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”.

With China in turmoil, now is the time to celebrate our relationship with India

 

As all eyes are fixed on China’s market turmoil, India is bullish about its own prospects. India’s economy is set to grow the fastest this year, at a projected rate of 7.5 per cent, according to the IMF.

India’s consistently high economic growth rate and its lead position in the latest Baseline Profitability Index provide indisputable proof it is a stable, promising investment destination.

The time has never been better for us to celebrate and reinforce the incredibly strong relationship between Britain and India. Yet, despite leading the Global Influence Index, reflecting Britain’s cultural pre-eminence and remarkable ‘soft power’, there has been a certain lack of commitment or drive to capitalise on that power through international trade.

Necessary austerity measures may have taken international relationships off the table temporarily, but long-term projects for our country must continue. As an Indian-born entrepreneur, Britain’s trade relationships with India are particularly important to me – but they should be to the whole country.

It is often said that for economic co-operation to be successful, mutual cultural understanding is paramount. British and Indian cultures have influenced each other enormously over the last 400 years. In fact this year, the 200th Anniversary of the Gurkha’s service to Britain and India, serves as an enduring reminder of Britain’s long-standing ties to South Asia.

I grew up amongst the Gurkhas – my late father Lt Gen FM Bilimoria was commissioned into the 5th Gurkha Rifles Frontier Force – so they are a central part of my past, but they are an essential part of Britain’s national history too.

Gurkhas have been fighting alongside Britain for centuries, suffering the loss of 43,000 of their number in the two World Wars and accumulating 13 Victoria Crosses for supreme valour defending the country. My father’s battalion was awarded three Victoria Crosses in one campaign in the Second World War, with two of these being awarded in a single day.

Britain’s reaction to those two terrible and tragic earthquakes in Nepal is testament to our close ties to the Gurkha community.

Despite the claim by David Cameron in 2010 that he would double trade with India by 2014, we still trade more with Belgium than with India.

We are, however, moving in the right direction. Prime Minister Narendra Modi’s visit to the UK this November is an important and symbolic step forwards, and signifies a renewed urgency to strengthen our historic relationship, and mark the start of a concerted effort to vastly expand our trading links with the region.

Britain’s widespread international influences and relationships are an untapped resource – particularly these deep-rooted cultural links which represent an enormous opportunity for British companies to expand into the world’s fastest growing economies.

 

The full article is available here

My Lords, I congratulate the noble Lord, Lord Maude, on his excellent maiden speech. It was a very balanced and frank speech and we look forward to much more of the same. I was privileged to interact with him in his role as Paymaster-General when I was a commissioner for six years at the Royal Hospital Chelsea—the Chelsea Pensioners—where he used to come regularly. Other interactions included going round the Rolls-Royce factory in Goodwood, where he showed a huge interest in British manufacturing.

 

When I came to this country from India in the 1980s, entrepreneurship was struggling to shake off a very negative image. The word used to conjure up images of dodgy second-hand car salesmen and people wanting to cut and run. There certainly were people wanting to break through the glass ceiling then but they were held back by attitudes including excessive regulation. Our business climate did not help. We made cars that no one wanted to drive, we mined coal that no one wanted to burn and we owned businesses that no international company wanted anything to do with. In this environment, when I decided to set up Cobra Beer, my father, who was commander-in-chief of the central army in India from the Gurkha regiment—last week I was privileged to lead a debate on the 200th anniversary of the Gurkhas—and had 350,000 troops under his command, said, “What are you doing with all this education? You’re becoming an import/export wallah”.

His words would have been echoed by the parents of many other prospective entrepreneurs—but just look at how present-day Britain is and how the world has changed. Entrepreneurship is cool and we have a society where anyone can get anywhere, regardless of race, religion or background. More importantly, we have a society in which we can encourage people to come to the United Kingdom to make their way in the world, and in which we enjoy a huge level of entrepreneurial talent. In fact, London leads New York and Hong Kong in terms of highly skilled, knowledge-based jobs—there are 1.5 million of them—and a recent report showed that London is one of the top two cities in Europe for entrepreneurship.

