15 March 2007
Many thanks for all your questions for Alistair Darling. Sorry he couldn’t answer them all. You can read the transcript below.
Read the transcript
Alistair says: Thanks for all your questions. I will try and answer as many as I can in the next hour and I’ll look at everything you have said over the next few days.
Peter Robinson: What do you think will be the greatest challenges facing the UK economy over the next 5 years?
Alistair replies:
The biggest challenge we face is how to adapt to a rapidly changing global economy. Changes as profound as those of the industrial revolution of 200 years ago are now taking place over 20 years. China and India and other developing countries are seeing rapid growth which we should welcome.
But it is important that we continue to compete successfully in this new world. And we have a lot to be proud of. Our financial services industry for example is recognised as being a world leader. But in other areas too, like pharmaceuticals, aerospace and in the new technologies, we have a worldwide reputation for excellence.
The key is to embrace this change and see it as an opportunity. We can and do compete with the best in the world.
Tim C: Where do you see the future of British manufacturing going? More and more is being outsourced to other countries . Surely can’t be good for the economy?
Alistair replies: Manufacturing output is higher now than it was 20 years ago and is increasingly productive. Nissan in the north east of England is Europe’s most productive car factory. It’s worth remembering that Britain makes almost as many cars as it did in the 1970s - the height of British car production. The names may be different but it’s British expertise and know how that’s succeeding. There are other examples - Airbus - the wings of most Airbus aircraft are made in Britain - and Rolls Royce is known throughout the world.
Mr David Strickland: I would just like to say that I believe it is the Nations duty to maintain our economy and one of our most important was the car economy. When MG Rover went into administration, over 6,000 jobs were lost. The main reason behind the fall was that the public sector was no longer purchasing cars made in the UK, but from other countries! Why is this, Im sure tax payers would prefer to see Rovers being driven by Police and fire support than Citroens or BMWs. The reason behind this according to was "Driving UK born vehicals would have been deemed offensive to ethnic minorities." So, have we got to a point where we are more concerned about a small group of people than say 6,000 jobs? I was not directly affected by the plant closing down but I feel that this is an absoloute outrage. I am only 17 but I can already see the answer, please, when MG Rover, under it’s new management, start producing cars again, let the public sector use them! Start supporting the UK economy!
Alistair replies: I don’t think that the answer to these problems is to stop people buying cars or other goods from different parts of the world. After all, we do export cars to foreign markets. The answer to these changes is more trade, which in turn will create more jobs in the economy. And although the collapse of MG Rover was a severe blow to the West Midlands, over 80 per cent of former MG Rover employees have found new jobs. The Government will do everything it can to help people retrain.
Edward: We hear a lot about the "knowledge-based economy" - what place is there for manufacturing in the 21st century? We will be a nation of service-economy workers?
Alistair replies: I said that we have a strong manufacturing sector. But you are right the service sector is extremely important and employs millions of people. The financial services sector is of huge importance not just in London but in Edinburgh, Leeds and Birmingham for example. There are other areas of expertise such as the creative industries which now account for 8 per cent of the country’s wealth. And the services sector is very important to the manufacturing sector. Let’s also remember that UK education is one of our biggest exports.
Mr Khalid Shafi: I am an entreprenuer who has set up who owns a knitwera business. I would like to ask what financial assistance is out there for budding entrepreuers.I found it VERY hard to get any assistance from governmental sources.
Alistair replies: Khalid - why don’t you try Business Link and also talk to your local Chamber of Commerce.
Rico: What are your plans for encouraging the next generation of entrepreneurs?
Alistair replies: First and foremost education. Half the DTI’s budget goes to fund science and technology. This morning I visited the Natural History Museum in London and met school students working on projects some of which may find their way on to the market in years to come. And there are many examples of universities developing their research into goods and services. There is increasing of teaching of entrepreneurship in schools. As a country we need to do more to celebrate individual achievement and aspiration.
Mohammed: I believe all young people between 18-30 should have the chance at running there own business if they do wish to choose. At the moment there is only help for those unemployed i.e. princes trust. But those working and with families cannot find the funds to start off going it alone. grants of upto £2000
Alistair replies: There are many schemes encouraging start ups. You could approach Businesslink.gov.uk .
