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Mr Philip Hollobone (in the Chair)
I am not allowed to take part in the debate from the Chair, but, because I am an east midlands MP, I hope everyone present has enjoyed an east midlands breakfast of either Weetabix, Ready Brek or Alpen, all of which are made in Burton Latimer in my Kettering constituency.
Mr Mark Spencer (Sherwood) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. It is also a pleasure to be here to discuss the manufacturing sector in the east midlands.
We have a great deal to be proud of. Nottinghamshire has been at the heart of manufacturing for centuries. Members will be familiar with brands such as Raleigh, which started in the city of Nottingham in 1887, but they might not be familiar with William Lee, the reverend who invented the knitting frame in the village of Calverton in my constituency, starting the industrial revolution. That is something of which we can be proud. We have many claims to fame.
Chris Williamson (Derby North) (Lab)
Will the hon. Gentleman concede that the world’s first factory was the silk mill in the centre of Derby?
Mr Spencer
I am keen that we remain as a team in the east midlands. I do not want to get into the Nottinghamshire-Derby rivalry, because—[Interruption.] I forget there are other counties in the east midlands.
As a region, we have a great deal to offer and a proud history. Many other Members will go on to talk about some of the great companies such as Toyota and Rolls-Royce in Derby. Of course, in the town of Hucknall in Sherwood more than 800 staff work at Rolls-Royce making parts for jet engines assembled in Derby. Rolls-Royce has invested more than £40 million in the Hucknall plant in the past 10 years, with more to come for the industrial estate.
Manufacturing is not only about greasy metal, but a range of different manufacturing processes, including drugs—we have Boots in Nottingham—food, hosiery and many other products to which value is added.
Sir Edward Garnier (Harborough) (Con)
I am grateful to my hon. Friend for giving way so early. Does he also accept that, although great names such as Rolls-Royce, Boots and other well known regional and national companies are to be found within the east midlands, the bedrock of the industrial and manufacturing scene in our area are the smaller, family-sized businesses with perhaps 10 employees or fewer and a turnover of less than £500,000? That is the real foundation of the manufacturing sector in our region.
Mr Spencer
I absolutely agree with my hon. and learned Friend—it is easy to focus on the big boys, but small family businesses are driving the economy. They are starting to expand and take on new staff, and they will move us forward as a region so that we are seen on the map. I want to highlight some of those companies.
I do not want my speech to turn into a list of companies in my constituency, but I have mentioned hosiery and I still have a sock manufacturer, F. J. Bamkin and Son. The company was formed in 1886 and is still making socks in the town of Hucknall. It has made them for the Ministry of Defence, although the MOD has decided to procure its socks from foreign manufacturers over the past 15 years. I hope the Government can redress some of those changes of the past 20-odd years—we have looked to foreign rather than UK-based manufacturers—and start to consider quality. I can guarantee that the socks are top quality. I have even worn a pair myself. [Interruption.] I am not wearing them today.
Yesterday I was at a company called Doff Portland, which, as well as manufacturing fertilisers and agri-chemicals for garden centres, is one of the major manufacturers of slug pellets. Anyone with an allotment or garden will know what a fight it was last year to keep slugs out. If it were not for companies such as Doff Portland that turn UK-grown wheat products into slug pellets and distribute them, we would all be much hungrier.
Not all the companies in my constituency date from 1886 and 1887. Howard Marshall Engineering was formed only 10 years ago. Howard Marshall is a young entrepreneur who set up his own agricultural engineering company, and he can produce anything out of metal that people might want. He has worked for a well-known BBC car programme that I had better not name, because it does not want to be publicly linked. He has also designed and made a grass-collection machine for Arsenal football club. His going from a young man starting in business to having more than 20 staff should be celebrated, and he should be congratulated.
David Simpson (Upper Bann) (DUP)
We started many things in Northern Ireland but not the industrial revolution. I congratulate the hon. Gentleman on securing the debate. On the point he raises about a young man starting in business, will he congratulate the new university in Derby that will teach not only manufacturing but business, entrepreneurship and financial skills to young people at 14?
Mr Spencer
I happily add my congratulations to the new university. I will go on to talk about skills training, which is one area we need to improve.
I want to highlight two more companies. Many Members may be familiar with the old Robin Hood sports cars, which were manufactured locally; the company is now called Great British Sports Cars Ltd. I know the Minister might not be able to afford a sports car on his salary, but should he ever decide to purchase one, I highly recommend the two-seater manufactured in my constituency. Perhaps at some future point he would like to visit the great constituency of Sherwood to see those cars for himself.
Mr Spencer
I am sure the Minister is more than comfortable with his own life, but should any Member decide to purchase a sports car, I highly recommend one manufactured in the constituency of Sherwood.
Next door is a company called Jonam Composites, which is at the other extreme. It manufactures high-tech composite bicycle spokes that have the same tensile strength as steel but are much lighter. That is a real indication of the progress we have made in manufacturing in Nottinghamshire and the east midlands. We are going in a high-technology direction. We are at the cutting edge of what is possible in manufacturing. As a country we must acknowledge that we will probably not become the great shipbuilders of the world that we were, but there are lots of opportunities to be right at the cutting edge, as we always have been. We were at the cutting edge of the industrial revolution, and we can remain there by looking to new technologies and using our skills, so that we can once again trade with the rest of the world and ensure that we are at the right place.
One area we often overlook is food and drink. Again, Nottinghamshire has a great tradition of producing food and drink with companies such as Home Ales and Mansfield brewery, which sadly have been bought up and gone to other parts of the country. Food manufacturing makes an enormous contribution not only to the east midlands but to the UK as a whole. Mr Hollobone, I know your constituency has an interest with companies such as Weetabix.
Smaller manufacturers have been mentioned. Every butcher in my constituency adds value to their product. They produce their own burgers, pasties and pork pies. Given the issue that is right at the top of this week’s political agenda, anyone who wants a top-quality burger or pork pie and wants to know exactly what has gone into it can buy one from their local butcher. [Interruption.] The hon. Member for Leicester South (Jonathan Ashworth) tempts me to mention farm shops, but I would have to declare an interest if I did. By going down the chain to smaller manufacturers, people can get the high-quality products that consumers are keen to purchase.
However, we can do more. The east midlands is ideally placed. We hear a lot about our country’s north-south divide, but the east midlands are smack bang in the middle. Geographically, we are ideally positioned to trade with the rest of the country. We have great connections with the A1 and M1, fairly good railway links, the possibility of High Speed 2, and East Midlands airport and Robin Hood airport. We have lots of good communication links and the ability to get products in and out.
Toby Perkins (Chesterfield) (Lab)
I congratulate the hon. Gentleman on securing this debate. He, like the rest of us, will be aware of the Smith Institute report showing that the east midlands fares the worst of any area in being awarded regional growth fund money. Given what he is saying about the great strengths of the east midlands—I entirely concur—why does he think the region fares so badly when it comes to Government support from the regional growth fund?
Mr Spencer
I think we need to look at ourselves: perhaps we MPs should be banging the drum harder. We should be cheerleading for the east midlands and supporting our businesses in making bids. Because the east midlands is ahead of the game and other areas are trying to catch up, perhaps we have not done as well as we could in that regard. The hon. Gentleman makes a fair point. We need to get out there and bang the drum for the east midlands. We need to ensure that people know we are there and know what we can offer, and I hope this debate will contribute to that knowledge.
Sir Edward Garnier
On the subject of banging the drum, may I commend to my hon. Friend Premier Percussion in my constituency?
Mr Spencer
I must confess that I have never banged a Premier drum, but I shall endeavour to do so at some point in future.
