IMF Economic Outlook

Baroness Wheatcroft Excerpts

Tuesday 31st January 2023 Lords Chamber

[Baroness Penn (Con)]

I completely agree with my noble friend on the importance of the financial services Bill to unleashing further growth in our economy. It is also a really important example of how we will take the opportunity of the freedoms of Brexit to design regulation in a way that works best for the United Kingdom. Growth forecasts are inherently uncertain, but they still play a valuable role for government, economists, industry and others. Their uncertainty is a fact of life, but we should still look carefully at what they say.

[Baroness Wheatcroft (CB)]

My Lords, as of November this year, the EU will require additional travel documentation for those leaving the UK and heading into Europe. Do the Government have any estimates of the effect that will have on UK trade?

[Baroness Penn (Con)]

I do not, but I will write to the noble Baroness if there is something available on that matter.

Financial Services and Markets Bill

Baroness Wheatcroft Excerpts

Committee stage
Monday 30th January 2023 Grand Committee

[Baroness Sheehan (LD)]

My Lords, I rise to move Amendment 42 in my name, to which the noble Baronesses, Lady Hayman and Lady Wheatcroft, have added their names; I thank them for their support. I refer noble Lords to my interest as per the register as a director of Peers for the Planet.

Amendment 42 seeks to inject a much-needed dose of realism into this Bill. I quote my noble friend Lady Kramer’s summing up of the debate on it at Second Reading:

“This is an industry that knows how to promote itself and speaks with a great sense of invincibility.”—[Official Report, 10/1/23; col. 1394.]


Yet this is also the industry that comprehensively crashed the economy in 2007. Some individuals walked away with accumulated profits, leaving the taxpayer to pick up the costs, with the most vulnerable suffering the most—as ever—through the years of austerity that followed.

I am sure that there are those who say that the financial services sector is our biggest asset; that we must unleash its potential, not shackle it with undue openness and transparency; and that we should most definitely not saddle it with an overarching requirement to safeguard the future of the one and only planet we have. However, I profoundly disagree, which is why I think that a healthy dose of realism is needed—not wishful or short-termist thinking, but reflection on what is happening to our planetary ecosystems in the real world and whether our sons and daughters will curse us in future as the last generation that could have acted in time to save the planet but did not do so.

Money matters. Money drives our economy and all our futures. We need to be able to find out easily what is being done in our name with our money. Amendment 42 is a simple but necessary one. It would require the FCA to make rules requiring fund managers, personal pension providers and insurers to give information on request to clients. It would also require Ministers to make regulations requiring pension funds to give information on request to beneficiaries, on the exercise of all voting rights on their behalf, however those rights are held.

This amendment is necessary because, at present, investors cannot easily find out how fund managers managing their money have voted on their behalf. This cannot be right. Good disclosure principles dictate that investors should be able to find what they need easily, be able easily to understand what they find and be able to use what they find to make informed investment decisions. It also goes without saying that good disclosure principles are a precursor to good governance and essential to a stable financial sector.

Noble Lords will be aware that with ownership of listed companies comes the opportunity to exercise the right to vote at the company’s AGM, including on the appointment of the chair and other independent directors, to accept or reject the annual report and accounts, to appoint auditors, and to agree pay arrangements and any shareholder resolutions which have been tabled or to table resolutions if they meet the minimum threshold. Voting with or against the management and supporting or rejecting shareholder resolutions is an incredibly important tool in ensuring good corporate governance, good long-term investor returns and good economic outcomes more broadly.

Of course, it is also important for the journey to net zero. The Treasury acknowledges this in its report Greening Finance: A Roadmap to Sustainable Investing, which was published in September 2021. In that report, the Government set out their expectations that pension funds and investment managers should

“Actively monitor, encourage, and challenge companies by using their rights and direct/indirect influence to promote long-term, sustainable value generation”


and

“Be transparent about their own and their service providers’ engagement and voting, including by publishing easily accessible, high-quality quantitative and narrative reporting.”


This is what Amendment 42 would do. It is necessary because, regardless of the Government’s expectations, the reality is that the complicated architecture of investment with large numbers of intermediaries, such as investment managers, insurers, consultants and additional fund managers, means that despite efforts by the DWP and the FCA to give pension savers greater transparency about how votes connected with their investments have been cast, it is still practically impossible for savers and often difficult even for the pension funds to get the information.

It is true that the FCA has made rules under the shareholder rights directive, which—in another world many millions of years ago now, it seems—the UK Government championed to improve levels of corporate governance and oversight across the EU. However, in DWP’s implementation of the directive, the pension fund must publicly report on only those which it considers significant. Guidance issued by the pension funds trade body—the Pensions and Lifetime Savings Association—recommends that around 10 out of at least 1,000 votes in which a pension fund typically has a stake should be disclosed. A fundamental weakness is that the pension fund does not have a statutory right to information on unreported votes from the fund manager, and the pension saver does not have a statutory right to information on unreported votes from the pension fund. Obscurity rules, it seems. I guess that even this weak reporting requirement will be swept away by the Retained EU Law (Revocation and Reform) Bill.

The difficulties with obtaining information on voting were covered at length by the DWP-commissioned task force on pension scheme voting implementation—I think it is called TPSVI—which reported in September 2021 and recommended that the DWP and the FCA should closely monitor delivery of vote reporting at fund level. It recommended that if investment managers do not deliver by the end of 2022 the FCA should legislate or issue handbook guidance to deliver fund-level reporting. Managers have not so far delivered.

In its letter to the DWP in October 2022, more than a year after the report, the FCA indicated that it was setting up a vote-reporting group with a view to having draft proposals by the middle of this year. However, the solution still seems entirely reliant on voluntary participation by investment management firms, which I understand are lobbying furiously against standardised disclosure. Some firms do not wish to provide reports on request because it will make them look bad and some do not want to invest in the technology to allow them to provide the data, but neither of these positions is acceptable today.

It was surprising to hear, in response to two Parliamentary Questions from the noble Baroness, Lady Ritchie of Downpatrick, that the Government do not appear to know anything at all about the voting records of UK-authorised fund managers and pension funds in relation to climate-related resolutions at AGMs. Yet the Government are reliant on the financial sector to take strong action on climate change through the exercise of voting rights.

For 16 years, the Government have had powers to require comprehensive vote reporting via the Companies Act 2006, but they have not yet used them. My amendment is intended to give the FCA, which regulates the voting behaviour of fund managers and insurers, the duty to make rules, rather than BEIS or the Treasury.

The US Securities and Exchange Commission regularly updates requirements for standardised disclosure of voting by fund managers, which must be presented in a consistent and machine-readable form, so action by our regulators in the UK is long overdue. Smart regulation is a vital aspect of retaining competitiveness, and this amendment is intended to be smart by giving the FCA the nudge to make rules and ensure that reporting is standardised, with similar provisions for pension funds, but it is not prescriptive on the details. If the FCA intends to make comprehensive reporting in standardised form mandatory, the Minister should welcome the amendment. I look forward to his response. I beg to move.

[Baroness Wheatcroft (CB)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Sheehan, and I echo everything she said. I apologise to the Committee that I was unable to be at Second Reading.