 

The Minister and the noble Lord, Lord Popat, mentioned infrastructure. We have some great infrastructure projects. Crossrail is being built beneath our feet. It is a £15 billion project and the estimated economic benefit is almost £50 billion. We will see huge effects, with thousands of jobs and world-class infrastructure.

 

Our universities have not been spoken about enough in this debate. In the QS university rankings, London had more top-rated universities than any other city in the world. The success is not confined to London. I am proud to have been installed recently as the seventh chancellor of the University of Birmingham. We, too, were in the top 100. Along with America, we have the finest universities in the world—and, talking about Americans, in 1758 American statesman Benjamin Franklin wrote:

 

“An investment in knowledge pays the best interest”.

 

That is a statement that I hope more countries will emulate.

 

Of course, education is an export that this country should be proud of. We have amazing strengths. The Minister spoke of inward investment. We are number two in the world in inward investment after the United States—a country that is more than six times bigger than we are. For such a tiny island, we really do, as noble Lords have said before, punch above our weight. We have 1% of the world’s population.

 

Since coming to England as a 19 year-old in the early 1980s, I have seen Britain transformed from the sick man of Europe to a country that is now the number five economy in the world. We enjoy one of the most open and free business climates in the world and we are a country where entrepreneurship is admired and celebrated. In spite of our tininess, we are right at the top table: a member of the G8, the G20 and NATO, and with a permanent seat on the UN Security Council. Our tourism industry alone brings in nearly £100 billion and we have the most respected royal family in the world.

 

We have world-class capabilities in every field, including advanced engineering, aerospace, automobiles, beer, architecture, design, fashion, literature, music, film, sciences, universities, museums, theatre, opera, ballet, law, accountancy, advertising—and sport. Britain came third in the Olympics and the Paralympics, with 1% of the world’s population.

 

This is brilliant. This is absolutely amazing. In our automobile industry, Tata Motors, run by a fellow Zoroastrian Parsee, took over Jaguar Land Rover in 2008. I spent a whole day there in 2008, soon after the takeover. I believe that I am due another visit, because my visit is completely outdated. Jaguar Land Rover is now making more profits than the Tata group paid for the company that it took over in 2008—a company that nobody wanted to buy. The automotive industry is a great British success story. Last year, Bentley announced that it was moving the manufacture of its 12-cylinder engines from the Volkswagen plant in Germany to Crewe in the UK.

 

It is often said that Mrs Thatcher destroyed manufacturing in the United Kingdom. The reality is that we produced more in 1990 when she left office than in 1979. The car manufacturing industry is, if anything, riding higher than ever. These are companies with British workers and British premises and British sales exported throughout the world. With a little help from India, we have the best-quality cars in the world—I am proud to drive one—being manufactured here in Britain. What a contrast with the bad old days of Rover and Morris Minor.

 

I could go on. Automobiles are just one example. Hitachi recently announced that it planned to move its rail business headquarters from Japan to the UK. Companies from Japan, India, Germany—pinnacles of high-tech manufacturing—are moving to the UK. This is fantastic and brings more jobs over here.

 

Not enough has been said about partnering. Last year, we were told the amazing news about India’s “Mangalyaan”, which successfully entered Martian orbit for just over a tenth of the price of the latest NASA voyage to the red planet. Indeed, for less than the cost of the film “Gravity” the Indian space programme was able to do something that very few nations in the world have managed. Last year the Chancellor announced that £80 million would go towards funding joint space missions with India, and the UK Space Agency is doing so much to promote foreign investment in scientific research. If India can reach Mars, just imagine what we can do if we work together.

 

The pace of change of foreign investment in the UK is accelerating. The talent that we are attracting continues to grow. My joint venture partner Molson Coors owns the largest brewery in the world in Colorado, but it also owns the largest brewery in Britain, in Burton-on-Trent in the Midlands, where Cobra beer is brewed. The Prime Minister visited the brewery last year.

 

It is an American-Canadian firm that is increasing inward investment over here. It plans to invest £75 million in its brewing operations in Burton-on-Trent over the next five years. Once again, high-tech manufacturing and chemical engineering are just the sorts of things we need.