The east midlands also has energy supply, which is important to businesses—
Andy Sawford (Corby) (Lab/Co-op)
I congratulate the hon. Gentleman on securing this debate. It is a pleasure to serve under your chairmanship, Mr Hollobone, particularly as you are my constituency neighbour. On the subject of energy, one of the great industries of Corby in east Northamptonshire, as I am sure the hon. Gentleman knows, is the steel industry. That, along with boot and shoe, made communities in my constituency, but Tata Steel’s particular concern at the moment is energy prices, which are much higher in this country than in France and Germany. Does he not agree that it is important that the manufacturing industry in my constituency and his can compete on a level playing field, including on energy prices?
Mr Spencer
I agree, and it is important that we as a Government address those concerns, but the hon. Gentleman will recognise how difficult it is to strike a balance between energy prices to consumers and to industry. It could be argued that logically, the more energy one buys the more cheaply one should get it; that would have a knock-on effect on our consumers and constituents. It is difficult to strike that balance and ensure that energy-consuming industries get a reasonable price, as well as our constituents who are struggling to pay their energy bills.
It comes down to energy security as well as price. Within the east midlands, the Trent valley provides a lot of electricity generation, so at least we are not far away from a power station, but we need to do more. The Government particularly need to consider carbon leakage. Energy-intensive industries are under pressure and looking to relocate elsewhere in the world. We talk about reducing the carbon footprint of industry and manufacturing, but it would be wrong to push out industries to other parts of the world where energy is probably bought from higher-carbon sources than in the UK, and then to import the goods. We should be aware of that.
Chris Heaton-Harris
I congratulate my hon. Friend on securing this debate. On the point about energy, we are now in the midst of global competition on a scale never seen before, and it is a threat to UK manufacturing. In the US, gas has fallen to one sixth of the price of four or five years ago, while our energy prices continue to rise, partly because of the contribution made to bills by wind energy. It is causing great concern in businesses such as Tata and Cummins, in my constituency. Does he have any views on that?
Mr Spencer
I recognise those challenges. Energy supply will be vital if we are to see our way through and ensure a thriving manufacturing sector. The Government need to address it and are addressing it. We must ensure that we have energy security as we move forward.
Lilian Greenwood (Nottingham South) (Lab)
Does the hon. Gentleman think that it is important for the Government to provide certainty about their direction of travel on energy? In my constituency, we have a fantastic engineering company, Romax Technology, which relies on providing service to the automotive industry and offshore wind. I know how important it is for the industry to have certainty about where the Government are travelling, in order to have the confidence to invest.
Mr Spencer
I recognise that challenge, but I feel that we are 15 years behind the game. We should have addressed these problems a long time ago. The nuclear decision was put off by previous Governments. Had we bitten that bullet much earlier, we would not be as concerned about energy security as we are today. I am glad to see that the current Government are trying to address the issue and get a clear direction. Of course, being a coalition Government brings its own challenges. Sometimes there is disagreement within the coalition about the best way to procure energy security.
I have been open about my view that nuclear is a great option that we should be pursuing. I also think coal has a role to play. Sherwood sits not only on a former coal field but on great reserves of shale gas, which could assist us. We also have a great deal of water, which can be important to manufacturing. Nottinghamshire sits on Bunter sandstone with aquifers. However, at the top of the list must be a willing and ready work force, which we in the east midlands have. We have great skills. As we have a thriving manufacturing sector, we already have a high skills base for any company that wants to relocate to the east midlands.
I hope the message of this debate will be that the east midlands is open for business to manufacturers of any sort looking for somewhere to relocate. The east midlands is the ideal place, and we would welcome manufacturers with open arms. I hope the Minister, as he goes around the country in his many dealings, will recognise how important the east midlands is and what it has to offer. If he is having discussions with any foreign or other companies looking to relocate, I hope he will recommend the east midlands. It would assist us in procuring more companies to come and make use of the area.
There is a lot more that we can do, and I want to emphasise what Government and local authorities can do. Broadband is important. People trying to run businesses in rural locations need access to good-quality broadband, and we must do more to get it out into rural locations so that companies can relocate to those areas as well. Infrastructure and traffic are a constant battle. Every time one improvement is made, it knocks on to another area. We must keep doing more to improve infrastructure to remove bottlenecks, so people can get around the country.
Finally, on training, we need the best-quality engineers and the most highly skilled individuals, which requires the work and support of some of our great training institutions, such as Loughborough university, Nottingham university and the many others that educate people to a high degree. Some colleges in and around our constituencies deliver courses on food and drink manufacturing, welding skills and so on. Such skills will be absolutely vital to our companies as we go forward. We have a little bit further to go.
Many of the businesses I talk to are crying out for good quality, highly skilled staff and they do not want to look to eastern Europe to procure those people; they want UK-based, qualified people and we need to keep pushing that door to ensure that they are coming forward.
Andy Sawford
It is my hope, as I am sure it is the hon. Gentleman’s, that the manufacturing industries in our constituencies employ local people. Does he recognise many people’s concern about the role of agencies, particularly those recruiting in eastern European countries for jobs that could be done by local people? Does he agree that we ought to ask the Government and Opposition Front Benchers to consider how we can deal with that?
Mr Spencer
I agree; it causes a great deal of frustration. Constituents e-mailing me with a copy of a job advert published in Polish feel excluded from that process, although I have tried to argue that such an advert is probably published in English as well. Our companies need quality staff and if they cannot procure local people, I suppose they will look to the rest of Europe to try to get people with the skills they need. We need to ensure that we train our constituents in those skills, so that they can compete on a level playing field. We are starting to get there—starting to push back and improve things—but there is further to go. There has been a deficit in the past 10 to 15 years and we need to start dealing with that. I hope that we are starting that process.
I am conscious that other hon. Members want to speak, so I do not want to take up too much time. I want to emphasise the fundamental message of this debate: there is a great manufacturing sector in the east midlands and we are open for business. If people want to locate somewhere, the east midlands is a great place to come. I hope the Minister takes the opportunity to visit businesses in Sherwood. I would be delighted to be his host, should he find time in his diary.
Mr Philip Hollobone (in the Chair)
Six Members wish to speak. If they limit their remarks to about six minutes each—it is not a formal time limit—they will all get in, with one or two interventions. That is just a guideline. The first four speakers will be in this order: Lilian Greenwood, Andrew Bingham, Jonathan Ashworth and Andrew Bridgen.
Mr Spencer mentioned that socks are made in his constituency. I am standing before you in Loake’s quality men’s shoes, made in Kettering.
Lilian Greenwood (Nottingham South) (Lab)
Mr Hollobone, it is a great pleasure to have an east midlands Member of Parliament in the Chair for this debate, particularly one who makes such a fantastic contribution every time he introduces a speaker.
I congratulate the hon. Member for Sherwood (Mr Spencer) on securing today’s debate and on giving us the opportunity to highlight the strengths of, and the challenges faced by, the manufacturing industry in the east midlands. As he said, the industrial revolution began in the east midlands, and manufacturing there still employs a higher proportion of people than in any other region: within the D2N2 local enterprise partnership, covering Nottingham, Nottinghamshire, Derby and Derbyshire, 16.7% of full-time jobs were in manufacturing, compared to 14.5% in the east midlands and 10.5% in the whole UK. Unfortunately, that is not so in Nottingham city, where at the moment manufacturing accounts for only 6.2% of full-time employment.
The largest manufacturing subsectors in the D2N2 economy are transport equipment, metals and food and drink. I will say a bit more about the local firms involved and their needs shortly. In the 19th century, Nottingham was at the centre of the world’s lace industry, a legacy that recently once again received national attention when it was featured in Mary Portas’ “Mary’s Bottom Line” programme. Sadly, there are no lace manufacturers left in the city.
During the 19th century, world-famous names were founded in the city, some of which have been mentioned already, including Boots the Chemist, the Raleigh Bicycle Company, and John Player and Sons. I cannot resist mentioning Frederick Gibson Garton, who recorded his secret recipe for HP Sauce in the Meadows in my constituency in 1894.
