A video of his speech is available here

Cobra’s crusading Lord bites back

 

Karan Bilimoria’s family background makes it almost perverse that he did not take up a military career. But he brings the same commitment and determination to his mission to help forge Britain’s future with the aid of Indian talent that his relatives brought to their distinguished service in the Indian army.

He’s a proud Parsi who gave the world Cobra beer, the favourite tipple accompanying Britain’s favourite food—curry.

Lord Bilimoria’s father, Lieutenant General Faridoon Bilimoria—popularly known as ‘General Billy’—was the General Officer Commanding-in-Chief of the Central Army Command of the Indian Army who also served as aide de camp to the first Indian president, Rajendra Prasad, and commanded the 2/5 Gurkha Rifles during the Bangladesh liberation war. He later went to review the work of the Indian Peace Keeping Force in Sri Lanka, recommending the recall of the force in 1990 and thus ending India’s military engagement with the Liberation Tigers of Tamil Elam. Lord Bilimoria’s paternal grandfather, Nasservanji Bilimoria, was one of the first Indians to be commissioned as an officer at the Royal Military Academy, Sandhurst.

As a cross-bench peer in the House of Lords, Karan Bilimoria’s primary focus today is to modify Britain’s counter-productive immigration policy which is jeopardising the country’s economic future and putting at risk the long-term relationship with India, the source of so much talent which has fed Britain’s professional, business and academic firmament.

Theresa May, the Home Secretary, has taken it on as a ‘personal mission of hers to destroy the country’s reputation,’ he says. ‘It’s a very difficult situation for Cameron. Theresa May has really taken this on in a very aggressive manner both during the coalition and now, when she’s been re-appointed, she seems to have taken it up into another gear. Though it’s Conservative policy, from what I hear it’s very much driven by her and I don’t think for a moment that a lot of other cabinet ministers are on side but it’s her department—that’s my personal view.’

For Lord Bilimoria, 53, it’s personal because she has seen fit to reverse one of his achievements in the field—instituting the two-year work visa for graduates once they had finished their courses, which was already in place in Scotland and which he helped engineer with cross-party support for the measure.

This perceived hostile attitude is turning away young Indians from educating their children here, even though they themselves have benefited from it.

The effect has been immediate and since 2010 the number of Indian students coming to the UK has fallen by 50 per cent. But beyond that the May stance has helped fuel the rhetoric of the likes of Nigel Farage and the United Kingdom Independence Party which took about 14 per cent of the vote during the May general elections.

But even for Farage, some of the Home Secretary’s proposals were too far out and George Osborne, the Chancellor of Exchequer, had to step in when she demanded that all foreign students should leave the country the day they graduate—a suggestion that prompted such headlines in Indian newspapers as: ‘Take our money and Go.’

‘So she’s on a rampage against immigration as a whole, which tars illegal and good immigration with the same brush. She’s economically illiterate when it comes to immigration. She’s damaging our country; damaging our reputation and our economy.

‘One of Britain’s greatest elements of soft power is our universities and our universities are the best in the world, along with America. In terms of international standing, international academics make up to 30 per cent in Cambridge and Birmingham, where I am chancellor.

‘The important thing with foreign students is not just the £14 billion that they bring in but that the English students are enriched by the experience of mixing with their foreign contemporaries. And when they go back they become ambassadors for Britain, they will do business for Britain, they will come back to visit Britain many times and it’s through these links over generations that you build up trade, business, culture and influence.

‘In terms of the soft power, one out of seven world leaders has been educated at a British university, including the two most recent Greek finance ministers,’ Lord Bilimoria adds with a chuckle. India’s former Prime Minister Manmohan Singh, meanwhile, attended both Oxford and Cambridge.

The Australian Minister of Education publicly thanked Theresa May on a visit to Britain for her immigration policy, which had led to a boom in the number of Indian students travelling Down Under to study and, to add insult to injury, the French have announced an intention to double their number of Indian students by 2020.

For Lord Bilimoria, the problems with untrammelled immigration go back to Tony Blair’s decision to remove exit checks on Britain’s borders in 1998.