 

The UKTI’s Sirius programme, which I was proud to champion and launch, is a brilliant programme encouraging young entrepreneurs from across the globe to set up business in the UK via its 12-month support programme. It is amazing. UKTI calls it, “the richest package of its kind in Europe”.

 

In its first 12 months, thousands of young graduates from around the world, from almost 100 countries, applied to join the Sirius programme to start up their businesses right here.

 

On the other hand, I have been very outspoken in my belief that the coalition Government’s immigration policy—which, unfortunately, the current Government seem to be continuing—was very damaging for business and sent out the wrong signals to our universities and academics and in terms of attracting investment and business. We should change our immigration rhetoric and, for a start, stop including international students in the immigration figures.

 

Inward investment in the UK is one of the genuine success stories to have emerged from the financial crisis. In every way, foreign investment is helping to transform Britain and the world for the better. On the other hand, the Minister, in his very frank speech, said that our exports are lagging. In the three months to April 2015, the UK’s deficit on trade in goods and services was estimated to be £7.2 billion, widening by £1.6 billion from the three months to January 2015. Our GDP growth is good, but our GDP per capita could and should be much higher. Our inflation is zero, which is brilliant, and our employment rate is fantastic—at 73.4% in December 2014 to February 2105, it was the highest rate since comparable records began in 1971. This is marvellous. At the close of trade on 8 May, the FTSE was 2.3% higher and the pound experienced the largest one-day rise against the dollar since the previous general election in 2010.

 

Noble Lords, including the noble Lord, Lord Davies, have spoken about productivity. It is one of the most important factors in the success of a country. The more efficient an economy is, the more that can be produced in a sustainable fashion. High productivity growth leads to a higher growth rate in the economy. The reality is that in 2013, based on GDP per hour, the UK came sixth of the G7 countries and productivity was 16 percentage points lower than the G7 average, which is the widest productivity gap since 1991. Does the Minister agree that this is a huge challenge that we have to address?

 

We have heard about a balanced economy. Manufacturing industry used to be much bigger than it is today. Today it employs 2.6 million people and accounts for 10% of our GDP. Almost 70% of our R&D investment goes into the manufacturing sector and, as we have heard, goods produced in the sector account for 45% of all exports. As a percentage, however, we underinvest by miles in R&D and innovation compared with the OECD, EU and American average. Will the Minister acknowledge that?

 

When it comes to all the great coalition Government initiatives for manufacturing—the catapult centres, the advanced manufacturing supply initiatives and so on—the Government still have not set a specific target of increasing manufacturing as a percentage of GDP. The Indian Government on the other hand have said that they want manufacturing as a percentage of GDP to reach 25%. Will the Minister agree that we should set a target for manufacturing as a percentage of GDP? It has dropped from 30% to 10% of GDP since the early 1970s, and we must arrest this decline. Investment in manufacturing was £26.2 billion—23% of total investment in business—and that has fallen once again.

 

Before I conclude, I emphasise that the Government have the right intentions. The Chancellor of the Exchequer said:

 

“We want the words: ‘Made in Britain’, ‘Created in Britain’, ‘Designed in Britain’ and ‘Invented in Britain’ to drive our nation forward”.—[Official Report, Commons, 23/3/2011; col. 966.]

 

Well, let us now walk the talk.

 

Not much mention is made of UK Trade and Investment. I have been privileged as a founding chairman of the UK India Business Council to work with that body, and I think that it does a great job. Could the Minister reassure us about support for UKTI going forward? The High Commission of India has been amazing. What are we going to do to encourage businesses to use its services more? In India, they have been fantastic. Now an Indian beer, Cobra, is being brewed in Burton-on-Trent, where IPA was brewed to send out to the troops in India. The Indian high commission helped us to launch Carling beer, a British joint-venture product of ours, in India. This is marvellous. The Minister said that the EU-India free trade agreement should be vitalised. Will the Minister tell us when that will be concluded? As for Europe, I was privileged to speak at the annual meeting of the Council of British Chambers of Commerce in Europe. What support has been given to these excellent initiatives around Europe and around the world, including the British Business Group in India?