Life in those industries was immortalised by local writers, including D.H. Lawrence and Alan Sillitoe. Although we do not make bicycles in Radford now, the Saturday nights and Sunday mornings of Arthur Seaton are still familiar to the city. Thousands of visitors come to Nottingham every weekend for a great night out in our purple-flag city centre. That shows that it is not just the manufacturing industries that are important; there is knock-on for the other industries in the area.
In the 21st century, Nottingham faces both opportunities and challenges. Government policy has led to the loss of some 53,000 public sector jobs in the east midlands. With three in 10 people in Nottingham city employed in public service, we must diversify if we are to become more resilient and avoid the damage wrought by high unemployment and a lack of opportunities for our young and growing population.
“The Nottingham Growth Plan”, published in 2012, aims to reconnect the city with its proud history and create a manufacturing renaissance, rebuilding our international reputation as a place that designs and makes things. Some of the elements needed for that renaissance are already in place. We are fortunate to have two universities that produce world-class research and a highly educated work force, and we already have highly successful companies and emerging sectors in areas such as digital content, life sciences and clean technology, which can provide prosperity and sustainable employment if we give them the right support as set out in that plan.
One of the city’s new growth sectors is digital content—a far cry from the grease and noise of the Raleigh factory, perhaps, but it already employs 6,400 people. That sector offers huge opportunities for growth. The games developer, Crytek, located on Canal street in the heart of my city, employs almost 100 people in the lucrative video games market. Many smaller gaming industry companies are locating in the Lace Market area, now the centre of Nottingham’s creative quarter, backed by the city deal.
Crytek stood to gain from Labour’s tax break for video games developers, but the incoming Government scrapped it in 2010, only to reconfirm it two years later, by which time the UK’s advantage had been lost to competitors in other countries. It would help if the Minister said how we can avoid such a stop-start situation in future.
Also in Nottingham’s creative quarter is BioCity, the UK’s leading bioscience incubator, established 10 years ago as a joint initiative between Nottingham’s two universities and the regional development agency. BioCity builds on Nottingham’s long-standing expertise in biosciences. It is on the site where ibuprofen was discovered by Dr Stewart Adams in the 1960s, and provides lab accommodation, facilities, expertise and access to finance. It currently sustains more than 80 fast-growing businesses —biotech, pharmaceutical and health care start-ups—and is looking to expand further to meet demand. The Government’s decision to cut total science spending, including in research and development, is exactly the wrong decision for the future development and expansion of this sector.
On the role of Government and support for regeneration, the Smith Institute recently published a report that identified the low levels of public investment in the region. That was the subject of discussion by the all-party group on the east midlands. The report’s authors describe how they realised in 2012 that
“something was going seriously wrong in the allocation of central government investment in the East Midlands”.
In the first two rounds of the regional growth fund, the east midlands received just 4% of the total funding available, the lowest share of any region. In round 3, the east midlands again received the lowest share of funding; it was allocated just £14 million, compared to £105 million for the north-east and £88 million for the north-west. That put it in a worse position than before the scrapping of our regional development agency; we were allocated 8.9% of total regional funding in the RDA’s last three years—more than the south-east, the south-west, or the east of England. I hope the Minister will say what he can do to address that under-investment, which, as the Smith Institute report says,
“in terms of jobs and growth and in rebalancing the economy, makes no sense whatsoever”.
Finally, let me return to one of our most historic sectors—food and drink, and specifically brewing, which is dear to not only my heart, but the hearts of many thousands of my constituents. I am fortunate to have four breweries in my constituency, Castle Rock, Nottingham Brewery, Trent Navigation, and a little micro-brewery, Magpie. They are responsible manufacturers who have continued to grow despite the recession. They are being hit, however, by a combination of higher VAT and the beer duty escalator. The escalator was introduced in different economic times. Should not the Government review alcohol taxation to support those vital manufacturers and the pubs that serve their produce?
Andrew Bingham (High Peak) (Con)
It is a pleasure to serve under your chairmanship this morning, Mr Hollobone. I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing this debate, and on giving the east midlands a chance to shine and us a chance to put ourselves on the record about what a great place it is for manufacturing.
I represent the High Peak which, to many of my constituents, does not necessarily feel part of the east midlands. We are the most northerly constituency, and much of the High Peak looks to the north-west: we have north-west postcodes and north-west television, and many of my constituents travel to the north-west to work and shop and for their recreational needs. Another part of the High Peak faces east, and the Hope valley gravitates towards Sheffield, parts of it receiving their media from the Yorkshire region. Forgive the geography lesson, Mr Hollobone, but I want to get over that the High Peak, far from being remote and miles from anywhere, as people sometimes think we are, is not only in the east midlands but is very much the cockpit of the north of England. Ideally situated between the cities of Manchester and Sheffield—I live 24 miles from either city—we are in striking distance of many other cities, including Leeds, Doncaster, Barnsley and Liverpool. Consequently, a huge variety of manufacturing businesses have grown up in the High Peak over many years. I want to talk about one or two of them, to stress how the High Peak as part of the east midlands is ideally placed for manufacturing.
We have many household names. Many people watching the Formula 1 Grand Prix will have seen the name Ferodo, manufacturers of brake linings. Ferodo was founded in 1897 by Herbert Frood in Chapel-en-le-Frith, in my constituency. Those brake linings are still produced there, in the east midlands, to this very day. Some of the manufacturing was outsourced abroad, but it is now coming back into the High Peak because we are doing such a good job. Despite Ferodo being acquired a couple of times since the name came out, anyone coming off the roundabout and going towards the factory will see the name “Ferodo” still proudly emblazoned on the front of the factory. I should probably declare an interest at this point, because I supplied that illuminated sign in a previous life, when I had my own business. The sign, which has been there for many years, is still working, which is testament to the quality of the goods that I supplied in my heyday—I am not sure whether that is now or then.
We also have a company called Street Crane, which manufactures cranes and crane kits that go all over the world. A while ago, as a member of the armed forces parliamentary scheme, I went out to Afghanistan, and I was particularly proud when I walked into the maintenance warehouse in Camp Bastion and saw two huge overhead cranes with “Street Crane” on. It was a proud moment to be in Camp Bastion with High Peak-made cranes straddling the warehouse, showing that Street Crane is exporting all over the world and doing its bit for the country, batting for Britain in a worldwide market.
Another company is Otter Controls. We all use and see many of the goods manufactured in the High Peak, but we are not necessarily aware of them. This morning, many of us put our kettle on, and there is a good chance that the thermostat in it was manufactured by Otter Controls. The company was founded at the end of the war to manufacture snap action thermostats that—to get technical—are used in a three-legged bi-metal blade. Those who did science at school should remember the bi-metal strip and how it moves with heat. The concept behind the switch was developed when the founder of Otter’s experimented with the strips for heated suits for RAF pilots during the war, because the pilots got either very cold or very hot in their aircraft. Having come up with the idea of the thermostat in the suit, after the war he decided to roll it out into other areas. The company was all about making people a little ’otter—that is where the name Otter came from. This is a High Peak product that people use without realising it.
Valentine’s day is nearly upon us, and I am sure everyone has been out shopping frantically—I hope the gentlemen have, anyway—so I draw my colleagues’ attention to another product that many will see: the famous Love Hearts by Swizzels, as well as Drumstick lollies and Refreshers. Those of us who have offices in Norman Shaw North know that there is usually a supply in my office—I am a bit like the pied piper sometimes—and those sweets are made by Swizzels-Matlow in New Mills. Swizzels employs hundreds of people, most of them from within a 10-mile radius of the factory. It has made sweets for the royal family and received royal visits, and it is a great name known throughout the world, also manufacturing in the High Peak. Many years ago, on holiday abroad, sitting in a little wooden hut having a cup of coffee with a friend of mine with some children, the guy behind him brought out some sweets for them: he brought out some Love Hearts. We thought: “We have come all this way, and they are giving us sweets that we could have nipped down the road to New Mills to get.”