‘It was a foolish thing to do because we know who’s come to the country but we don’t know who’s left. If you don’t know who’s left you don’t know who’s overstayed—you’ve lost control of your borders.’ And he points out that the technology is there to re-institute the system with a string of Indian techno-companies standing by to do the work.

The noble peer led a debate in the House of Lords in 2012 on how religious and ethnic minorities contribute to Britain—26 peers of different backgrounds and religious communities spoke, saying that Britain would not be where it is today were it not for the contributions of those people.

‘We’re proud to be less than one per cent of the world’s population but we’re four per cent of the world’s economy. We’re the fifth largest economy in the world and we’re the second largest inward-investment destination in the world after the US. Forty-five per cent of that is financial services and the City of London is number one in the world—would it be number one if it were not for the amazing talent in the City? And the governor of the Bank of England is a Canadian—without that foreign input we wouldn’t be where we are today.’

He notes that the next President of the Royal Society will be Nobel laureate Sir Venkatraman (Venki) Ramakrishnan.

Sir Venki studies how genetic information is translated by the ribosome to make proteins, and the action of antibiotics on this process. He received the Nobel Prize for Chemistry in 2009 with Tom Steitz and Ada Yonath and was awarded a knighthood in 2012.

Sir Venki is currently Deputy Director of the MRC Laboratory for Molecular Biology (LMB) and a Fellow of Trinity College, Cambridge. There have been 60 presidents of the Royal Society since it was founded in 1660, including Christopher Wren, Samuel Pepys, Isaac Newton, Joseph Banks, Humphry Davy, and Ernest Rutherford.

Amartya Sen has achieved the seemingly impossible as a Fellow of Trinity College, Cambridge and All Souls, Oxford. He was awarded the Nobel Memorial Prize in Economic Sciences in 1998 and Bharat Ratna in 1999 for his work in welfare economics. He was also awarded the inaugural Charleston-EFG John Maynard Keynes Prize in recognition of his work on welfare economics in February at a reception at the Royal Academy.

‘Sen could easily go to America. We need people like that—instead of attracting them you’re driving them away and this is sending the wrong message.’

Britain’s wealthiest businessmen are also of Indian origin—the Hindujas and the Mittels are worth more than £22 billion between the two families. But there are likely to be fewer of them following in their footsteps, given the hostile visa policy now being pursued. And will there be such follow-on success for companies like Tata—already having grave difficulties getting visas for its staff—which now has the nation’s best export record through Jaguar-LandRover?

Apart from campaigning at the national political level for a change of heart, Lord Bilimoria is also working to rescue a street-corner business which is suffering grievously through an inability to bring in qualified staff from the subcontinent: the curry restaurant.

His Cobra beer company has launched an initiative whereby Michelin-starred Indian chefs are made available to coach less experienced curry chefs in restaurants all over the country, to raise their skills in the absence of the ability to hire staff from abroad.

‘The Indian restaurant business is two-thirds run by Bangladeshis. Those restaurants need skilled chefs from South Asia and they can’t get them because of the immigration rules. Now how ridiculous is that—when you have a cuisine which is the nation’s favourite?

‘When I give talks around the country I ask the audience: “How many of you love curry and eat curry regularly?”, and every hand in the audience will go up.

‘You want that cuisine, you love that cuisine and the reason it’s a favourite is because restaurateurs have come round to every village in every corner of the country as strangers, opened up restaurants and put back into the country and made curry the favourite food of this country.

‘On the other hand, you don’t allow them to bring in the skilled chefs that they need. It’s so wrong and it’s an ungrateful nation, quite frankly, to have that attitude.

‘So this is the message you send, so it’s absolutely damaging. It’s damaging, harmful and it’s wrong.’

The original article can be found here

 

United Kingdom: Productivity

My Lords, matching UK productivity to United States levels would raise GDP by 31%. The graph in the Government’s report clearly shows that the United States has high living standards and high productivity. In Britain we have a lot going for us: we have less than 1% of the world’s population but have the fifth largest economy in the world. However, if our GDP was 31% higher, it would allow us to leapfrog Germany as the biggest economy in Europe and the fourth largest economy in the world.

