and is a top 20 brand over here—so much for their prejudice.

 

The Minister and I served together when I was the founding chairman of the UK India Business Council. She spoke about the new report which Sajid Javid—I can call him my friend as he is my neighbour—the Secretary of State for Business, Innovation and Skills has commissioned. I wish the noble Baroness, Lady McGregor-Smith, all the best with it and welcome her to our House. There are lots of objectives in the report. One is to increase the number of BME students going to university by 20%. I am proud to be the first Indian chancellor of a Russell Group university, the University of Birmingham. However, I am the first; how many other ethnic minority chancellors are there? How many ethnic minority vice-chancellors are there in this country?

 

We talk about getting more ethnic minority students. Is the Minister aware of a programme called GEEMA? It is the Group to Encourage Ethnic Minority Applications and is for year 11 schoolchildren. It has a summer school at the University of Cambridge, and I addressed the opening course. I was inspired because it turned out that they were ethnic minority children whose families had never been to university. Many of them ended up getting into the University of Cambridge and other universities.

 

As the Minister said, there is an employment gap. It is a gap of more than 11% between BME people and the rest of the population. Two-thirds of FTSE 100 companies still have an all-white executive leadership. This is appalling. The research found that 10 people from ethnic and cultural minorities hold the top posts of chairman, chief executive or finance director, which is equivalent to 3.5% of the 289 jobs at that level, and 98% of FTSE 100 chairs, 96% of FTSE 100 chief executives and 95% of FTSE 100 CFOs are white. We have made progress, but there is so much more to be done. Thirteen per cent of the UK population is from an ethnic minority background, yet in Parliament we have almost 100 BME Members, which is still nowhere near 13% of the 650 Members of the House of Commons and more than 800 Members of this House. There is only one BME Cabinet Minister, my friend Sajid Javid. The first minority ethnic Minister was Lord Sinha, whom I mentioned earlier.

 

We talk about international comparisons. The noble Lord, Lord Morris, mentioned them. The US House of Representatives has 435 Members, of whom 20% are non-white, but only 6% of the 100 Senators are minority ethnic, so we are doing much better than the Americans, let alone on diversity because more than 50% of them are lawyers.

 

In the public sector, only 7% of the UK’s Armed Forces are ethnic minority, and less than 3% of officers, yet without the contribution of nearly 5 million people from India, south Asia, the Caribbean and Africa in First World War and the Second World War, we would not be here in the free world we have today. Of Premier League footballers, 25% are ethnic minority. That is the one area where we are ahead of the average.​

 

Before I conclude, we have to talk about boards. I founded the Zoroastrian All-Party Parliamentary Group, which had an event called Faith-based Ethics in Business—the Cadbury and Tata Way. Tata Steel is now in the spotlight, but people forget the net employment that Tata has created through the success of Jaguar Land Rover and the enormous charitable work that it does. David Landsman, head of Tata Ltd in the UK, said that there is a clause in the Tata code of conduct about equality and non-discrimination on any grounds.

 

In 2003, I was a member of the Tyson task force on the recruitment and development of non-executive directors. The noble Baroness, Lady Bottomley, spoke about diverse teams. That task force, 13 years ago, said very clearly said in its summary:

 

“Diversity in the backgrounds, skills, and experiences of NEDS enhances board effectiveness by bringing a wider range of perspectives and knowledge to bear on issues of company performance, strategy and risk”.

 

It is indisputable that broader, more rigorous and more transparent searching is needed to get there, yet this amazing lack of diversity exists at the moment. I have been the only ethnic minority member of the board of Booker, a FTSE 250 company—it is around number 125 at the moment—and the senior independent director for the past eight and half years. We have had two women on our board.

 

Success is not a destination, it is a journey. I have shown the huge lack of diversity that exists and the reason this report needs to be commissioned. Yet I have also shown how far we have come in the 35 years since I came here as a student. I am proud to say that London is the most diverse, vibrant, multicultural and cosmopolitan city in the world, but we need to continue to aspire and to achieve. As the Prime Minister said, and as I have said many times, there will be Asian Prime Minister of this country soon.

My Lords, Britain has less than 1% of the world’s population and represents just 4% of the world’s GDP, and yet it makes up 7% of the world’s welfare spending. There is no question that the Budget deficit needs to be cut and that the Chancellor needs to balance the books, even if this has meant cuts of well over 20% in some departments, as we saw in the Statement. Yet now the British economy is growing faster than any other G7 economy, with low rates of unemployment and high employment, and projections which show that the growing economy will produce more tax receipts, allowing the Government to invest in the crucial means to make us more productive and innovative. I thank the noble Lord, Lord Carrington, for initiating this debate, and I could not agree with him more about tax simplification—in fact, I often say that the Office of Tax Simplification is an oxymoron.

I turn first to higher education, which is one of the jewels in this nation’s crown. The decision to allow part-time students to access maintenance, as well as the protection of science budgets in real terms, is an excellent one. The Government are finally moving in the right direction with regard to our universities. For decades we have underinvested in R&D, well below the OECD, EU and United States averages, but now there is a financial boost going towards Innovate UK and the UK’s network of world-leading Catapult centres. Investment is being made into promoting exports through UKTI. We see investment in our aerospace industries and other advanced manufacturing industries. Here I applaud the Chancellor’s decision to provide extra support for postgraduate students, who are a vital part of boosting productivity in this country.

As we have heard from the noble Baroness, Lady Noakes, by maintaining a historically low rate of corporation tax, the Chancellor has supported a business-friendly Britain, but as an entrepreneur and businessman of course I think that the top rate of income tax should fall back from 45% to 40%. If it did so, that would make us more competitive. Also, capital gains tax should be reduced from 28% to 18%, which is where it was. This week I spoke at the launch of ResPublica’s excellent report, Make or Break. It is all about encouraging manufacturing in the UK. During his visit to the UK in November the Indian Prime Minister, Narendra Modi, spoke of his “Make in India” initiative. India has a target to increase manufacturing as a percentage of GDP from 16% to 25%. Does the noble Lord, Lord O’Neill, agree that we in Britain should have a target to increase manufacturing from 10% of GDP, where it is today?