In a previous life, as I say, I had a small business and supplied many High Peak engineering companies with equipment. Since being elected, I have renewed my acquaintance with many of those businesses, such as the GJD group in Glossop, which makes engineered components for the aerospace industry and timber-frame buildings for the construction industry—that shows the breadth of business.
I have a particular fondness for micro-businesses, which I shall just touch on—I am conscious of the time. I recently went to see a Mr Philip Taylor, who is a cordwainer. You, Mr Hollobone, were talking about Loake shoes; Mr Taylor makes specialist footwear. He has made more than 1,500 pairs of shoes for people. When I visited him, he had a client in from Canada, because Mr Taylor was the person who can make shoes to deal with the client’s condition.
I could talk about many more companies in the High Peak, such as the quarries and the quarry-related products. My wife works for a company that makes linings for gutters—instead of changing our gutters, we could line them—and, given the amount of rain we get in this country, it is busy. Business is tough, however, and there are challenges. We want better transport links and, certainly, better broadband. I am proud that the Government are rolling out better broadband, and agree that they should—I describe broadband as the fourth utility. The High Peak, within the east midlands, is working hard and punching above its weight. We are making a wide range of products and selling them to the UK and throughout the world. For anyone who reads the debate, let me say this: I agree with what has been said—the east midlands is a fantastic place to bring business to and, in my view, the High Peak is the best place in the east midlands.
If I may, I shall take a second to touch on the regional growth fund. I hope that the Minister will look carefully at the bids in the fourth round. We have a bid in from Buxton in my constituency. It is shovel-ready, it will create jobs, and I hope that it may be successful, as it has not been in previous rounds.
Jonathan Ashworth (Leicester South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. As an east midlands MP, I hope that you will later be eating a bag of Wotsits crisps made at the Leicester Walkers site.
I thank the hon. Member for Sherwood (Mr Spencer) for his success in securing the debate. He spoke well, and I learned something about Calverton of which I was not aware, although I will of course be checking it out later with my father-in-law, who was his geography teacher at school in Calverton only a few years ago.
I want to repeat some of the points made about the importance of manufacturing to the east midlands economy. Manufacturing makes up a greater part of the economy in the east midlands than in any other English region. According to figures I have seen, manufacturing gross value added was around £12.5 billion, or 15.8% of total regional GVA output—a higher proportion than any other region—compared with an average of 10.3% for the UK as a whole. Manufacturing employment in the region amounted to 265,000 or more than 13% of total employment—again, the highest proportion of any region, and it compares with a UK average of about 8.5%. Our manufacturing firms score highly on productivity, with many of our sectors outperforming national averages. We have already heard not only about many of the big ones, such as Toyota, Rolls-Royce, Bombardier, Caterpillar and Walkers, but about the many smaller manufacturers that make up our huge manufacturing base.
The hon. Gentleman talked about food and drink. In Leicester and Leicestershire, more than 11,000 people are employed in food manufacturing, so it is important for our region. As he said, some of the reasons our region does well is that we are central, our development in the past has been driven by coal in the north and ironstone in the south, and we have concentrations of grade 1 agricultural land. We do not have any major, dominant economic centre. I would, of course, argue that Leicester is the premier city in the region, not least because we have a former king of England there.
Andy Sawford
On the point of manufacturing, it is a shame for those of us who feel that Fotheringhay, the birthplace of Richard III, should be his final resting place, that my hon. Friend is manufacturing a case for Leicester.
With regard to the food and drink industry, does he recognise that, while there is a fine tradition in all parts of the region, including my constituency, in many ways Government policy has helped to shape some of the opportunities for manufacturing? For example, in the 1980s the enterprise zone helped to bring lots of food and drink companies to Corby. Will he support my case that we ought to have an enterprise zone today in Corby in east Northamptonshire, where, as he knows, there are high levels of youth unemployment?
Jonathan Ashworth
I thank my hon. Friend for a point he puts well. However, we in Leicester have fought off York and will certainly fight off his constituency when it comes to Richard III.
On balance, the lack of a major dominant conurbation is a strength for our region and its development opportunities, even if it does sometimes mean that we tend to lack a regional identity. That brings us one or two disadvantages that I will touch on in a few moments.
Although the debate has been conducted in a good cross-party spirit, there are problems in our economy, in the cities and former coalfield areas. Unemployment rates remain too high, and are much higher than they were at the 2010 election, even if they have come down a little in recent months. Youth unemployment rates are still too high. Let us be clear: we are seeing a huge squeeze on incomes and many changes to benefits, such as the bedroom tax and the council tax benefit changes. Regardless of the rights and wrongs of that debate, that will suck money out of the local economies of the east midlands. Household consumption will be depressed again.
In the past, Ministers have talked about wanting to rebalance the economy, and we would all agree with that. However, we would like more details about what that rebalancing means. I know that Ministers want to move away from an economy that is solely dependent on public investment and household consumption, towards one that is more in favour of export-led recovery.
Chris Williamson
Does my hon. Friend share my disappointment that, although the Prime Minister came with his whole Cabinet to Derby in March 2011 to make the point about the importance of rebalancing the economy towards manufacturing, three months later a decision was taken to appoint Siemens as a preferred bidder for the Thameslink rolling stock programme? Will he join me in calling on the Government and the Minister, even at this late stage, to think again about that decision? If they cannot reverse it, can they at least ensure that, whenever Government contracts are concerned, notwithstanding EU procurement rules and so on, they take appropriate steps to ensure that British manufacturing has a fair chance of winning them?
Jonathan Ashworth
I thank my hon. Friend; he is absolutely right. I want to pay tribute to the work that he has done on Bombardier. The Bombardier decision was tragic not only for Derby and Derbyshire, but for manufacturing in the east midlands. The whole supply chain was affected by it.
I agree that trade and increasing exports are an important part of the rebalancing of the economy that we want to see, and supporting our manufacturing base is vital to our exports. The regional growth fund is supposed to be part of driving that rebalancing, as my hon. Friend the Member for Nottingham South (Lilian Greenwood) mentioned, yet, consistently and sadly, the east midlands has lost out. In round 1, £450 million was allocated. The east midlands made up 13% of the bids and won just 4% of the successful awards. In round 2, £950 million was allocated. The east midlands made up 11% of the bids and was given just 8% of the awards. In round 3, over £1 billion was allocated to private sector projects. East midlands was allocated just £14 million, or 2%.
Frankly, that is not good enough. Given that manufacturing is so important to the east midlands region, and that it is the leading region in manufacturing, why are we not getting a fair deal on the regional growth fund bids? I would be grateful if the Minister said a word or two about that. It has been suggested in the media that the quality of our bids was not good enough. I do not accept that, given the strength of our manufacturing base. To be honest, it is a bit of an insult to our manufacturers.
Will the Minister outline some of the criteria by which those bids are judged? He will no doubt be aware of the National Audit Office report that has cast doubt on the objectivity of the criteria. The NAO argued that,
“a significant number of projects in the first two rounds performed relatively poorly on criteria such as the amount of additional employment supported and the ratio of economic benefits to public costs”.
Will the Minister shed some light on why the east midlands has done so badly? Some have suggested that the reason is that a lot of the bids have focused on the cities. The Department for Communities and Local Government has been keen to focus growth through the core cities initiative. For example, 47% of round 2 of the regional growth fund money went to core cities. Leicester, of course, went along with the great vision of the Secretary of State for Communities and Local Government and the Prime Minister. We went for the directly elected mayor model; not many places did. Although we are now in discussions about a core city deal, we were left out in the first round, although parts of Nottinghamshire and Derbyshire have been covered by a city deal. That has meant that the majority of the east midlands region has been left out. Perhaps that is another reason why we have not done so well at getting our fair share of regional growth fund money.