 

The Government’s report very clearly outlines several factors that increase productivity, and as a happy businessman—to quote the noble Lord, Lord Desai—I commend the Government’s decision to reduce corporation tax to 18% by 2020. I am proud to be chancellor of the University of Birmingham, one of the top 100 universities in the world. The UK has more universities in the top 100 in the world than any other country except the United States. We have phenomenal capabilities in a variety of sectors. We also have one of the most open economies in the world and are a true trading nation. In fact, most people do not realise that we are the second largest inward investment destination in the world. Yet when it comes to productivity, as the Minister acknowledged, we have lagged behind other economies. We are ranked 18th out of 34 OECD countries, in the bottom half of the list.

 

The Government’s report talks about school reforms. Again, there have been good initiatives on this front, with the Labour Government’s introduction of academies, which the coalition continued and which this Government continue to promote, and the Government’s promotion of free schools. However, I believe that the biggest mistake that this country made was to close grammar schools, of which only 164 are now left. To think that at their peak in the 1960s there were 1,300. These grammar schools gave the opportunity to a bright child, regardless of background, to get to the very top, and no one—including Margaret Thatcher, herself a grammar school product—has had the guts to reintroduce them. Why cannot the Government promote academies and free schools but also support the reintroduction of grammar schools? That would definitely provide a huge fillip and have a direct impact on our productivity.

 

Where our universities are concerned, Universities UK states that the higher education sector generated £73 billion of output, both directly and indirectly, for the British economy. In Britain, government expenditure on higher education is 0.88% of GDP, which is lower than that of other OECD countries. In Finland, 1.87% of GDP is spent on higher education, in Germany the figure is 1.12%, and even in the United States more public expenditure goes on higher education, at 0.94% of GDP. In fact, universities in the United States go further. They receive a significant amount of private funding. I am an alumnus of Harvard University through its executive education, and Harvard has an endowment of more than $36 billion. The philanthropy at Harvard is extraordinary. Last year one alumnus contributed $350 million for the Harvard TH Chan School of Public Health, and this year an alumnus donated $400 million for the John A Paulson School of Engineering and Applied Sciences.

 

Universities in the United States boost their revenues through not only private benefaction but corporate partnerships—something that we should emulate here. The University of Cambridge has made a great start, raising £1 billion for its 800th anniversary. That was excellent, with the money being raised ahead of time. And I am proud to say that the University of Birmingham has raised £160 million in its latest fundraising campaign. Looking at combined public and private expenditure on higher education, the UK spends 1.2% of GDP;

 

The Minister spoke about encouraging innovation. When it comes to R&D, the Royal Society has produced some interesting figures. My noble fried Lord Rees was an eminent president of the Royal Society, and the next president, for the first time ever, is going to be an Indian. Sir Venki Ramakrishnan is a Nobel laureate and a fellow at Trinity College, Cambridge, where my noble friend Lord Rees was master. Cambridge University has produced more Nobel prize-winners—90—than any other university in the world. Within Cambridge University, Trinity College alone has produced 32 Nobel prize-winners. According to the Royal Society, 51% of productivity between 2000 and 2008 was due to innovation. The Royal Society has also noted that firms that invest consistently in R&D are 13% more productive than those that do not.

 

Today I had a meeting with the Secretary of State for Defra, Elizabeth Truss. I was informed that Britain’s food and drink industry is bringing 16,000 new products to markets per year. That is brilliant; it is more than the figure for France and Germany combined. This is extraordinary and very exciting, and there is a new initiative being promoted which I am delighted to be supporting.

 

The UK is great at research. Figures from the Royal Society show that, with less than 1% of the world’s population, we achieve 3.2% of global R&D expenditure. We have 4.1% of researchers globally and we produce almost 16% of the world’s most cited academic articles. This is in spite of the UK Government hugely underinvesting in research and development as a percentage of GDP. They invest 0.49% of GDP in R&D compared with 0.67% invested by OECD countries and 0.76% invested by the US. The figure for Germany is 0.85%. Does the Minister accept that we should increase government expenditure on both higher education and R&D and innovation? The Government talk about the science budget being ring-fenced. As it stands, it is not protected from inflation and is going to go down in real terms. Does the Minister accept that?