Furthermore, and more important, the Chancellor has understood our recommendations on military and defence spending. The warnings have been there since SDSR 2010, in which the scaling back of spending on defence and security, I believe, damaged our capabilities in those areas. On top of that, when it comes to security in the dangerous world we are living in, dismissing the idea of cuts to police forces is excellent news.

In full, this is an excellent review of the public finances. While it is right to continue to make the cuts that will make us more efficient as an economy, it is also essential to use the UK’s advantageous position to invest in helping the economy to grow. No business can grow by cutting alone; businesses can become more efficient by making cuts, but they also have to invest to grow. These are all steps in the right direction. However, this is dependent on a continuing increase in tax receipts and on net interest payments being low. If interest rates go up, it will be more difficult for the Chancellor to continue down this path.

Moreover, let us not forget that this was made possible by the Chancellor finding an extra £27 billion. The noble Lord, Lord Horam, talked about luck. Well, my best definition of luck is when determination meets opportunity. What is brilliant is that we must not forget that forecasts can be very badly wrong.

Robert Chote, the director of the OBR, said that his organisation had predicted growth to be six times stronger between 2010 and 2012 than the official figures suggested was the real case.

I would like to conclude by saying that I am so glad that the Chancellor has made the decision to reverse his planned cuts on tax credits. While the media and the noble Lord, Lord McFall, may have branded the Chancellor as having committed a dreaded U-turn, let us not forget, with all due respect to the noble Lord, Lord Wakeham, that without the actions of this House, the mistakes the Chancellor would have made would now be mistakes enshrined in law. That is no better reminder of the importance of this House when carefully considering legislation, and as the check and balance and guardian of the nation. Steve Jobs, the founder of Apple, said that, “changing your mind is a sign of intelligence”.

Clearly, we have a very intelligent Chancellor. I now also name him as “the listening Chancellor”. Thank you, Chancellor.

My Lords, last month, I accompanied my university contemporary, Greg Clark, the Universities Minister, on a delegation to India. I spoke at an Indian higher education conference. Sitting next to me, sharing the platform, was the first ever permanent secretary-equivalent of a department newly created in India by Prime Minister Narendra Modi: the department for skills and entrepreneurship.

I declare my various interests to do with this debate and the Bill. Last Monday, I spoke at the opening of Global Entrepreneurship Week alongside Vince Cable, where it was revealed that London is one of the top two cities for entrepreneurship in Europe. Last week, I became a founding member of the Guild of Entrepreneurs, which will soon become a livery company in the City of London. We are currently on the 687th Lord Mayor of London, so it has taken us a long time to establish a Guild of Entrepreneurs.

Yesterday, I was at my old university, Cambridge, speaking at the 10th anniversary of the Centre for Entrepreneurial Learning at the Judge Business School. I have been proud to have been appointed one of the first two visiting entrepreneurs at Cambridge, and have been involved with the CfEL since its inception, spreading the spirit of entrepreneurship throughout the university—not just the business school but the whole Cambridge University community. More than 300 students from around the university attend projects such as Enterprise Tuesday. Look at the culture shift that has taken place. When I was at Cambridge in the 1980s, there was no business school. Today, there is not only a flourishing business school but a centre for entrepreneurial learning.

However, there is not one mention of the word “entrepreneurship” in the entire text of the Bill. Can the Minister explain that omission? I am of course delighted, as the Federation of Small Businesses noted, that the Bill even exists in the first place. There is a lot that is music to my ears. There is so much of what the Minister said that is fantastic, such as helping businesses start from home, and childcare help for businesses. She herself noted that small businesses make a huge contribution to the UK economy. Between them, SMEs comprise 96% of all UK businesses, accounting for about half of UK jobs and one-third of private sector turnover—the engine of our economy.

Speaking as someone who started a business with just two people that has grown over the years, I have seen first-hand entrepreneurial businesses. My business has dealt a lot with the curry restaurant industry. More than 10,000 of them are represented by the Bangladesh Caterers Association: pioneering entrepreneurs who have made curry the favourite cuisine of this country. I know the sacrifices that those individuals have made; I know how difficult it is to start, to grow and to survive in business. One of the first cases I ever sold of my product was to a local corner shop. Of course, those corner shops have survived and grown thanks to the Asian community. So I have been a micro-business, an “s”, an “m” and now I have a joint venture with a global giant.

There is a problem with the terminology used in the Bill. Grant Thornton—I declare an interest as I have dealt with the firm for many years as a client—has noticed that there is an unnecessarily restrictive definition of SMEs in the Bill. The current definition of SMEs used by the Government largely excludes mid-sized businesses from many of the provisions of the legislation, such as on access to finance, late payment and credit information. However, these same businesses will still have to abide by a number of additional burdens, such as the duty to publish a report on payment practices.

Grant Thornton estimates that approximately 34,000 mid-sized businesses will be left behind by the Bill, as they lack the resources of the large corporates that are needed to cope with additional regulatory reporting but are not granted the same exemptions granted to SMES within the Bill. Will the Minister acknowledge and, I hope, deal with this omission by widening the positive provisions to a larger section of the business population and altering the definition of an SME used in the Bill, which is based on the Companies Act and restricts an SME to a turnover of just £25 million.

