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Gavin Williamson (South Staffordshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Williams, and to have secured the debate. I am impressed by the Minister because, in anticipation of the debate, he arranged for Jaguar Land Rover to announce 800 jobs over the weekend. If that is how it goes, we should have such a debate each week to ensure that another 800 jobs are announced each weekend.
Manufacturing is incredibly important to the west midlands, which is at the heart of industry. The industrial revolution started in the west midlands, and we rely heavily on manufacturing jobs, although we have seen many changes during not only the past decade but the past century. In 1997, when I left university and started working in manufacturing, 3.6 million people worked in the manufacturing sector, but that had sadly declined to 2.3 million by 2010. However, the decline in manufacturing jobs was not confined to that period; unfortunately, we have seen a steady and continuous decline under Governments of all colours. I hope that we can approach the debate in a spirit of consensus, because of the importance of manufacturing not only in my constituency but in all constituencies across the west midlands. Although I would like to say that the decline in manufacturing employment is a national issue and that the west midlands has been able to buck the trend—
Mr Jim Cunningham (Coventry South) (Lab)
I agree with the hon. Gentleman so far in relation to Jaguar Land Rover, because the previous Government, like the present Government, did a lot to keep Jaguar Land Rover in the west midlands. More importantly, will the hon. Gentleman offer his support for the retention of the London Taxi Company in the west midlands, particularly in Coventry? It needs all the support that it can get. The Minister has assured us that he will support us to retain the London Taxi Company in Coventry.
Gavin Williamson
I cannot pledge what the Minister will say, but I personally offer my support. For such an iconic brand with such a sense of Britishness as the great London taxi to be built anywhere other than Great Britain would be an absolute tragedy. I understand that one of the problems with London Taxis International was that it outsourced the making of many of its parts to China and the product quality was not right at final assembly in Coventry. I do not, however, pretend to understand the root causes as well as the hon. Member for Coventry South (Mr Cunningham) does.
The hon. Gentleman asked whether I would pay tribute to what the previous Government did to support Jaguar Land Rover. I would particularly like to pay tribute to the right hon. Member for Wolverhampton South East (Mr McFadden) who did so much to support the automotive sector when he was a Minister, including with the establishment of the Automotive Council and other initiatives that the present Government have taken further and improved. That is why a consensual approach is important in the debate, because there is much to be gained from looking at where we can agree and how we can improve our industrial base.
It is my firm view that the decline in manufacturing in the west midlands has held back other sectors of the economy. The number of people employed in manufacturing in the west midlands between 2000 and 2010 fell from 462,000 to 279,000. That has been reflected in most of our constituencies. The gross value added that manufacturing contributed to the west midlands economy fell from 22.5% to 14.5%. That has a massive impact on the spending power of all our constituents and, therefore, a massive impact on retailers and service industries, which are all very important to the west midlands.
I may be considered an old romantic, but I believe that the beating heart of the west midlands is our manufacturing industry. We can produce the best goods, sell them around the world and be a great success. In South Staffordshire 3,600 of my constituents, or 15.9% of the active work force, work in manufacturing, which is almost double the national average. Although we may not have lots of factories, we have many important ones, including the new Jaguar Land Rover engine plant, and manufacturing has a massive significance for employment and prosperity in South Staffordshire.
Peter Luff (Mid Worcestershire) (Con)
My hon. Friend is right to emphasise the decline in manufacturing jobs historically, but is it not right to say that the success of Jaguar Land Rover means that the problem facing the west midlands manufacturing industry is a shortage of skilled engineers? Should we not be sending out a message to young people, “Come to engineering, because there is a really attractive, stable, long-term, good career for you in engineering in the west midlands and elsewhere.”?
Gavin Williamson
My hon. Friend makes a valid point, and one of the brakes on expansion for many manufacturing businesses is the need for skilled, qualified and able labour to work in design, manufacturing and other aspects of their business. There has been a boom in apprenticeships in South Staffordshire, where 1,000 of them have been created in the past year alone, and the apprenticeships that so many manufacturing firms offer are some of the very best. I would tell pupils at Codsall community high school, Ounsdale, Edgecliff, Cheslyn Hay or Great Wyrley—I think I have managed to mention all my high schools—that they should look at a career in manufacturing where there is a high-quality apprenticeship, because that will offer them as many opportunities as a degree, which is the route that we have traditionally encouraged young people to follow.
Mr Marcus Jones (Nuneaton) (Con)
I congratulate my hon. Friend on securing this important debate. Does he agree that one of our big problems is that for many years we have not valued those who have gone into engineering, unlike other countries, such as Germany, which regard engineers as highly qualified, highly skilled professionals? Should we not put more emphasis on making engineering that sort of career in this country?
Gavin Williamson
I am pleased that a former solicitor recognises my importance as a former manufacturing man. My hon. Friend is absolutely right; we have tended to see manufacturing as a dirty industry, and we have often steered our children and young people away from it. We want to encourage many more people to take up the cudgels and go into manufacturing. Although manufacturing has shrunk as a percentage of gross value added, it still plays a vastly important role in the prosperity of the nation. Manufactured goods make up 48% of our exports.
Mr Robin Walker (Worcester) (Con)
Yamazaki Mazak, a machine tools manufacturer that is one of the largest employers in my constituency, sells 80% to 85% of its production overseas in exports. It is hosting an event with UK Trade and Investment in March to show other manufacturers the benefits of export and make sure that they can access markets around the world. Does my hon. Friend agree that that is the sort of partnership between the private sector and the Government that we really need to get manufacturing in the west midlands going and to support UK exports?
Gavin Williamson
There has to be a clear recognition that industry and Government do not work in separate silos—they have to work hand in hand—and one of the areas that we have not put enough emphasis on is small and medium-sized enterprises. Of course, it is easy to talk a lot about some of the big names in manufacturing in the west midlands—I am sure that we will do so in this debate—but historically, SMEs have often significantly underperformed by comparison with their competitors in Germany and France in realising their export potential. If we were to encourage those SMEs, to see more of them attacking export markets with as much gusto as their competitors in Germany, France, Italy and Spain, that would make a vast difference not only in redressing our balance of trade but in ensuring that we create more jobs in the west midlands, including in South Staffordshire.
Mr John Spellar (Warley) (Lab)
The hon. Gentleman has just mentioned a number of our competitor countries. However, is not one of the big differences in those countries the approach of the public sector and civil servants? It is fashionable at the moment to talk about some of the deficiencies of our civil servants, and this is clearly one of them. Those competitor countries actually look after their own industry, but we in the UK have ambulances and fire engines being imported; we only have to go down to Palace Yard to see police vans from Germany. Indeed, the Home Office has actually told the West Midlands police force that it cannot buy Jaguars for its motorway fleet. Is not that an absurd position to take, and does it not need all parties to get a grip of the civil service on this issue?
Gavin Williamson
The right hon. Gentleman makes a valid point. Although I do not know the details of the West Midlands police force arrangements, a lot of Government procurement should be about ensuring that officials place a higher value on actually buying British; certainly, they should ensure that a value is placed on jobs being created in the west midlands and the rest of the UK.
Gavin Williamson
I will give way to the hon. Gentleman, who might have got a little bit lost on the way over from Northern Ireland.
David Simpson
I congratulate the hon. Gentleman on securing this debate; I came to make sure that he knew what he was talking about. Certainly, he has been very impressive thus far.
