EUC Report: Agriculture

Lord Bilimoria Excerpts

Monday 6th February 2012 Grand Committee

[Lord Bilimoria]

My Lords, there are some out there who would raise their eyebrows at the idea of a report about innovation in agriculture. Far too many people, in both business and politics, consider agriculture to be an antiquated, backward industry with no place in the 21st century economy, to which the noble Lord, Lord Carter of Coles, alluded in his opening speech. This view is, of course, completely wrong. I am delighted that the EU Committee has tackled the subject of innovation in agriculture and produced a report that makes the case for a reinvigorated, stronger British farming industry.

My business is of course beer. I am sure that many noble Lords know that the most important ingredient in any beer is barley. I can proudly say that 100 per cent of the barley used in Cobra beer comes from Britain. The second most important ingredient is water. Needless to say, the water for the beer that we produce in Britain is 100 per cent British, too—there is no Evian in our beer. As the noble Baroness, Lady Parminter, told us, the food and drink industry consumes two-thirds of what our farmers grow in the UK.

In a recent debate on the creative industries, I mentioned that I was brought up throughout my childhood being told that I was not creative because I was useless at art. I have realised that being creative and innovative are two crucial skills for business. That applies whatever industry you speak of, including agriculture. Over the past three decades, Britain has evolved into one of the most open economies in the world. That has been wonderful and one of our great competitive advantages. However, one of the downsides of that evolution is that we have an economy based far too heavily on services, where manufacturing makes up barely 13 per cent of our GDP, and agriculture barely 1 per cent.

We constantly complain about too much power being exerted on us by Europe and Brussels. The extreme example, the industry that is most crushingly regulated by Brussels is agriculture; and the single area of expenditure in the EU budget that is bigger than all others and makes up well over 40 per cent of the budget is agriculture. As has been pointed out so many times in this debate, of that, the budget for research is a mere €2 billion for five years. It is good news that it will be doubled, but surely we all agree that that is a drop in the ocean. Do the Government agree that more should be invested by the EU and the UK in R&D in agriculture and, if so, what are the Government going to do about it?

There is no question that we have to innovate to cope not only with the increasing global population, as has been pointed out, but the rise of India and China, whose consumption of food, especially meat and dairy products, will rise exponentially as they grow wealthier. We know that Malthusian theories have been proved wrong. In the so-called green revolution of the 1960s in India, a country which for centuries had catastrophic food shortages, innovative farming methods were used to increase crop yields and almost completely eliminated famines forever. One of the key catalysts of the green revolution was widespread adoption of genetically modified crops.

Fast forward to today, and we see that some of our European partners are seemingly blind to those innovations and insist on sticking to a backward precautionary approach. Rather than promoting innovation in GM, the current practice of the EU forces GM to prove that it is 100 per cent safe beyond any reasonable doubt before it can be used. I fully agree that caution must be a priority, but one must look at the scientific evidence and weigh up the risks and benefits. In a court of law, you are innocent until proven guilty. In the case of GM in Europe, the perception is that it is guilty until proven innocent. Are the Government for promoting research and use of GM crops?

Global food security is a serious issue, and I have personally seen the havoc created by food inflation, which unfortunately has existed regularly in India over the past few years. The European Union has been fantastic in promoting trade and peace between our member nations, but there is no doubt that one of its worst manifestations has been the CAP, which has been unbalanced and unfair within the EU, with countries such as France benefiting disproportionately compared to countries such as Britain.

Furthermore, although the EU has been one of the best manifestations of globalisation, the CAP has made us in the European Union hypocrites. We preach free trade to the world and yet, through the CAP, we practise protectionism. We subsidise our cows in the European Union by $2 a day, when we know that there are 1 billion people globally living on less than $1 a day. The European Union is the second-largest overall agricultural producer in the world after China, but our output would increase so much more if we could be more productive. That means investing in innovation and research and encouraging our youth to enter agriculture

On that note, I congratulate my noble friend Lord Curry of Kirkharle on his excellent and authoritative maiden speech. He informed us that Kirkharle is where Capability Brown hails from. Some of us may have noticed that there has been a resurgence and renaissance in Capability Brown gardens in Britain today. I hope that there will also be a renaissance in agriculture in Britain today.