On access to finance, the United Kingdom lags way behind our major competitors. Just look at Germany, where SMEs can draw upon close personal and financial links with a multitude of local lenders, many of which are state owned or operated as mutual firms. Germany’s small and medium-sized businesses, the Mittelstand, are exemplary and have been the centre of the economic success of that economy. The United States has always been brilliant in the way that it has helped to fund its small businesses, but I believe that we could go even further. In fact, the Institute of Chartered Accountants in England and Wales, of which I am proud to be a fellow, recommends that in order to help businesses with the wider issue of finance and cash flow the Government should foster new business growth by introducing critical growth loans, where a percentage of the loan is guaranteed for SMEs trading for between two and five years.

I have benefited personally from the Government’s small firms loan guarantee scheme, which is brilliant at enabling businesses that do not have the collateral to get the Government to back the security with the bank that lends to the business. We could and should increase that lending far more than we are. Does the Minister agree that we should be doing this? Business is going global. The Bill talks about export finance and there is so much good work going on. UK Trade & Investment has sponsored a programme called Sirius, where we attract the brightest young graduates from around the world to come and open their businesses here in the UK. This is the sort of initiative that we should be encouraging and growing.

With regard to the moral aspects of the Bill, the fact that we are addressing the minimum wage is excellent. If the Bill is clamping down on those rogue businesses which exploit their workforce, that is great news. I cannot think of any ethical business that would pay less than the minimum wage, let alone the living wage. However, the Guardian reported last week that despite the Business Secretary’s rhetoric last year that the coalition Government would crack down on firms that underpay their employees, there have been no successful prosecutions of such illegality since February 2013. Can the Minister confirm that? The annual survey of hours and earnings for the Office for National Statistics recently reported that around 287,000 workers were paid at less than the minimum wage in 2012. Are the Government aware of that and why are they not doing more about it? I hope that the Bill will be able to address this. Can the Government assure us about it?

With regard to the pub industry, I said that I declared my interest and I cannot spend the whole of my time declaring my interest in this area. The sad thing is that more than 10,000 pubs have closed down in the United Kingdom in just the last decade. We need to do everything we can to save the British pub, which is at the heart of British communities. The beer tie itself is somewhat of a double-edged sword. Of course, it allows big brewing or pub groups to invest in the pubs. To actually start a pub, you have to put down perhaps £250,000. However, if you are with a big pubco you do not have to do that and can actually run a pub. That is the advantage of being part of a big pub group.

However, if by doing that you also have to pay 70% to 80% above the market price for your beer, and pay higher rents, that does not feel fair at all. Given the recent defeat on this issue in the other place, I am delighted to hear the Minister say that the Government have listened and are going to try to achieve what I hope will be a middle way, where we can have the benefits that the big pub groups bring while enabling our pubs to be competitive and flexible, and to flourish, thrive and grow.

With regard to insolvency, Britain’s insolvency environment ranks pretty highly. In fact, we rank seventh in the world. The Bill talks about reforming insolvency in this country. I do not believe it is doing it in bold enough terms. For example, we are not going as far as having the famous American Chapter 11 or the Canadian Division 1 principles—and, surprise, surprise, countries number 1 and 2 in the insolvency environment are Canada and the United States of America. Those two measures, Chapter 11 in particular, provide a company trying to restructure with protection from creditors to give it time to do so. I have gone through this. I tried to institute a company voluntary arrangement. We got 90% of our creditors to agree, but we could not go through because there was no protection and one of the creditors scuppered the whole arrangement.

The Bill talks about pre-pack administrations. This is meant to be the least worst alternative. I have had to go through this procedure. It is awfully painful, but it is there to save brands and businesses if companies go through the procedure above board, as we did. I am proud to say that today we have a brand and a company that are flourishing. The worst thing about it is that when I went through that procedure I realised how badly misused it is in this country. It is misused to the extent that shareholders, creditors and, worst of all, employees suffer. That is not on. I do not think that the measures in the Bill go anywhere near far enough to improve the pre-pack administration regime. Bringing in Chapter 11 would be the best way of taking things forward. Do the Government agree?

Most importantly, this Bill is not just about businesses remaining as they are. As the Minister said, around one-fifth of small businesses say that they want to grow significantly and are determined to do so. The overall thrust of this legislation is aimed at making it easier for SMEs to operate and grow within the economy, which is something we should celebrate. Why are the Government not going further? One of the things that SMEs need is education. I attended the business growth programme at Cranfield. Cambridge has the diploma in entrepreneurship. These are fantastic courses, but they cost up to £10,000 a year. The Government should have a competition for 100 businesses a year to attend these courses to improve their competitiveness and help them to grow. Will the Government accept this suggestion?

I do not want to look a gift horse in the mouth. The fact that the Bill exists in the first place is wonderful, but I despair that it does not emphasise entrepreneurship. I worry that Britain today is number 2 in the world in inward investment. That is something we should be proud of because we are an open economy. However, I hear stories of Indian businesses having huge problems opening bank accounts and setting up companies over here. We are trying to address money laundering, but we are hampering our competitiveness and inward investment capabilities. We are one of the top 10 economies in the world. We have to encourage entrepreneurship, growth and employment.

He was joined by the Bulgarian Ambassador to the United Kingdom. Konstantin Dimitrov, and Labour MP Barbara Roche, the former Immigration Minister.

The following transcript was kindly provided by Sky News.

DERMOT MURNAGHAN: Well immigration is one of the most divisive issues in politics at the moment but does our opinion of immigrants change depending on what country people come from to the UK?  Well a poll for this programme suggests that of course it does.  In the exclusive YouGov poll carried out for this programme people were asked ‘Do you think that immigrants from each of the following countries make a positive or negative contribution to life in Britain today?’  Well Australia, the United States and Germany came out top, at least 50% of people think they do make a positive contribution, immigrants from India and Poland also did pretty well coming out at 44% but the figure was much lower for immigrants from Bulgaria and Romania, just 18% of people think they make a positive contribution to life in Britain and in fact more people think they actually have a negative impact.  So why is that?  Well I am joined now by Bulgaria’s Ambassador to the UK, Konstatin Dimitrov, by the Labour MP Barbara Roche who is a former immigration minister and chair of the campaign group, the Migration Matters Trust and by Lord Bilimoria, an Indian born British businessman of course who is chairman amongst other things of Cobra Beer, a very good morning to you all.  Well Ambassador I want to start with you, first of all your reaction to that poll in that your countrymen and women when they come to the UK, they aren’t really rated very highly?