Although the west midlands is doing very well, the hon. Gentleman will agree that other parts of the UK are not doing as well. I come from a constituency that has the second largest manufacturing base in Northern Ireland. Does he agree that, to grow other areas, we need more of a level playing field, whether right across the whole UK or across the EU?
Gavin Williamson
The hon. Gentleman makes a valid point. I want to ensure that we have a level playing field in procurement. We must recognise the fact that many Governments—whether in Germany or France—put a great value on ensuring that local employment is created as a result of their procurement.
Northern Ireland has benefited significantly, whether by buses being produced in Ballymena or other things. We would like to see various parts of the UK—whether Northern Ireland, the west midlands, Yorkshire, the north-east or the north-west—all benefiting from a Government who are passionate about buying British. I hope that we are starting to see that, but I would certainly like to see a lot more of it.
Jeremy Lefroy (Stafford) (Con)
I am most grateful to my hon. Friend for giving way, and I congratulate him on securing this debate. On Friday, I visited Alstom with the Government’s chief scientific adviser at the Department of Energy and Climate Change, because Alstom is a major investor in energy, particularly high-voltage direct current. One of the points I noted was that our national grid buys most of its transformers from overseas. Stafford is the only place in the UK with a transformer manufacturer. However, the real reason that the national grid is buying from abroad is that in our procurement in the UK we do not take into account the quality of UK products and hence their longevity. The value-for-money approach needs to take longevity into account. If that were the case, I believe that we would be buying more from UK manufacturers.
Gavin Williamson
My hon. Friend, who is a constituency neighbour of mine, makes a valid point. Alstom also has a significant impact on my constituency. Looking at how things are procured, the value that is gained over a long period and the investment, in terms of jobs, training and apprenticeships that are brought to the UK, are all incredibly important points that must be recognised in Government procurement.
Mr Aidan Burley (Cannock Chase) (Con)
I welcome the consensual nature and tone of my hon. Friend’s debate, and I just want to build on the point made by my hon. Friend the Member for Stafford (Jeremy Lefroy). Is my hon. Friend aware that under EU procurement rules there is actually the possibility that a Government can introduce what is called a socio-economic weighting to a bid, which means that they can put a value on bids from companies in their own country, notwithstanding the other bids that come from across the EU? We saw that with the Bombardier problem, where it was argued by the civil servants involved that, in order to fulfil EU procurement rules, we had to have equal weighting for all bids from across the EU. Actually, what other EU countries do is place a socio-economic value on companies from their own country. Should we not send out a message today to the civil service that we should be doing the same?
Gavin Williamson
That is certainly a message that I will heartily endorse, because Government decisions on procurement have a massive impact. Often there is a lot that can be learned from our continental counterparts, primarily about how to ensure that we support and benefit our own businesses.
I will now go a little bit away from procurement to return to exports, especially the importance of exports in the west midlands. Of course, much of what we are producing is for export, and as I mentioned, almost half of the UK’s exports are of manufactured goods. We hear an awful lot of talk about how we need to improve exports from the service sector and our creative industries, and about bringing in more tourists to the UK. Those are all incredibly important issues, but if we could achieve a 10% increase in the amount of manufactured goods that we export, that would have a much more significant impact on our balance of trade, job creation and the wealth of our nation.
I very much welcome the work that has already been undertaken by UKTI and I encourage it to do more. However, I will go back to the point I made earlier, to say again that it is very easy for us all to focus on the very large businesses but there are some fantastic businesses that are quite small, perhaps employing only 20 to 200 people, and quite often they fall under the radar. Recently I spoke to a constituent, Louis Barnett, who exports chocolate from Britain; Mexico is one of his largest markets. However, he did not understand about export guarantees, or what else was available. Now he is working very closely with UKTI and he has a much better understanding of the support that is available to help his business and many similar businesses. That is the message that we need to get across—that there is a vast market out there. It is not just the west midlands, or the rest of the UK; it is the world.
Karen Lumley (Redditch) (Con)
I congratulate my hon. Friend on securing this debate. Does he agree that manufacturing is alive and kicking in the west midlands, and will he join me in congratulating Peterson Springs, a company in my constituency, which last year increased its exports by 20%? I would be delighted if the Minister would like to visit it.
Gavin Williamson
My hon. Friend is getting a very early bid in there; again, I will leave the Minister to respond to that request himself. However, I of course join her in congratulating that company on its work. I am sure that one of the great reasons it has seen such export success is its investment in research and development. R and D is important in the west midlands. Indeed, 72% of all R and D is derived from the manufacturing sector, so we must appreciate what a significant role the sector plays in terms of our universities and developing new technologies. One of the finest examples is the Warwick Manufacturing Group, which is based in the west midlands and really leading the way. It is a shining example of what we want to see more of, not only in the west midlands but right across the UK.
Jeremy Lefroy
I just want to point out the importance of the Government’s regional growth fund. In the case of Alstom—I have already mentioned Alstom, and I would be grateful if the Minister could visit it to see for himself the impact of the RGF—the fund has been used to invest in world-beating high-voltage direct current technology. For instance, last year Alstom received an order worth 250 million euros from the Swedish grid, even in the face of stiff Swedish opposition.
Gavin Williamson
I certainly concur with all the points that my hon. Friend has made, and my right hon. Friend the Minister will have a very busy diary by the time that he leaves Westminster Hall after this debate.
I am very conscious of time, and that other people want to contribute to the debate. So I will try to go through some of the points that I want to make very rapidly, and I hope that Members will not think me discourteous if I try not to take too many interventions from this point on. As I say, I am very conscious that others want to an opportunity to speak.
South Staffordshire has seen some enormous manufacturing successes since 2010. Last year, McCain Foods announced it was investing £3 million in its Wombourne factory, introducing new product lines, securing the factory’s future and creating jobs. We have seen a massive investment by Moog’s aviation division, which has moved from its old site in Bilbrook, in my constituency, just a couple of miles down the road to the new i54 site, which is also in my constituency. It has invested many tens of millions of pounds, securing British jobs—jobs that have a significant impact in not only South Staffordshire, but Wolverhampton. We have seen investment from Eurofins. Of course, the most significant investment came from Jaguar Land Rover, which invested £350 million in the i54 business park. That will, I hope, create 750 jobs and make sure that all the company’s engines are manufactured in the UK. The firm is investing significantly in new technology, such as its new four-cylinder engine, which will reduce emissions and, I hope, drive exports and domestic sales.
Jack Dromey (Birmingham, Erdington) (Lab)
The hon. Gentleman is to be congratulated on initiating the debate. He was right when he said there is a degree of agreement. If the scrappage scheme saved the automotive industry from collapse, the Automotive Council provided the focus for its regeneration, and it is welcome that there has been continuity of policy under this Government. However, on investment, which is crucial, does the hon. Gentleman share my concern that, in a global marketplace in which we need to export on the one hand and attract inward investment on the other— particularly in the automotive industry—prolonged uncertainty for years to come as to whether our country will remain in the European Union could deeply damage investment decisions?
Gavin Williamson
No, but I thank the hon. Gentleman, because we have worked closely on a number of issues that affect our constituencies. We might not agree on his last point, but there is certainly a lot of agreement on many other issues.