 

Our universities are also being stifled by the Home Office and, in particular, by the Home Secretary’s economically illiterate policies on immigration, removing the two-year post-study work visa for foreign students—75% of the population think that they should be allowed to stay on and work if they want to—having a target to reduce net immigration to the tens of thousands and continuing to include students in the immigration figures. Does the Minister agree that foreign students should be removed from the Government’s immigration statistics and targets? Is it any wonder that the number of students from India has declined by 50% in the last five years?

 

I was recently appointed as a president of the UK Council for International Student Affairs. ·Is it any wonder that 51% of foreign students feel unwelcome? Is it any wonder that, when the Home Secretary makes statements saying that foreign students should leave the day they graduate, headlines from India read: “Graduate, then get the hell out!”. Foreign students are one of our greatest forms of soft power, with the vast majority returning to their country of origin as ambassadors for Britain for years—for generations—to come. I am the third generation of my family, from both sides, to have been educated in this country. One in seven world leaders has been educated at British universities, including Greece’s current and former Finance Ministers. Dr Manmohan Singh, the former Prime Minister of India, was a graduate of Oxford and Cambridge. Foreign academics make up 30% of academics at our top universities, including Oxford, Cambridge and the University of Birmingham. These Immigration Rules and negative perceptions are damaging our universities and directly damaging our productivity. Does the Minister agree? We should be attracting foreign graduate entrepreneurs, for example by using the Sirius scheme of UKTI, which is brilliant.

 

We should of course invest more in infrastructure. As regards the airports report that has just come out, we should expand both Heathrow and Gatwick. The noble Lord, Lord Desai, spoke about investment. I am proud to say that private industry is doing its job. My joint venture partner Molson-Coors has invested £80 million in the biggest brewery in the country, in Burton-on-Trent, where we brew Cobra beer, by upgrading our bottling and packaging to make it world class, and improve our quality and productivity. I recently chaired an event in Parliament for entrepreneur-to-entrepreneur exchange, at which Sherry Coutu spoke about her scale-up report. If we close the scale-up gap, the estimate is that it will be worth an extra £225 billion and 150,000 jobs in the next 20 years. Does the Minister agree that we should have a Minister responsible for reversing the UK’s scale-up gap?

 

In conclusion, we have a lot going for us in this country. We have world-class capabilities and institutions —whether they are the Royal Society, institutes of engineering, livery companies, high-end aerospace, lawyers, accountants, beer, cars, JLR or Tata. They are shining examples. Just imagine how much better we would be if we invested more in higher education, better schooling, R&D and innovation, and had a sensible policy on immigration. We are great; but in the words of Saint Jerome:

 

“Good, better, best. Never let it rest. ‘Til your good is better and your better is best”.

Britain’s universities have been neglected

 

“An investment in knowledge pays the best interest.”

One does not have to be an economist to understand these words, written by the American statesman Benjamin Franklin in 1758.

An investment in education lasts longer than any other.

Though not the oldest in the world, Britain’s well-established universities have long set the standard for higher education, for the world’s future lawyers, doctors, financiers, business leaders and politicians.

One in seven world leaders are educated in the UK, the British Council has found. This makes our higher education sector a tremendous cultural and political force at a time when the greatest superpowers in the twenty-first century continue to be driven by innovation and supercharged by discovery in the laboratory and specialist research hubs.

And as other nations charge ahead in economic fields, particularly in productivity, I would urge the Chancellor to consider that public sector expenditure in higher education is far below where it should be.

“The neglect of Britain’s university faculties is starkly reflected in our low productivity rate, which sits around 15 percentage points below pre-crisis predictions for 2015.”

Real-term investment in both higher education and R&D has been dropping for decades and now sits well below the United States, as well as the EU and OECD average. Universities are vital to filling our hospitals and factories with skilled, talented staff and supplying the world of business with inquisitive and resourceful minds.