KONSTANTIN DIMITROV: Yes, I’m not surprised, it’s a combination of the brutal anti-Bulgarian propaganda for years now by certain politicians and media whose name I will not mention for obvious reason and the second point, a simple lack of personal knowledge of Bulgarians by many Brits.  Why?  Because there are only about 60,000 Bulgarians working in the UK in a population of 64 million so there is a very low chance for anyone to have met a Bulgarian or worked with a Bulgarian person and moreover, one other thing, it is exactly in places where there are no Bulgarians that people are very much prejudiced against Bulgarians unlike centres of mixed communities where Bulgarians are seen as very …

DM: You just tell us, I know you’ve told me before, that the majority of Bulgarians who come to the UK come here to get jobs and when the jobs disappear or when they have worked long enough, they go back to Bulgaria.

KONSTANTIN DIMITROV: Exactly, just 1080 people have been registered to receive substantial work benefits in the UK last year, imagine, 1080 people, that’s absolutely negligible.  Our compatriots are primarily between 18 and 35 years of age, single and they come here to work primarily as a result of an a priori agreed upon contract.

DM: Barbara, you come in to this, clearly there are different perceptions of different nationalities here, do you think we need some cool heads when it comes to discussing this issue, in particularly migration from within the European Union?

BARBARA ROCHE: Oh absolutely, I absolutely agree with what the Ambassador has had to say and indeed when I was a Member of Parliament and now in my role as Chair of Migration Matters, that’s what we actually try and argue.  We just need to look at the facts and I also think it’s time that all political parties know and say what’s in their heart of hearts, that actually legal migration can be a very positive good for this country both in our public services and for our economy so the more we know the facts, the better.

DM: Do you think there is any point trying or should we not even try at all to limit migration from within the European Union and in particular underlying these figures, these findings we’ve got in particular to restrict Bulgarians, Romanians and a lot of East Europeans?

BARBARA ROCHE: I think the difficulty is that when we talk about this, and I am somebody who actually does believe in freedom of movement within the European Union, I think it is one of the fundamental tenets.  I remember one of my very first votes as a young woman was to vote for Britain to actually stay in the Union and not only is freedom of movement a good thing but we actually don’t often discuss the fact that there are very many British people who are working elsewhere in the European Union, particularly young people, and they value their freedom of movement and we would lose that.

DM: Lord Bilimoria, you come in, are you heartened by the fact – and this then begs the question, is it just a matter of time of the indigenous population so to speak getting to know the immigrant population – India is pretty popular, it features up there along with the Poles coming in at 44% approval?

 LORD BILIMORIA: Well that doesn’t surprise me at all and I am relieved to hear that the Indian community is being appreciated for the contribution that it has made for decades to this economy and I would think this immigration debate has become so dangerous now particularly driven by UKIP, where everyone is being tarred with the same brush and you don’t look at the good immigration that has helped this country become great.  I mean look at Bulgaria, I know a very, very impressive young Bulgarian banker who works for the Queen’s bank who is highly impressive, you’d want somebody like that in this country.  We look at countries on this league table that you have just put up, you’ve missed out Bangladesh.  This evening I am going to be speaking at the Bangladesh Caterers Association annual awards dinner, over 1000 Bangladeshi restaurateurs from around the country, they are the ones – over two-thirds of restaurants are owned by Bangladeshis – they are the ones who actually brought curry to our homes, we love that food and yet they can’t bring in the skilled chefs that they need.  Look at Tata who own Jaguar Land Rover, a company six years ago nobody wanted to buy, now it is so successful.  Who is the Chief Executive of Tata Jaguar Land Rover in this country?  A German, Ralf Speth.

 DM: Just to stay with this, Lord Bilimoria, do you think it is some of the perceptions and misperceptions if I can coin that phrase, that go around especially this idea that the vast majority of immigrants some people think come here to claim benefits, to sponge off society.  When people get to know for instance the South Asian community, let’s lump them all together, they are very hard working, there is a lot of productivity going on there.

LORD BILIMORIA: Hard work, family values, education.  Look at foreign students, we still include international students in our immigration figures and the government has got this ridiculous target and one of the biggest mistakes that David Cameron has made is to put up this target of reducing immigration to the tens of thousands.  They are more than double that figure, they are never going to hit that figure.  I think that was a huge mistake to make and they are paying the price for that right now.

DM: Ambassador, what do Bulgarians, your nationals who come along to you, what do they tell you about the way they are treated by the UK population because there is that classic case where you might answer a survey like ours and say I am not very keen on Bulgarians and Romanians and others but when you actually have met someone or worked alongside one of them as you mentioned, you think they are okay.

KONSTANTIN DIMITROV: I would revert back to the last point I made, those who have worked with Bulgarians are very open and many Brits, 400,000 Brits a year go to Bulgaria to spend their time there, to have their holidays there, to even buy properties there.  If there is some inborn antipathy no one would do that.  The problem is those who are objects of propaganda and indeed those who haven’t met any Bulgarians at all, statistically these are quite convincing parameters as only 60,000 people in your country out of a country of 64 million, how could you possibly have an idea as to the contribution of such a small batch of people to your economy or to the texture of your society?

LORD BILIMORIA: And if you look at it, the other point is if you ask Theresa May, tell me the number of illegal immigrants in this country she wouldn’t have a clue, her department wouldn’t have a clue.  They don’t know whether it’s half a million, a million, a million and a half because we have lost control of immigration in that sense.  We still don’t have exit checks at our borders.  We would have a queue of Indian IT companies ready to do that job so that we can scan everyone’s passport when they come from wherever in the world, scan everyone’s passport when they have gone and then we would know who shouldn’t be here who are still here.  We should be attracting the best and the brightest people to this country.