We no longer have a regional development agency, and I do not think that my party is arguing for its return. There may be such an argument, but everyone accepts that the development agencies have gone, and it is not our policy to argue for their return. Given that the east midlands region has 36 local authority districts, five county councils and four unitary authorities, that fragmentation leads to a lack of a consistent voice on such matters. I do not necessarily know the solution, but we should all be banging the drum as a group of east midlands MPs. We must think about what more we can do collectively to ensure that our region gets its fair share of bids.
I am conscious that I am taking a lot of time. I want to say a couple of things quickly about Leicester. It is a city with a strong manufacturing base and deep links, as everyone will know, with India, Bangladesh, east Africa and Pakistan. In Leicester, we have manufacturers exporting to those parts of the world. Asian food made in Leicester is exported to the middle east, Europe and India. When I meet exporters, they tell me of the difficulties of accessing export finance, especially for smaller volume exporters. When people raise UKTI issues with me, they talk about the fees involved in the overseas market introduction service. One matter is always being raised with me: given that cities such as Leicester have communities with deep cultural ties to parts of the world where we now want to export more, should the Department for Business, Innovation and Skills not be doing more to work with organisations such as Leicester’s Indo-British trade council and other groups to leverage the expertise of those communities?
Finally, I want to mention our higher education sector. De Montfort and Leicester universities do great work linking with local manufacturers. There are lots of great examples of how they are adding value to many firms and supporting our manufacturing base. Most of those projects, however, do not lead to any financial benefits to the universities. Given the importance of such projects to our economic future, will the Minister think about financial incentives to support the HE sector to link up more with manufacturers? I know that De Montfort university, having done a lot of projects in the past, is now thinking of scaling back, as such work is not in its financial interests.
Given that the HE sector is so important to our economy and exports—worth £15 billion nationally—will the Minister, who was brought in with great fanfare and was going to shake things up, deal with the crazy policy of the immigration cap on student numbers, which is doing huge damage to our economy? We need to support our HE sector at the moment.
Andrew Bridgen (North West Leicestershire) (Con)
I, too, would like to congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing the debate. I very much enjoyed the evident passion and pride in his speech and his enthusiasm for manufacturing, quite rightly not only in his constituency but across the whole east midlands.
I had better declare an interest, Mr Hollobone. I am the non-executive chairman of a fresh food processing company based in my constituency. I founded the company 25 years ago with my younger brother with £1,000, and it thrives today, turning over in excess of £25 million and employing more than 200 people.
My constituency has a rich history in manufacturing, and that continues to this day. We have a diverse range of manufacturing output, from two of the leading brick manufacturers in the country to high-tech companies that are enjoying record rates of expansion. There is no doubt that the UK economy needs rebalancing, regionally and in terms of production, after the previous Government’s dependence on financial services and the public sector led to the record deficit that was bequeathed to the coalition Government.
Chris Williamson
Does the hon. Gentleman agree that there is a symbiotic relationship between the public and private sectors, and that many in the private sector—particularly small and medium-sized enterprises—rely on public sector procurement? Does he agree that it is important that where local authorities and other public sector bodies are letting contracts, they look, wherever they can, to support SMEs in their local economy?
Andrew Bridgen
Absolutely. In North West Leicestershire we are a pioneering a buy local campaign whereby local companies can register, and not only will the local authority look to procure from local firms offering services, but that website facility is then open to other companies in the district, and it is hoped that they will join in. However, I bring the hon. Gentleman back to the point that we cannot have the situation we inherited, where 50% of the economy is public sector and 50% is private sector, and we are asking the latter to support itself and pay taxes to support the former. That is unsustainable. That is why we have a huge deficit and why we need to rebalance our economy.
Andy Sawford
The tone of the debate has been very constructive. It was set very well by the hon. Member for Sherwood (Mr Spencer) and it is to Members’ credit that political point scoring has been resisted. However, for the record, we cannot allow that point to stand. Was it the previous Labour Government who were selling sub-prime mortgages in America, for example? The hon. Member for North West Leicestershire (Andrew Bridgen) is entirely wrong on that point.
Andrew Bridgen
I thank the hon. Gentleman for his comments, but I will not allow him or any other Labour Member to rewrite history. The fact is that under the previous Labour Government, manufacturing as a proportion of GDP in this country fell by 50%. It is not a record that I would be proud of if I were sitting on the Labour Benches. The hon. Gentleman should think on that. It is this Government who will address the need to grow manufacturing and rebalance our economy.
Lilian Greenwood
I simply want to respond to the hon. Gentleman’s comment about the public sector somehow riding on the back of the private sector. Those people who are employed in the public sector doing vital work in our schools, hospitals and universities also pay tax and make a hugely important contribution to our economy.
Andrew Bridgen
The hon. Lady is absolutely right. Public sector workers do vital work, but the answer is that all the wealth creation comes from the private sector. We cannot ask 50% of the economy to support itself and the other 50%. That is why we need to rebalance the economy. It is simple maths and it is why we have a deficit.
In the 1980s, following the closure of the coal mines, we needed to rebalance our economy in North West Leicestershire, and as a result of that successful rebalancing it is now in the top 20 districts for business-led growth in the whole of the UK, and in the top 15 for export-led growth. I would like to cite the success of two small-to-medium-sized companies to illustrate the huge contribution they are making to the local and national economy.
Norton Motorcycles, which is based in Castle Donington in the north of my constituency, was founded in 1898 but rejuvenated in 2008, when Stuart Garner bought the rights to the brand. Success and growth has followed, with the help of the Government underwriting a loan in 2011. The company has doubled production of motorcycles, from 500 to 1,000, and it has an order book going forward of some £25 million. Some 90% of its sales are for the export market and 83% of the motorcycle components are manufactured in the UK. It has also started a Norton academy with Stephenson college, based in my constituency at Coalville. The project is focused on youngsters and limbless ex-servicemen, whom we are already working with at BLESMA—the British Limbless Ex-Service Men’s Association—to give them a chance to get settled back into our society and employment post-injury. That illustrates the wider impact and community benefit of our thriving manufacturing success in North West Leicestershire.
Another firm that I have visited in my constituency is Zeeko, a technology company based in Coalville that produces ultra-precision polishing solutions for optics and other complex surfaces. It is growing at a significant rate, taking on more staff every year, and it is exporting all over the world. In 2011, it won a Queen’s award for innovation.
Those are only a couple of examples of how my constituency and the east midlands as a whole are exporting overseas, and are at the forefront of the Government’s mission to rebalance the British economy to ensure that we can pay our way in the world. Encouragingly, as other Members have mentioned, exports from the east midlands have recently reached another record high, sending some £13.5 billion-worth of goods overseas for the 12 months to the end of September 2012.
Another very encouraging signal for the sustainability and growth of east midlands manufacturing is the fact that the latest figures from Her Majesty’s Revenue and Customs show that non-EU exports now account for 57% of exports from the east midlands. Europe may have been the future once and it is still a very sizable chunk of the market, but with its heavy indebtedness, sclerotic economies and adverse demographics, it is a market that, while important, we will have to look beyond for the future of our manufacturing export growth.
My constituency also plays an important part in distributing manufactured goods, both in the UK and throughout the world. East Midlands airport, which is located in my constituency, is the largest dedicated cargo-handling airport in the UK, currently handling over 310,000 tonnes of flown cargo every year, with ample room to grow. The airport is another advantage for our exporting manufacturers. Together with the proposed strategic rail freight interchange, which will get more freight off the road and on to rail—if HS2 does not run straight through the middle of it—that again illustrates the advantages and opportunities for manufacturers in the east midlands. It is worth pointing out that the strategic rail freight interchange will involve £500 million of private sector investment in my constituency, creating in excess of 7,000 new jobs, hopefully by 2016.