 

The noble Lord, Lord Stoneham, said that we should really be committing more to defence. I have asked the Government many times whether we will commit to spending 2% of GDP, the NATO target. Our hard power and soft power is what makes us strong.

 

The noble Lord, Lord Clement-Jones, spoke about the Magna Carta. What an auspicious day on which to make your maiden speech, on 15 June 2015, 800 years after the Magna Carta. Let us think of Britain’s influence, reputation and respect from that one document 800 years ago, and how it has influenced the whole world. This is what we underestimate.

 

I conclude by saying what a brilliant campaign is the GREAT campaign, again not mentioned so far in this debate. I urge the Government to get even more behind it. When I spoke at the Milan Expo, along with Dominic Jermey, the head of UKTI, I visited our British pavilion, the “beehive”, which was the most innovative, creative and different by miles. We stole the show, and we are going to do that until December. In Germany, which people talk about being the most powerful economy in Europe, who built the German Parliament, the Reichstag, but our own Lord Foster?

 

In design, we are the best in the world. The UK is the epicentre of trading—we have been a trading centre for ever—and the epicentre of truth, justice, fairness and openness.

 

The Minister and I visited the Rolls-Royce factory, where you see this acronym everywhere: PRIDE. We should have pride in our abilities as the best trading nation and inward investment nation in the world.

The full video can be found HERE.

My Lords, when the United States was formed in 1776, it took 19 people on a farm to produce enough food for 20 people, so most people had to spend their time and effort in growing food. Today, it is down to 1% or 2% to produce the food. So let us consider the vast amount of supposed unemployment produced by that. There was not really any unemployment produced; what happened was that people who had formerly been tied up working in agriculture were freed up by technological developments and improvements to do something else, which enabled us to have a better standard of living and a more extensive range of products. That is Friedman—arguing against the race to the bottom. The noble Lord, Lord Giddens, talked about robots, but I have gone back to 1776. Nothing has changed in that sense.

I thank the noble Lord, Lord Freud, for initiating this debate. I have just a few points to make. First, the rise in the overall employment rate is real and is at record levels and, correspondingly, there has been a fall in unemployment. With the economic dominance of the south-east, there is a need to rebalance the economy by supporting manufacturing, particularly in the regions. Continued tax reform is also needed. The Office of Tax Simplification is an oxymoron; our tax system is getting more and more complicated.

UK unemployment has fallen by 63,000 to 2.33 million. The unemployment rate now stands at 7.2% of the population. As the noble Lord, Lord Holmes of Richmond, said in his excellent speech, employment has risen to a record of more than 30 million. The bad news is that the NEETS are still close to the 1 million mark; although the figure is falling, it is still above 900,000. The number of people claiming jobseeker’s allowance has fallen to 1.175 million. Over the year that number has dropped by 363,200, which is terrific. That is all really good news.

The new Governor of the Bank of England, Mark Carney—I say new, but he has been in post for almost a year—made a fundamental mistake in saying that he was going to give us forward guidance and that when unemployment fell to 7% the Bank would think of raising interest rates. That figure has been reached more quickly than thought, and he has had to back-track on the forward guidance almost straightaway. Interest rates are still at a record low of 0.5%. Just think: what got us into this financial crisis was what was then perceived as being the longest period of low interest rates for a long time—and they were then at 5%. Interest rates are 10 times lower than that, but still we cannot increase them, although the unemployment figures are near, or at, what the Governor of the Bank of England wanted them to be. They have been kept unchanged at 0.5%.

The real issue is public expenditure. Public expenditure used to be around the 40% mark. It was 42% of GDP in the early 1970s. Then under the previous Government it went up to almost 50% of GDP. By the late 1980s it was below 40%. We need to get that public expenditure down to 40%, because our tax-collecting ability historically has been around 38% to 39%. If we can get our public expenditure down to 40% we will have a balanced economy and will eliminate the deficit.

