UK Fashion Industry

Tuesday 12th February 2013 Westminster Hall

15:59

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

As ever, it is a pleasure to serve under your chairmanship, Mrs Riordan. At the end of this week, London fashion week will dominate the media with news of the latest trends on the catwalk, but if we look beyond the perfect seams of the catwalk shows, there lies the beating heart of an industry. It is an industry that contributes £21 billion to the UK economy and supports 816,000 jobs, making it the largest employer of all the creative industries, so it is definitely an industry worth talking about.

For all that significant contribution to the economy, there is also huge potential to grow, to flourish, to be better and to create more jobs. Excellent foundations are in place. Our fashion colleges are exceptional, and London has a worldwide reputation as the creative launch pad for the industry. My constituency, Hackney South and Shoreditch, has had a long love affair with the industry. It is embedded in both the history and the culture of the borough. From the arrival of the silk weaver Huguenots in the late 17th century to the present day, generations of aspiring designers have settled and set up their businesses in the east end. It is the natural hub of an industry, its beating heart, which today provides 1,500 jobs in design and manufacturing.

16:01

Sitting suspended for a Division in the House.

16:16

On resuming—

[Meg Hillier]

Before I was interrupted, I was saying that my constituency is the natural hub of an industry that today provides 1,500 jobs in design and manufacturing. Hackney is home to about 150 design, manufacturing and design consultancy businesses.

London fashion week alone generates £30 million for the city’s economy, showcasing about 250 designers to a global audience and generating £130 million-worth of media coverage. London and the UK benefit from fashion tourism too, which is estimated to have accounted for 0.5% of tourism spending in 2009. However, the debate is not just about Hackney and London; in 2009, the fashion industry directly provided more than 800,000 jobs across the UK, and indirectly accounted for 4.5% of total employment. Today, I want to talk about how we can sustain and build on that success in the future, in both London and the rest of the UK.

Sustaining the industry and securing its future starts with education, so we must ensure that that is working well. I am incredibly proud of the fashion colleges and institutions across the country and in my constituency. They have an international reputation for excellence and year-on-year produce many talented graduates from around the globe. The London College of Fashion, which has a campus in my constituency, is a shining example of that. It has been running for over 100 years and has produced incredible talent, including: Linda Bennett from L. K. Bennett; Emma Hope; Jane Brown; and Jimmy Choo, the famous shoe designer, who also had his first studio in Hackney.

Who are the success stories of the future? How do we make sure that the graduates of today have the support to succeed? Along with other higher education establishments, our fashion colleges face squeezed budgets, so we cannot assume that they can continue to do as well as they have been despite the cuts. Other countries understand that and are pouring money into their own fashion colleges. We face increased competition and cannot fall behind. Education is the foundation of the industry; it is where talent is moulded, encouraged and allowed to flourish. We must ensure that our young people continue to be able to study at world-class institutions here in the UK.

The Government’s plans for the EBacc, although now abandoned, reflect a mindset that downgrades the importance of creative skills. I hope that the Minister will disabuse me of that notion and say that that is not the case in the Department for Business, Innovation and Skills, but we have certainly seen that attitude from other parts of Government. We need a clear path laid out from secondary school onwards, so that young people can see the career opportunities before them. We also need to see the end of unpaid internships. I am pleased that both the British Fashion Council and the UK Fashion and Textile Association are putting their weight behind proper training, apprenticeships and real jobs. Unpaid internships cannot be justified in an industry that generates so much money for the UK.

I move on from education to the skills needed; there is a skills deficit in business and manufacturing. Fashion, first and foremost, is a business, so however talented a designer, he or she needs business skills, but too often the creatives do not have such skills. I have met some amazing people in my constituency from companies in which there is a good relationship between a creative and someone with a business head. Many people do not have such a relationship automatically, so they need support. Like those in any small company, they cannot do everything in the business. Creative businesses start at a disadvantage, because they find it harder to get funding. Financial institutions are much less likely to lend money to creative businesses, which are more likely to have new, innovative business models and younger owners, and are therefore seen as more risky.

