---

Finance (No. 2) Bill

My Lords, I shall speak about the Finance Bill less from the point of view of tax or economic affairs—I was not a member of the sub-committee, but I join the noble Lord, Lord Northbrook, in congratulating it on its report—and more from that of business, which is where the Bill affects most people—at work. I support the Bill because it continues the Labour management of the economy which, as my noble friends Lord Barnett and Lord Sheldon, said, has been so right for business over recent years. For me, perhaps the most important element of that is the Government's attitude towards private enterprise—no, not the difference between public and private. The difference is that, during the past few years, we have seen that a Labour Government support private enterprise, whereas Tories try to protect it. We are now able to judge the difference. Let me explain. Private enterprise creates income and wealth. It creates jobs. It offers choice to consumers and workers and drives innovation and growth. It creates the opportunity for people to better themselves and their families through effort and enterprise. It creates new routes for social mobility and rewards initiative, contribution and hard work. On that, I think that we all agree. The Tory way was to protect private enterprise from interference—interference from imports, from competition, from regulation and from Europe. Those who pay for that are the consumers, in higher prices. Society pays through lack of opportunity and businesses themselves suffer because there is less need to change. Yet to be profitable and successful, companies need economic stability. In his opening remarks, my noble friend explained how we delivered low interest rates and low inflation. Business needs access to skilled and flexible personnel, so the Government delivered skills training and tripled the number of apprenticeships. Business needs new technology, so the Government doubled investment in basic science and prepared a 10-year plan. My noble friend told us about the research and development credit scheme, which contributes to that. So we broke down the protective trade barriers and, instead of walking away from Europe, we engaged with our European Union partners. This is one reason why the City of London is so successful in the European Union. That openness provided the City with the scale, scope and challenge for it to be efficient and innovative. Yet the Conservative Party is still looking for alliances with anti-European conservatives in the mistaken belief that that will protect our economy. The fact is that all that was achieved in the face of strong opposition from noble Lords opposite in the name of not interfering with wealth-generation—and, according to the noble Baroness, Lady Noakes, because there is too much regulation. Much new regulation happens not because of a wish to interfere but because, as the noble Lord, Lord Marlesford, implied, we are becoming aware of more and more things about work and society. We are becoming more aware of how health and other hazards prevent people from being more productive. Good businesses are rarely poor employers because they are concerned about health and safety and workers' rights. They are becoming more aware of the importance of the environment and sustainability. Indeed, we now know that a healthy and sustainable environment and a healthy economy go together. For most businesses, the ultimate goal is to create long-term value for shareholders. That is not achieved by behaving in a way which is socially or environmentally unacceptable or unethical. Indeed, the best-run companies find areas where shareholders’ long-term interests overlap with those of society. But what about regulation of markets? Some say that it kills free enterprise. Does it? We now know that business can operate successfully only within the accepted norms of the society in which it works. Those norms vary from market to market. There are much tighter rules for selling pensions and banking services than there are for selling clothing. Instead of condemning regulation of markets wholesale, as some tend to do, our careful regulation of each individual market has helped private enterprise by dealing with market failure and encouraging more variety. That has helped business to grow. Indeed, environmental regulation has created a whole new market for environmental products. Amazingly, that is an area where we now see business and the environmental non-governmental organisations working together. Yes, our policies of supporting private enterprise instead of protecting it have produced one or two surprises. The absence of economic volatility has enabled private enterprise to take on higher levels of debt. As a result of credit being available in greater quantities and on better terms than ever before, sooner or later some borrowers will get into trouble. The noble Lord, Lord Marlesford, reminded us that much low-tech manufacturing has gone elsewhere. He spoke also of higher tech manufacturing, which is staying here and growing. That is very much service-based, and the Treasury must review the way that it labels some activities as manufacturing and others as services. The output of the part of a manufacturing company engaged in research, consultancy or technical assistance is often categorised as a service. Yet without offering these services, modern manufacturing companies would lose their customers. This is how they stay at the leading edge. The noble Baroness, Lady Noakes, pointed out that unemployment is growing, but the number of people in work is at its highest point for 10 years. At the moment, the number of people entering the labour market is slightly larger than the number of jobs being created. This may be due to immigration or to people coming off invalidity benefit, but private enterprise is helped by keeping the growth in balance, as the Government are doing. My point is that it is this engagement with business, support for private enterprise and the acknowledgment that society has moved on that has created the economic dynamism in this country, rather than the so-called free-market paradise which the Tories seek to protect. This is what has created our economy. The noble Baroness spoke of economic decline. I agree with my noble friends Lord Barnett and Lord Sheldon that, in recent years, thanks to private enterprise, Britain has been growing faster for longer than any of the G7 leading industrial nations—the Minister gave us the numbers in his opening remarks. This is largely because Britain is an attractive place in which to do business because of the support that business gets from Government. Protection by the Government would not make it nearly as attractive. The Finance Bill expands and continues this support, which is why I support the Bill. Much has been said this evening about the Chancellor of the Exchequer. Perhaps we would all like to unite in congratulating him on the birth of a son this morning.