To sum up, the east midlands is leading the way in manufacturing growth in the UK, and my constituency is playing a key role. In addition to the Government, we must all do what we can to provide the conditions for that growth to continue. Lower corporation tax, increased capital allowances, and many measures in the Enterprise and Regulatory Reform Bill will help to ensure that growth is promoted not only in the east midlands, but across our country.
Mr Philip Hollobone (in the Chair)
Three Members are seeking to speak. If we start the wind-ups at 10.40 am, and if you limit yourselves to no more than four minutes, including interventions, you will all just about get in. The order will be Jessica Lee, Chris Heaton-Harris, and Heather Wheeler.
Jessica Lee (Erewash) (Con)
Thank you, Mr Hollobone. It is a pleasure to serve under your chairmanship, and I, too, would like to join hon. Members in thanking my hon. Friend the Member for Sherwood (Mr Spencer) for securing this extremely important debate. One matter that will always unite us across the House is the pride we all take in the different industries and the range of products manufactured across the east midlands. We have heard about the magnificent range of manufacturing across the area. I will be doing my best this morning to convince everyone that Erewash is, in fact, the beating heart of the east midlands and of manufacturing in the area, ably supported and assisted—I would concede—by surrounding constituencies.
A valuable part of being a MP is visiting different businesses in our constituencies. We all learn so much, and we have probably all met so many inspirational people who have taken that risk and followed their ideas, made innovations and created businesses.
Just last week in Erewash—to deal with an historical matter for a moment—we unveiled a blue plaque with Derbyshire county council at the home of Frances Bush, a remarkable woman. She was a lace manufacturing entrepreneur and well known in the east midlands at the time for her vision and her successful business. Lace has been mentioned this morning. We also have Cluny Lace, the last remaining traditional lace factory in the country, which made part of the Duchess of Cambridge’s wedding dress—something that I always mention. It has a niche exporting market and is doing extremely well.
There have been other successes recently. Gill Manufacturing was awarded the Queen’s award for enterprise. It exports its clothing around the world. Other successes include up-and-coming businesses, such as Goodeseats. Mr and Mrs Goode won a national competition for their cushion seating. It is a fine example of the hard work and vision involved in bringing a product to the market.
The centre of upholstery and furniture making was Long Eaton for many years, and it continues to do well. If anything, there is a need to encourage more young people to consider the benefits and rewards of going into the furniture and upholstery industries. That links to the Government’s drive for apprenticeships and university technical colleges. In Erewash, we face the prospect of two schools merging in Ilkeston. In my view, to continue the site with an educational use, a UTC would be an ideal project. That project is in its infancy, but I will be doing all I can to encourage the site to become a UTC in the near future. With national apprenticeship week fast approaching, I think we are all spending time—I certainly am—visiting many businesses that take on apprenticeships in our manufacturing areas and do so much to support young people. That, too, needs to be encouraged.
Time is against me. I shall briefly mention just a couple of other points to allow other Members to make their contributions. The brewing industry has been mentioned. The county in the UK where brewing is growing most is of course Derbyshire, as Members will be pleased to know. I certainly spent a happy morning learning the art of brewing—trying not to get in the way, of course—at Muirhouse Brewery. That business, too, started at home but is now expanding and doing very well, and there are many more to follow.
Manufacturing in the east midlands involves a wide range of products and areas. It is diverse and forward looking and brings all the essences of entrepreneurship together. We can celebrate the increased number of women also involved and the range of businesses emerging. As I said, the east midlands is at the heart of our country, at the heart of manufacturing and is very much open for business in this area.
Chris Heaton-Harris (Daventry) (Con)
It is a pleasure to speak under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing the debate. I should follow the declaration made by my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) by saying that I used to buy his product when he wholesaled it, and I made more money out of it than he did.
I was very lucky to be the Member of the European Parliament for the East Midlands for 10 years. One of the wonderful things that Members of the European Parliament get to do is travel widely and see in operation all the businesses that invite them. Not many hon. Members from Lincolnshire are here today, but there are fantastic manufacturers in Lincolnshire. Siemens in Lincoln is one of them, and it has just won a massive contract in Australia. In my constituency, I have the full range, as every other hon. Member does, of big, medium-sized and small manufacturers. There is Cummins, a big multinational. Power generation is its thing. It has produced diesel engines in the UK for more than 50 years. It is in the top 40 list of UK exporters, with 70% of its products exported, generally outside the European Union.
Mercedes-Benz has its Formula 1 precision engine plant in the village next to where I live, Brixworth, where it employs more than 600 people. It illustrates some of the issues that manufacturing faces in more rural areas, because it has problems with a consistent energy supply and had to put in, at huge cost to itself, a broadband supply, because it takes real-time readings from precision engines firing round Formula 1 circuits across the globe and can adjust things almost remotely from my constituency.
I have the fantastic shoe manufacturer Barker in my constituency—Barkers are just slightly better than Loakes. The Northamptonshire shoe industry is booming now, because it is a quality product that is being exported massively across the world.
Like other hon. Members, I have food manufacturing in my area. Butcher’s Pet Care has just invested £38 million. It produces food for the pet sector—and it knows what goes into its product. There is proper traceability and line of sight.
Hambleside Danelaw produces roofing and ventilation products, rooflights and cladding. That sounds boring, but it is a very big business. Its products are on all the big sheds that we see around the place. That is its business; that is what it does, and it manufactures in my constituency. There are also smaller companies. B and D Dyes produces little washers that go into very fast cars. It is amazing precision engineering.
These companies are doing fantastic things, and they are all served by the logistics base that the east midlands is so good at providing—we are proud of how we do logistics—and by a good education base, which is constantly improving. On my patch, I have Moulton college; a UTC will be opening in the next few months; and there are very good regional universities. What does that lead to? It means that I am very lucky in my constituency; I do know that. There are more jobs on offer at my local Jobcentre Plus—or there were at the end of last year—than there were people on jobseeker’s allowance across my constituency. Not many constituencies can say that.
There is more interesting news from the Northamptonshire chamber of commerce, whose latest report to MPs said that despite concerns about some things, which Government can do very little about—they include the cost of raw materials, competition and cash flow—Northamptonshire businesses, in both the manufacturing and services sectors, had reported an increase in confidence relating to both expected turnover and profitability in the coming 12 months. There is good news out there. Manufacturing in the east midlands is a sector that we should be very proud of and should nurture as best we can.
Heather Wheeler (South Derbyshire) (Con)
I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing this Westminster Hall debate. It is a pleasure to speak in it under your chairmanship, Mr Hollobone.
I personally have a special relationship with Toyota, as its factory in Burnaston is located in my constituency, and time after time I have been extremely impressed by what it is doing as a company. Toyota is not only one of the world’s leading car manufacturers; as a leader, it is committed to the environment and the economy. In fact, Toyota Motor Manufacturing UK was the first British car manufacturer to achieve zero waste going to landfill and has recently embraced solar energy at the plant, too. On top of that prodigious achievement, Toyota has provided employment and training opportunities for people throughout the region. On a recent visit to the factory in Burnaston, I was delighted to hear that Toyota is expanding its apprenticeship programme. Toyota also has a charitable trust. That funds the Lucy Prince award, which last time was awarded to Alfreton Park community school.
Apart from Rolls-Royce and Toyota, which respectively focus on jet engines and cars, Bombardier is a world-renowned manufacturer of rail vehicles. In fact, including Bombardier, there are 230 rail engineering companies around Derby alone. Bombardier is well known for the high-speed rail vehicles that have been installed in China and Italy. The hope is that, if all goes well, it will be contracted to design the vehicles for our own HS2.
Manufacturing companies in the region have truly proven that it is equally important to benefit the growth of the economy while creating opportunities for people. I cannot express the pride that I have in the manufacturing industry in the east midlands. From having the manufacturer that first powered the Boeing 787, the most widely used aeroplane, to a transportation company that has an installed base of more than 100,000 rail vehicles, to an international car company that exports back to Japan, our area has proved to be a manufacturing hub in the UK and an asset to the whole world.