The neglect of Britain’s university faculties is starkly reflected in our low productivity rate, which sits around 15 percentage points below pre-crisis predictions for 2015. To bounce back from the blows dealt to the economy in the last decade, our nation needs a sturdy pipeline of skills and talent in every field.

If we look to the United States, public expenditure on Higher Education is over twice the size of ours, just in proportion to our GDP.

The United States suffered barely a blip in its labour productivity as a result of the financial crisis, but it cannot go unnoticed that it has for decades invested consistently and uncompromisingly in its keenest minds from Berkeley to Boston.

Their economy is more balanced and grows continuously, whereas growth and equality still remain points of contention in the United Kingdom. These blights do not befit an advanced economy like ours, and our deficient higher education investment may be culpable.

American universities such as Harvard benefit from greater public expenditure

On other fronts too, our universities are more vulnerable than ever. Coupled with the effects of the Home Secretary’s vengeful homilies on the soaring numbers of immigrants entering the country, deterring the brightest prospective students from approaching Britain’s shores, Britain becomes powerless to fill the ranks of its top businesses and manufacturing workforces, despite having no small share of the world’s business giants.

An increasingly unwelcoming policy agenda sees teenagers opting instead to study at new and competitive universities in Canberra and Melbourne, neglecting the UK institutions that have been formative for many of the world’s minds.

For example, in five years, Britain has suffered a 50 per cent drop in the number of Indian students studying in Britain, some of whom presumably sense that the international communities in Britain’s universities – who are still wrongfully included in net migration statistics – have a diminished voice.

“The less we stimulate growth in the higher education sector, particularly through public expenditure, the less productive and influential Britain will be.”

As a university Chancellor myself, this raises concerns for my colleagues and I. Recent estimates from the Department of Business, Industry and Skills place the value of selling British education to those from overseas at £14 billion.

And in the business world, many entrepreneurs start young. Some skip university altogether, but those who don’t must build global networks and reputations while they study. In this context, Chancellor George Osborne should consider universities an untapped vehicle for economic growth.

The appointment of Jo Johnson as universities and sciences minister offers those in the Higher Education sector hope. Yet a different approach to the universities is needed throughout the Cabinet.

The less we stimulate growth in the higher education sector, particularly through public expenditure, the less productive and influential Britain will be. It only remains for the Chancellor to act.

The full article is available here

My Lords, the Government are very proud of the good things in the economy at the moment. As the Minister said in opening the debate, we have low inflation, low interest rates, high employment and growth figures et cetera, but, as he said, it is austerity to prosperity, and he admitted frankly that productivity is too low and the deficit too high.

Earlier this month, my noble friend Lord Low held a debate which I chaired. The motion was:

“This house believes that the Government’s deficit reduction plan involves cutting the deficit too far and too fast”.

The noble Lord, Lord Skidelsky, was present as well. We had Jonathan Portes, the well known economist, Simon Wren-Lewis, professor of economics at Oxford University, Roger Bootle and Doug McWilliams—all very well known economists. When the motion was put to the vote at the insistence of the noble Lord, Lord Skidelsky, it was carried quite comfortably. The point was made, as the noble Lord, Lord Skidelsky, has mentioned in the debate, that the calculations are that if austerity had not been as severe as it was, the growth rate could have been 5% to 10% higher over the five-year period. One needs just to do the sums to see the difference that that would have made. On the other hand, austerity has created confidence in the global financial markets and we have the security of a lender of last resort in the form of the Bank of England.

The Chancellor has, on the one hand, shown his commitment to long-term prosperity for the economy by sticking to the austerity agenda, but, on the other, he has not had the guts to invest in what will make this country truly competitive and increase the productivity that so many noble Lords have spoken about. For example, where in the Budget is an increase in investment in higher education? We invest less by far as a proportion of GDP than the United States, the EU average and the OECD average. This Labour proposal to reduce tuition fees to £6,000 is a red herring. What we need is more investment in higher education. What about investment in innovation? Where in the Budget is the major investment in R&D and innovation? Once again, we as a country invest way below the United States, the EU and the OECD average as a proportion of GDP. The patent box is tinkering at the edges. How can we get businesses and universities to invest more in innovation? Will the Minister tell us about that?