The investment in the i54, including by Jaguar Land Rover, happened not only as a result of Government support. We often forget that although central Government play an important role, the role played by local authorities has been just as important, whether it is South Staffordshire district council, Staffordshire county council or Wolverhampton city council. They put their money where their mouth is and supported investment in infrastructure.
Michael Fabricant (Lichfield) (Con)
May I, too, congratulate my hon. Friend on initiating the debate? Will he also give credit to the role of the local enterprise partnerships? Lichfield is a member of the Greater Birmingham and Solihull LEP, which is dynamically run by Andy Street, who is also the chief executive officer of the John Lewis group. He is working with my noble Friend Lord Heseltine as part of a pilot programme, which could bring in a further £1 billion in investment. Would my hon. Friend like to say a few words about the role of LEPs in stimulating industry?
Gavin Williamson
I am happy to do so, because I was going to touch on that in relation to the Greater Birmingham and Solihull LEP pilot. I hope that it will be a massive success and that it can be rolled out to the Stoke-on-Trent and Staffordshire LEP and the black Country LEP. I was also going to touch on the importance of city deals. Rather by coincidence, today is the deadline for them to be submitted, and the black country and the Stoke-on-Trent and Staffordshire LEPs have both submitted theirs. City deals will be a key mechanism in helping small and mid-sized businesses to expand, and they will give LEPs much greater powers and a much greater ability to bring money in. Whether we are talking about the regional growth fund or what the LEPs are doing, it is key that our focus is constantly on bringing in private sector investment to support public money.
Jack Dromey
The hon. Gentleman is absolutely right that the role of various key players is recognised, but does he agree that it is also important that we recognise the role of the work force? On the one hand, the Society of Motor Manufacturers and Traders has praised the British work force in the automotive industry. On the other hand, the remarkable Ralph Speth has said that the turnaround of Jaguar Land Rover could not have been achieved without the support and co-operation of the work force.
Gavin Williamson
The hon. Gentleman makes a valid point. Any business is only as good as its work force. The work force make the business; the managers, the people working on the shop floor and the designers are what the business is. The hon. Gentleman will not hear a single word of disagreement from me on that.
What I hope we will see from the LEPs is embodied in what we will see over the next couple of years, with the city deals and what is being piloted in Birmingham—a great expansion of their role, with them taking a much more active role, being much more involved in small, medium-sized and large businesses, and encouraging investment.
The regional growth fund has an incredibly important role to play. I welcome the fact that we have it until 2015. I also welcome the fact that, in the last round, the west midlands benefited from £123 million of investment from the RGF. Those are immense positives, which I welcome, but I would like the RGF to go far beyond 2015. I appreciate that it is not always within the gift of the Government to say when these things will go on to, but we want some degree of consistency in industrial policy. I always say that one of Germany’s great successes is the fact that it has taken a consistent approach to industrial policy pretty much since the war. There has been more of an evolutionary process, as against radical change when there has been a change of Government.
I very much welcome what the RGF does, but one slight flaw in it is the fact that it is aimed at very big investments. I applaud what the black country LEP did to bring together a consortium of businesses. A number of the people involved in those businesses live in my constituency, and they have talked about the important role that the initiative has had in helping much smaller companies to tap in to what the RGF can deliver. I encourage other LEPs to look at a similar mechanism and at how they can build consortia to tap into the RGF.
I would welcome it if the Minister could say something about the Government’s commitment to the RGF and give more commitments about what it can do. I was going to say that I will not engage in special pleading for the west midlands, but that would be a lie—I do want to engage in special pleading. We want the number of manufacturing jobs to increase, and the RGF will play an important role in that. Yes, cuts in corporation tax are important. Yes, Government support for everything from Catapult investment into apprenticeships is vital. However, for the west midlands to grow, the Government must back British and west midlands manufacturing consistently, all the way, absolutely to the hilt.
The local authorities in my constituency—Staffordshire county council and South Staffordshire district council—and Wolverhampton city council are very much working to make sure that we get tens of millions of pounds more in investment in the i54 business park. I would like a clear commitment from the Minister that he will support Staffordshire county council, Wolverhampton city council and South Staffordshire district council in getting that investment and that he is willing to listen if they need help and support from the Government. He has had an open-door policy since he came to his post in September, and I very much hope that that continues.
Together, consensually, as a group of west midlands MPs, we can make sure that the west midlands are the industrial heartland and the manufacturing centre of this great nation, and that our manufacturing businesses are once again growing and employing more people. We are starting to see that, and that is what we all want and what we are all striving for. I hope my right hon. Friend the Minister will help us to deliver that.
Hywel Williams (in the Chair)
At least eight hon. Members have indicated a wish to speak. I intend to start the winding-up speeches at 10.40, so I ask them to try to restrict themselves to about five minutes, if possible, so that everyone can get in.
Richard Burden (Birmingham, Northfield) (Lab)
I congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing the debate. I agree with a lot of what he said. He was right to emphasise the importance of continuity. I am pleased that he began his speech by mentioning the 800 new jobs that have been created at Jaguar Land Rover. That is a tribute to many people, including Jaguar Land Rover itself, under the ownership of Tata, which has really put its money where its mouth is. Tata understands the importance of investment in plant, skills and product, and in the supply chain to back that up. I will say more about that, but it is important to recognise the importance of JLR these days as a corporate citizen of the west midlands.
That said, the markets where Jaguar Land Rover is expanding are the far east and elsewhere. If it were as dependent on the European market as some other manufacturers are, however good a corporate citizen it is, the story would be different. We heard about Honda shedding 800 jobs last week—just outside the west midlands, admittedly—Ford announcing plans in October to cut 1,400 jobs at plants in southern England, and Vauxhall moving to a four-day week for more than 2,000 workers in Ellesmere Port. Only last week General Motors forecast that European car sales would weaken still further this year. I say that because the UK exports 82% of its cars, and the European market is vital to that. In all seriousness, going down the road of knee-jerk anti-Europeanism will not help. What happens in the eurozone will affect us, whether we like it or not. I hope that that big picture will be remembered on Friday.
The automotive industry is doing well. The west midlands is a key part of that, but the Government could do more to back it up. I want to say something about the supply chain. There has been £6 billion of major investment by the big manufacturers, but if we look at who supplies them, we see that, all too often, the parts come from abroad. Most of the big first-tier suppliers are not UK-owned, but there is no reason why more products could not be manufactured here and supplied to them through our second, third and fourth-tier suppliers. The UK could get a lot more benefit out of that if it ensured that the myriad often specialist companies in the west midlands and elsewhere got a greater piece of the action. The Society of Motor Manufacturers and Traders has estimated that there could be £3 billion of extra opportunities if we could get more coherent support for the supply chain.
Some good things have happened under the present and previous Governments. The regional growth fund, which has been mentioned, and the advanced manufacturing supply chain initiative are good, but we need to do more, and that is the message coming from the automotive industry. It is a bit of a cliché, but it is true none the less, that the Government need to be consistent and joined-up, and to work on industry’s time scale, not the glacial pace at which too often they work. They also need to do more about access to finance. For small and medium-sized firms in the supply chain, access to finance is still an issue, and many such firms continue to tell me either that banks do not understand how they operate, or that they do understand but work at a glacial pace or make credit so conditional, so prohibitive, that only firms that probably do not need the credit in the first place can get it.