I believe that this amendment is necessary if we are to have a properly active shareholder democracy in this country. At the moment, shares are not held by the majority of individuals directly; they are held through institutions, and shareholders tend to be passive. The individual shareholder does not know what is happening with his or her money. Yet when we look at how companies behave, all too often, one is reduced to saying, “How on earth could the owners allow that to go on?” Whether it is overpaying executive directors while the people at the bottom of the pile in the business are dependent on universal credit, paying the executives in the water companies huge bonuses while they pour sewage into our rivers or continuing to do business in Russia when the country is absolutely begging people to come out of Russia, too many companies behave badly, and they are not held to account.

It is very rare for institutional investors to vote against a remuneration report to the extent that a majority forces the company to think again. It is probably even rarer for institutional investors to vote against a proposed merger when it will be in the long-term interests of the executives, perhaps, but not of the workers in the UK.

We need individual investors to take a serious interest in what the business is doing. Not all of them will, but for those who are interested, it should be very easy for them to find out how their money—their shares—are being voted. It is a perfectly simple thing to do. Websites could easily be made accessible to show how the vote has been cast on every issue with every company at every annual meeting. Technology would find that quite straightforward. The majority of private individuals with investments in pension funds and insurance companies would not find it difficult to access that information, but it has to be made available.

It has to be an absolute requirement that all companies make all that information available, not just a fraction of it, and the sooner the regulators and the Government move towards that position, the better. The more information is out there, the more individuals will look at it and decide, for instance, that their company—the company in which they have a stake through their pension fund or insurance company—is not behaving as they would wish it to, and they can begin to put pressure on those who hold their shares. That might be because they are passionately involved in the employment issue or in remuneration, or because they want to see evidence that the company is taking its net-zero responsibilities seriously, and in many cases companies now have a vote on the net-zero target and how they are meeting it. Let us give the majority of people who hold shares through intermediaries the chance to see how those shares are being voted and to decide for themselves whether they approve of the way their shares are being used.

--- Later in debate ---

[Lord Harlech (Con)]

The review is necessary because it is important to take into account multiple government departments, including the Treasury, and non-governmental bodies such as the regulators. I believe it is scheduled for that time to facilitate the gathering of evidence and set out the scope of the review.

[Baroness Wheatcroft (CB)]

Rather than talking about a need for more investigation, could the Minister say what he thinks could possibly be wrong with telling organisations that they must put this information up? I cannot see the downside. Can he explain?

[Lord Harlech (Con)]

If I could go on, perhaps my further remarks will address the noble Baroness’s question; if not, I will endeavour to write to her, if that is all right.

In November 2022, the FCA convened an independently chaired vote reporting group following the recommendations made by the Taskforce on Pension Scheme Voting Implementation. The aim of this is to develop a more comprehensive and standardised vote disclosure framework for asset managers, ensuring a fair, proportionate and practicable approach. The group’s draft proposals are expected to be published in April 2023 for public consultation. Moreover, local government pension scheme funds are already required to publish an investment strategy statement, including their policy on voting rights and ESG matters, with guidance on annual reports also encouraging transparency on how voting rights are exercised.

The FCA’s Conduct of Business Sourcebook—COBS—Shareholder Rights Directive rules already require all investment firms to develop and disclose an engagement and voting policy. This includes how the engagement is integrated into the investment strategy; how environmental, social and governance issues are monitored; and how conflicts of interests are managed. This policy must be reported on annually online.

The Government believe that it would be premature and unnecessary to amend voting disclosure legislation at the current time, given the initiatives that are already under way. I therefore ask the noble Baroness, Lady Sheehan, to withdraw her amendment.

Budget Statement

Baroness Wheatcroft Excerpts

Tuesday 14th March 2017 Lords Chamber

[Baroness Wheatcroft (Con)]

My Lords, I applaud the judgment of my right honourable friend the Chancellor in making this the last spring Budget. In my time as a City editor, the Budget was one of the worst elements in the calendar. It was a challenge to look through all the small print that came from HMRC and the Treasury to find what was missing from the Chancellor’s speech. This being a competitive business, it was not a good thing to miss the story. Having two Budgets a year compounded the agony, so one is definitely a relief in the right direction.

I also commend the Chancellor for not burying the bad news. The national insurance increase was right up-front and I support it. I cannot see why it is being greeted as quite such an appalling blow to the entrepreneurial spirit of this country when, as my noble friend Lord Willetts pointed out, it is a perfectly rational move to begin to align these two national insurance contributions, as benefits are being aligned. That makes sense. The Institute for Fiscal Studies greeted it as “modest but welcome”.

My noble friend Lord Macpherson of Earl’s Court suggested that there may be no-go areas when it comes to tax. I do not think that we should accept that. I see no reason why national insurance any more than other taxes—of course, it is a tax by any other name—should be beyond the Chancellor’s writ. As the Chancellor pointed out, he does not have wads of cash to shell out. With our net debt standing at an astronomical £1.7 trillion—a whopping £62,000 for every household —we are having to keep on borrowing on a prodigious scale.

We have already heard many dissections of the state of our national finances but I would like to concentrate on just two issues. I will not drone on about Brexit. My views are clear and others have made it perfectly clear that they too have grave fears for the economy, but let us hope that the Government are right.

I would like to talk about productivity, which has been mentioned by other speakers. As the Chancellor said, it remains stubbornly low, and there is certainly no denying that. We are 35% behind Germany and 18% behind the average of the G7, and GDP per capita is barely 2% higher than it was before the crash. That means that the economy has grown by little more than 2% over nine years, which is just about what you might hope it would do in a single year. Of course, the ramifications of that poor performance are painful. According to government forecasts, average earnings in 2022 will be no higher than they were in 2007—15 years without a pay rise, which is painful. As my noble friend Lord Willetts pointed out, for many people it has been much worse than that average figure. No wonder some people are feeling deeply disillusioned and perhaps showing their disillusionment at the ballot box.

The productivity gap has been much discussed but nothing seems to make any difference. Only last year, the then Business Secretary, Sajid Javid, outlined his suggestion for making things better. There were 15 key areas and two pillars. What it amounted to was infrastructure and training and all the things we have talked about over the years. Of course, I am delighted to see the emphasis on technical education in this Spring Budget. However, there may be another problem. Certainly, the Productivity Leadership Group, chaired by Charlie Mayfield, came to the view that one of the biggest problems with productivity in this country was bad management. The Chartered Management Institute did its own survey and found that 43% of managers rated their own line managers as “ineffective”.

Therefore, I ask the Minister whether the Government have any plans to help business improve its not entirely impressive record on management as a means of improving productivity growth. It is certainly worth fighting for that growth. As we know, households are suffering and could do with more national income. The OBR records that average household debt has reduced from the peak of 160% of income down to about 140% but is now on the rise again. The OBR even suggests that in the final quarter of last year people were dipping into their savings to go shopping—and this at a time when it is absolutely essential that the country saves more. We need the money to pay for our old age and social care, not for an increased spend on consumer goods now. Can the Minister say what she thinks would help improve the savings ratio? I suggest that a national savings bond with an interest rate of 2.2%, when inflation is heading towards 2.4% this year, might not be the answer.