UK manufacturing is not dead, by any means. We are excelling in manufacturing. Our aerospace industry is the second largest in the world. Our automotive industry, of which I speak regularly, is flying. When Tata Motors bought Jaguar Land Rover in 2008 I spent a whole day at the Land Rover factory. Wow—it was impressive. I am due another visit, because my last one is already outdated. The company is now making more in profits than it paid for a business that nobody was interested in buying in 2008: that is how well it is doing. It is also exporting and creating employment.

We have heard the great news that Bentley is moving its 12-cylinder engine manufacturing from Volkswagen in Germany to Crewe in the UK. How wonderful is that? Rolls-Royce is manufacturing at Goodwood. Therefore, we have the best of the best quality—the best cars in the world—being manufactured here in Britain.

Our chemical industry is huge; our defence industry is huge; our electronics industry is huge; and so is our food and drink industry. I speak from my own experience. I mentioned yesterday that we were manufacturing a great deal in Europe. In fact, the majority of our production was in Europe some years ago and we decided to reshore to the UK because here we can produce world-class beer. We now produce in Burton upon Trent; we are winning award after award and exporting around the world. I am proud of that.

We have a plastics industry and a steel industry; we also have a textile industry, which we thought was dead but which is not dead at all. There are still almost 80,000 businesses employing 340,000 people and generating £11.5 billion of turnover.

What about the regions and the whole focus on London? We have a country where one big city is the capital and the financial capital and is much bigger than the second biggest city, Birmingham—let alone Manchester or anywhere else. If we look at a large country such as the United States, New York is big but you have Los Angeles, Chicago and lots of other big cities. If we look at another large country, India, there is Mumbai but also Chennai, Bangalore, Hyderabad, Calcutta and Delhi, which are huge cities in their own right. We have this one big city. I am very proud of London; it is the greatest of the world’s great cities. But how can we encourage business and employment in the regions? The answer is simple: we must encourage manufacturing. We cannot manufacture in London; we have to manufacture in the regions. That can create the jobs.

The Financial Times analysis tells a story in which the percentage of people on jobseeker’s allowance benefits dropped by more than 30% last year in places as varied as Oldham in the north, Stafford in the Midlands and the Suffolk coastal region. This is great news. If we can carry on in that vein, we will have growth and employment outside London.

Again, worries about lopsided economic growth are not new. The noble Lord, Lord Giddens, talked about developments 50 years ago, at a time when the economy was also recovering after a period of stagnation.

The then Labour leader, Harold Wilson, complained in Parliament of a two-nations economy and said that,

“the Chancellor has to try to restrain the overheating which he sees in the South at a time when large areas in the North are still in the chill grip of his predecessor’s freeze”.

—[Official Report, Commons, 14/04/1964; col. 285.]

Those were the comments of Harold Wilson on Reginald Maudling’s 1964 Budget speech.

We should look at the great signs of success. We have already heard that Hitachi is to move its rail business headquarters from Japan to the UK, and that Bentley is to move from Germany to the UK. Companies from Japan and Germany, the pinnacles of high-tech manufacturing, are moving to the UK. This is fantastic. Hitachi says its move will expand the number of rail jobs to 4,000, which is excellent. I have already mentioned Jaguar Land Rover and Bentley. The Chancellor has promised to cut the costs of manufacturing to boost growth, and he has done it. He predicts that energy costs will go down by £7 billion. Again, that is excellent.

Immigration is one area where I fundamentally disagree with the Government. Their immigration policy has sent out the wrong signals around the world to foreign students and academics. That affects not just universities such as Oxford and Cambridge, where 30% of the academics are foreign. For example, more than 30% of the academics at Birmingham University are foreign. As I say, bad signals have been sent out, and the number of Indian foreign students is now plummeting, but we should look at the contribution Indians make to our economy. On Friday, I went to the celebrations for the principal of West Nottinghamshire College, who has been made a dame. She is the first Indian-born dame in 83 years. She came to this country as a young bride unable to speak English but today heads the most successful further education college in the UK, and probably one of the most successful in the world. That is the power of immigration.