Of the 7,000 plant species that have been used for food in the world, just 150 have been commercialised on a large scale and only three—wheat, maize and rice—supply half of the world's daily food. There is so much potential here. The noble Lord, Lord Plumb, spoke of young people. Just look at how the world has changed. Now, young people aspire to be techies and geeks, thanks to the internet revolution. In the same way, it is great to see the new policy encouraging the youth in Europe to go into farming. However, they have a lot of competition. Last month, I was speaking at an annual conference in India—the Pravasi Bharatiya Divas, the Indian Government’s conference for the 30 million-strong global Indian diaspora—to an audience of 700 members of India’s youth, including university students, senior schoolchildren and medical college students, and I was utterly inspired by their enthusiasm, brightness and aspirational attitude. This is India’s future. This is the future with which we in Britain and Europe will have to compete.

When people say that British manufacturing is dead, I and others like me in the manufacturing sector defiantly say that it is definitely not dead, and that we have world-class, cutting-edge, high-end advanced engineering, be it in aerospace, automobiles or pharmaceuticals. This enables us to partner on an added-value basis with the growing economies of the East. We must ramp up investment and innovation drastically if we are to do the same with agricultural innovation. In fact, just yesterday the Chinese Premier, Wen Jiabao, said:

“Now that Europe is facing a [sovereign] debt crisis, we must consider our relations with Europe strategically … On the one hand, our largest export market is Europe. On the other hand, Europe is our biggest source for importing technology. From this perspective, helping to stabilise the European market is actually also helping ourselves. We must let all parts of the society understand this”.

The noble Earl, Lord Caithness, pointed to a lack of co-ordination, and the noble Baroness, Lady Sharp, also spoke of this. Britain and Europe should be at the cutting edge of innovation and research, exchanging ideas between our 27 nations, making Europe the most fertile hotbed of agriculture creativity. We have the diversity of all our nations, and in Britain we have the best higher education institutions in the world, along with the United States. In spite of higher education funding having been cut—and I am sorry to say I hugely disagree with this; I think it was very short-sighted of the Government—and in spite of our R&D expenditure being a fraction of that of a country such as the United States, we continue to punch above our weight. As the noble Baroness, Lady Parminter, said, protecting the science budget is not sufficient. Do the Government, on reflection, agree with this?

Last year, I was privileged to write the foreword for Big Ideas for the Future, a book by Research Councils UK and Universities UK illustrating about 200 world-beating, world-changing innovations in several sectors from universities throughout the UK, including in the area of food security. In fact, I quoted from this book earlier, referring to the 7,000 varieties of food-bearing plants, of which just a fraction have been commercialised; and the book points out some examples. Reaping the Benefits by the Royal Society in 2009 predicted that, as we have heard, the global demand for food will double by 2050. A great deal of innovation is necessary to tackle this challenge. The report refers to a “virtual root” which has been developed by a group of researchers at the University of Nottingham, supported by the BBSRC, as a predictive model to simulate root growth accurately. Results from the model are already being translated for crops such as barley, which of course is of great interest to me. This could result in improved varieties being available to farmers in 10 years’ time. Another example is that at the University of Birmingham researchers, also supported by the BBSRC, have been identifying key genes that control meiotic recombination, a process that allows genetic modification to occur. Once identified, this information will be an important tool for plant breeders, enabling them to breed improved plant varieties in a shorter period of time. Just imagine the effect of that.

This sort of research is going on all over the country and, indeed, across the European Union. However, in order to face the future we need to invest in it multifold. The developing world, led by India and China, needs innovation in order to feed its growing populations. The question is whether Britain and other EU members will be leading partners in this process or whether we will let over-regulation, politics and underinvestment keep us on the sidelines.

In conclusion, I should again like to quote, because it is so important, the excellent report of which we are taking note. The introduction to Chapter 6 cites Georg Häusler, Head of Cabinet, DG Agriculture at the European Commission, who asks this question:

“Does Europe say that it can provide food for 500 million rich Europeans and import what we do not have, or does it play a role in feeding 9 billion people, including 1 billion people in China and India”,

many of whom,

“are starting to eat meat?”.

It is indeed a pressing question, and one that only the EU itself can answer. I am hopeful that we will choose the latter path but I am worried that the EU may be wandering the wrong way.