DM: Barbara Roche, there is an absolute numbers argument going on here as well.  If you get net migration of 250,000, just do the maths, over 20 years you end up with millions more people here and whatever nation they come from it just means that particularly public services are put under enormous strain.

BARBARA ROCHE: You have to look at it two ways, first of all it is absolutely right that countries, and we need to control our borders and certainly when I was the Immigration Minister that was a tenet.

DM: But how would you stop it?

BARBARA ROCHE: Well what you have to do first of all is also to acknowledge that people come and people go, we live in a global world and …

DM: But you just said that you don’t support stopping Europeans coming in and they are the vast majority of migrants so how do you control your borders?

BARBARA ROCHE: I actually think, I want to go back to the question that you asked about public services, you were talking about the strain on public services.  What the figures show and what the OECD says is that actually migrants contribute more to public services than they take out.  I think it is estimated that nearly 40% of our doctors, nearly 40% are migrants so the question is, are we asking the right questions about the effects on our public services?  If we stopped migration tomorrow our public services would be worse and our debt would be worse and I also would say if you stopped migration here, what is going to happen to all those people who want their holidays [inaudible] … the European Union?

DM: Okay, quick thoughts on that Ambassador, I know you want to come in on that.

KONSTANTIN DIMITROV: That is right and also let us face a truth, outsiders, foreigners, come to work here because there are niches that the Brits wouldn’t like to take up, they wouldn’t like to go to the agricultural sector because there is no interest in such positions so of course legally our working citizens of the European Union will continue to come here to fill in the niches which are not wanted for other reasons by the Brits.  If the Brits started filling those niches in, there would be no need for such immigration as we talk about.

DM: So market forces can deal with it.  Last point to you Lord Bilimoria.

LORD BILIMORIA: Well I think it’s across the board. It’s what the Ambassador has just spoken about but also I mentioned the Chief Executive of Jaguar Land Rover, my joint venture partners at Cobra Molson Coors, we had a worldwide search for our UK chief executive, who is he?  A Belgian.  We want the brightest and the best across the board, from the Commonwealth, from the European Union and the biggest advantage of this country is that we are an open economy and that’s why we are still number two, number two inward investment country in the world today is this tiny country.

DM: Oh well pointed out, I didn’t know that.  Listen, I must end it there, thank you very much to you Lord Bilimoria, good to see you, Konstantin Dimitrov, Ambassador and Barbara Roche, thank you very much indeed.

Lord Bilimoria also criticised the failure of the government to introduce exit-checks as British ports of entry, as well as the negative response to the mooted “Visitor Bond” system, which was scrapped last year after public outcry.

My Lords, arriving at his Cardiff primary school at the age of five, the future vice-chancellor of Cambridge University could use just one English phrase. Today, at the age of 63, he still remembers the kindness that people showed him as he learnt to speak English, and of course he now holds one of the world’s most influential academic positions. The gracious Speech talked about the packed programme of a busy and radical Government, but despite that there is no mention of immigration or of higher education. I want to talk about those two topics and I declare my various interests in the higher education field, as well as being an immigrant. Professor Leszek Borysiewicz has made a defence of the value of immigration. He opposes crude numerical limits and praises Britain’s plural society as one of its greatest strengths.

We all know that the target of tens of thousands has become a real issue. The number of students coming here from India fell by 39% between 2011 and 2012. The vice-chancellor has said that a university such as Cambridge is in the global race, a point also made by the Prime Minister. It is competing not just with other British universities, but with Princeton, Harvard and Stanford. Setting an immigration target of this kind is harming Britain, because for the first time in many years the number of international students coming to Britain has fallen overall. What is even more scary is that the numbers have fallen in the STEM subjects, which we so desperately need students to study.

Michael Kitson, a university lecturer in global macroeconomics at the University of Cambridge, has come up with some great insights. He feels that the popular press has been propelling the bandwagon in immigration. He has said that non-EU students contribute over £7 billion to our economy—our GDP and balance of trade—and, while some students may remain after they have finished their studies, the vast majority leave. When we look behind the figures for net immigration, if students are excluded, the net figure in 2013 was 58,000, averaging 49,000 between 2004 and 2013. Voilà, the Government’s target of net immigration to be measured in the tens of thousands has already been met if students are excluded. When we look at people who come here to work we see that, while 214,000 came to work here in the UK, some 186,000 left the country to work overseas.

The main driver of future prosperity in this country can be summed up in one word: innovation. Innovation is driven by diversity. Just look at Silicon Valley, one of the most diverse communities in the world, and what it has achieved in changing our lives. What has happened over here is that the popular press has been stirring up a hatred of immigration based on anecdotes, rumours and slurs, not on figures. I think we need to come to terms with that. The National Union of Students has conducted surveys which show that 51% of non-EU students think that the UK Government are either not welcoming or not at all welcoming towards international students. We had the Government’s £3,000 visa bond, which set off the alarm bells. In a U-turn, the Government withdrew it. They then had the idea of hoardings saying “Illegal immigrants go home” being driven around. Even Nigel Farage of UKIP objected to them, and they were the subject of another government U-turn. Yet here in this House we have the noble Lord, Lord Glendonbrook, who made an excellent maiden speech.

He is an immigrant who has made a brilliant contribution to this country. The Government’s attitude to immigration can be summed up in one word: hypocrisy. On the one hand, we have the immigration cap, while on the other hand, for years I have been saying that we should bring in exit controls at our borders: scan every passport that comes in and scan every passport that goes out. You will then know who is in the country and thus who should or should not be here. The Government must do this. The e-border scheme has been a miserable failure and over £500 million has been wasted on it.