Matthew Robb: Does the minister worry that our drive (and the cost) of being "green" in everything we do will restrict our ability to compete in the world market place?
Alistair replies: No I don’t! Climate change is one of the biggest threats to our future economic success as well as to the planet itself. You don’t have to choose between tackling climate change and economic success. If we don’t act to tackle climate change the cost to us and other countries will be immense. And remember there is an opportunity here too. What you might call the green industries - energy, water and waste are already worth 25 billion pounds almost as much as the pharmaceutical and aerospace industries combined. It could employ 400,000 people in just 3 years time.
Wallis: Joining the European single currency or giving the right to tax citizens to the European Union would be a huge give away of political power from Westminster to Brussels which few people have confidence in and which even fewer hold allegiance to. We must withdraw from EU to boost our economy
Alistair replies: Wallis - I don’t agree with you. To pull out of a market of nearly 500 million people doesn’t make sense to me. Half of our exports go to the European Union and its worth a great deal of money and creates millions of jobs. I’m in favour of reducing trade barriers not increasing them.
Richard: There is too much red tape in the DTI, as you know well Mr Darling. What are you going to do to make it easy for British firms to compete in the very competitive market place. I’m thinking manufacturing. Let’s have a level playing field, shall we?
Alistair replies: We do need to do more to reduce bureaucracy and we are. The recently enacted Companies Act has simplified greatly the burdens particularly on smaller businesses. Of course the need to cut down red tape has to be balanced by the fact that you do need a reasonable level of regulation in relation to maternity and paternity leave for example. And the OECD rates Britain as the best place in Europe to do business.
Caroline : Do you agree that to succeed in a global economy, the UK must commit to technology skills, improving the attractiveness of technology careers and the relevance of It education?
Alistair replies: Caroline - I very much agree with you. That’s why we have doubled the amount of money we have spent on science and technology over the last ten years. The technology programme has allocated over 430 million pounds to R& D programmes enabling manufacturers to capitalise on key technologies. Skills need to be increased and you are quite right to emphasise the importance of science and technology in schools. After all the next generation of entrepreneurs are still at school and we need to emphasise the massive opportunities open to them.
Noel Hatch: How do you see innovation being optimised across sectors - public, private and voluntary - to drive local knowledge economies?
Alistair replies: This is important. Public and private sectors need to work together. That is one of the jobs of the Regional Development Agencies. One example of this is the setting up of six science cities: Manchester, York, Newcastle, Nottingham, Birmingham and Bristol. These bring together universities and business and have already seen new companies established converting innovation into goods and services. Government can also help encourage innovation through the goods and services that it orders.
Steve Varity: I would be very interested to know what kind of effect you think allowing thousands, maybe hundreds of thousands of eastern europeans to come here and work will have on our long term economy. Even now we have skilled workers such as bricklayers, carpenters unable to find well paid work because these people are willing to work for at least half the wages of a british worker. dont forget these peoples mortgages are set at there income, they simply cannot aford to work for less. I feel that in the future we will be a nation of slave labour. I would like to know what you think.
Alistair replies: We have the highest level of employment for over 30 years and the best employment record amongst the big countries in Europe. We’ ve created over two and a half million jobs since 1997 but at the same time many employers are telling us that they’ve got skill shortages. Skilled people coming here from Europe or from other parts of the world do make a big contribution to our economy. However, we do need to manage migration and we also need to improve the skills and training of people which is the best way of helping them improve their living standards.
John Maitland: It matters that Britain has a strong record for fairness and proper checks and balances in the relationship between public institutions and private sector companies who provide services of importance to the community.
Do you agree, and if so what is the strength of your commitment to stable independence and jursidiction of economc regulators in essential industries such as transport, energy and telecoms?
Alistair replies: I do agree. Regulators do need to be independent of the Government whether it is to regulate competition or to ensure protection for the consumer.
neil alldred: Whilst wishing to congratulate your Government on its competent management of the economy over the last 10 years, many of us are becoming worried that the Government’s view of ‘economic dynamism’ remains too exclusively focussed on the financial picture presented by individual enterprises, rather than on any broader understanding of the social costs of rising inequality, a weaker sense of community, and huge problems of job insecurity when even incompetent managers and the shareholders who suppor them can award themselves ever increrasing slices of the cake, irrespective of a firm’s performance.