I shall end where the report begins:

“Regulation should help, not hinder. Politicians … must not be afraid of new properly tested technologies … Benefits and risks must be clearly articulated, recognising that too precautionary an approach may pose risks to global food security”.

Higher Education (Basic Amount) (England) Regulations 2010

Lord Bilimoria Excerpts

Tuesday 14th December 2010 Lords Chamber

[Lord Bilimoria]

My Lords, the human tendency since time immemorial is for us often to take things for granted. I do not think that we stand back and appreciate enough how excellent the higher education sector in this country is. We always punch above our weight. The benchmark for excellence in higher education is the United States, yet as a country six times smaller, we consistently produce four or five of the top 10 universities in the world, the others being American. Again, I do not think it is highlighted enough that the United States spends as a proportion of GDP nearly three times as much on higher education as we do, almost 3 per cent versus 1.1 per cent. What is more, government expenditure in the United States is 1.2 per cent of GDP, higher than our combined expenditure on higher education, both public and private.

There is no question but that we need to increase overall expenditure on higher education. The ideal situation is when we get to the same place as the United States, where two-thirds of the provision is private and one-third comes from government. The two-thirds provision should come from student fees, benefaction, endowments, scholarships and sponsorships. In this light, my noble friend Lord Browne was asked how we could improve higher education. So much of his report is good and there are many excellent suggestions, but instead of moving towards what I have just outlined, the cat was let out of the bag in the last sentence of his report. It states:

“These measures create the potential to allow the numbers of student places to increase by 10% and enhance support for living costs while still allowing public spending reductions to be made”.

Here we are, on the one hand with the Government actually proposing to cut teaching support by 80 per cent to try to save £3 billion over four years, and on the other hand by almost tripling tuition fees in one go in 2012.

We all know that the finances in this country are in a dire position. We all know that cuts need to be made, and we all know that public expenditure is far too high as a proportion of our GDP. But to get out of this predicament, we do not necessarily just have to make cuts; we also have to grow as an economy, and to do this we need the elements of our economy that are our unique selling proposition—our core competences—and there is no better example than our higher education sector.

There are cuts and there is carpet bombing. We need to be selective and to cut effectively by pinpointing. There are big-ticket items where billions can be saved, such as inefficiencies and administrative savings in the NHS. It is possible that tens of billions could be saved. The Department for Work and Pensions budget is nearly £200 billion. That is where big savings can be made. But to try and save £3 billion in an area where we are the best of the best in the world, and in such a blunt way, does not make sense.

This is combined with an immigration cap. Every day I hear from businesses that say that they are hurting because of the immigration cap. I hear every day from our higher education sector, where 10 per cent of our academics are foreign and where it is estimated that foreign students bring up to £8 billion of direct and indirect income into this country. We must learn that when the United States clamped down on immigration, it lost out; we benefitted. We have competition—10 EU countries spend more on higher education as a percentage of GDP than we do.

--- Later in debate ---

Tabled by

[Lord Bilimoria]

To move to resolve that this House accepts that an increase in tuition fees is necessary to maintain and improve higher education in this country; but regrets the drastic cuts in higher education funding and the multi-fold increase in tuition fees being proposed to fill the gap created by these cuts; and calls on the Government to consider and report to Parliament on the possibility of staggering and phasing in over a period of years any increases in tuition fees and not to implement the increases all at once in 2012.

[Lord Bilimoria]

We have had an extensive debate and the Government have won the vote in both Houses. My Motion does not propose to change anything but acknowledges only that we as a House regret that higher education funding has been cut and that, as a result, tuition fees have had to be put up to such an extent. It requests that the Government consider not postponing the increase but implementing it in a staged manner from 2012 onwards. The reason for this is that we have balanced the books of the country and of universities but we have not thought enough about the students. They will suffer so much because of this and the Motion would have helped them. The perception at the moment is that the Government do not care enough, and we all need to be wary about that perception.

However, given the way in which the debate and the votes have gone, I shall not move my Motion.

Motion not moved.

Queen's Speech

Lord Bilimoria Excerpts

Wednesday 2nd June 2010 Lords Chamber

[Lord Bilimoria]

My Lords, I congratulate the Minister on her appointment. We have all witnessed the hard work that she has put in in this area. I also congratulate the noble Lord, Lord Henley.