Derbyshire exports more per person than any other place in England. Despite how impressive the large companies are, I find the local businesses to be equally important to the success of the manufacturing industry in the east midlands. In my constituency alone, there are multiple manufacturing companies that stimulate economic growth and provide global services.
One of the smaller firms in my area is Appleby Woodturnings. That specialist family business in south Derbyshire produces wood pellets to conceal screws and boltheads and, furthermore, it produced bespoke tapered wood pellets for the deck and hull of the Cutty Sark in London and the door frames in Portcullis House. Appleby Woodturnings is an excellent example of the ingenuity and skill that we have in south Derbyshire.
Another major manufacturer that has had national and global success is the JCB Power Systems factory, which is a purpose-built, multi-million-pound manufacturing plant and assembly line in Foston. JCB builds construction vehicles and recently needed to employ hundreds of extra skilled workers to cope with the increase in overseas demand for its equipment. Overseas demand for the UK-built products is coming from Brazil, Russia, Turkey and particularly India. In fact, JCB finalised a deal with the Brazilian Government to supply 1,000 machines to improve the nation’s infrastructure in time for the 2014 World cup and 2016 Olympic games, which Brazil will host.
The success of the manufacturing industry in the east midlands shows that it is vital that the Government continue to make manufacturing in the UK easier and continue to work with small businesses and manufacturers, so that the growth we have seen in the region can lead to growth in the national economy. Manufacturing in south Derbyshire is important. It is so successful that between May 2010 and December 2012 unemployment decreased by 18%—I can think of no better way to end my contribution.
Mr Iain Wright (Hartlepool) (Lab)
May I start by saying what a pleasure it is to serve under the chairmanship of a strong east midlands MP, Mr Hollobone? I congratulate the hon. Member for Sherwood (Mr Spencer) on securing this enjoyable debate. I thank my hon. Friends the Members for Nottingham South (Lilian Greenwood), for Leicester South (Jonathan Ashworth), for Chesterfield (Toby Perkins), for Corby (Andy Sawford) and for Derby North (Chris Williamson), and the hon. Members for South Derbyshire (Heather Wheeler), for High Peak (Andrew Bingham), for North West Leicestershire (Andrew Bridgen), for Erewash (Jessica Lee) and for Daventry (Chris Heaton-Harris) for their important and significant contributions.
We started the debate by hearing from the hon. Member for Sherwood about Mr Lee, who invented the knitting machine that the hon. Gentleman claimed started the industrial revolution. For the avoidance of doubt, and at the risk of alienating you, Mr Hollobone, and much of the Chamber, I can confirm that the industrial revolution started in my region—north-east England.
It is clear from today’s debate that the east midlands is and should be a leading player in any UK industrial policy. The hon. Gentleman started by saying that the region has a great deal to offer, and the debate has shown that to be true. As my hon. Friend the Member for Leicester South said, a greater proportion of the region’s economic output comes from manufacturing—more than 15% of regional gross value added—than it does in any other part of the UK.
The region is home to some truly world-class companies. No discussion about manufacturing in the east midlands would be complete without reference to one of the world’s greatest engineering companies: Rolls-Royce. The company employs something like 14,000 people in the east midlands, the majority at its plant in Derby, which I had the pleasure of visiting last year. It adds £2.4 billion of value to the regional economy, providing 33,000 jobs in indirect employment.
Mr Wright
Let me finish these statistics, because they are impressive.
One in every 165 people working in the east midlands is directly employed by Rolls-Royce, which rises to an astonishing one in 11 working people in the city of Derby. The company spent over £300 million on its supply chain in the east midlands.
Andrew Bridgen
Is the shadow Minister aware that more than 265,000 people in the east midlands are employed in manufacturing and that that is more than in any other region?
Mr Wright
I shall come on to that important characteristic of the east midlands economy. I mentioned the important success of Rolls-Royce, but it would be wrong to think of the east midlands as a one-company region. Every hon. Member who contributed today, including you, Mr Hollobone, highlighted successful manufacturing firms in their constituencies, and it is important to do so.
Andy Sawford
The largest employer in my constituency is RS Components. One of its great features, and I am sure a great feature of Rolls-Royce and the many other companies that have been mentioned, is the way that it contributes to the local community, adding additional value though fundraising, supporting schools and so on. Will my hon. Friend congratulate our industries across the east midlands on that?
Mr Wright
I certainly will. An important characteristic of a good and responsible company is that it realises that it is part of a community, not isolated from it, and contributes, not only directly by providing employment, but to social good.
The hon. Member for South Derbyshire mentioned Toyota, an important manufacturer for not only the region, but the UK. I am looking forward to visiting the Toyota plant next Tuesday—I am giving her advance notice—to see the investment recently pumped into building the new Auris model. The investment in the new plant totals £100 million, and is creating an extra 1,500 jobs, with a further £85 million spent in the local supply chain.
The shape of the region’s economy is distinctive. It is particularly strong on mid-sized businesses that are crucial to the growing specialisation and increased productivity that manufacturing requires. The Mittelstand in Germany is often cited as a reason why the German economy is so successful, and if there is an equivalent in the UK, I suggest that it is in the east midlands. Mid-sized firms employ 290,000 people in the region. I agree with the conclusion in Grant Thornton’s report on the mid-sized business sector:
“MSBs—many of the East Midlands’ and UK’s most dynamic organisations—are integral to the recovery prospects and long-term health of the British and local economy.”
Within that, Government’s role is to provide a framework in which businesses can flourish, and to provide resources—whether by sector, by region, or nationally—so that businesses can realise their potential and enhance our competitiveness.
I therefore have a number of questions for the Minister. My first is on how Government procurement can help manufacturers and their supply chains. I am pleased to see my hon. Friend the Member for Derby North here, because he has been a strong champion of Bombardier. We are all aware of it, because it is probably the most vivid example of Government procurement policy failing British manufacturing. The Department for Transport looks specifically at price, rather than thinking about wider value to the supply chain; that illustrates that the Government do not seem to be joined up. What has the Minister learned from the Bombardier example? How can procurement back British manufacturing? I do not believe in protectionism at all, but we can have patriotism in procurement policy to create, as my hon. Friend the Member for Derby North said, a level playing field for British companies. Other nations do it; we should too.
Chris Heaton-Harris
I point out to the hon. Gentleman that in France there is a social element to the procurement of big projects—something that we do not have. If it is legal for the French to take that approach, surely it must be legal for us to do so.
Mr Wright
I absolutely agree. We should use economic values. If Bombardier or any other company fails to win a contract, we should consider the wider economic consequences, in terms of lost taxes, the money that could have been pumped into the local economy and the losses in the supply chain. Those important factors should be part of procurement decisions.
The second point I want to mention relates to a particularly distinctive strength of the east midlands economy and its manufacturing firms: the supply chain. I am interested in it, because it is an important part of improving competitiveness. In November last year, the Minister announced the advanced manufacturing supply chain initiative—we are now on round 2. Despite the importance of mid-sized firms in the east midlands and their potential, will he confirm that no east midlands firm was successful in the bids? What will he do about that to help to realise the potential in the supply chain?
Thirdly, the whole House will agree on the importance of an export-led economic recovery. As we heard today, there is potential for that in the region, but the Derbyshire and Nottinghamshire chamber of commerce’s latest quarterly survey says:
“Export sales are at their lowest levels since December 2009”.
It goes on to say:
“Net manufacturing export sales balances remain significantly lower than the national averages.”
As an interested outsider, it is clear to me that the region is not reaching its potential for an export-led recovery. What can the Minister do in conjunction with UK Trade & Investment and others to ensure that that potential is realised?