Mr Spellar
Does my hon. Friend agree that there is an absurd situation for suppliers who have long-term contracts with major companies such as Jaguar Land Rover or, indeed, Rolls-Royce, which has a massive order book stretching out 10 years? Rolls-Royce is having to fund them because the banks will not lend against that very predictable order book. Is not that madness?
Richard Burden
My right hon. Friend is absolutely right. We are all a bit like cracked records when we say this. I chaired the Regional Select Committee on the West Midlands, and our first report was on that issue. We highlight it time and again, and if we are to make the step change that is needed, we must deal with it.
I have already taken five minutes, but I want briefly to mention two things, beginning with local involvement. Bringing banks and industry closer requires mechanisms that will allow that and encourage it to happen. Often, such mechanisms are the most successful when they are born out of crisis. I know that from my experience of the kind of work that was done after the collapse of MG Rover and partly in preparation for what eventually happened there. The regional development agencies were starting to do some good work on that. They have gone now, but a glue to stick things together—finance sector and industry co-operation, reaching out to SMEs and understanding the needs of manufacturing—remains vital. That is why Lord Heseltine’s report is so important and why I welcome the pilot scheme being mounted in the Greater Birmingham and Solihull area, but there is a need for follow-up. I hope that when the Government consider the bid submitted in relation to the pilot, they will see the huge potential for the local enterprise partnership and, more importantly, for the broader west midlands and beyond.
I acknowledge and support what has been said about procurement and skills, but I will not elaborate on that. My last comment is on technologies and the future. I have spoken entirely about the automotive industry, but when I do that, I am not talking simply about cars, or even commercial vehicles and so on. I am talking about an industry at the heart of manufacturing, which is often a catalyst for the development of other industries, whether in defence, in composites, in other advanced manufacturing, or in medical technology. That is why messages of the kind that are coming from the Automotive Council are so important and why we should understand the contribution made to manufacturing by Britain’s motor sport industry, many of whose companies are based in the west midlands. For those benefits to be developed, there must be a consistent Government approach. It is also vital to have mechanisms in our region that are controlled and run by people in the west midlands who understand manufacturing, who can decide local priorities and, just as importantly, who can mobilise and lever in the resources needed to increase our manufacturing industries’ potential and translate it into reality.
Chris White (Warwick and Leamington) (Con)
I commend my hon. Friend the Member for South Staffordshire (Gavin Williamson) for securing this important and timely debate. I am also delighted to follow the hon. Member for Birmingham, Northfield (Richard Burden), not least because of my experience of working for MG Rover in his constituency for several years.
Manufacturing accounts for nearly 15% of the gross value added for the west midlands economy, above the national average. With about 290,000 people still working in manufacturing, we should recognise the strength that the sector maintains in the region. As co-chair of the Associate Parliamentary Manufacturing Group I was pleased to host a round table last year at Warwick Manufacturing Group, located at the university of Warwick, to discuss the future of manufacturing in our region. There was general agreement that if we can get the policy right, there is great potential for growth.
Our region has a number of strengths on which we need to capitalise. First, manufacturing is likely to become more highly skilled in the years ahead—the UK Commission for Employment and Skills estimates that by 2017 there will be as many people working in the higher end of the industry as the lower end—and we have a range of world-class research establishments such as Warwick Manufacturing Group, which will also be home to one of the Catapult centres for high-value manufacturing, and Coventry university’s automotive engineering research group, as well as the world-class universities of Birmingham and Coventry. I am glad that the Coventry and Warwickshire local enterprise partnership has sought to integrate those institutions fully into its five-year plan, but we need to do more to strengthen the triangle and create a strong manufacturing cluster right at the heart of the region.
Secondly, we have strong connectivity with the rest of the UK. Our region connects well to London and the south-east by road and rail, and our good access to aviation gives global reach. We need to continue to strengthen our regional infrastructure because it is key to boosting regional productivity and making our manufacturers competitive in the global marketplace. I urge the Government to work more closely with our local enterprise partnerships to ensure that the west midlands is given proper consideration when infrastructure spending is discussed.
Thirdly, we have a strong brand. At the Conservative party conference last year, I was pleased to speak at an event hosted by IDEA Birmingham, a collaboration between businesses and Birmingham City university, about improving growth in the region through good design. It was clear from that event and from speaking to businesses involved in it that our region’s heritage and reputation, which attracts businesses to invest, has the potential to draw in more inward investment. The Government have rightly stressed the need to rebalance the economy away from dependence on financial services and imports and towards manufacturing and exports, but we must ensure that we have an integrated approach that builds on the collective strengths of our region.
Finally, I do not want to miss this opportunity to invite the Minister to Warwick and Leamington to visit Aga Rangemaster and DCA Design International, companies which are local, national and international success stories.
Ian Austin (Dudley North) (Lab)
It is great that we are having this debate, and I congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing it. He is absolutely right to highlight the great news we have had this week of 800 new jobs at Jaguar Land Rover, and to draw attention to the contribution that small and medium-sized enterprises make to the manufacturing sector in the west midlands.
We have companies such as Revolvo at Queen’s Cross, which is a traditional bearings manufacturer that now exports to Brazil and produces bearings for large wind turbines, showing that traditional manufacturers can find new markets in emerging economies abroad and in new industries in this country. Eurocraft at Netherton produces the cabinets that house the communications equipment installed in streets across the country for broadband connections. Boss Design produces what is, without doubt, the best furniture in the world. The chairs that world leaders sat on at the Gleneagles G8 meeting and those that right hon. and hon. Members sit on when filming “Question Time” on a Thursday night are all manufactured in the middle of Dudley. Cab Automotive is a fantastic company in Tipton producing car components for manufacturers around Europe. It is bringing the supply chain back to the black country by beating German companies for contracts with German manufacturers.
Like many right hon. and hon. Members, I spend a lot of my time visiting local companies and meeting with organisations such as the chamber of commerce and Made in the Midlands and listening to their views. They tell us that they want, first, a stable and competitive tax regime that enables them to plan and invest for the long term; I therefore welcome the decision to reinstate capital allowances. Secondly, as we have already heard, they want access to finance—that is absolutely crucial. Eurocraft, for example, is winning orders from around the world but it has to turn business away because it cannot get the finance it needs from the banks to invest and fund expansion. Thirdly, they often complain about skills shortages in the region and their inability to attract young people into manufacturing.
It is no exaggeration to say that my constituency of Dudley has had a bigger impact than anywhere else in the country on the development of Britain’s economy. Dudley lit the spark that fired the industrial revolution and changed not just Dudley and the black country, but Britain and the whole of the world. That happened in Dudley.
Mr Spellar
My hon. Friend is of course entitled to make his case in his own way, but as the Member of Parliament for Smethwick, which contains the Soho works of James Watt and Matthew Boulton, I think that his proposition is, at the very least, contestable.
Ian Austin
It is true that Watt and Boulton and the rest of them exploited the industrial revolution, but it was triggered—[Interruption.] It is true. Perhaps my right hon. Friend needs a history lesson: the industrial revolution was triggered by learning to smelt iron ore with coke, which enabled the production of cast iron in sufficient quantities, and that happened first in Gornal in my constituency, so it is absolutely true that the industrial revolution started in Dudley. My point is that we have to be inspired by that history and to create in the 21st century a new industrial revolution to bring new businesses, investment and jobs to the region.