What about tax rates being competitive? A brilliant thing the Government have done is to bring corporation tax down to 20%. It is one of the best things they have done, attracting inward investment and making our companies more competitive. On the other hand, the Government do not have the guts to bring the income tax rate down to 40%. In his enthusiastic speech, the noble Lord, Lord Rooker, spoke about the catalogue of achievements of the Blair Government. It was the Blair Government who carried on with 40% rate of tax, until it was increased to 50%. It was the Blair Government who reduced capital gains tax to 18%, which was hugely competitive, while entrepreneurs’ relief was 10%, encouraging wealth creation, prosperity and tax competitiveness. On the other hand, the Labour Government’s mistake was to increase public spending to nearly 50% of GDP. This Government want to reduce it to 36% of GDP. I still believe that will require unrealistic and drastic cuts in the welfare state and the NHS, which make up a huge proportion of our public spending. Will the Minister explain how the Government are going to achieve that drastic cut? As the Chancellor said, the EU has 7% of the world’s population, 25% of its economy and 50% of its welfare spending. In the Chancellor’s words, we cannot go on like this. Will the Minister explain what he is going to do?

When it comes to defence, the Government refuse to commit to the 2% of GDP NATO commitment. Will the Minister commit to it? The SDSR was negligent. We do not have our Nimrods, which we now need with Russian submarine incursions. We have no aircraft carrier capability for Harriers, which we have needed several times over the past five years, let alone now with the threat in the Falklands. For one of the strongest defence countries in the world to have no carrier capability for a decade is negligent. The Army cannot even fill Wembley, which is negligent. The security of our country is our number one priority. We have physically destroyed the Nimrods and depend for carriers on the French—on the 200th anniversary of the Battle of Waterloo. Will the Minister tell us whether the back-up from the French has been effective?

When he speaks, will the noble Lord, Lord Davies, speak about Labour’s policies? We hear about the dangerous policies: the mansion tax; raising income tax to 50p; increasing corporation tax by perhaps up to 6%; employees sitting on boards of companies’ remuneration committees; employees being given first refusal when a company is sold; and employees being given a share of companies’ profits. To an entrepreneur and a businessman, these sound like real communist measures, and we know how successful communism has been. The business community has genuine concern about the leader of the Opposition and his care for, knowledge of and familiarity with business. He has missed out business in many major speeches. Will the noble Lord on the Front Bench confirm that these Labour measures will be implemented?

What about the SNP? The leader of the Opposition says he will not go into coalition with the SNP, but what if the SNP props up a Labour Government? It wants to get rid of Trident, our nuclear deterrent. Would the noble Lord, Lord Davies, agree with that? Increase public expenditure and you have the nightmare scenario of Labour being propped up by the SNP. It reminds me that in the middle of the financial crisis, my fellow Fellow of Sidney Sussex College, Cambridge, Desmond Tutu, looked up and said, “Oh God, we know you’re up there, but can you make it a little more obvious?”.

It is a question of balance. Britain is number two in the world in inward investment. We have to protect that, and Governments have not been able to. If you look at the graphs in the Budget reports, Governments have not been able to balance their books. Public spending at 40% is the best a Government can achieve. That is what we should target, and getting a 40% tax take. With regard to debt interest, servicing it alone takes 2.5% of GDP. Will the Minister tell us what the plan is when debt interest goes up? How will the Government deal with that amount of more than £50 billion?

The Office of Tax Simplification is an oxymoron. Simplification of tax collection is in this Budget, but the tax code is still 11,000 pages long. There are huge issues here. As chancellor of the University of Birmingham, I chaired for the first time the university court and the university annual meeting. I was able proudly to say that it is a billion-dollar institution. It has revenue of more than £500 million, a healthy surplus, a healthy cash position and, most importantly, a £300 million infrastructure investment programme over the next five years, with a state-of-the-art swimming pool, libraries, a dental centre, new student accommodation and all the things that make it attractive to inward investment in terms of students and academics from around the world. If only our country could balance its books in that way and have an investment programme in the future, we would be able to get high productivity, get the deficit down and get our debt down.