To give an example, Not Just a Label is an innovative and exciting new business in my constituency. Based in a small office in Shoreditch, it searches out fresh new designer talent, and promotes and sells their products on an online platform. When it started, it was given no funding from banks or investors. Now, as it tries to expand, banks will still not lend to it, despite its success, saying that online businesses are too risky. Such businesses are not necessarily looking for a grant or a subsidy, but simply for a loan—sometimes just an overdraft facility—to help them start up or expand.

With all those barriers, how do new designers get off the ground? Happily, some support is available from the British Fashion Council and the Centre for Fashion Enterprise, which is based in Hackney. The Centre for Fashion Enterprise—its director, Wendy Malem, used to be a designer—and NewGen, a programme run by the British Fashion Council, both offer the business support that is so needed by designers. NewGen is currently sponsored by Topshop, and last year it celebrated its 10th anniversary. Without that programme, we would never have heard of Alexander McQueen, who started his business in Hackney and whose legacy gave Kate her wedding dress.

However, both schemes are vastly oversubscribed. From speaking to those in the industry, I know that there is an appetite to expand such partnerships, but no funding for it. Incidentally, Not Just a Label provides a platform for new designers. It is a business that has recognised not only a gap in the market and been a success, but the importance of fuelling new designers and showcasing and supporting new talent to grow businesses as a whole. Its business has helped many designers grow substantially, which shows what can be achieved when talent is given the right tools.

When designers get the support and funding they need, they face another hurdle: where to manufacture? There is a real desire to manufacture more in Britain. Volume manufacturing may have gone, probably irrevocably, abroad. However, I am not talking about grubby, backstreet sweatshops, but high-end manufacturing—the top end, which is the true craft that involves artisanship, local production and traditional techniques. Throughout the country from London to Scotland, there are established and specialised manufacturers producing exactly such top-quality products. In the east midlands alone, about 10,000 to 15,000 jobs are provided by fashion manufacturing.

Many manufacturers set up in the UK to create those high-quality products, but they are struggling to expand and grow because of a lack of skilled machinists. Currently, the industry needs 150 more skilled machinists a year just to sustain itself, and companies can barely afford to take on and train new apprentices, because the cost of mistakes in high-end manufacturing is too great to be worth the risk. The Government have a programme to support apprenticeships, and it would be good to hear from the Minister how that might be better applied to the fashion industry.

Instead, manufacturing businesses are forced to work around the clock with a skeleton staff in the build-up to London fashion week, and they often close their doors for months afterwards. It is no wonder that there is a temptation to use unpaid interns. British designers want to make their samples and garments here, but there is not currently the capacity to do so. The UK Fashion and Textile Association has recently secured £2.7 million for the Textile Centre of Excellence in Huddersfield to support skills training throughout the UK. The industry is therefore giving much support, but a bit of focus on how the Government might support it better would be welcome.

The Designer-Manufacturer Innovation Support Centre—also known as DISC—was launched last year with European regional development fund money. Its goal is to create links with designers and manufacturers, and to offer support and advice to manufacturing businesses. DISC has proposed the creation of a machinist school that would train 25 machinists a year and provide the manufacturing industry with a new, young generation of highly skilled professionals with relevant skills. It is here that we hit one of the challenges of how to fit fashion into the models that the Government are promoting. To be a good machinist, someone needs not a short apprenticeship but lots of practice, which means a longer training course than some of the apprenticeships now being funded by the Government.

The establishment of such a school, which we are keen to host in Hackney, would sustain the industry, but there are other opportunities to expand. When the elements of excellent education, design support and the ability to manufacture come together, the industry will have an opportunity to flourish and grow further. In New York, fashion zones or clusters have been created to encourage industry growth by offering cheaper rents and loans. Encouraging growth in those areas of the fashion industry might produce massive economic benefits locally and nationally.

The British film industry has often been the focus of tax breaks or investment vehicles, so why not look imaginatively at what might be done to support jobs and growth in fashion? It is an exciting time for the industry, and one that is filled with opportunities. Across the world, there is huge demand for British-made products, because they are the hallmark of quality and good design. To give just one example, men’s footwear brands are enjoying international success in the far east and the US, and factories are currently working flat out to keep up with demand.