As we have heard, we have great strengths in the west midlands. We excel at innovation, which is the driving force behind our economy, we have an adaptable work force and we have companies that can produce absolutely anything, but we have to be honest about the fact that the regional economy faces major challenges in transport and trade, innovation and investment, and jobs and skills.
The recession hit the west midlands harder than anywhere else in the country. Since 1976, the region has fallen behind the national average—36 years in which we have dropped further and further behind. During a decade of growth under Labour, ours was the only region in which private sector investment fell, and although we have some world-beating businesses and great universities, we have not managed to attract new industries to replace the jobs lost in traditional ones. Fundamentally, that is because we have not had the skills that investors in industries such as computing and pharmaceuticals look for.
Even before the recent recession we had higher unemployment than in the rest of the country, and the proportion of jobs that are in the public sector or low-growth industries is above average. Birmingham should be the engine driving the region’s growth, but one in three jobs there are in public services and only one in 10 are in manufacturing. Underpinning all of that are the most worrying facts of all: we have too many people with poor literacy and numeracy and too many with no qualifications. In our regional economy, there are 70,000 fewer workers with high-level skills than in other regions, and we have a lower proportion of managerial, technical and professional jobs. Over the next 20 years, there will be huge growth in areas such as low-carbon manufacturing, advanced manufacturing, digital media and biomedical technologies, but the areas that get the jobs will be the ones that have the skills investors are looking for.
I refuse to accept that our best days are behind us. I am ambitious for our region and I believe that we are as good as anyone. I want to ensure that people in the west midlands have the opportunities that people elsewhere in the country take for granted. As west midlands MPs we should agree, first, to make education and skills the No. 1 priority, setting as an ambition for the region the biggest rise in educational standards anywhere in the UK. We need more people doing technical apprenticeships. I want to see a university technical college in every town in the region, equipping youngsters with the skills manufacturers need and persuading them to take up fulfilling and rewarding careers in industry. We need better links between schools and universities and a real focus in the black country, with businesses, schools, colleges, universities and local authorities there coming together to work out how to attract new investment.
We should consider introducing regional and industrial banking. Could we use local authority pension funds in the region to fund investment in new industries and emerging technologies? Let us sort out the region’s transport problems. I would like to see High Speed 2 not stopping at Coleshill, but going through Birmingham and into the black country, where we have the largest concentration of manufacturing companies anywhere in western Europe. Let us extend the runway at Birmingham and have more direct flights to India, China and Russia. As my right hon. Friend the Member for Warley (Mr Spellar) said, let us sort out procurement, to support the regional economy.
As Britain emerges from recession and the economy starts to grow again, if we do some of those things we will be able to build a stronger economy and exploit new opportunities with better skills and more innovation. That will transform the west midlands and the lives of the people who live there.
Mr Marcus Jones (Nuneaton) (Con)
Thank you, Mr Williams, for allowing me to speak in this important debate.
I congratulate my hon. Friend the Member for South Staffordshire (Gavin Williamson), who is a staunch advocate of both manufacturing and the west midlands. Manufacturing industry is extremely important to the west midlands and to my constituents. Twenty-two per cent. of people in work in my constituency are engaged in the manufacturing industries. I also have a large number of manufacturing companies in my constituency, from large manufacturers, such as Rolls-Royce and Triton Showers, to small and medium-sized companies that serve niche markets and the supply chain in the automotive and aerospace sectors.
I have visited many such companies in my constituency, and it is obvious that companies that are fully engaged with the growth markets of south America and China are doing very well. The decision of Jaguar Land Rover, which is fully engaged with those markets, to employ a further 800 people at Solihull is welcome. That is in stark contrast to the unfortunate situations that we have seen recently for manufacturing companies that are concentrated on the domestic and European markets.
I therefore welcome the Government’s action to support further investment in UK Trade and Investment with a 25% increase in year-on-year funding. Putting more money and resources into UKTI is important. I am sure that the Minister agrees that our efforts should be focused on getting the best value for money from that additional resource. I am also sure that he will ensure that the additional investment and resources are carefully monitored, so that we get value for money, particularly for west midlands manufacturing companies.
I commend the Minister and his colleagues, including the Prime Minister, the Chancellor and the Foreign Secretary, for their hands-on role in promoting our exports. All those representatives of our Government are getting onto planes and getting out to emerging markets. [Interruption.] The hon. Member for Dudley North (Ian Austin) thinks that that is funny, but I think that it is fantastic that our Ministers are getting out there and working with other countries. Many emerging countries have completely different cultures to ours, and they value the time provided by Ministers and senior Cabinet Ministers, who are doing a great deal of good and providing a great deal of benefit to our manufacturing industry.
Skills are our biggest challenge to grasping the opportunities that are coming down the track for the west midlands. Although we have a highly skilled work force in the west midlands, the work force in our manufacturing industries is ageing. We must ensure that we are creating skills to meet the challenges and opportunities that lie out there for the west midlands. I am still not sure that we have a golden thread of skills running through our growth agenda in the west midlands. We must do far more work on that.
James Morris (Halesowen and Rowley Regis) (Con)
My hon. Friend is making an important point about skills. One of the recommendations of the Heseltine review, in relation to his idea of single-pot funding, is to have a much more radical devolution of responsibility for skills funding, with the local enterprise partnerships taking a more important role, to address the long-term problem that the hon. Member for Dudley North (Ian Austin) also raised: we do not have the correct match of skills in the west midlands to take advantage of the massive opportunities before us.
Mr Jones
I thank my hon. Friend for his comments. He is absolutely right. Further education is now taking a far greater role, with our further education colleges trying to put on more courses that suit local employment and industry. We must develop that further and get the public sector working more with the private sector.
One of my other great concerns is for some of our smallest manufacturing companies that employ four, five or six people. Although there has been welcome progress on apprenticeships and Government funding, we have not gone far enough. For a manufacturing company of that size to employ an apprentice, they often effectively need to designate one member of staff to mentor and look after that apprentice, and that causes a huge strain on a small business’s resources. Although many small business owners to whom I have spoken would like to start training apprentices, their business models do not allow for it. Nationally, we are now engaging business mentors, and I should be grateful if the Minister considered a similar regional system to engage people involved in manufacturing who are perhaps coming up to retirement, or who have retired, to work as mentors by going into companies to support the development of apprentices. Will he consider whether a funding stream could be developed for that?
We are short on time, so, finally, I plead on behalf of the Coventry, Warwickshire and Hinckley and Bosworth city deal bid, which is currently being submitted to the Government. The bid goes across county and regional boundaries, reflecting the rich manufacturing history and the current manufacturing activity within those areas. I am convinced that, if we can secure the city deal, it will help us to drive the skills agenda, to obtain growth from the high-value manufacturing that we can produce in our region and to connect with emerging markets. Will the Minister make a plea to my right hon. Friend the Financial Secretary to the Treasury to ensure that the city deal bid is successful? I hope that we can keep driving our local economy forward.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing this timely and important debate on an issue close to all our hearts as west midlands MPs.
I am sure there could be much discussion with my neighbour, my hon. Friend the Member for Dudley North (Ian Austin), on the genealogy of manufacturing in the west midlands. My constituency’s claim probably focuses on the activities of John Wilkinson, who launched the world’s first iron boat in Bradley and made other innovations in the Bilston and Bradley area. I suspect that that ground is contested and we would all have to make our own claim.