Economy

Baroness Wheatcroft Excerpts

Thursday 10th September 2015 Lords Chamber

[Baroness Wheatcroft (Con)]

My Lords, I am grateful to the noble Lord, Lord Haskel, for securing this debate and introducing it so passionately. However, unlike him and many other noble Lords, I saw this as an opportunity to gaze at the sunlit uplands that will be our reward for the years of austerity. The Government have been determined to rebuild the nation’s finances and the results are that we can look towards a high-wage, low-tax economy and a society in which those who can enjoy the dignity of work do so and those who cannot are supported by a sensible welfare system.

I commend the brave move of the Chancellor of the Exchequer in the summer Budget to raise the minimum wage. There are those who have said that this will cost jobs. I cite the case of Andy Harrison, the chief executive of Whitbread. He estimates that the increase will cost his company around £20 million. However, having mused about passing on that cost to those who favour his coffee, he actually said that the company made a profit of £550 million last year. Perhaps the shareholders in that business would not mind sharing a little of that profit with the workers. Those are not his words but mine.

My noble friend Lord Mawhinney talked about the need to address inequalities in society. I agree with him and hope that companies and investors will take note of the fact that, if they do not move, then the Government may have to. For too long we have had a system in which the taxpayer subsidised low-paid workers, to the benefit of shareholders and often, I am afraid, highly rewarded chief executives. That has to change. Their rewards for work are preferable to state handouts.

Of course it takes time to change a benefits culture that has taken root in this country, but it is gradually happening. With improvements in education and skills under way, we are moving towards an economy in which, for many, work will not be a chore but a pleasure. The creative industries are on a roll and constitute the fastest growing sector in the UK, contributing about £77 billion to the economy last year. The New York Times recently referred to London as,

“the design capital of the world”.

When it comes to film, we are booming. There are plans for a new studio as part of a massive redevelopment scheme in Greenwich alongside the O2. The latest Bond film, the new instalment of “Game of Thrones” and the latest “Star Wars” movie are all made in the UK. The Government have done their bit to foster these successes with tax breaks. Despite some of the gloom that we have heard today, the Government are also encouraging other exciting industries to thrive and create high-value jobs.

Many have bemoaned the lack of manufacturing in this country, but Innovate UK is proving highly effective in stimulating business in science and technology. Since its creation in 2007, Innovate UK has invested £1.5 billion and, with what does not sound a huge amount of money, created around £7.5 billion in added value for the economy and 35,000 extra jobs. There are catapults around the country, which are not as dangerous as they sound but are promoting nine different sectors in highly technical areas in which we could build world beaters.

That is not to say that we are out of the woods. Household debt remains a huge issue; we have to turn a borrowing nation into a saving nation; and we are not immune from what is going around the world, and the problems in Europe and further afield. As my noble friend Lord Howell pointed out, the need to continue to be careful with the country’s finances remains intense, and there is still room for improvement. When it comes to procurement, the Government are not anywhere near as effective as they should be. We recently heard about the cost of police truncheons being purchased; they were four times higher in one police force than another. Unless the cheap one is inflatable, I should have thought that we could go for the lower-cost truncheon.

That finally brings me to my question for the Minister, concerning Hinkley Point. It does not look like a good example of government procurement. Today it looks like a means by which to lock in high costs for consumers, at a time when energy costs and demand seem to be going in the other direction. Will the Minister reassure the House that the Government will re-examine the economics of Hinkley Point?

Queen’s Speech

Baroness Wheatcroft Excerpts

Thursday 4th June 2015 Lords Chamber

[Baroness Wheatcroft (Con)]

My Lords, I add my voice to those who have congratulated my noble friend Lord O’Neill of Gatley and the noble Lord, Lord King of Lothbury, on their maiden speeches. In my former life I used to listen to them both intently and I shall continue to do so. My noble friend Lord O’Neill is, of course, known for his acronyms and the noble Baroness, Lady Liddell, suggested that he should come up with some more. I am confident that he will bring us all the PIES: productivity increases, infrastructure investment and economic sustainability. I will say a few words on each.

A lot has already been said about productivity. Recently, the Bank of England’s experts produced an article trying to analyse what the causes were. Of course, they talked about low skill sets and pointed out that, after Spain, we have the lowest proportion of unskilled labour of any country in the OECD, but they confessed that they were unable to explain the full extent of the productivity shortfall. I will throw in one suggestion: too often, our management is not up to scratch. There is real reluctance in this country to part with people who clearly are not the right people in the right jobs. There is a big contrast with the United States in that. When Jack Welch ran General Electric, he was renowned for saying to one-10th of his managers every year that both they and the company would be better off if they changed direction. While not advocating a 10th every year, too often we do not have the right management taking our companies in the right direction.

We have too much regulation and the gracious Speech promised us a Bill to cut red tape. In our new Business Secretary, Sajid Javid, we have somebody who actually knows about business. As he said, he grew up living over the shop. I have every confidence that he will slice through the red tape. I hope, too, that our new Government will be able to bring us the Transatlantic Trade and Investment Partnership. It has stalled so often, but if we can get it through it will bring huge benefits to this country.

I should like to think that the local enterprise partnerships, which are already proving so successful in parts of this country, will now be built on by the Government. They vary incredibly in what they can do and in the calibre of people working there. They could do a great deal more for small businesses. As others have said, much of our future lies in growing the small businesses that we have. At their best, local enterprise partnerships can really help there; they need government help and to benefit from talking to each other. The Federation of Small Businesses has produced an in-depth report looking at how these organisations function and suggesting ways that they might do better. Too often, they are governed by big business and do not cater for the needs of small business.

What else could we do that would benefit productivity? How about remuneration? A new report has come out this week from the Chartered Management Institute, which refers to an,

“unacceptable discrepancy between pay and performance”,

in Britain. It looked at 72,000 employees and found that 30% of those rated as “not meeting expectations” were paid a bonus. That is quite hard to understand. When it looked at higher-paid people and directors, it found that it was not 30% of people who had not met expectations who received bonuses, but more than 40%. Clearly, we need to look at remuneration again.

The noble Baroness, Lady Drake, spoke at length about low pay and the link between low pay and productivity. While it is not an issue for government to legislate on, as others have remarked—we do not want too much legislation—it is up to shareholders to begin to put more pressure on companies to distribute the rewards of growth a little more fairly. It cannot be right that the gap between the top and the bottom is now so great that the people at the bottom are being subsidised by taxpayers while the people at the top get huge bonuses. I would like to see shareholders really wake up to this and do a bit more.

Going back to those PIES, on infrastructure we have heard about HS2. My noble friend Lord O’Neill pointed out that he has not always been the strongest advocate of HS2 beyond all else—perhaps the east-west connection is at least equally important—but there are much smaller things that impede this country’s efficiency. Since it was in the Conservative manifesto, I see no harm in reminding people that we are apparently pledged to fill 18 million potholes before 2021. I do not know who counted them but it is there in black and white.

We have done a good job so far on economic sustainability but there is a long way to go. I point to one issue where I have concerns. We have got through one financial crash but where will the next one come from? A former chairman of the Federal Reserve in the States, Paul Volcker, said that he could think of only one financial innovation that had been of any benefit to the public in the past 20 years, and that was the ATM. I am inclined to agree.