Today, we have a huge public sector debt and a huge deficit. Working-age employment is at its lowest level since 1996 and we have over 5 million out-of-work benefit claimants. We are one of the most highly taxed economies in the world and Europe is on the brink of disaster. The previous Government blamed our crisis on the global situation and now the current Government are blaming the previous one for everything. Surely we have had enough of the blame game.

Being out of the euro has saved the British economy from being added to the list of the PIGS countries. For the euro to be truly effective, I believe that you need political, emotional and economic alignment. In reality, countries set their own fiscal measures, there is no emotional commitment and, as we know, there is no economic alignment—just look at Germany and Greece. Thanks to being out of the euro, we have not been straitjacketed by the euro interest and exchange rates. I am all for keeping a mutually beneficial relationship with Europe as a trading partnership.

On the subject of trading partners, I am absolutely delighted that the enhancement of the UK’s partnership with India was mentioned by Her Majesty in the gracious Speech. I agree with Larry Summers, who said that,

“the dramatic modernisation of the Asian economies ranks alongside the Renaissance and the Industrial Revolution as one of the most important developments in economic history”.

I am proud to be president of the UK India Business Council, supported by UKTI. India’s economy has grown by over 6.5 per cent while we have been in recession. British business, in particular our SMEs, could be doing so much more.

The coalition Government’s move to reverse the national insurance increase is welcome; according to the FSB, it will help to protect 57,000 jobs. On the other hand, the 50p top tax rate, the non-dom levy and the proposed capital gains tax increases not only send out all the wrong signals to the world but also hinder our ability to create a balanced economy. Many studies suggest that an increase in capital gains tax does not actually increase tax receipts; it is quite the reverse. For example, during the last century in the United States, virtually every time taxes were lowered, whether on employment, savings, investment or risk taking, tax revenues went up, not down. A small country such as Britain can flourish only if it is able to create a highly skilled, highly creative, innovative, open and value-added economy, and this can be achieved only by the Government creating the right economic environment that attracts both inward investment and the best brains. Creating a competitive tax structure is essential to enable this. As Winston Churchill famously said,

“for a nation to try and tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”.

The introduction of the Office for Budget Responsibility is a positive move, as is the plan to increase the Bank of England’s regulatory power. In my opinion, the FSA was asleep on the job and definitely not up to the job. I am convinced that, if the Bank of England had been in charge, much of the suffering in our financial sector and the economy over the past three years would have been prevented.

The welfare reform Bill is also welcome. We have a benefits trap in this country. Today, the difference between welfare support and a 40-hour week on minimum wage is just £37—hardly enough to inspire people in difficult times to seek jobs. As I have said before, in 1997 government spending accounted for 40 per cent of GDP, similar to the level in the United States. Last year the figure rose to 52 per cent of GDP. That is just not sustainable. We have a public sector that is not delivering; it is overpaid and full of jobs for life and gold-plated pensions. Setting a target for reducing public sector spending to 40 per cent of GDP is essential and would, in effect, wipe out our deficit.

This is not just about making cuts; it is about making the right cuts. Ring-fencing services for votes has led to an incredible sense of imbalance. On the one hand, the Department for Work and Pensions has a £135 billion budget, yet we skimp on national security and our Armed Forces while our brave troops are making the ultimate sacrifice for us.

I am delighted that the Minister has talked about supporting SMEs. There is talk of a £500 million loan guarantee scheme, but that is a drop in the ocean when compared with the £1 trillion of quantitative easing for the financial sector. Again, this is about priorities. Britain’s higher education sector punches above its weight and is the best of the best in the world, in spite of 13 OECD countries outspending the UK as a proportion of GDP. It is important that cuts in the area are completely avoided. Education is our future and the key to our competitiveness.

I believe that this Government can snatch victory from the jaws of defeat if they recognise that it is the private sector that creates the jobs that pay the taxes that pay for the public sector and that thus pay the people who genuinely need our help. We must never forget, as the Minister said, that by stifling business we kill the goose that lays the golden egg.

This was a game-changing election and I am very hopeful about this new coalition. However, our economy could either be “Con-Dem-ed” or “Con-Liberated”. For the economy, although things look incredibly bleak at this moment, now is the time to seize the opportunity—to go down the route not of the politics of envy but of the politics of aspiration. Now is the time to unleash the spirit of enterprise and achievement for which this great country has been famous for centuries and centuries.