Growth Sectors
Posted on 18th April at 2:58am
As part of the 2020 Group's Growth and Industry Month, MPs with personal experience of particular high growth sectors were invited to give short presentations to the rest of the Group.
On 28th February Stephen Hammond, Adam Afriyie and George Freeman spoke on financial services, the digital economy and life sciences.
Stephen Hammond - Financial Services
The financial services industry is not just the City, it's also a huge employer outside London. For example, in the North East alone the industry employs 45,000 people. Similarly, the City itself is not just about investment banking. The 640,000 people who work there provide a vast range of services: insurance, asset management, lease lending and so on.
Even in a rebalanced economy the financial services industry must be a major contributor:
Aside from being one of the UK's biggest employers the sector contributes �175 billion to national income and �53 billion in tax.
It is also a major export industry.
The cluster of expertise in the City is a vital competitive asset for the UK. For example, we are a world leader in the provision of insurance.
The economic evidence shows that clusters, such as the City, drive growth.
Growth will always need to be financed: between 2005 and 2010 UK financial services raised �445 billion for businesses to grow.
What do we need to do?
1. Stand up for finance: we should be proud that we excel in this industry
2. Stand up to Barnier (EU Commissioner for the Internal Market): regulation should not be one-size fits all.
3. Ensure that regulation is effective but not overbearing.
4. Encourage the entry of new financial institutions into the market. We need to make it easier to set up banks.
5. Encourage new models of financing.
6. Look at how financial innovation can meet our social objectives. E.g. securitization techniques in the funding of social housing. The Dilnot Report provides us with the basis for a new kind of insurance product.
Discussion
- There is no contradiction between recognising the importance of financial services, while opposing the excesses of a small clique within the system. It is still too easy to get too rich by risking other peoples' capital. Arguably this is a market failure. The question is how to tackle this 'crony capitalism' without driving business offshore.
- Many modern financial institutions were founded in Methodist/Presbyterian cultures which placed a strong value on thrift and serving the community (e.g. Scottish Widows). How do we return banks to these founding principles?
- Banker-bashing is a convenient political tactic, but perhaps it's time for the political class to assume some of the blame. Reform won't get very far until politicians accept responsibility for what happened during the banking crisis.
- Some local authorities are sitting on huge cash reserves. Why not use them to set a local community bank?
- We should promote the idea that the English Common Law is the best legal system in the world in which to conduct financial transactions.
Adam Afriyie - The Digital Economy
Innovation is intrinsically Conservative. It proceeds by small gradations, building on what's gone before. Digital technology is both highly innovative and a powerful conduit for Conservative values:
It can unite family over large distances (e.g. Skype)
It puts a high premium on individual choice (e.g. privacy settings)
It dispenses with the need for wasteful bureaucracy and the 'in tray/out tray culture' (e.g. computer files can be reproduced cost-free)
It allows for deregulation (If Govt accepted electronic signatures on company invoices we could grow the economy by 1%)
What do we need to do?
1. Continue to invest in broadband.
2. Design regulation that enables rather than constrains � and which privileges individual responsibility. As with child protection programmes on the internet, regulation should have a default setting which individuals can then change. When it comes to Government's dealings with citizens, the default setting should always be set on privacy.
3. Reform intellectual property laws. Open government data can be catalyst for fast-moving businesses.
4. Rather than see digital technology as an industry or sector to be championed we should regard it as a repository of Conservative values that should permeate all aspects of policy. It should be the backbone of everything we do.
Discussion
- Do we need an industrial policy for the high tech sector? The space and mobile phone industries didn't need subsidies to grow.
- Technology is not just for the young, the elderly could perhaps benefit most from digital tech. Where can it be used in social care?
Government can learn a lot from the private sector's use of digital tech. For example we conduct most of our financial transactions with a single electronic ID: our credit card number. Why can't it also be used to access Govt services?
- Could government departments conduct digital impact assessments?
- As we become more dependent on digital infrastructure, people have to be confident that the information used by Govt is secure.
George Freeman - Life Sciences
As a country we need to think about what we can sell to the rest of the world.
Life sciences - defined as the use and understanding of natural systems to solve social problems - could be a major export industry.
Why life sciences?
Given the pressing need to provide food and healthcare to a rapidly growing population the developing world offers us a huge market.
World class research base: we produce more academic publications, per person per pound, on life sciences than any other country in the world.
The UK is a global centre of excellence for agricultural research.
If we support the developing countries with their agricultural, energy and medical needs then we will have significant 'soft power' influence as their domestic markets become more sophisticated.
What do we need to do?
1. Overcome EU hostility to GM tech.
2. Take advantage of the vast data mine that is the NHS.
3. Promote closer integration between hospitals and research scientists, introduce more digital technology to hospitals.
4. Longer term investment into research councils and universities.
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On 28th February Stephen Hammond, Adam Afriyie and George Freeman spoke on financial services, the digital economy and life sciences.