I am fearful about algorithmic trading. I do not know whether noble Lords have read Flash Boys by Michael Lewis. It is quite a scary tome and points to something that is the very antithesis of investment—and investment is what we need. Therefore, I ask the Minister to investigate whether the regulators are looking at this carefully enough.

Small Business, Enterprise and Employment Bill

Baroness Wheatcroft Excerpts

Wednesday 28th January 2015 Grand Committee

[Lord Berkeley]

It is a question of what would constitute selling and what would be transferring it to a company in which the brewery had 100% or 99% of the shares. It is a grey area. The noble Lord may be right but I do not see that as a reason for having his Amendment 80 or any of the others. We can go on debating this.

I still think that Amendment 82, in the name of the noble Lord, Lord Hodgson, is trying to say that once the tenant has started the negotiation he has to finish it. That is very unfair on the tenant because, while he may have said that he wanted to start it, if he is not happy with the outcome it is surely reasonable that he would not have to conclude an agreement. The short answer is that he will not stay there long and will suffer severe financial hardship.

I could go on for a long, long time, but I have one last comment on Amendments 73 and 74. I did not really understand the noble Lord’s explanation to my noble friend Lord Snape. If his amendment would enable the tenant to buy his beer and other drinks at whatever price he chose from whomever he chose, why are we going through all the rigmarole of all these different adjudications? Just let him do it now. I am sure that I have it wrong, but it would be nice if at some stage the noble Lord could explain the amendment in words of one syllable.

[Baroness Wheatcroft (Con)]

My Lords, I speak in favour of my noble friend Lord Hodgson of Astley Abbots. First, given the in-depth knowledge that he has shown on the subject, I hope that he is a member of our Catering Committee because he would be an asset there. I shall speak briefly because this is complicated and there is a lot more to go. We need to spell out that if a tenant opts for a market rent only deal, there should be a completely new agreement between the tenant and the landlord, and that should take in everything, from investment to the length of lease—it is a new lease, effectively. We should spell out that there is freedom to renegotiate there.

On Amendment 80, I completely concur that, for the ongoing good of the business, it is important that an MRO should not be triggered simply by a sale or an administration. The Minister indicated that she saw things the same way, and I hope that we will hear that confirmed.

[Lord Snape]

My Lords, to respond to some of the amendments of the noble Lord, Lord Hodgson, I say in passing that although, at my request, he came up with some examples of landlords being happy with the tie, they did not seem to me typical of what takes place in the industry. I do not want to repeat to the Committee anything that I said on Second Reading, when I detailed some of the problems that my daughter and son-in-law have had. Their treatment by Enterprise Inns is a lot different from the cases outlined by the noble Lord when he moved his amendment. Similarly, on Second Reading, with the permission of a couple called Dawn and Michael Shanahan from the Bulls Head in Old Whittington near Chesterfield, I read out a letter showing how they had been treated, which, I am sure that the noble Lord would agree, is a lot different from either of the examples that he gave to the Committee this afternoon.

The fact that more than 70% of pubco tenants have expressed their unhappiness to CAMRA indicates that far more of them have been and are being treated as in the two examples that I gave on Second Reading than in the two examples that the noble Lord has given to the Committee today.

I thought that the noble Lord was seeking to intervene; he looked a bit restive. I thought that he was going to come up with even more examples of happy tenants, but there are not that many of them around. He has probably exhausted the lot of them with those two.

Small Business, Enterprise and Employment Bill

Baroness Wheatcroft Excerpts

Wednesday 7th January 2015 Grand Committee

[Lord Mitchell (Lab)]

My Lords, first, happy new year to everybody. At Second Reading, the general tone that came from these Benches was that we welcome the Bill. We welcome it because we, the Opposition, realise only too well that national growth in productivity, investment, exporting and employment—all of which we desperately need—can come only from a strong political culture that supports small and medium-sized companies. The Government, and in particular the Conservative Party, want to lead us to believe something else, but we refute it. Labour stands for a dynamic business sector that will prosper with strong support and without the debilitating threat hanging over us of the possibly of the UK leaving the EU two years from now.

I must admit that even I have struggled to keep up with each of the announcements that the Government have made for various forms of funding for small business. Given that it is my job to keep up with all of this, I wonder what the average small business man at the sharp end makes of it all. Let us take a look at Funding for Lending. I said at Second Reading that I thought it was a flop, and the Minister—the noble Baroness, Lady Neville-Rolfe—chastised me and said that I had got it wrong. But I still have to say that I do not think I have got it wrong; I think I have got it right. Much of the funding that has been advanced to the banking sector has been assigned by the banks to the business areas that they know well: in particular, mortgage lending, which is easy, profitable and relatively risk-free for them, as opposed to lending to small businesses, which is hard work and risky, and probably cannot make anything like the same return.

Predictably, they went for the easy option and the route that minimises risk and maximises profit. As a business, why should they not? But that is not what the Government said was going to happen. Investment in small business has made little progress, which is why I called it a flop. The noble Baroness may think otherwise but I can assure her that, based on my own background in equipment leasing, I know the SME funding scene. She may be told by the banks and by her officials that small businesses are being helped, but I speak to those at the coalface and know that many businesses strive in vain to get vital funding. We have to do more to help them.

With that in mind, I turn to this first group of amendments. They are designed to ensure greater security and understanding of the action that the Government are taking with the aim of supporting small businesses. They will enable us to better account for the effectiveness of the steps taken in this direction. The first of the two amendments requires the Secretary of State to undertake an immediate strategic review of the key issues affecting small businesses and, in doing so, design better policy interventions to support them. The second requires that, allied to this strategic review of what small businesses need from government, the Government should publish an annual report which details the steps that they are taking. Taken together, the intention is, first, that there will be a greater level of strategic thinking about the correct policies to support small business in the future and, secondly, that Parliament will be better able to scrutinise these policies.

The truth is that this is required because all is not well with regards to the policy framework for small businesses. During the term of this Government, they have been adversely affected by a £1,500 rise in business rates in what by any account have been difficult trading conditions. It is our view that they should now see a freeze or a cut in business rates. This is one immediate step that could be taken towards supporting small firms. When it comes to receiving advice about how to strengthen and grow small businesses, the landscape remains confused. I have to say that when I go around and ask those who are running small businesses what is the main issue that really bothers them, it is business rates—so this needs to be looked at very seriously.

In the United States, the Small Business Administration represents a successful model for providing support and advice, and indeed for directing policy, and one that we should look to imitate in this country. It is often easier for large companies, especially those which can pay for lobbying advice, to understand how to approach business and how to look for the support that government may be able to provide. In the UK, responsibility for small businesses lies with the Minister of State, who has additional sectors to his brief. In the US, the head of the SBA is a member of the President’s Cabinet: surely we should have the same prominence here.

Perhaps the most important area which the report sought by these amendments should look at is access to finance. There has been a great deal of activity with the intention of improving credit conditions for small businesses—but, as I have said, with only limited success. The Federation of Small Businesses’ Voice of Small Business index shows that small firms are struggling to get the finance they need and still require greater competition and choice in the banking options available to them. Without improvement in these areas, we are unlikely to see significant improvements in credit conditions. The latest Bank of England Credit Conditions Survey shows that credit availability fell slightly during the last quarter, while Funding for Lending figures show that net lending to small businesses remains negative, despite improvements for larger businesses. This issue will arise throughout our discussions in Committee and these figures provide the backdrop to it.