My Lords, in his first Budget in 2010, the Chancellor said that the Government would,

“have debt falling and a balanced structural budget deficit by the end of this Parliament”.

—[ Official Report , Commons, 22/6/10; col. 168.]

Despite the Chancellor’s tough talk about austerity and cutting public expenditure, the reality is that public expenditure as a percentage of GDP has continued to increase. I thank the noble Viscount, Lord Younger, for leading this debate.

Yesterday, it was announced that the Government will spend £746 billion in 2015-16, rising to £765 billion in 2018-19, compared with £692 billion in 2010. Government spending is increasing and, as a percentage of GDP, our national debt is rising. According to the OBR, it will now peak at 81% of GDP in 2015-16. This means that the Chancellor will completely miss his target to ensure that net debt is falling relative to GDP by 2015-16.

We have a perception of austerity that has simply not been matched by reality. Yesterday, the Chancellor acknowledged that we are at least another four years away from that target. To build on what the noble Lord, Lord Skidelsky, said, if we are borrowing £300 billion more than the Chancellor said he would in 2010, why should anyone believe him this time around? The OBR has predicted that public expenditure is going to have to fall to 35.2% of GDP by 2019-20—the lowest level since the 1930s. Let us remember that the 1930s were pre-welfare state days. Can the Minister confirm that that is really achievable?

In order to achieve those cuts, it is predicted by the OBR that the defence budget, which is already negligently too low, will have to be cut by 60%. Can the Minister confirm that that might have to happen, although it is hoped that it never will. However, I was delighted to hear that the Government will be giving money to veterans, including £2 million for the Gurkhas. I was privileged to have been brought up with the Gurkhas. My late father, Lieutenant-General Bilimoria, was commissioned to the 2nd Battalion, Fifth Gurkha Rifles (Frontier Force), and was president of the Gurkha Brigade when he was commander-in-chief of the Central Indian Army. I was privileged to have been brought up with two Victoria Cross holders from birth—they were living legends. Therefore, I thank the Government for doing that.

However, it is the low level of interest rates for a prolonged period, at the level of 5% that led to the financial crisis from which we suffered. Yet today we are being propped up by interest rates that are 10 times lower—at 0.5%. Government borrowing has been increasing year on year and expenditure on debt interest has contributed to it. It is more than £1.27 trillion and is costing us £1 billion a week—more than the entire defence budget.

Does the Minister agree that interest rates might have to rise? The Governor of the Bank of England made a ridiculous statement that he would start increasing interest rates when unemployment fell below 7%. Unemployment is at 6% now and interest rates have not gone up, but they will go up at some stage, and if they do the debt interest levels will go up. The SNP made the mistake in its budgets with the oil price and its budgets are shot to tatters at the moment. Will the Minister give his views on future interest rates?

Wearing my hat as chancellor of the University of Birmingham I have seen that our higher education sector is one of the jewels in our crown. I am delighted that the Government are about to announce loans for postgraduate studies. On the other hand, we highly underinvest in higher education as a proportion of GDP compared with the OECD, the EU and America. On R&D and innovation, the patent box is all very well—it is stored—but if we invested the same proportion of GDP as countries such as America, the OECD and the EU, we would help our productivity hugely. Our current account deficit has reached 5.2% of GDP, which is worse than Italy and France. Our fiscal deficit of 5% is almost double that of the United States, let alone Germany which has just 0.2%.

As the noble Lord, Lord Adonis, said, skills are so essential. I am proud to be an ambassador for Studio Schools. Last month I opened the Vision Studio School in Mansfield. That is the sort of initiative that I am glad the Government are backing. Tax breaks to apprentices are excellent but, on the other hand, the word “entrepreneurship” was completely missing from the SME Bill. Entrepreneurship should be the cornerstone of our future growth. I launched the 10th anniversary of the Cambridge University Centre for Entrepreneurial Learning this week. That is what we should be backing. The Sirius campaign, backed by UKTI, bringing young entrepreneurs to Britain to develop their businesses, is a great initiative that the Government should be doing.