Stephen Hammond - Financial Services
The financial services industry is not just the City, it's also a huge employer outside London. For example, in the North East alone the industry employs 45,000 people. Similarly, the City itself is not just about investment banking. The 640,000 people who work there provide a vast range of services: insurance, asset management, lease lending and so on.
Even in a rebalanced economy the financial services industry must be a major contributor:
Aside from being one of the UK's biggest employers the sector contributes �175 billion to national income and �53 billion in tax.
It is also a major export industry.
The cluster of expertise in the City is a vital competitive asset for the UK. For example, we are a world leader in the provision of insurance.
The economic evidence shows that clusters, such as the City, drive growth.
Growth will always need to be financed: between 2005 and 2010 UK financial services raised �445 billion for businesses to grow.
What do we need to do?
1. Stand up for finance: we should be proud that we excel in this industry
2. Stand up to Barnier (EU Commissioner for the Internal Market): regulation should not be one-size fits all.
3. Ensure that regulation is effective but not overbearing.
4. Encourage the entry of new financial institutions into the market. We need to make it easier to set up banks.
5. Encourage new models of financing.
6. Look at how financial innovation can meet our social objectives. E.g. securitization techniques in the funding of social housing. The Dilnot Report provides us with the basis for a new kind of insurance product.
Discussion
- There is no contradiction between recognising the importance of financial services, while opposing the excesses of a small clique within the system. It is still too easy to get too rich by risking other peoples' capital. Arguably this is a market failure. The question is how to tackle this 'crony capitalism' without driving business offshore.
- Many modern financial institutions were founded in Methodist/Presbyterian cultures which placed a strong value on thrift and serving the community (e.g. Scottish Widows). How do we return banks to these founding principles?
- Banker-bashing is a convenient political tactic, but perhaps it's time for the political class to assume some of the blame. Reform won't get very far until politicians accept responsibility for what happened during the banking crisis.
- Some local authorities are sitting on huge cash reserves. Why not use them to set a local community bank?
- We should promote the idea that the English Common Law is the best legal system in the world in which to conduct financial transactions.
Adam Afriyie - The Digital Economy
Innovation is intrinsically Conservative. It proceeds by small gradations, building on what's gone before. Digital technology is both highly innovative and a powerful conduit for Conservative values:
It can unite family over large distances (e.g. Skype)
It puts a high premium on individual choice (e.g. privacy settings)
It dispenses with the need for wasteful bureaucracy and the 'in tray/out tray culture' (e.g. computer files can be reproduced cost-free)
It allows for deregulation (If Govt accepted electronic signatures on company invoices we could grow the economy by 1%)
What do we need to do?
1. Continue to invest in broadband.
2. Design regulation that enables rather than constrains � and which privileges individual responsibility. As with child protection programmes on the internet, regulation should have a default setting which individuals can then change. When it comes to Government's dealings with citizens, the default setting should always be set on privacy.
3. Reform intellectual property laws. Open government data can be catalyst for fast-moving businesses.
4. Rather than see digital technology as an industry or sector to be championed we should regard it as a repository of Conservative values that should permeate all aspects of policy. It should be the backbone of everything we do.
Discussion
- Do we need an industrial policy for the high tech sector? The space and mobile phone industries didn't need subsidies to grow.
- Technology is not just for the young, the elderly could perhaps benefit most from digital tech. Where can it be used in social care?
Government can learn a lot from the private sector's use of digital tech. For example we conduct most of our financial transactions with a single electronic ID: our credit card number. Why can't it also be used to access Govt services?
- Could government departments conduct digital impact assessments?
- As we become more dependent on digital infrastructure, people have to be confident that the information used by Govt is secure.
George Freeman - Life Sciences
As a country we need to think about what we can sell to the rest of the world.
Life sciences - defined as the use and understanding of natural systems to solve social problems - could be a major export industry.
Why life sciences?
Given the pressing need to provide food and healthcare to a rapidly growing population the developing world offers us a huge market.
World class research base: we produce more academic publications, per person per pound, on life sciences than any other country in the world.
The UK is a global centre of excellence for agricultural research.
If we support the developing countries with their agricultural, energy and medical needs then we will have significant 'soft power' influence as their domestic markets become more sophisticated.
What do we need to do?
1. Overcome EU hostility to GM tech.
2. Take advantage of the vast data mine that is the NHS.
3. Promote closer integration between hospitals and research scientists, introduce more digital technology to hospitals.
4. Longer term investment into research councils and universities.
Note: 2020 Discussions follow Chatham House rules. The views expressed in this post are those of individual 2020 members and not the group as a collective, the Conservative Party or the Government.
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