The amendment would also require the Secretary of State to look closely at how best to support small and medium-sized businesses that want to export. This is vital and goes to the heart of the kind of economic recovery we want to experience. The news over the recess that the UK’s current account deficit is at one of its highest ever historic levels should serve to focus our minds on the importance of exports. The export-led recovery that the Chancellor promised has simply not taken place, and to meet the impossible target of £1 trillion a year by 2020 would require nominal growth of around 10% per year—way above current levels and, I must say, way beyond anything I can imagine.

The OBR’s latest forecast has revised down the contribution that trade is expected to make to GDP growth for every year of the next Parliament. Policy action taken to improve this does not show much sign of having a positive effect. The £5 billion export financing facility has helped few businesses. This is a huge missed opportunity. Also, I simply do not understand why we are forever cutting back our embassies and trade capabilities. You cannot set up an environment for export if you are not represented in the countries concerned. In my travels, I frequently come across foreign business people who say that the UK does not take their own country seriously and how good it would be to have more ministerial and trade visits.

Finally, we need to see increased help for those who want to recruit apprentices. The number of apprenticeships actually went down last year, so this is another area that the Government could usefully look at both in terms of future needs and the efficacy of current government policy. I hope that the Minister will be able to accept these amendments, which represent a good way of combining strategy planning and support for small businesses and the effective scrutiny of policy interventions. I beg to move.

[Baroness Wheatcroft (Con)]

My Lords, I take issue with these amendments. What we do not need is another report into the problems that small businesses face. There is no shortage of information on these problems, not least from the Federation of Small Businesses, to which the noble Lord referred. We know what the issues are. There is not enough finance available for small businesses. One of the things that this Bill attempts to do is make access to finance easier. It also includes lots of measures that will help small and medium-sized businesses. However, what those businesses need is action now, not another delay while another report is produced. As we get regular feedback on what the legislation does, that will become more than apparent. Organisations such as the federation will not hesitate to make clear what they think about what the Government are doing. This would be just another bureaucratic exercise when what we need is action.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)]

My Lords, Amendment 1 asks that we report on the long-term needs of small and medium-sized businesses. In moving it, the noble Lord, Lord Mitchell, touched on the wider issues surrounding small business. I do not want to give the Committee another Second Reading speech. A lot of the issues that the noble Lord raised will come up on the various amendments that we discuss today, but I feel that we have done more to help small business than any Government before. This Bill is the latest evidence of that process.

In particular, I refute the claim that the Government are not doing enough to increase lending to small businesses. While the annualised figures remain negative, the tide is turning and there is a significant upward trend. According to the SME Finance Monitor report of November 2014, 71% of all loan and overdraft applications within the previous 18 months were successful. We support small business in many ways. Of course, a recovering economy—which this demonstrates—after probably the worst recession in history is a very important way to help entrepreneurs.

Turning to the amendment, first and foremost, through our industrial strategy the Government are working in partnership with industry to understand the future needs of all businesses and to set the long-term strategic direction. In each of our sector strategies we have joined forces with industry to set ambitions for the sector and our commitment is to invest in helping firms—including small firms—to access finance, skills, innovation and export opportunities so that we can compete internationally. I share the noble Lord’s aspirations for international success.

As well as engagement, we undertake in-depth research and analysis every year to fully understand small and medium-sized business needs. I draw attention in particular to the Small Business Survey, BIS’s flagship annual research project. Results from this are used to develop our business support policy and are also published so that private sector organisations working with small businesses can benefit from the insights. The survey is considered the country’s foremost source of knowledge about small business needs and is widely referenced.

Amendment 1 refers to specific areas of policy relating to small business. This is a good list and I take this opportunity to reassure the noble Lord that the Government are already researching and reporting on the needs of small businesses in these areas. I will give some examples. Last year, the British Business Bank published its strategic plan, setting out a long-term vision for the organisation that will deliver for smaller firms. Only last month, the bank published its first report on trends in business finance markets. The market gaps identified through this in-depth market analysis are feeding into the bank’s product development process. Important and interesting conclusions include the following: more businesses will seek finance for growth; a more diverse and vibrant supply of finance is needed—this Bill helps with that; and awareness and understanding of the range of finance options is not yet comprehensive enough. I am placing a copy of the report in the House Library. We expect future reports to be published on an annual basis.

Secondly, last year, UKTI published Britain Open for Business, an update to its five-year strategy for providing practical help to exporters. UKTI last year worked with 42,684 SMEs to provide a range of services designed to help companies enter new markets. This hands-on relationship allows UKTI to understand and catalogue the needs and challenges faced by these companies and to develop specific programmes to overcome perceived barriers to exporting. Last year, this included a first-time exporter’s package, a medium-sized business programme and an e-exporting initiative.

--- Later in debate ---

[Lord Newby]

The important thing is that information which a company has and which might be shared is shared only with the explicit prior approval of the company. As I was saying, this is one of the things that is often included in the terms and conditions of any agreement or relationship that the company has with the bank. Unless the company has explicitly said that it is prepared to have its data shared, they will not be shared. More generally, all the activity that we are talking about is covered by normal Data Protection Act safeguards.

[Baroness Wheatcroft]

My Lords, I just wish to raise a slight qualm that I have on this issue. I applaud the idea of data sharing and the theory that it would enable small firms to shop around for credit more easily in the Funding Circle that the noble Lord, Lord Mitchell, mentioned—it is one of those organisations that can respond very quickly if it gets the data that it needs—but Amendment 17 seems to offer the possibility of small firms picking and choosing which bits of the data are made available. We all support small firms but some do not always behave entirely honourably, and I would be very nervous about a proposal that allowed a small firm to say, “This little bit of the verdict on what I do can be relayed to a potential lender but not that little bit because that little bit tells a very different story”. Therefore, I think that we need to be clear that when we are saying that a small firm, or indeed any firm, can give its permission for data to be shown to an alternative lender, it needs to be the whole picture, otherwise we are in danger of getting to where we have got to now—with references to individuals, for instance—where the reference is meaningless. You are very lucky if the reference says, “You would be very lucky to get this person to work for you”, which of course can be interpreted in two different ways. People are now very nervous about committing anything on the basis of just a corporate reference.

[Lord Newby]

I think, my Lords, that that concern is dealt with by the fact that approval or agreement that data might be shared tends to take the form of being included in the standard terms and conditions of the bank, so one will not be able to pick and choose. One will be presented with a standard form that states, “You agree to the following forms of data being used”. There will not be much scope for negotiation as to which data are open for discussion.

Assisted Dying Bill [HL]

Baroness Wheatcroft Excerpts

Friday 7th November 2014 Lords Chamber

[Baroness Neuberger (CB)]

My Lords, I rise to speak to the amendment of the noble Lord, Lord Pannick, to which I have put my name, and to add to that of the noble Lord, Lord Carlile. I agree with almost everything that has been said but, if responsibility is given to the Family Division in some way or other, there might be reason for a ticket system, as happens in serious sex or murder cases. That way, the judges within the Family Division who are going to hear these cases very quickly will have had training in how to look at them and, where necessary, examine the medical evidence in detail. A ticket system and specific training for members of the Family Division in this area would be an improvement on simply saying that it was available to everybody. I support the amendment of the noble Lord, Lord Pannick.