Alistair replies: This is a complex question. However despite the fact that most people will have a number of jobs between starting out and their retirement, recent surveys have shown that people’s sense of job security has increased. You are right that what matters is how we feel as individuals about ourselves and about our families’ prospects. One of the reasons that we have put so much emphasis into getting people into work (and remember the millions who were out of work in the 1980s and early 1990s) is because work provides an income and security. And in relation to inequality remember we have taken action to take a very large number of children and pensioners out of poverty with specific help.
Boxer: You say unemployment is low, yet there are so many low-skills, low-pay service industry jobs. When are we going to see proper employment long-term opportunties for young people - bring back apprenticeships!
Alistair replies:
Apprenticeships are back. Over 130,000 employers already offer apprenticeships and we want to see more. There are currently 330,000 people going through apprenticeships. I recently launched the National Manufacturing Skills Academy which will train 40,000 people per year by 2012. Top companies on board include GKN, Airbus, BAe and Ford.
Read more on apprenticeships from the Learning and Skills Council
Linda Walker: There is an economic slowdown in the US and Asia - can we escape the fall-out?
Alistair replies: The OECD expects the world economy to grow despite slow downs in some countries. Of course as I said earlier economies are increasingly interdependent but the UK economy has seen the longest period of uninterrupted growth over the last 10 years. This is despite the fact that during the same period other large economies went into periods of recession, which because of the strength of our economy, and our macro-economic policies, the UK has been able to withstand. And of course increased trade and avoiding protectionism is the key to continued growth in world trade.
Johanna: With the out-sourcing of typing work to India, first of all valuable work has been diverted out of the UK but also this assists a loss of skills in the British economy, it assists the trade deficit and I wonder whether you would not find it better to place a quota on how much work can be outsourced to countries out of the common market, especially as the companies earning the money from it do not pay taxes from their profits back to the UK.
Alistair replies: Johanna - its important to remember that this is a two way process. India invests very heavily in the UK and we see more jobs because of that. When I was in India in January I was impressed by the fact that Indian companies pointed to our education, our ability to innovate, and the research capabilities of the UK. And British companies also invest in India which helps us too.
Roger Rosser: What EXACTLY are we doing to help bridge the skills gap between us and the emerging economies of India etc?
Alistair replies: There is renewed emphasis on raising skills generally with special focus on science engineering and maths. We want to increase the number of people in the workforce with good quality skills at all levels from basic skills to people with degrees. And we want to give employers a strong voice in deciding what skills and qualifications are provided for people in work.
William: Are you worried about the number overseas-based private equity firms taking over UK companies - the latest being Boots?
Alistair replies: Remember private equity firms have turned around some poor performing companies who otherwise have failed. What’s important is transparency. And as you may know the Treasury is carrying out a review of the sector. As for foreign ownership it cuts both ways. London, for example, is home to most of the world’s foreign banks who employ hundreds of thousands of people. And we don’t object when British firms acquire foreign companies.
David Talmage: Is the Minister worried about the high-levels of personal debt in the UK and the number of bankruptcies?
Alistair replies: David - I am concerned about people who are over indebted. We are spending over 47 million pounds on hiring debt advisers to give free face-to-face advice to people who get into difficulties. And of course banks and other financial institutions have a responsibility not to lend to people who can’t repay their debts. We must keep things in perspective and the vast majority of consumers don’t get into difficulties.
sam weitzman: in your plans to integrate renewable energy have you considered the economic impact and rivalry from fossil fuels? would the intorduction of renewables cause a drop in fuel prices therore wiping out any significant renewable contribution?
Alistair replies: Its important that we have a mix of energy sources. If we are going to reduce the amount of carbon going into the atmosphere we need more renewable and low carbon energy. And fossil fuel can, with the right technology, be used to generate electricity whilst giving off less carbon. We are looking also at mechanisms for capturing and storing carbon.
Alistair says: Thanks again for all your contributions. I’m sorry I wasn’t able to answer all of them in the time available.
Moderator says:
Thanks for all the questions.
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