Oral Answers to Questions

Chuka Umunna Excerpts

Thursday 11th September 2014 Commons Chamber

[Vince Cable]

Indeed, we will. I have had good discussions with Northern Ireland colleagues about the very successful advanced manufacturing sector. Bombardier has an expanding presence in Belfast, as the hon. Gentleman will know, and there are other parts of the aerospace supply chain that we are keen to develop in Northern Ireland.

[Mr Chuka Umunna (Streatham) (Lab)]

Before I ask my question, I am sure that on the anniversary of 9/11 the whole House will want to remember those who lost their lives, including British citizens, on that terrible day 13 years ago. Our thoughts, best wishes and prayers go out to their families and friends.

Scotland’s vibrant financial services sector is important to the UK’s competitiveness, and more particularly to Scotland’s competitiveness in the global marketplace. RBS has been mentioned, and no doubt the Secretary of State will also have heard Lloyds bank and Clydesdale bank say that they will relocate their headquarters to London in the event of separation. The vote next week is, of course, for the Scottish people, but does that not illustrate the lorry load of uncertainty for jobs, competitiveness and growth in Scotland that will come with the break-up of one of the most successful unions the world has ever seen?

[Vince Cable]

I absolutely agree with the hon. Gentleman and he makes the point well. In addition to the lists of institutions he has just given, Standard Life in the insurance sector has made it clear that it could not remain in Scotland were it to be an independent country. That relates to the need for large financial institutions to have a regulator, and in some cases a lender of last resort. A country the size of an independent Scotland would not be able to support those institutions. The hon. Gentleman is absolutely right in his approach.

--- Later in debate ---

[Vince Cable]

My Department published some detailed analysis, which I think enjoyed wide consensus. It was objective in relation to the potentially damaging effects not just on business and the British single market, but on research in the United Kingdom. As I said earlier, Scottish university institutions have attracted a disproportionate share of finance for the very good reason that they do excellent research, but that arrangement clearly could not be guaranteed in an independent Scotland.

[Mr Chuka Umunna (Streatham) (Lab)]

Sir David Barnes, former chief executive officer of AstraZeneca, told us that while companies should manage their tax affairs efficiently, it should not have been the driving force for Pfizer’s proposed takeover of AstraZeneca because it was

“a narrow basis on which to build an enduring and constructive business partnership.”

Does the Business Secretary agree with that general principle in respect of the takeover of important British companies?

[Vince Cable]

Yes, I do agree with that, and I made that very clear at the time. I think that the response of the Government, as well as of the shareholders of AstraZeneca, was a factor in persuading Pfizer not to pursue that bid.

[Mr Umunna]

The tax avoidance mechanism—tax inversion—that Pfizer sought to use through that takeover has been one of the main driving forces behind this year’s surge in cross-border deals. However, this week US Treasury Secretary Jack Lew said the Obama Administration would crack down on inversions pending further action by Congress. Does the Business Secretary share my concern that if we see takeovers of British firms being primarily driven by the desire to avoid US tax, there is a real risk of a large flight of capital back to the US when the threatened crackdown comes, leaving important UK companies high and dry?

[Vince Cable]

Again, I agree with the hon. Gentleman’s basic proposition. As it happens, much of the alarm that was raised some months ago about large American companies taking over British companies or British-based companies on the back of those tax provisions have proved wholly unfounded. He is quite right that takeovers, although they are generally beneficial to the UK economy, should not be driven by artificial short-term tax considerations.