The National Union of Students, which supports the aim of removing international students from the immigration figures, says clearly that such students contribute a great deal to the social and economic fabric of the UK, contributing more than £12.5 billion to the UK economy. Its surveys show that only 1% of all immigrants granted settlement in 2009 progressed directly from a study route to remain in this country. That is because the vast majority of students leave the UK within five years. The excellent post-graduation work visas need to be brought back in by the Government. In any case, we have one of the most expensive visa systems in the world.

I conclude by going back to the vice-chancellor of Cambridge, who has said:

When I think of how my parents were welcomed to this country, I find that actually quite saddening. I do feel we are an open, democratic country and we should be setting the standards for the rest of the world, not hindering them … One of Britain’s greatest strengths has been in the way it has assimilated so many different communities, and we are a very plural and open society … At a personal level I abhor the idea that we actually have a very strict migration target. There are so many nuances to numbers in this regard that it actually hides the true potential benefit that people coming into Britain can have. We should be looking at the capacity of individuals to contribute to our society here rather than have a political ding-dong over ‘we brought in 10,000 fewer than you did’”.

My Lords, last Friday, Professor Venkatraman Ramakrishnan—known as “Venki”—the winner of the Nobel Prize in chemistry 2009, joint chair of the structural studies centre at the University of Cambridge and a fellow of Trinity College, received an award at the Asian Awards at the Grosvenor House Hotel for outstanding achievement in science and technology. In his acceptance speech, he said:

“I was very touched by the Prime Minister who gave us such a warm welcome address in a video message earlier this evening but I have to say, over the past 10 years, the level of xenophobia and anti- immigration rhetoric has been ramming up—visa laws are increasingly restrictive, so that’s hard for us senior scientists to attract the best talent! They do not see necessarily that actually Britain is really a wonderful place. I get offers regularly to go back to the U.S and I always decline, because I love working here. That perception has to be changed and can only come” from the Government changing their policies on immigration. There I end the quote from one of the world’s great scientists.

Foreign academics make up 30% of all the academics at our top universities, including Oxford and Cambridge, and foreign students are some of our most talented undergraduates and postgraduates. If people such as Professor Ramakrishnan are saying things like this, who knows how many future Nobel Prize winners are choosing not to take up a position at our universities?

I am an alumnus through executive education of the Harvard Business School. In January, I was present for a speech that the president of Harvard University, Professor Drew Gilpin Faust, gave to her university’s London alumni at the Guildhall. Professor Faust made it very clear that Harvard would make the best effort to attract the best students and academics from around the world. She said:

“The future we face together, the future we shape, will depend perhaps most of all on who we are and who we will be. Attracting and supporting the most promising students and faculty are crucial to all we aspire to do. When we think of what Harvard has meant to the world, we inevitably find ourselves focusing on people: the extraordinary individuals to define our identity and embody our aims”.

There you have it: the president of Harvard making it absolutely clear that her university will do whatever it takes to get the best academics and the best students, regardless of their social or economic background or their ability to pay. In July 2010, Nitin Nohria became the 10th dean of Harvard Business School. Nitin Nohria is an Indian who studied at the Indian Institute of Technology before going to the United States to study at MIT. In July, a fellow Indian academic, Rakesh Khurana, will take over as the new dean of Harvard College.

That is what we are competing against, and that is an example from just one university abroad. How easy it would be for us to lose our stars, such as Professor Venkatraman Ramakrishnan, when the likes of Harvard have an ethos such as that. The competition is not coming just from the United States. Canada is on an aggressive recruitment drive for international students. Australia and New Zealand are both attracting thousands of students from India, China, Korea and Japan to study in Sydney, Melbourne and Christchurch. Why are we not following their lead in trying to attract the best and brightest overseas students to our country?

The threat is not just from the Anglosphere. The French Government are moving to simplify the visa application process for international students. The ministry for education in France has just announced that it plans to double the number of Indian students at France’s universities by the end of the decade. Why do not our Government set a target to double the number of international students? Why do not they set a target of any sort to attract more international students, let alone from countries such as India?

The situation is not good. For the first time ever, our total student numbers are down. In a rush to reduce net migration to tens of thousands by the next election, the Government have succeeded in convincing some of the world’s most talented young minds that Britain does not want them. A report last week from the Higher Education Funding Council for England showed that international and EU student numbers decreased by 4,595 in 2012-13, the first such decline since 1985. That followed a survey from the National Union of Students in January showing that 51% of international students found the Government unwelcoming. In 2012-13, meanwhile, the number of Indian postgraduate students at Russell group universities declined by 18%. That is worrying news when the Department for Business said that education exports were worth £15 billion. That is wonderful news, but it makes the position all the more absurd when we are finally seeing signs of economic recovery.

Just today, we have heard that we are the fastest-growing economy in the developed world. If we want that to be sustainable, we need to invest in research and development.

We spend a fraction of the OECD average on R&D funding. The Minister says that the Government have preserved their funding for research, but the Times Higher Education Supplement points out that, according to the Office for National Statistics, the UK spent 1.72% of GDP on R&D in 2012, down from 1.77% in 2011. Can the Minister confirm that?

At the moment, that places us in a miserable position in the EU 28 group. We are currently 12th, behind countries such as Slovenia, Estonia and the Czech Republic. Finland spends the highest proportion of its GDP on R&D at 3.55%, but even the EU average is 2.06%, and we are well below that. Investing just an extra 0.5% of GDP in science would make such a huge difference and should be a priority. That would give us the competitive edge for sustainable growth.