The debate, of course, is not only the story of the past; it is the story of the present and future. I echo the welcome for the Jaguar Land Rover announcement and, indeed, for the investment under way on the border of Wolverhampton and South Staffordshire for the new engine plant. That site was ready for development only because of the activities of Advantage West Midlands, the regional development agency at the time, which prepared and kept the site to have something ready for Jaguar Land Rover to go into. I make that point not necessarily to try to rewind the clock, but to say that the state has a role, either locally or nationally, in helping to make such investments happen.
The important thing for the local enterprise partnerships, which have replaced the regional development agencies, is that they have the power and punch to carry out their role. That is why Lord Heseltine’s recommendations for more devolution of power and spending are important. There will be significant institutional resistance to that within Whitehall. The report is easy to write but a challenge to implement. If the LEPs are to be effective, and if the commitment of business people is to pay off, they need power and punch.
The hon. Member for South Staffordshire was right to say that manufacturing is not all about headline names; critically, it is about the supply chain and the small companies that dot our constituencies. I call that the ecosystem of manufacturing, and others refer to it as the industrial commons, but all those companies are interdependent and reliant on one another. I do not want to repeat what companies have asked for, because other Members have already addressed that, but the hon. Gentleman is familiar with Wescol—the owners live in his constituency, and the business is in my constituency —a manufacturer of gas equipment. LS Manufacturing in my constituency makes quality textiles. Wednesbury Tube makes copper pipe, and there are many others.
Businesses want the things that hon. Members have mentioned. They want reasonable energy costs; they look with some envy at the rebates available to energy-intensive industries in Germany. They certainly want a skilled work force, as my hon. Friend the Member for Dudley North said. They also want the freedom to operate. That is an important message that we receive: they want freedom from business crime and metal theft—problems that we are not yet on top of and that challenge manufacturing businesses in many parts of the country.
Businesses want a stable tax environment. I welcome the autumn statement changes in capital allowances, but they prompt the question why capital allowances were cut in the first place. It never made sense to talk about the march of the makers and then impose more tax on the activity of making things. That position has now been reversed, which I welcome and have called for consistently over a number of years.
On the regional growth fund, there is a difference between announcing expenditure and getting expenditure to the companies that need it. Again, I reflect something that the Minister will undoubtedly be experiencing: due diligence is a good thing, but paralysis is not. There is a difference between announcing money and spending it. We need to get better at getting money out the door after it has been announced. It is important that that happens with the regional growth fund.
I have two other points to make in closing. Many of the issues that we are discussing are about supply-side measures. Businesses also need demand in the economy. There is not enough demand, and given that every major developed country is pursuing austerity policies, it is not surprising that businesses are struggling to employ, create and grow. It is important to have demand and the right investment to avoid the collective austerity that is dragging down demand across our economies.
I echo the point made by my hon. Friend the Member for Birmingham, Northfield (Richard Burden): business needs certainty. If we are about to embark on years of uncertainty about where we stand in the world and in relation to Europe, it will not do our manufacturing businesses any good. Of course we are in a global game—it is not only about Europe; it is about China, India, Russia and other markets—but Europe remains our biggest export market. Sending a message to both inward investors and our own domestic investors that we will now have years of uncertainty about our relationship with our biggest export market is not good for manufacturing. I am sorry to make this somewhat partisan point in what is otherwise a fairly consensual debate, but it is important to stress that all of us in this Chamber are united in wanting more of the activity of making things. I believe that geopolitics—where Britain stands in the world—is critical to investment decisions. That is the important point on which I close.
Hywel Williams (in the Chair)
I remind the hon. Member for Stourbridge (Margot James) and the hon. Member for Cannock Chase (Mr Burley), who want to speak, that I wish to start the winding-up speeches at 10.40.
Margot James (Stourbridge) (Con)
I congratulate my neighbour the hon. Member for South Staffordshire (Gavin Williamson) on securing this important debate. Nationwide, in the 10-year period around the turn of the century, we lost 1.7 million jobs in manufacturing across the country, so it is encouraging to see signs of improvement and manufacturing’s share of GDP increasing again. We have heard a lot in this debate about the renaissance in the automotive sector. Coming from Coventry as I do and having family connections to the car industry, I treat it with a special respect. It is encouraging.
I will concentrate my few remarks on the promotion of manufacturing in the west midlands in schools and universities, in the wider community and to exporters and customers abroad. The Manufacturing Advisory Service did a survey focusing on exports last year and found that 42% of respondents reported improvements in first-half activity last year, and 46% anticipated a further upturn. That is because they were exporters. Some 85% aspired to increase exports this year. MAS commented that exporting has been a key driver in improving manufacturing.
I was delighted that this Government continued with the enterprise finance guarantee scheme and opened it up to exporters, to whom it was not previously open due to EU restrictions. UK Export Finance has been renewed and reinvigorated, although it still has some way to go; I note that my neighbour the hon. Member for Dudley North (Ian Austin) said that a company in his constituency had problems getting finance. Last year, 42% of exports from our region went to the EU, 22% to Asia and 16% to North America. Opposition Members are right to point out the importance of the EU single market to our manufacturers.
My hon. Friend the Member for Worcester (Mr Walker) mentioned UK Trade and Investment, which is vital. UKTI has supported a great many manufacturers in our region, and it is approachable and willing to offer Members the resources at its disposal, including seminars to gear up for their manufacturing audience. I urge Members who have not taken up that opportunity to do so for the benefit of manufacturers in their constituencies.
I said that I would mention education. Skills are vital. My area of the black country has a skills deficit, as we have heard from other Members. Only 19% in our area have NVQ level 4 qualifications, versus the national average of 31%, and fewer people are educated to degree level. That must change. I am delighted by the Government’s commitment to apprenticeships. In 2011, we had 49,000 starts in engineering and manufacturing, and 17,000 of those were at advanced and higher level. It is vital that we keep that up. University technical colleges are a great breakthrough, and I wish the hon. Member for Dudley North success in attracting Aston to establish a UTC in Dudley, which would benefit my constituency.
I will conclude, as I know that my hon. Friend the Member for Cannock Chase (Mr Burley) wants to speak and we have only three minutes.
Mr Aidan Burley (Cannock Chase) (Con)
In the two and a half minutes that my hon. Friend the Member for Stourbridge (Margot James) has kindly let me have, I echo much of what has been said. Manufacturing is important to my constituency. The three towns making up my patch—Cannock, Hednesford and Rugeley—have a sizeable manufacturing and engineering base. More than 20% of my constituents are employed by manufacturing-centred small businesses. Manufacturing is vital to my constituents.
As Members have said, the west midlands and Cannock Chase are blessed with skilled workers in manufacturing. It is the ideal place for businesses to set up and invest. We have manufacturing firms of all sizes, including giants such as JCB Cab Systems, which employs more than 400 people, and ThyssenKrupp, which employs more than 900, right down to the small family firms with which my hon. Friends will all be familiar: Plum Logo, Mailcoms and Fuel Conservation Services, all of which employ between 10 and 30 people. All those firms are vital to supporting jobs and securing growth in our economy.
I have determined to visit as many of those firms as possible, not only to pay tribute to their hard work but to learn at first hand what challenges face local employers and listen to the views of employees. The three issues that have come up, which have been echoed in this debate, are training and skills, lending and promoting investment. I will not repeat the speeches made on those issues, but I want to impress on the Minister that it is vital to tackle the skills shortage in manufacturing in the west midlands and encourage more young people to take mechanical and engineering qualifications.