The Government are doing a lot, but are they doing enough on the big things? We have a tax system that is so complicated that the tax code is now 17,000 pages long. The Office of Tax Simplification is an oxymoron. Our corporation tax rate is low but our income tax rate is too high. Capital gains tax is too high. The Indian restaurant industry which we supply and the Bangladesh Caterers Association UK are constantly complaining about VAT and asking for it to be reduced. Our hospitality and tourism industries say that VAT is far too high. We do not have a competitive tax system.

The noble Lord, Lord Rose, in his excellent speech, spoke about confidence. We need confidence, productivity, and a better educated and more entrepreneurial workforce who think globally. Government expenditure should be at a believable rate: 35% is unachievable; 40% would be a realistic rate. We could then balance our books and have an educated, productive, confident and enterprise-based economy so that, even as 1% of the world’s population—that is all we are—we can continue to punch above our weight.

The following article was published on the New Statesman’s “The Staggers’ blog on Monday 1st September.

Founded in 1913, the New Statesman is one of the most well-respected current affairs magazines in the United Kingdom.

The government must stop treating international students with hostility

This year, the number of foreign students undertaking higher education in Britain fell for the first time since 1983. The government must stop treating them with contempt.

Aung San Suu Kyi, Bill Clinton, Desmond Tutu, Mahatma Gandhi. Each one of them has shaped the world in which we live and, as it happens, every one of them was educated here in Britain.

Along with the United States, the UK’s universities are the finest on the planet. The ability that this gives us to attract the world’s talent to these shores represents not only an enormous economic opportunity but also a crucial component of our nation’s cultural strength. It is something I have been proud to observe in recent months as the newly appointed chancellor of the University of Birmingham.

I came to the UK from my birthplace of India because of the outstanding quality of its higher education institutions, but it was Britain’s internationalism – its unique role as a point of congregation for ideas and creativity from around the globe – that allowed me to start Cobra Beer here.

And yet despite the mutually beneficial historic relationship between the UK and international students, this government continues to badge them as immigrants, a group it treats with a contempt bordering on outright hostility.

That’s despite new research from Universities UK, which found that only 22 per cent of the British public considers overseas students to be immigrants. Political leaders from the Deputy Prime Minister to Lord Heseltine have added their voices to the call for international students to be removed from the immigration figures. And yet the Home Office still refuses to take action, despite the evident failure of its crude policies towards controlling net migration, shown recently to have risen by 68,000 in the last year.

Net migration may be rising but one vital statistic is going the other way, with potentially severe consequences. This year the number of foreign students undertaking higher education here in Britain fell by 1 per cent – the first time a decline has been recorded since 1983. With government-sponsored poster campaigns barking “go home or face arrest” and the disastrous, failed proposal for “high risk” visa applicants from nations like Sri Lanka, India and Pakistan to pay a £3,000 “security bond” deposit upon entering the UK, it’s little wonder that the world’s brightest and best are starting to look elsewhere.

Indeed, an NUS poll carried out earlier this year recorded that 51 per cent of international students found the British government “unwelcoming”. That damage is being done to Britain’s reputation on the world stage as a home for the future talent on which our economy increasingly depends couldn’t be more clear.

And while the government is helping promote a climate of hostility against overseas students, the Universities UK research clearly demonstrates that this does not reflect the public mood. 59 per cent of respondents to the survey said that the government should not reduce numbers of international students, even if such action made reducing overall immigration numbers harder.

Our universities are competing in a zero-sum game of global proportions and every engineer, programmer and aspiring entrepreneur that we turn away will be welcomed with open arms by the likes of Canada, Germany and Australia. Given that the Department for Business, Innovation and Skills estimates overseas students contribute more than £13 billion to the UK economy, that is a prospect we should all be extremely worried about.

For years the government has been ignoring the well-founded requests of colleagues within the House of Lords and many more besides, to remove international students from the immigration statistics. Now the public has spoken too; and it is time the government started listening.

Lord Bilimoria CBE is founder and chairman of Cobra Beer, a crossbench peer and chancellor of the University of Birmingham

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’”.