[Baroness Wheatcroft (Con)]

My Lords, we have heard from three lawyers. I am not a lawyer—I have to confess that I have not read even paragraph 205 of Lord Wilson’s judgment—but I feel obliged to stand up and say that I think we are missing the point, as I see it, of the Bill of the noble and learned Lord, Lord Falconer.

This is not about medical decisions or judicial decisions; it is about compassion for people nearing the end of their lives. These people have decided that they have had enough. The thought of having to go through a legal process—even if, as we have heard, it has been curtailed as far as possible—and incurring legal bills is the last thing that they want to deal with, if they have complied with the law that the noble and learned Lord, Lord Falconer, is suggesting and have actually come to a reasoned decision that they have gone on long enough and the time has come for them to die. We ought not to prolong that procedure for any longer than we have to. I do not think that lawyers have the final view on all that is right.

[Lord Deben]

My Lords, my noble friend is assuming that every one of these cases is of someone who had voluntarily made all those decisions. We are here concerned that there will be some cases—from my long experience as a Member of Parliament, rather more than some people think—in which that is not so, and somebody has to protect them against being thought to have made that decision when in fact they have not done so.

[Baroness Wheatcroft]

My Lords, there may indeed be one or two occasions on which that is the case. However, we are looking for at least two medical opinions here, both of which will regard the sanity of the individual. If that individual decides, in full knowledge of what is going on within the family, that that is the decision they want to take, then, on balance, I suspect that we should let them.

[Baroness Mallalieu (Lab)]

My Lords, I have put my name to the amendment. I support the Pannick version of judicial intervention for the reasons already given with great care by the noble Lord, Lord Pannick. I also listened with care to almost all of the 129 speeches at Second Reading on 18 July in this House. There is a need to address two major reservations expressed by a number of noble Lords, which I accept have validity.

In essence, those reservations relate to two undeniable traits of human behaviour which we must accept exist and which no Bill of Parliament or amendment can extinguish. The first is selfishness. I see the noble Lord, Lord Tebbit, was trying to speak and I hope that he will shortly. He referred in his Second Reading speech to “the vultures”: relatives or friends who might have a financial or other interest in the death of a dying person and be tempted to put pressure on that person to end their life, to bring forward the date of the realisation of their expectations or, perhaps, to save care fees—albeit that, under the Bill, they would only have to wait a maximum of six months in any event.

Secondly, there is selflessness: those who feel guilty about the expense, trouble, time, worry and distress which they are causing those whom they love, and who may be tempted to shorten the process—not because they truly wish it—not for themselves, but for others. There are, of course, subdivisions: the relatives who cannot bear to see mother suffer, and so on. I accept that those are genuine concerns and they are the reasons why I primarily support the amendments of the noble Lord, Lord Pannick.

Although neither selfishness nor selflessness can be eliminated, through judicial oversight it can be guarded against, possibly even better than it is at present. The medical condition of the applicant can be assessed by a medical expert and by a wholly independent, experienced judge—although there are crooked lawyers and experts of every kind, our judiciary is still, thankfully, totally respected—who by training and expertise is qualified to judge pressure, coercion and genuine or false wishes, and to examine or evaluate evidence as to whether somebody has capacity, is acting voluntarily and has a clear understanding and a settled wish to end his or her own life. I want someone like that to have the ultimate say on the decision.

However, it is not a question of a decision being made by a doctor or by a judge; I want the decision to be that of the person who is facing death. We have got to get back to that. Judges, especially in the Family Division, are dealing with judgments of that kind—about what people really want, whatever they say, and about pressure and coercion—day in and day out. I will of course listen carefully to the amendments in the next group that have been tabled by the noble Lord, Lord Carlile, and others on judicial oversight. However, on the basis of what we have heard already from the noble Lord, they appear to present a bureaucratic, legalistic obstacle race which is bound to be both lengthy and costly to the applicant. One of the objects of the Bill is, I hope, to leave behind the absurd anomaly we have at present whereby, if you are rich enough, you can go to Zurich, but if you are not you have no choice but to endure possibly totally unnecessary suffering at the end of your life.

National Minimum Wage

Baroness Wheatcroft Excerpts

Thursday 6th November 2014 Lords Chamber

[Lord Newby]

My Lords, the Government support the living wage and encourage all employers who are able to do so to pay it. Her Majesty’s Treasury’s pay rates ensure that all its employees, including apprentices, are paid above the living wage and other departments are following suit, including DECC.

[Baroness Wheatcroft (Con)]

My Lords, the minimum wage is only a floor. Many companies are now choosing to pay the living wage and, indeed, ensuring that their suppliers pay it. Can my noble friend give us some numbers on that?

[Lord Newby]

My Lords, the number of companies that were accredited for paying the living wage in 2013 was 432. I believe that the number has more than doubled during the course of this year.

Industrial Strategy: British Business Bank

Baroness Wheatcroft Excerpts

Tuesday 8th July 2014 Lords Chamber

Asked by

[Baroness Wheatcroft]

To ask Her Majesty’s Government what is their strategy in relation to industrial policy, and in particular the British Business Bank.

[Baroness Wheatcroft (Con)]

My Lords, I am delighted to be leading this debate on the industrial strategy and the role of the British Business Bank within it. The good news is that there is a strategy. The even better news is that it is working. We have in the past seen Governments meddle with industry with less happy results. In steel, in motors and even in travel agency, Governments have demonstrated that they are not great when it comes to running things.

However, this Government have a well thought-out strategy which is not about short-term froth but about long-term benefits for the country. Establishing the British Business Bank is an important facet of that strategy, helping smaller firms to overcome that perennial problem of how to get their hands on finance. Governments sometimes seem to struggle to breach the divides between various departments but, on the industrial front, we really do have joined-up government: the Treasury working with BIS and UKTI to get the right results, to help our businesses grow and, crucially, to export.

The overarching policy is to provide an environment which nurtures business generally, with low corporation tax and sensible, not overburdensome, regulation. Although there are some difficulties which cannot be addressed overnight, and will in fact take years to put right, such as infrastructure failings and the skills shortage—which all too often means a failing of numeracy and literacy—the UK is nevertheless now an attractive place to start, build and grow a business. It is Europe’s top destination for foreign direct investment, the money flows that create jobs.

There is one school of thought that argues that government should not attempt to intervene in industry beyond providing that hospitable environment. Certainly, picking winners is a dangerous occupation, not that some Governments do not still attempt it. Choosing individual companies to be nurtured into being national champions is a recipe for national disaster. This Government have avoided it and wisely chosen to look not at companies, but at those sectors where we already have an edge and where an extra push might produce the greatest benefits for the country.

