UK Modern Industrial Strategy

Kit Malthouse Excerpts

Monday 23rd June 2025 Commons Chamber

[Jonathan Reynolds]

I very much welcome the question and the work that my hon. Friend has done. He has been an ally in ensuring that there are no problems around the defence sector being seen as a legitimate source of business investment and economic activity. We recognise why we need that in the national interest, but we should not in any way be squeamish about the contribution that defence makes because the deterrence value is a fundamental contribution to peace, as well as to economic security.

I can tell my hon. Friend that the strategy commits us to double the amount of the defence budget that goes specifically to SMEs, rising to £2.5 billion a year. SMEs, in diversifying the defence supply chain and creating those opportunities, are absolutely a part of this strategy, and if he has any red tape to show me that we need to get rid of, let’s work together to get rid of it.

[Kit Malthouse (North West Hampshire) (Con)]

I draw attention to my entry in the Register of Members’ Financial Interests. This is the sixth industrial strategy announced from that Dispatch Box since “New Industry, New Jobs” by Gordon Brown in 2009. While they have all been filled with a box of chocolates selected by the Secretary of State, with his or her preference often underpinned by a huge subsidy, not a single one of them has made any significant difference to the UK’s growth rate, and that is because they all miss a particular piece of the jigsaw. I urge the Secretary of State to recognise that the Government can build as many roads and bridges as they want, train as many young people as they like, pump as much money into the British Business Bank as they want, but unless they can find individuals to take a risk with their own capital, they will not get any investment. Unless these individuals can see a return on that capital, they will not invest. I urge him, as we move towards a Budget in November, to work with the Chancellor of the Exchequer to increase entrepreneurs’ relief, cut capital gains tax, and reduce the taxation on dividends so investors can see a return on their risk.

[Jonathan Reynolds]

I hesitate to say this, but I think the right hon. Gentleman underestimates the number of strategies there have been in recent years. It is certainly more than six; we are at 11 in the past decade, or something like that. There have been six Business Secretaries in five years, which is certainly far too many. I think we can all agree that we need some long-term consistency in that area alone.

I agree with the right hon. Gentleman’s point on risk. That is one of the more thoughtful contributions I have heard on the low economic growth, mainly under a Conservative Government, since the financial crisis. We have to consider that attitude to risk in terms of regulation. Maybe our role as parliamentarians, when we ask regulators to fix every problem and stop every bad thing happening, is to ask ourselves whether that is the right balance, whether that is a reasonable request, or should it be—of course, with that in mind—proportionate to the performance of the economy.

The right hon. Gentleman mentions some specific measures. We have the lowest corporation tax in the G7 and a competitive tax rate overall, but we are always seeking to improve that. We need supply side tools, fiscal changes and a consistent long-term environment. That is what we seek to put in place.