On bank lending I think, like many other hon. Members, that the pendulum has swung too far in the opposite direction. Access to reasonable finance for firms that clearly have a future has become far too difficult. Ministers have a duty to remind the banks, which were so generously bailed out by taxpayers just a few years ago, that they have a moral duty to lend to viable small businesses to create jobs and growth. I have four seconds left, so with that I will hand over to the Minister, who we are all looking forward—
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship, Mr Williams. I congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing the debate and thank him for the consensual tone that he set, which has been characteristic of the debate. Today’s debate is on promoting manufacturing in the west midlands, and from listening to hon. Members today, I think there is much to promote. Hon. Members’ contributions have strongly brought out the region’s clear strength in automotives in particular and manufacturing in general.
I join other hon. Members, particularly my hon. Friend the Member for Birmingham, Northfield (Richard Burden), who brought his considerable expertise in the automotive industry to bear, in welcoming the great news announced in the past 24 hours that Jaguar Land Rover is to create 800 new production jobs at its plant in Solihull. That is a welcome counter to last week’s grim news that Honda will cut 800 jobs from its factory in Swindon. Jaguar Land Rover sold almost 360,000 vehicles last year—an increase of 30% on the previous year—and is rightly recognised, as we have seen today, as a true success of British manufacturing.
My hon. Friend the Member for Dudley North (Ian Austin) mentioned the potential for the west midlands of the development of advanced low-emission vehicle technology. It is similar to my region of the north-east, which was at the heart of, and the spark that brought about, the industrial revolution—I want to put that on the record. It is an example of how a modern industrial strategy should work: businesses and Government working not in silos, as the hon. Member for South Staffordshire rightly said, but together to identify the sectors in which we have a competitive advantage and the potential for high growth in the future; and Government enabling and facilitating the principal actors to come together through investment and co-ordination to realise that potential.
Gavin Williamson
I appreciate the time, so I thank the hon. Gentleman for giving way. Does he think it is important for every Department, not only the Department for Business, Innovation and Skills, to encourage manufacturing?
Mr Wright
The hon. Gentleman is spot on. The Department for Business, Innovation and Skills should not be the only Whitehall Department with responsibility for business; every Department in Whitehall should be responsible for business. I pay tribute to my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) for trying to press that point when he was doing fantastic work in the Department. It would be wrong for UK manufacturing and the UK economy as a whole if we thought that business resided in Victoria street. That is not how it should be and that should be impressed on every Whitehall Department. There also needs to be a degree of consensus across the House and Whitehall on the importance of manufacturing, which would facilitate the suggestion made by the hon. Member for South Staffordshire.
As was mentioned, continuity of policy is important. It is pleasing that much of the good news from Jaguar Land Rover and other parts of the automotive sector is the fruition of policies laid down by the previous Government as part of the new industry, new jobs initiative, the low-carbon vehicles sector initiative and the points made in government by my right hon. Friend the Member for Wolverhampton South East. Such continuity and certainty over the next 20, 30 or 40 years would help British manufacturing and must be a hallmark of good industrial policy.
Despite the good news and positive figures from Jaguar Land Rover and the consensual tone of this debate, there are concerns, which I would like to flag up. Office for National Statistics figures published last Friday show that a manufacturing-led economic recovery has stalled; manufacturing output on a seasonally adjusted basis fell by 2.1% in November 2012 compared with November 2011, and that month’s figure in 2011 was itself a fall of 0.6% on the previous year. For all the talk from the Chancellor and others of a march of the makers, manufacturing output is significantly down, even from the recession—on ONS figures, the index of manufacturing is 6% below the level of summer 2010.
The national picture is confirmed in the west midlands. The survey published last Monday by the West Midlands chamber of commerce showed, for the last quarter of 2012,
“most companies, especially manufacturers, struggling to maintain their performance levels”.
In the survey, only 31% of manufacturers—down 10% on a year ago—reported an increase in domestic sales. Exports, which should be the lifeblood of an economic recovery, also showed a dip from their position last year. Steve Brittan, president of Birmingham chamber of commerce, said at the time of the survey’s publication last week:
“These figures are a concern and demonstrate that the government must act on its priorities.”
Given the huge potential of manufacturing in the west midlands and across the country, and the stalling, disappointing and deteriorating position for manufacturers, what will the Minister pledge to do differently to realise the potential?
The hon. Member for South Staffordshire mentioned the regional growth fund, and the Minister will no doubt be aware of the Public Accounts Committee report that shows that only £60 million of the £1.4 billion allocated has been spent on front-line projects. The west midlands was awarded 31 grants in the first two rounds of the regional growth fund, but as of October last year, some 18 months after the first round, only eight schemes had received funding. My right hon. Friend the Member for Wolverhampton South East eloquently raised that point; there is a huge difference in Whitehall culture between announcing an initiative and getting the money to the people on the front line. Will the Minister update the House on how he has speeded up the process to ensure that money is provided as quickly as possible? What lessons have been learned for round 3? I understand that the west midlands secured £124 million for 17 projects in October 2012. Three months after the announcement, how much of that £124 million has found its way to those 17 projects?
The survey by the chamber of commerce, to which I referred, shows that the cash and financial position for manufacturers was getting worse over the last quarter. Only 16% of west midlands manufacturers registered an improved cash-flow position compared with 31% in the previous quarter. The survey also marked low investment in plant and machinery and training, which shows, according to the chamber, a general lack of confidence among manufacturers. Given the concern of manufacturers, the past performance of the regional growth fund and perennial concerns regarding cash and access to finance, what will the Minister do differently to realise the potential? Could he say a little more about how a British investment bank, announced in September by the Secretary of State, might have a regional dimension to assist west midlands manufacturers?
Hon. Members have spoken about the successes of manufacturing and how successful foreign direct investment can transform industrial performance. Jaguar Land Rover is the obvious example, but there are others and I hope we are not complacent. We need to determine how to help the English regions. The Minister may have seen Ernst and Young’s attractiveness survey for 2012, which showed London and the south-east securing more FDI projects than the rest of England put together, and that grip is intensifying. The west midlands showed year-on-year falls in FDI of about a quarter. The report tentatively suggests that it is “worth noting” that the closure of English regional development agencies, including Advantage West Midlands, occurred in 2011.
The report states that only 12% of respondents say that they would use UK Trade and Investment for queries regarding FDI. Foreign investors are unclear as to whom they should go to in the regions if they were considering investment in manufacturing. Given that the debate is on promoting manufacturing in the west midlands, it is a crucial question: who does a potential investor from Singapore or China contact in the west midlands to get things done and facilitate investment?
Mr Marcus Jones
The hon. Gentleman seems to be giving glowing praise to the role of RDAs, particularly in the west midlands. If they were so successful, why during the time of the RDAs did private sector employment reduce in the west midlands, not increase?
Mr Wright
In general terms—I declare an interest in that I worked for an RDA before coming to the House—[Interruption.] It is probably for the best. The RDAs produced something like £6 of private investment for every £1 of public investment.