There are 11 such sectors. Another Administration might have rounded the number up and gone for a neat dozen, or rounded it down to come up with a top 10. The fact that both those options have been resisted in favour of 11 chosen sectors surely indicates that a genuine plan, rather than passing headlines, is what this is all about. The sectors are aerospace, agricultural technologies, automotives—and here I declare an interest as a director of Fiat; we do not yet manufacture in the UK but I am doing my best—construction, information economy, international education, life sciences, nuclear, offshore wind, oil and gas, and professional and business services.

Is it not instantly cheering to reflect that in all those really important and high-growth sectors, the UK already has some world-class businesses and they are going to get better? There are things that an enlightened Government can do to help. Within each sector, top executives now get together, not to collaborate on price—which would see them land up in jail, which is not part of the Government’s industrial strategy—but to look at where there are barriers to growth and things that Ministers can do to make life easier for them.

The Government can, and do, help to fund research which will benefit these chosen sectors. For instance, there is now a £7 million centre for “extreme engineering” at the University of Newcastle. The Neptune Centre for Subsea and Offshore Engineering brings together industry and academia to develop technologies that can withstand the world’s harshest environments. Future success in the oil and gas industry will depend on being able to employ the best science and technology, and what emerges from this centre will keep British companies at the forefront of these developments. Siting this ground-breaking centre on the north bank of the Tyne will give a boost to the revival of this part of Tyneside.

It is absolutely vital that our industrial strategy is not just about rebalancing the economy in terms of its dependence on the service sector, but about rebalancing it geographically. The concentration of wealth and wealth creation in London and the south-east is simply not healthy. In terms of gross value added, the average Londoner generates more than £37,000, while in the north-east the figure is marginally over £16,000, and in Wales it is even less than that.

While I am sure that we here in the capital like to think that we are doing our bit for the economy—although there are of course some who doubt that we do much of it in here—I am confident that in the north-east and Wales people feel the same way. These figures are a reflection not of a lack of energy or enterprise but of the huge growth in the financial services sector which has benefited London and of a lack of investment in the regions. Perhaps the Minister could tell the House how industrial strategy is contributing to rebalancing that. We need to make sure that the profits of growth are shared across the country and not just in the wealthy south-east. The growth is coming but we need to be sure that it is shared.

Remarkable evidence of that growth has come just today, with the latest figures from the National Institute of Economic and Social Research. It estimates that in the previous quarter Britain enjoyed its fastest growth for four years, at 0.9%; that really is cause for celebration. Yet, despite that remarkable achievement, we could do better. Too many of our small businesses stay just that way. For some that is a lifestyle decision, but for many it is because they hit hurdles that they simply cannot get over.

That was why the Government established the British Business Bank. In some ways this is still a notional entity, as it has to go through the laborious process of getting EU approval before it can take on a life of its own. That should come, I hope, by the end of the year. However, for now, the British Business Bank is part of the Department for Business, Innovation and Skills, and here it is already at work.

I confess to something of a maternal interest in the British Business Bank as I was a member of the steering group which tried to plot a useful course for this innovation. It was conceived as a potential solution to growing complaints from smaller businesses about the banks’ reluctance to lend, or at least to lend on reasonable terms. It is all very well to make an offer of funding to a small firm, but if it is at an interest rate and on terms which are completely impossible that does not really constitute an offer at all. The latest available figures indicate that banks’ reluctance to lend remains. According to the Bank of England, in the first four months of this year total lending to small and medium-sized enterprises was almost £2 billion lower than in the same period last year, which was itself £1.5 billion lower than in the previous year.

Now, maybe demand has really shrunk, but it is hard to believe that it has evaporated on that scale. The British Business Bank is therefore attempting to bridge the gap, encouraging new lenders into the market and channelling funds into innovative operators such as the peer-to-peer lender Funding Circle. Here I must confess to a touch of nervousness when I read the bank’s promotional material and see: “We’ll use … securitisation techniques”. It goes on to say:

“By using leverage as a tool”,

we will be able to—noble Lords will get the gist of what concerns me. Securitisation and leverage are not of themselves ruinous, but anyone who has lived through the ravages of the financial crisis has learned to treat them with a degree of caution. Can the Minister reassure the House that the business bank will remain focused on helping smaller firms rather than becoming a government-owned investment bank? I have always struggled with the term “investment bank” anyhow, because investment seems to be the antithesis of what those organisations do. Will the business bank specifically help companies in those 11 sectors that have been set out as the strategic sectors for the country?

The business bank can do much useful work in just guiding smaller firms through the various schemes available for them—all 810 of them, according to the website. From the Armagh Business Centre through the Survive and Thrive programme to the Wood Energy Business Scheme, there surely must be something for everyone—but finding it may be difficult. A bit of streamlining might not go amiss. The business bank website is on its way to becoming a user-friendly information hub, but there is still a way to go. Often money is not the key to what smaller firms need.

I will end—and I promise that I will end here—by mentioning a scheme launched at the beginning of this year to bolster the 8,900 mid-sized businesses in this country. Currently those businesses make up just 0.5% of all businesses, but contribute around a fifth of employment and turnover. The CBI reckons that if they were to reach their full potential, they could add £20 billion to £50 billion to the economy. I cannot see why the sky should not be the limit. However, only 17% of those businesses export. The Government have now sent a personal letter to each one of those companies, asking if they would like individual support from UKTI to get them exporting. There are specialists ready to work with them. Is that not an industrial strategy in action?

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, I am extremely grateful to my noble friend Lady Wheatcroft for initiating this important debate. I pay tribute to her for her contribution to the business bank steering group.

Changes in international economies are creating new challenges and opportunities for business across Britain. Last week, in a debate in this House, I talked about what we are doing to support manufacturing in the UK, which was mentioned earlier. This debate allows me to go in to more detail on the Government’s industrial strategy and how the British Business Bank is providing access to finance for smaller businesses to help them grow and prosper. I fear that I will not be able fully to address the questions raised by the noble Lords, Lord Haskel and Lord Stevenson, because there were some particularly negative opinions given. As my noble friend Lord Stoneham said, I believe that the industrial strategy is clear and I seek to try to explain that today.

Your Lordships will be aware that the industrial strategy, launched by Vince Cable in 2012, has given impetus and focus to this Government’s long-term plan for growth. I am pleased to hear that there was much agreement today on that. It provides businesses, investors and the public with more clarity about the long-term direction of the economy, looking beyond this Parliament. The Government are working in partnership with industry to provide support across a wide range of sectors. They are broad sectors rather than picking winners, as my noble friend Lady Wheatcroft said.

The noble Lord, Lord Haskel, asked what the purpose of the industrial strategy is. The industrial strategy is providing a spectrum of support for a range of sectors and this partnership with industry is giving both government and industry confidence in the future direction of the economy and confidence to set policy to address the needs of business, and for business to invest in long-term growth. But it is more than that. The industrial strategy is about economic growth and providing benefit for us all.

The noble Lord, Lord Stevenson, asked about the creative industries not being one of the industrial strategy sectors. The Government are providing a spectrum of support for a wide number of sectors, over and above the 11 listed in the industrial strategy, and BIS is working closely with DCMS on the creative industries strategy. Nicola Mendelsohn, the industry chair of the creative sector, sits on the industrial strategy council, which is a sign of the breadth of engagement outside the 11 sectors.