The fact is that our great universities—we have many—are succeeding despite, not because of government policy. The changes to student loans will come back to bite us. When the Government announced the changes to the system in 2010, they said that only a small number of universities would charge the new maximum of £9,000, tripled overnight from £3,000, and that the new system would create a more sustainable market-based environment in our universities, which would be better funded than ever. On all those measures, the scheme has failed. Only last month, the Government quietly announced that about 45% of university graduates will not earn enough or will not be able to repay their student loans. If the figure is only slightly out and reaches 48.6%, the Government’s own experts calculate that the Government will lose more money than they gained by increase in fees in England to £9,000 a year. Can the Minister confirm that?

The result of this is clear. Universities are no better off, students are worse off and the Government will end up having to pay even more to fund higher education than they did under the old system. The Government said in 2010 that the changes would allow for a free market of choices between courses and that competitive universities would prosper. There is no free market: almost all the universities are having to charge almost the maximum £9,000 for courses, when previously the Government said that only a minority would. The reason is that when the Government tripled the fees, they reduced the funding to universities and withdrew teaching funding almost entirely. Will the Minister concede that this was a big mistake? Can he tell us how many of the universities are charging near that £9,000 and what proportion of students are paying it? I am excluding the expensive courses, such as medical courses.

As I said in a debate that this House had on the Immigration Bill, the Government’s madcap immigration cap has harmed us. Over the past year, the number of Indian students has fallen by 25%. That is also partly because of the abolition of the two-year post-study work visa. Every time that I talk to foreign students they say, “If only we could have that ability to work for two years”. The current system is not easy when they have hardly any time to find a job. It is too difficult but that two-year post-study work visa really helped them to pay for their expensive education, gain some work experience and continue to build generation-long links with their countries. It did not help to have “Go Home” vans or the £3,000 bond, which were, thankfully, scrapped. These messages are sending out completely the wrong image: that this Government do not want international students. I wholeheartedly agree that the Government need to clamp down on illegal immigration and must continue to do so. However, that does not mean that we should harm the good immigration, particularly in our universities, which are desperately in need of academics and students.

Speaking recently, the chief executive of the Higher Education Funding Council for England, Professor Madeleine Atkins, said:

“International students enrich our universities and colleges—and our society—academically, culturally, and through their contribution to the economy. Supporting high-quality international education is a crucial part of ensuring that the UK continues to engage with, and benefit from, the increasingly interconnected world”.

The higher education sector is one of the jewels in the United Kingdom’s crown, as all of us who work within higher educationknow.I am privileged to be associated with a number of universities. I sit on three university business school boards: Cambridge, Birmingham and Cranfield. I also have appointments at Cambridge. I know that this tiny country, with less than 1% of the world’s population, has six of the top 20 universities in the world according to the latest QS rankings. There is higher attainment by ethnic minoritystudents than ever before and our universities will continue to dominate the international rankings, but these achievements have not been borne out by government policy, which is lagging behind. The Prime Minister is fond of referring to Britain as being in a global race for growth, trade and investment. Unfortunately, the juxtaposition between the Government’s economic and immigration policies more closely resembles a three-legged race.

I conclude that if we want to have a sustainable, competitive economy, yes, we need better school education and skills but our higher education is a crucial priority and must continue to be so. We must invest more in higher education as a proportion of GDP, from both public and private sources. We need to remove student immigration from the immigration figures. Can the Minister say whether the Government are going to do this? Our competitors do not include figures for student immigration within their immigration figures: the United States does not, nor does Canada or Australia. Can the Government also ensure that the two-year work permit is brought back in, so that students can work after they finish their studies, and that we invest more in R&D as a percentage of GDP than we currently do? Then we will stand a chance of competing in the global race.

My Lords, over the past weeks, I have received numerous requests by journalists from around the world because one of the seven schools that I attended was the Hyderabad Public School. The 46-year-old chief executive officer of Microsoft, Satya Nadella, also attended the Hyderabad Public School. He then went to the United States for his education and is now heading one of the world’s largest companies, with a market cap of $340 billion.

Earlier this afternoon, I attended a talk by the Governor-General of Canada, David Johnston. A huge part of his speech was about education and about Canada wanting to attract the best students from around the world. Like me, he came as a foreign student to Cambridge to read law. Is it not sad that, on 16 January, the Times Higher Education Supplement carried the headline “Overseas student total falls ‘for first time’ as Indian numbers collapse”? It went further and stated that,

“the number of non-EU students at UK universities fell by 1 per cent last year, the first such decline ever recorded”.

An NUS survey of more than 3,000 international students conducted in January found that 51% of non-EU students thought the UK Government unwelcoming. Meanwhile, in Canada, the Government aim to double the number of international students in Canadian educational institutions by 2022, raising the total to 450,000 yearly. In Australia, more than 74,000 student visa applications were lodged in the September 2013 quarter, 7.1% higher than the same period in 2012 and the highest for this quarter in the past four years. In France, the Government have moved to simplify the visa application process and to double the number of Indian students studying at French universities. Does the Minister have a target for increasing the number of foreign students in the UK, let alone of Indian students?

The Russell group has reported that the intakes of postgraduate students from India at its institutions dropped by 21% in 2011-12, with a further drop of 18% in 2012-13. Even the growth rate in new students from China has started to taper off. Meanwhile, postgraduate student numbers to the United States increased by 40% in 2013. Visas granted to Indian students across all levels in Australia have risen by 22% in the past year, following the introduction of a more open immigration policy, and visas granted to Indian students in Canada rose by 8% in 2012.

The Prime Minister talks about Britain having to take part in a global race yet the Government’s insistence is on following this madcap immigration cap policy and targeting bringing down the immigration level to the tens of thousands. This is shooting ourselves in the foot. What are the Government thinking of? Why do the Government keep including student numbers in the immigration figures when Canada, Australia and the United States—our immediate competitors—do not? Does the Minister agree that we should exclude foreign student numbers from the immigration figures? The Government might then hit their target but they should not do it for that reason: they should do it because this policy is sending out the wrong messages. The Prime Minister has said that there is no limit to the number of students that we want to come to study in the United Kingdom—I have heard him say that myself—so why are the Government not following the example of our counterparts in Canada and setting a target to double the number of foreign students coming into the United Kingdom?