Andrew Bingham
Is the hon. Gentleman aware that exports from the east midlands in the first three quarters of 2012 were £13.5 billion, which is up £500 million on the same period in the previous year?
Mr Wright
That is welcome, but we should not be complacent in any region. In my region of the north-east, the economy has an important export-led component, but we cannot be complacent in what is a fierce race, as the Prime Minister has said. We should be resolute in ensuring that the potential for exports is fulfilled as far as is possible, so that we can have an export-led recovery.
Jonathan Ashworth
I am grateful to my hon. Friend for giving way; I will be very quick. Does he agree that when senior Ministers, from the Prime Minister downwards, go to India and Turkey on trade missions, they should take representatives from some of the small and medium-sized manufacturers, and business people from cities such as Leicester, rather than the great and the good?
Mr Wright
I hope the Minister will respond to that excellent idea.
I also want to mention access to finance, which manufacturers tell me is still a problem across the country. I again quote the latest Derbyshire and Nottinghamshire chamber of commerce quarterly survey:
“There was a net 3% increase in the firms reporting deteriorating cash flow. The lack of access to working capital continues to be a problem for firms. DNCC welcomes the creation of a state-backed business bank but is concerned that this will take too long to be formed and must have the ability to provide loans directly to growing businesses”.
Will the Minister say what is happening with regard to that British business bank?
Finally, several hon. Members mentioned the regional growth fund, and the fact that the east midlands region is not reaching its potential in that regard. My hon. Friend the Member for Nottingham South said that the east midlands secured only 4% of all projects in rounds 1 and 2, and my hon. Friend the Member for Leicester South said that in round 3, firms in the region gained moneys for only five projects, totalling just £14 million—the lowest amount of any region in England. Will the Minister explain why? Does he think that manufacturing firms in the east midlands do not warrant such support? What will he do to redress the balance?
This debate has been important and positive. Manufacturing is important to the UK, and it is certainly important to the east midlands. We must ensure that it realises its potential, and I hope that the Minister will explain how we can do that.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I repeat what hon. Members have said in welcoming you to the Chair, Mr Hollobone. I, too, congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing this debate. As he said, the east midlands has a long, proud and—as we have learned—historical tradition of manufacturing, which is vital not just for UK manufacturing but for growth in the wider economy. Its location at the geographical heart of the UK, an abundance of natural resources, and a spirit of invention put the east midlands at the centre of the industrial revolution. As we have heard, inventions that have come out of the region include the jet engine, ibuprofen, DNA fingerprinting and the MRI scanner. My hon. Friend’s constituency has a long history of mining, and it has been home to Rolls-Royce since the 1940s. The food and drink industry is a major employer there, and it has a strong record of productivity.
Nobody in this debate has been under any illusions about the scale of the wider economic challenges we face as a country. The continuing sovereign debt crisis in the eurozone is affecting the real economy and depressing demand, which has caused uncertainty for British businesses and damaged some of our manufacturing output. That damage was already pronounced under the previous Government, which presided over the fastest ever decline in manufacturing as a share of the economy: manufacturing fell by nearly 10% as a share of gross domestic product, and almost 1.7 million jobs were lost in the sector. Under this Government, manufacturing’s share of GDP is growing again and our manufacturing capability is increasing in quality—nowhere more so than in the east midlands.
Michael Fallon
I will not.
I had the pleasure of visiting Toyota’s factory at Burnaston near Derby last week, and I saw for myself how a world-class work force in a cutting-edge facility can produce workmanship that is second to none. Earlier last week, I also met Rolls-Royce to hear its plans for the future. To kick-start the recovery, the first thing we had to do was to tackle the deficit, but we have not focused only on that. We have taken a wholly proactive approach to unlocking growth, reducing the red tape that holds back business and creating a competitive tax system so that businesses choose to locate and grow here.
In the autumn statement, the Chancellor of the Exchequer announced multiple measures to encourage greater investment in manufacturing. There will be a significant temporary increase in the annual investment allowance from £25,000 to £250,000. An additional £210 million will be added to the £2.4 billion regional growth fund until March 2015. There will also be an extra £120 million for the advanced manufacturing supply chain initiative. Let me reassure colleagues 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.
A greater proportion of the east midland’s economic output comes from manufacturing than in any other English region or part of the UK. Some 12.3% of the work force are employed in manufacturing, compared with 8% across the UK. The region has a positive balance of trade in manufactured goods, and the latest figures are expected to show that it achieved its highest annual level of exports in 2012, worth some £18 billion. The iconic names that are at the heart of the region’s manufacturing base—Rolls-Royce, Siemens, JCB and Toyota, to name just a few—employ thousands of people directly, and are at the centre of the network of hundreds of smaller businesses that make up their supply chains across the region. As we have heard, the region has a thriving sector of small and medium-sized enterprises working in the advanced manufacturing supply chain, and in the automotive and aerospace supply chains in particular.
Last week, I met the private sector chairs of the region’s local enterprise partnerships and some council leaders from the east midlands. I was impressed by the common sense of purpose across the public and private sectors, across political divides and even across traditional geographic rivalries. I saw for myself the determination to ensure a strong recovery for all parts of the east midlands and to tackle some of the barriers and bottlenecks that they have identified.
Mr Spencer
Will the Minister commit to coming to Sherwood to see some of those small and medium-sized enterprises, so that he can stand on the factory floors and hear the concerns at first hand?
Michael Fallon
I will certainly try to work that into my diary, and I look forward to such a visit.
Let me turn to a couple of points mentioned. The regional growth fund is distributed not by ministerial allocation, but by competition. It is a competitive fund, as indeed is the advanced manufacturing supply chain initiative. The fund is already helping to rebalance the economy, particularly by assisting areas that have been over-dependent on the public sector, and it is already unlocking private sector investment in the local economy.
The east midlands has had some strong successes under the fund. Derby city council’s £40 million business support scheme, which has been approved, will provide funds to support the growth of enterprises in Derby, creating nearly 1,000 direct jobs by 2015, to fund a global technology cluster and to enable redevelopment of the Derby railway technical centre. The Northamptonshire, Leicester, Leicestershire and D2N2 LEPs and Nottingham city council have all had conditional offers of support for programmes that will address local needs under the regional growth fund.
On the advanced manufacturing supply chain initiative, we need strong manufacturing supply chains if we are to have more major manufacturers investing in the east midlands. We have invested in that initiative to bolster supply chain capacity, and the scheme has attracted bids involving major companies from across the country, including the east midlands. There was high demand in rounds 1 and 2; there were more than 70 bids with a total funding ask in excess of £300 million. That is why we announced, in the autumn statement, additional funding of £120 million for a further two rounds of the initiative. That further investment in advanced manufacturing supply chains underscores our ongoing efforts to create the right conditions for UK suppliers to grow and remain competitive on the world stage. It will be based around a single national funding pot that will be open to supply chain companies from across manufacturing sectors, including in the east midlands.
The Government have announced other recent investments to support economic growth in the east midlands, including £500 million to electrify the midlands main line north of Bedford; £160 million to dual the A453 in Nottinghamshire and Leicestershire, a key route between Nottingham and the M1, which businesses told us could simply not cope as a single-track road; and £22 million towards the work, which is now well under way, to provide a new dual carriageway linking Kettering and Corby. We have increased the numbers of apprentices, which have grown from 21,000 in 2009-10 to 39,610 in the east midlands, a rise of almost 90%. Significantly, apprenticeship starts in the engineering and manufacturing sectors have grown by 156% over the same period.
In conclusion, the Government are working hard to encourage and support British manufacturers, and to create the environment in which they can thrive and compete in a global marketplace. We want manufacturers in the east midlands to be our partners in achieving that economic transformation and in fulfilling a strategy that places world-class manufacturing at the heart of a healthy and rebalanced economy across the United Kingdom.
Mr Philip Hollobone (in the Chair)
From Wotsits to widgets, we have just about covered it all.