The UK also has great strengths in the life sciences field—a sector I want to focus on—where, among other successes, and as evidenced in the news today, we are world leaders in ground-breaking dementia research. Last week, we launched “Create UK” in support of the creative industries, which are worth £71.4 billion to the UK economy, a sector that I know well in my role as the Minister for Intellectual Property.

My noble friend Lady Wheatcroft asked how we would address regional imbalances in terms of investments and funding. Only yesterday we launched the growth deals for the 39 local enterprise partnerships further to support local growth throughout the country through £6 billion of funding for transport, housing, business support and skills projects in the regions. These growth deals are the latest part of the Government’s long-term plan to boost growth around the country, following, among other projects, the multi-billion pound regional growth fund, and the city deals signed with 26 urban areas across the country.

My noble friend Lady Wheatcroft raised the issue of ensuring that the impact of the industrial sector is felt across the UK. As the House will be only too well aware, my noble friend Lord Young of Graffham is working hard with the sectors to increase their help for small and medium-sized enterprises, and in the professional and business services sector, which I co-chair, we run regular regional workshops for SMEs. Members of the council, including my co-chair, attend these and offer advice.

I will be focusing primarily on access to finance but there are some cross-cutting themes that underpin our support for all sectors. As I mentioned last week, we have invested £600 million in the “eight great technologies”. These are the technologies where we have the research expertise and business capabilities to be a world leader. They are supported by the Technology Strategy Board and include robotics, big data and energy storage. We are helping to bridge the gap between research and development and the market through £74 million of investment in nine catapult centres, which are complementary to our industrial strategy.

On the important subject of skills, which was raised by my noble friends Lady Wheatcroft and Lord Stoneham, we need to address the current and future shortages. We need to strengthen our science, technology, engineering and maths skills base by building a skills pipeline at all levels from technicians through to postgraduates. To do this, we are, first, investing £185 million in the teaching of STEM subjects; secondly, offering traineeships to young people; thirdly, we are building and delivering a network of new national colleges to provide specialist vocational training; and finally, as the House will know, we have set up university technical colleges.

As my noble friend Lord Stoneham highlighted, we are unlocking procurement opportunities, advising businesses in advance what the Government are planning to purchase so that they can invest in the right skills and equipment to make the most of these opportunities. Through UKTI we are helping our companies to export. In April 2014, UK organisations won four new contracts worth £1 billion to establish 12 technical and vocational training colleges in Saudi Arabia. Key events such as the International Festival for Business in Liverpool, which I attended two weeks ago, help us to showcase our companies and technologies on the world stage. The festival is creating new business-to-business relationships, and unlocking commercial openings for small, medium and large companies, both at home and overseas.

I now turn to the important point of access to finance. Well-functioning markets for finance are crucial for ensuring that firms can invest and operate when they need to, producing new and improved goods and services, and in turn boosting the UK’s productivity and competitiveness. We do understand that there are some well-documented long-standing supply and demand issues, which mean that smaller firms cannot always access the finance that they require. My noble friend Lady Wheatcroft alluded to this. We have been addressing these issues, and hence the reason that this Government have established the British Business Bank.

The business bank is providing funding and guarantees through private sector finance providers, allowing them to offer more targeted and appropriate finance products for smaller firms so that they can prosper and grow. My noble friend Lady Wheatcroft raised issues about using securitisation techniques as part of the modus operandi of the business bank. I agree with my noble friend that the business bank should operate for the good of the economy. It will not operate for its own benefit. It is already staffed by skilled professionals who know how the markets work. But it will operate within the rules set by BIS and the Treasury, and with a sensible risk appetite.

Over the next five years, the bank aims to unlock up to £10 billion of financing for commercially viable smaller businesses. A range of British Business Bank programmes is already making a real and significant difference, catering for the diverse needs of smaller firms, such as start-up loans, which support entrepreneurs looking to start a business with a repayable loan of up to £25,000, and give access to a business mentor. I am delighted to report that more than 18,500 of those loans have now been offered to entrepreneurs, with more than £92 million approved to finance start-up businesses.

The British Business Bank also provides guarantees through the enterprise finance guarantee scheme to support loans to firms that would otherwise be declined funding due to a lack of collateral for working capital purposes. This programme has proved a considerable success, providing nearly 15,500 loans since the election and resulting in more than £1.6 billion of additional lending to smaller businesses.

The bank also provides a suite of venture capital interventions, including enterprise capital funds, which support and promote a diverse and vibrant market to help early-stage and high-growth firms. The enterprise capital fund programme currently has 16 separate funds, nine of which are investing in early-stage opportunities, with a combined capacity of more than £530 million.

As my noble friend Lord Leigh mentioned, a £300 million investment programme has been developed to provide support for a range of finance providers, including debt funds and peer-to-peer finance platforms. To date, £198 million of awards have been recommended by the investment panel, which will support more than £800 million of lending capacity.

The British Business Bank will also provide information and advice to smaller businesses about how to successfully go about getting the right type of finance. One example of this is the recently published Business Finance Guide, produced in association with the Institute of Chartered Accountants in England and Wales.

We believe that the investments made by British Business Bank programmes are already delivering significant results. In total, British Business Bank programmes facilitated £782 million of new lending and investment in the last financial year. Over 60% of this funding was provided through new, emerging or smaller finance providers.

My noble friend Lord Wrigglesworth mentioned the need to balance good regulation in banking with promoting sensible risk-taking. Banking regulation has tightened greatly. This Government have led global efforts to increase capital and liquidity requirements but we are also aware of the need to promote competition. This is why rules for small and new entrants are not as strict and the process for new banking licences has been streamlined. We see the results in new banks coming into the market.

My noble friend Lord Stoneham asked about success measures for the British Business Bank. Last week we published our success measures in the bank’s strategic plan, which are: increasing the amount of finance for small firms; increasing choice; increasing small firms’ confidence in finance markets; and finally, doing all this while managing taxpayers’ resources efficiently. These will be turned into detailed KPIs over the next few months and this will be monitored by the British Business Bank’s board, which itself will report to BIS Ministers.

My noble friend Lord Leigh asked to see greater transparency on the British Business Bank’s results. I assure my noble friend that all results will be published and fully transparent.

The noble Lord, Lord Haskel, if I read him correctly, asked how much of the British Business Bank’s activity is effected on its own account. All the bank’s lending and investment is exercised alongside private sector providers. So, of the £782 million of lending and investment last year, around one-quarter is public sector money and the rest is new money from the private sector.

To conclude, the British Business Bank is integral to the UK’s long-term industrial strategy and is playing a vital role in removing the barriers to businesses accessing finance. This Government’s commitment to a long-term industrial strategy has already proven a success in supporting growth and turning our economy around, and its impact will continue to be felt long after this Parliament. It is essential that we continue to work in partnership with industry to address barriers to growth, both to unlock the potential of British business and to deliver strong and sustainable growth.

[Baroness Wheatcroft]

My Lords, I thank the Minister for his comprehensive response, and I take comfort from the fact that he reassured us that the business bank will work within strict limits as to the risk it takes. I take rather less comfort from his reassurance—

[Lord Newby (LD)]

My Lords, I am sorry to interrupt the noble Baroness, but I should perhaps remind her that in this type of debate she does not have the right of reply.