The statistics show that Indians make a huge contribution to our economy. In 2013, Indian men topped the ethnicity employment table in the UK and Indian women came second. Indian men had the second lowest rate of unemployment—and so it goes on. One in seven companies is founded by a migrant entrepreneur. Migrants make a huge contribution to our economy and create jobs. Migrant entrepreneurs have been a benefit to this country.

In looking at overall business performance, we must not neglect SMEs. The Minister talked about all the Government’s initiatives. I was on the National Employment Panel for eight years and on the New Deal task force before that. SMEs account for 59% of private sector employment and 48% of private sector turnover. Within SMEs, small businesses account for 79% of employment and 69% of turnover. We need to encourage these small businesses to grow, because the argument about big companies not paying corporation tax misses the point. Yes, we would like them to pay more corporation tax, but that tax makes up only 8% of our tax take. Most of our tax take comes from the tax that is generated by employment—more than 50% comes from PAYE and NI-paying employees and NI-paying employers. The more jobs we create, the more tax we will generate, therefore we should encourage SMEs to grow.

I have suggested to the noble Lord, Lord Young, that we should have a competition in this country to sponsor staff from 100 companies to attend the Cranfield School of Management business growth programme or the University of Cambridge Postgraduate Diploma in Entrepreneurship. It costs £10,000 to attend these programmes. The businesses that send people to attend those programmes will grow faster than other businesses because we will be training our entrepreneurs to perform better and grow their businesses.

We need to go further on national insurance breaks. Ralf Speth, the chief executive of Jaguar Land Rover, said that the secret of his company’s success was innovation. UK Trade and Investment was mentioned by the noble Lord, Lord Shipley. Exports are crucial. The further we go down the route that I am suggesting of training our entrepreneurs, encouraging manufacturing in the regions and generating jobs, the more exports will follow. I have mentioned my own experience as an example of that.

To conclude, what is the purpose of business? I think that, yes, you want to create a product that people love, but you also want to create employment for the well-being of the people whom you employ. In every survey that asks people what is most important to them, they say family. What else is important to them? They say health. What else is important to them? They say their working life. If people do not work, they are not going to be happy. A happy country is a country with, ideally, full employment. We will never get to full employment, but at least let us try.

The spending review is about to come along. Are the Government on target, given that, as the noble Lord, Lord Forsyth, said, our borrowings are increasing and will double to £1.5 trillion? We have to bring government expenditure as a proportion of GDP down. Is there a target of 40% of GDP for government spending? Could the Minister confirm that?

With regard to priorities, immigration has reared its head again. I am really worried about this. The gracious Speech mentions dealing with illegal immigration, the bad immigration that harms our country, and yes, we need to deal with that. Unfortunately, though, the signals that are being sent out, reinforced by highlighting immigration in the gracious Speech, are about discouraging and deterring the immigration that we benefit from. The number of Indian students has gone down by more than 40,000. In fact, recently we had a former head of immigration from Australia in the UK, and he said that every day in Australia they pray and thank God for the existence of the UK Border Agency. It has been proven unfit for purpose; that is why it is being dismantled. We are harming our competitiveness. If students do not come here, they go to Australia, Canada and the United States. It is one of our biggest strengths. We need to send out a very clear signal that we want immigration to benefit this country and that we appreciate the good immigration that has benefited it.

On infrastructure and High Speed 2, the noble Lord, Lord Forsyth, hesitated, but in his fantastic speech moving the Motion for an humble Address, the noble Lord, Lord Lang, spoke about High Speed 2 being a good investment in infrastructure from which our grandchildren will benefit. It is high speed being delivered at slow speed. Will the Minister confirm exactly when this project will be completed? It is an example of long-term thinking, which is great. The Minister spoke about Crossrail. I congratulate the Government on Crossrail. It is a fantastic initiative, started by the previous Government, which will benefit our economy, but nobody has spoken about Heathrow and the desperate need to improve our air services. We need that third runway at Heathrow. Why are the Government just postponing it?

