Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.
Scandals about Ministers benefitting from public expenditure are damaging and have clearly damaged the Government’s popularity. But what really matters over the longer term is the success of economic policies.
Here, while there was a case for increasing public expenditure while Covid-19 was closing down too much of the economy. Government spending as prescribed in the Budget looks to be far too high and risks serious permanent damage to this administration’s standing.
I am one of the traditional Conservative voters wanting to see Government expenditure reduced significantly as soon as is possible. I cannot understand a Tory Government indulging in such huge deficits. As inflation rises, the cost of financing the public deficit rises more substantially. There is the danger of the Government being forced to cut back expenditure materially and, with this, losing its credibility.
My wife recently gave a party for old friends to celebrate getting back to normal. Most had been vaccinated three times, and the majority had had Covid-19. It is clear that we have to live with the virus and as vaccinations increase, the incidents of Covid-19 (and, in particular, fatalities), should reduce to relatively modest numbers.
This is one area in which the Government has faired well, and our economy is thus better positioned than are most European economies. The main area of Government weakness is excessive spending – and the inflation risk that comes with it.
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The parliamentary magazine, The House, has conducted an interesting interview with Sir James Dyson. He has been greatly concerned about the future of British manufacturing and innovation for many years. His main worry is that we do not produce enough engineers.
In Britain. we produce 20,000 a year, China produces 600,000 and India 350,000 pa. Even the Philippines produce more engineers. In the global completive world in which technology is everything, we risk getting left behind.
We have excellent design and engineering universities in the UK, but the majority of students and researchers in them are from outside the UK. Dyson thinks the problem is our lack of interest in manufacturing which has existed since Victorian times.
The major problem is that the status of an engineer in the UK is low by comparison with Germany and France. Manufacturing is still seen as something done by the less successful. Factories are seen as places providing employment – not producing great products which we can sell all over the world. As a nation ,we admire the wrong things.
In 2017, Dyson established the Dyson Institute of Engineering and Technology – a private Higher Education institution. It is based in Malmsbury. Students are paid a salary for working three days a week: they study for the other two days, and have their tuition fees covered for the four-year course.
If they want a job, there is one guaranteed at the end of the course. Recent winners of the Dyson Award covering 29 countries have included a Spanish student who created a box which can detect cancer, and sends the results to a cloud and then informs the user what cancer they have and what to do next; and a Pilipino student who discovered a way to generate electricity by mashing up certain fruits and vegetables, spreading a thin film across a pane of glass and shining a light on it.
Not surprisingly, Dyson is a champion for entrepreneurs. He favours lower tax for investors and innovators. In 2010, he wrote a report for David Cameron on how to make the UK the leading tech exporter in Europe, including additional tax relief on research and development investment. Government should not try to pick winners, but make it attractive for entrepreneurs and engineers to come up with new ideas themselves.
Dyson now employs more than 12,000 people in 89 countries. In 2002, he shifted most of his manufacturing from the UK to Malaysia – largely because it was hard to find UK suppliers who could deliver components on scale.
In 2019 he was criticised for moving his headquarters to Singapore, although his UK based employees have since doubled.
As a country we need to learn from Dyson’s experience. Government needs to apply itself to reducing unnecessary red tape; if anything it is still increasing it.
We need to boost our manufacturing sector and to reduce planning constraints, both in relation to factory accommodation and housing. Our SME sector continues to be very successful – substantially the result of the Enterprise Investment Scheme and Venture Capital Trust tax incentives on investing and smaller businesses.
Government needs to sort out our finances. Faster economic growth is needed, but the money supply needs to be controlled. We need to be doing more business in Asia, where the Foreign Office can assist by identifying opportunities on the ground. There are also plenty of business opportunities for the UK in the EU, particularly in Poland and other Eastern EU countries.
We need to have a Government focusing on improving our economy – and to put behind us both Covid-19 and politically damaging scandals. Going forward the priority must be what is good for the economy.