Given the importance of a single co-ordinated point to ensure co-ordination, does the Minister think that the move from RDAs to local enterprise partnerships—I think there are now six in the west midlands—has improved matters and provided a more co-ordinated approach? Ernst and Young conclude in the survey that:
“A more strategic approach to FDI that places inward investment within the overall economic context is required if the UK is to retain its lead in an increasingly competitive global market for FDI.”
It should be one of the hallmarks of a co-ordinated and active Government industrial strategy, so will the Minister say a little about it?
Finally, my hon. Friend the Member for Coventry South (Mr Cunningham) raised the important subject of Manganese Bronze. The Minister will be aware of this company, based in Coventry, which is Britain’s only black cab manufacturer and was placed in administration on 22 October last year. There is a strong possibility that a foreign buyer may manufacture the London taxis abroad. Will he say a little more on that and update the House as much as possible on the current situation? Specifically, will he set out what action he has taken with interested parties to ensure that the manufacture of black cabs takes place in the UK, and in Coventry in particular?
This has been a positive and consensual debate, and I congratulate the hon. Member for South Staffordshire again. It is clear that we need to back British manufacturers, particularly in the west midlands, in a co-ordinated, long-term way. I am interested to hear what the Minister has to say about allowing that potential to be realised.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I, too, congratulate my hon. Friend the Member for South Staffordshire (Gavin Williamson) on securing such a good debate on such an important subject. I thank all those who spoke and attended. Some 11 Government Members from the region have attended, as against four or five Opposition Members, although I do not want to make a point of that. I also thank colleagues for the spirit in which they made their points. We have had some interesting discussions on the precise history of the industrial revolution. We might have had some interesting discussions on the actual cause of the turnaround of the British automotive industry, which I believe is founded on the dramatic changes in labour relations undertaken by the Thatcher Government and the inward investment that Margaret Thatcher and Norman Tebbit brought in when they brought Nissan to the north-east of England, but I do not want to pursue that point too far.
I thank all those who have spoken, especially those who have been free with invitations to visit their constituencies, all of which I will consider. I have not been left much time to reply to the individual points, but I am happy to write to all colleagues. Some good points have been made about Lord Heseltine’s review, the role of the local enterprise partnerships, wave two of the city deals, the importance of supply chains and what we are doing to improve skills. Some specific points have been made about black cab manufacturing and so on, and I am happy to reassure the hon. Member for Hartlepool (Mr Wright) that we are dealing with that issue.
The west midlands is vital not only to UK manufacturing, but to economic growth in the wider economy. It sits at the very heart of British industry. Last Thursday, I visited the Birmingham area to see for myself some of the great things—we have heard about many others—that are being achieved by manufacturers across the west midlands, such as Aero Engine Controls, a leading aerospace and defence manufacturing company and a key part of the supply chain of the aerospace industry, or Quality Plated Products, which will be using funding from our advanced manufacturing supply chain initiative to increase capacity, create more jobs and start a new apprenticeship scheme. I also visited what is now called Mondelez International, which owns the Cadbury brand, to launch its primary authority partnership with Birmingham city council. That deal will cut red tape, reduce duplication and ensure high safety standards while reducing costs. That is one of hundreds of companies that have taken the opportunity to work closely with their local authorities to reduce the burden of regulation.
The constituency of my hon. Friend the Member for South Staffordshire is home to the high-tech i54 business park, where two global companies, Moog and Eurofins, are thriving. Jaguar Land Rover has become the third major international company that has chosen to move to the site, investing £355 million in a new advanced engine manufacturing facility, bringing with it 750 jobs and thousands more via supply chain opportunities.
No one is under any illusions, however, about the scale of the wider challenges we face. The eurozone’s continuing sovereign debt crisis is affecting our economy and depressing demand, causing uncertainty for business, and I recognise that the west midlands manufacturing centre has not been immune to such pressures, which were pronounced under the Labour Government. I think the hon. Member for Dudley North (Ian Austin) was honest enough to admit that. They presided over the fastest ever decline in manufacturing as a share of the economy. Its share of GDP fell by nearly 10%, and almost 1.7 million jobs were lost in the sector. Under the present Government, its share of GDP is growing again and our manufacturing capability is increasing in quality—no more so than in the west midlands—and represents a crucial platform on which to build economic growth and recovery.
To kick-start recovery, the Government had to tackle the deficit and take tough decisions, but we have also taken a wholly different approach to unlocking growth. We are reducing the red tape that holds business back and creating a competitive tax system so that businesses choose to locate and grow in this country and, in the last autumn statement, we provided more measures to encourage greater investment in manufacturing, such as a significant temporary increase in the annual investment allowance from £25,000 to £250,000. That is a tenfold increase. An additional £210 million will be added to the regional growth fund until March 2015 which, with the £100 million allocated from previous rounds, means that a new total of more than £310 million will be available. There will also be an extra £120 million for the advanced manufacturing supply chain initiative. I assure you, Mr Williams, that the Government have never been clearer in our commitment to manufacturing, which we see as an essential building block of a more resilient, innovative economy.
The west midlands accounted for more than 7% of the United Kingdom’s gross value added in 2010. It is important for us all, wherever our constituencies are, that the west midlands is successful and prosperous. It has long been at the heart of British manufacturing. In recent times, we have had much welcome news of private sector investment, including by BMW at Hams Hall, by Jaguar Land Rover, as I have mentioned, near Wolverhampton, and by JCB, which is investing more than £31 million to develop new engine technology. The region also has a thriving small and medium-sized enterprises sector working in the advanced manufacturing supply chain, in particular in the automotive and aerospace sectors. A significant part of the Rolls-Royce supply chain is in the west midlands. Employment in the region has increased by nearly 60,000 since the general election. Jaguar Land Rover’s announcement of record global sales last year is excellent news.
The regional growth fund is helping to rebalance the economy, especially those areas that were over-dependent on the public sector. The fund is working and is unlocking private sector investment. The west midlands was awarded the largest regional allocation of the fund in round three. Some £194 million was provisionally allocated to programmes and projects with a strong focus on high-value manufacturing growth.
I was asked a couple of specific questions about the fund. My hon. Friend the Member for South Staffordshire asked about smaller companies. They can and will benefit through the programme bids that have been awarded under the fund, rather than through the big project bids for individual companies and plants. The right hon. Member for Wolverhampton South East (Mr McFadden) made a fair point about getting the money out of the door. We have set new triggers to ensure that final offers are agreed under round three within three months. That timetable expires this week. The grants must then finally be awarded within three months, by 17 April. We will set similar and probably faster triggers under round four, which we expect to announce later this week. I am determined to ensure that money physically gets out of the door and to the companies that need it as quickly as possible, subject to the proper due diligence that the Public Accounts Committee and our taxpayers expect to see carried out.
In conclusion, the Government are working hard to encourage and support British manufacturers and to create an environment in which they are free to thrive and compete in a global marketplace. The importance of the west midlands as a manufacturing region is one of the reasons why it makes such an excellent location to hold our third manufacturing summit, which is taking place at the Heritage Motor Centre in Gaydon on 28 February. Those annual summits are an important part of our approach to having increased engagement with the sector and will bring together key stakeholders, including senior leaders from Government and from national and local businesses. There will also be an exhibition at that summit to showcase local manufacturing excellence. We want manufacturers in the west midlands to be our partners in achieving economic transformation and recovery—a strategy that places world-class manufacturing at the heart of a healthy and rebalanced economy in the United Kingdom.