In contrast, let us look at what is happening over here. The number of Indian students has fallen by 25% and the overall non-EU enrolment of overseas students has dropped from 173,560 to 171,910. The Government are sending out a negative message: that Britain does not want foreign students. The noble Baroness, Lady Hamwee, referred to the perception of reality. The perception has become reality and the Government have been bringing out ridiculous ideas. When the idea of a £3,000 bond for foreign visitors was floated, it did not take long before the Government backtracked. However, it sent shockwaves around the world. I kept getting asked about this on every visit to India. Then the Government had the amazing idea of having vans going around the UK saying “Illegal immigrants go home”. I do not like quoting Nigel Farage but even he—a man perceived to be entirely anti-immigration—said:

“I think the actual tone of the billboards is nasty, unpleasant, Big Brother”.

There you have it.

There is no question that a lot needs to be done to reform immigration in this country. Illegal immigration is out of control. The noble Lord, Lord King, asked whether we know the numbers. Have we lost control of our borders? I think we have. The UK Border Agency was not fit for purpose and has been disbanded. Can the Government tell us the number of illegal immigrants in this country? I will let the Government round it up to the nearest 100,000 but I bet that they could not even give a figure. They do not even know whether it is half a million or a million. The coalition Government have given a manifesto commitment to reintroduce exit controls and there is matter in the Bill to address this. However, the Government should bring in mandatory scanning of all passports when people leave this country—whether they are British, EU or non-EU—and scan them when they come in. The technology is there for us to know who has come in, who has left and who has stayed when they should not be staying. We could then control illegal immigration. Why are the Government not doing that? The e-Borders programme is a step towards that but we could get to that step right now.

As the noble Lord, Lord Dholakia, said, the Government are right to crack down on sham marriages, but they are wrong to bring in landlord controls and ask the landlords to do the job of the border authority. Even the Minister responsible for the Bill, Mark Harper, could not find out the status of his own cleaner when he had tried hard to do so. This is impractical and I fear that it will be another government U-turn.

The proposed NHS fees are unwelcoming. As a former foreign student in this country, I know how expensive it is to study here. The average international student will spend something in the region of £75,000 during a three-year degree programme. A PhD student coming in with a spouse and children could pay thousands of pounds in advance for this. These fees will seem like a penalty charge and could be a powerful disincentive. In a survey carried out by the National Union of Students, 74% of the non-EU students surveyed, who would be subject to the charge, said that an additional charge of £150 per year of study would make it more difficult or impossible for them to study in the UK. The Minister said that the figure is only 1%, but the perception, unfortunately, is the reality. More than 82% of those with dependants say that free access to the NHS was important in their choice to study in the UK. The current visa fees are really expensive in any case and the Government have just announced a 40% increase for some additional family members. Why do we need NHS charges? Most students are young and healthy and do not use the NHS much. The Government have been penny wise and pound foolish.

On the matter of the appeals process and the changes proposed in this Bill, Universities UK notes that more than 50% of appeals by students are successful. If these measures are brought in they will be deprived. In the House in 2007 I initiated a debate on the two-year post-study work visa. The noble Lord, Lord Adonis, was the Education Minister answering at the time. He listened, the Government responded, it was brought in and we saw international student numbers go up. Even the Business Secretary disagrees with government policy on this. Vince Cable has said that around £17 billion is generated each year by universities, £10 billion of which comes from overseas students through their fees and expenditure. At last year’s Liberal Democrat party conference he warned that a lot of students who would normally come to Britain would go instead to America and Australia where they thought a “warmer welcome” would be given to them.

If students here want to work after this expensive education it is important for them to be able to pay for it, gain work experience, pay some taxes, and build the generation-long links with this country and their countries—and on the whole they go back to them. Three generations of my family have studied in this country. Moosung Lee, a PhD candidate at the University of Minnesota, notes that 27% of world leaders have been educated in the United States. The Americans are streets ahead of us. We are missing out as a result of this and we need to start thinking long term. Shutting down the bogus colleges was good, but we do not need to create a perception that what was true for them is true for our good universities as well.

My recommendations are as follows. First, student figures should be removed from the immigration figures to send out a clear message that we do not include them in the Government’s madcap immigration cap target. Secondly, a system in which everyone’s passports will be scanned in and out of the country, at all ports of entry, should be introduced as soon as possible. Thirdly, the Government should bring back the post-study work visa. The mechanism at the moment is not fit for purpose. Can the Minister tell me how many graduates have taken up work after they have graduated under the new scheme that the Government have initiated? Fourthly, NHS charges for students should not be brought in. Students are spending huge amounts of money here already. A fee of £150 a year is a classic example of being penny wise and pound foolish. Fifthly, the Government should scrap the ridiculous and impractical idea of landlords having to make checks on foreign nationals and especially students. Landlords are not immigration officials. Finally, the Government should reform the appeals process that is already flawed. They should not be bringing in a system that will make it worse. Already 50% of appeals by students are successful.

As the noble Lord, Lord Dholakia, said, Britain is a most amazingly fair and just country. London is the most cosmopolitan city in the world. Recently, I led a debate to mark the 150th anniversary of the Zoroastrian Trust Funds of Europe to ask Her Majesty’s Government how they have recognised and supported the role and contribution of faith and minority communities in Britain during Her Majesty’s reign. All of us who spoke in that debate were able to give scores of examples of the amazing contribution that immigrants have given to this country. We would not be where we are without the contribution of immigration. On the other hand, we know that people abuse this country’s generosity and the Government must clamp down on those excesses.

However, the Government now have a system that creates negative perceptions and unfortunately those perceptions have become reality. The Government must stop going down this path before it is too late and this wonderful country is permanently damaged.