What about a balanced economy? There is nothing in the gracious Speech about a balanced economy. When I am asked about my business, I say with pride that first and foremost we are manufacturers. Are the Government keen on promoting manufacturing? What are they going to do about that? We should be maximising our competitive strengths.

The tourism industry brings more than £115 billion to this economy. Expanding Heathrow would help tourism, but the most photographed building in the world is the Eiffel Tower. The second most photographed building in the world is our wonderful Palace of Westminster. The reason it is second is because we are not in the Schengen scheme for visas. There are so many people, particularly from China, who come to Europe, come as far as the channel, but do not come to the UK because a Schengen via for 25 countries is cheaper than a UK and Ireland visa. We should join Schengen. Anyone who has a Schengen visa should be able to come into this country. The reason we do not join Schengen is that we are worried about our border security. I have just spoken about the UK Border Agency. Why are the Government continually postponing imposing exit checks at our borders? They need to be brought in soon. We know who is coming into our country, but we do not know who is leaving. We need to have those exit checks. Will the Minister inform us of when they are going to be introduced?

Another of our competitive strengths is higher education, but there was not one mention of it in the gracious Speech. Earlier this month it was mentioned in this House that the University of Cambridge has achieved more Nobel Prizes than any other university. That is something of which we should be proud. That is in spite of the fact that we spend less as a proportion of GDP on R&D and innovation than the OECD or the European Union. We spend half the proportion of GDP on R&D that South Korea spends. When it comes to higher education funding, overall we spend less as a proportion of GDP than the EU average or the OECD average and way below countries such as the United States. Why is it that the United States always bounces back quickly? Why is it so competitive? Why is it so productive? Why it is so innovative? It is because it invests more than we do as a proportion of GDP in innovation and higher education. Why do the Government not do more of this?

Will the Minister confirm that we are going to be promoting clusters? There are three big clusters in the world: Silicon Valley, Boston-Cambridge in Massachusetts and Cambridge in the UK. We need to promote more clusters. Birmingham, for example, is a prime location for a manufacturing cluster. Will the Government promote clusters more proactively?

The noble Lord, Lord McFall, spoke about the financial sector. I remember speaking in the debates about Northern Rock. That was six years ago. The nationalisation of Northern Rock was rushed through in six months. It has taken us six years to get to reforming our banking system. That is scary. I am very hopeful, and I congratulate the Government on appointing Mark Carney, a Canadian, to come in and head our Bank of England. Can the Government confirm that, apart from inflation targeting, they will now encourage the Bank of England to also have nominal GDP growth targeting as well? On SMEs, which other noble Lords have spoken about, I keep hearing that they cannot raise finance. In fact, I have heard that the enterprise finance guarantee scheme loans are falling. Can the Minister confirm that? They should be increasing at times like this, when businesses desperately need finance.

On a positive note, I am delighted with the efforts that the Government are putting in through UK Trade and Investment to promote British businesses doing business abroad. I am delighted to hear that the UK India Business Council, which is funded by UK Trade and Investment and of which I am the founding chair, is now to be opening up within India. The British high commission in India has opened up two new deputy high commissions in Hyderabad and Chandigarh and will increase the number of people on the ground helping to promote British business in India. This is fantastic. As the noble Lord, Lord Forsyth, concluded, we must promote and encourage our businesses not just in doing business with Europe, but in doing business with the emerging markets such as India-the BRIC nations.

The Government are doing a fantastic job through their marketing campaign, “Great Britain“. The “Great Britain” campaign tries to promote Britain with confidence aboard. I suggest that we need a “Great Britain” campaign to promote Britain within Britain. We do not appreciate enough the amazing strengths that we have as a country. We have the best of the best in the world in just about every field you could imagine, whether it is the creative industries or the legal and accounting professions, and manufacturing including beer, automobiles and aerospace, as well as sport, film and theatre. Our universities are, along with America’s, the best in the world. London is the greatest of the world’s great cities. I could go on.

We may be bumping along the bottom as an economy, but we should never take for granted the amazing strengths that I wish the Government would get behind-strengths which we should spread with confidence throughout our country. Then we will be able to generate growth with confidence.