Organisations such as DISC and the Centre for Fashion Enterprise are laying the foundations for the fashion industry’s future, yet they are funded not by the Government but by the European regional development fund—I was present when the European Commissioner launched it in my constituency—and that funding will not last for ever. DISC’s funding will run out in 2014, which is only next year. Will the Government step up and support British industry as well, or will they leave it to someone else? If the industry is important enough for Europe to fund, I hope that the British Government will similarly support it.

We can be very proud of the fashion industry, which provides substantial benefits to the whole country. We have a wealth of creative talent, and we have educational institutions, which are the best in the world, that are making the most of it. However, we cannot let it end there: the fashion industry is not letting it end there, and we could be doing a lot more. The Government should invest in a machinist school as part of their general support for manufacturing. Will they partner with the British Fashion Council, which will launch a British manufacturing and textiles mapping report this week to underline the potential of what we already have? With a modicum of Government support, the industry could grow and create the jobs that the Prime Minister is so keen to see.

Across the Atlantic ocean, in New York, a £3 million fund has just been created to protect the garment district, through supporting skills training and investment in new machinery. London and the UK must not be left behind: we should be leading, not following, in what is one of our leading-edge industries. Business schools in the USA partner with the fashion industry to marry the best business and fashion brains. We, too, could follow their lead with a little support, and set up a fund to lend to new creative businesses and to support our fashion colleges.

I am sure that the Minister is aware of the Prime Minister’s personal support, which he pledged at the London men’s fashion event at Downing street recently. He cited fashion as one of the key industries that is critical to the future of the British economy. The industry is stepping up to the mark to develop its own solutions, but the Government could help. In particular, will the Minister back the move from unpaid interns to apprenticeships—including, crucially, graduate apprenticeships—with a programme of support and information, and a focus on the gap in technical skills that is opening up and might, if not quickly plugged, leave the UK fashion industry behind the curve? Will she agree to work with the British Fashion Council to map manufacturing business and support development and growth at the high end, which does much to entice international designers to come to the UK and to entice graduates to stay?

I hope that the Minister will agree to work with employers. They know what skills they need and, with co-ordination, they can develop skills programmes to train people in those skills, particularly in the seven eighths of the iceberg that we do not see—not the catwalk end, but all the skills that support the manufacturing and retail industry. I have previously raised with the Treasury the issue of small business support and innovative finance models, which are often not regulated by the Financial Services Authority. They need to be available to the small businesses that make up so much of the fashion industry, because those businesses struggle to raise money in other ways.

I am sure that the Minister’s Department is already in intense discussions with the Home Office about the graduate work visa programme, which is restricting opportunities for some of the best international graduates of our fashion colleges from setting up their fledgling businesses in the UK. Over the years, some of those graduates have stayed, because they could, and have grown their small businesses into bigger businesses, creating jobs and wealth in the UK. I do not mind who creates jobs and wealth, but I want that to happen here. With the current visa regime, the danger is that those people will have better opportunities to travel to and be poached by countries that see the advantage of doing so. We have already seen adverts in Australian newspapers for people to travel there—not particularly in relation to fashion, but I am sure that that will follow.

As I said earlier, the British film industry has been the focus of tax breaks and investment vehicles, so we should look imaginatively at how to support fashion. I hope that the Government will react not simply with words of support to echo what the Prime Minister has said, but with action. In these difficult economic times, the Government should support the fashion industry and recognise its value and importance to the UK economy.

16:30

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I welcome the opportunity to serve under your chairmanship, Mrs Riordan, and congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing this debate, the topic of which is both important and timely, as London fashion week starts this Friday.

Textiles and fashion have a long history in the UK, and their importance has been felt even in these august premises, in the Houses of Parliament. Back in the 14th century, the Lord Speaker of the House of Lords sat on a Woolsack to demonstrate the importance of the wool trade to the nation. In the 18th century, textiles were the single biggest economic interest after grain. Throughout our history, from the Stuarts to the sixties, fashion has added definition to our society. Today, the UK is home to some of the most inspiring fashion designers in the world, some of whom were mentioned by the hon. Lady. Hackney is right to be proud of its strong fashion heritage. With strong mayoral support for the creative industries, the fashion business has a great deal to offer London and indeed the rest of the UK.

Fashion remains an important part of the economy. Its wider contribution is estimated at more than £37 billion —the hon. Lady mentioned £21 billion as the direct figure for fashion—and more than 800,000 jobs are supported more widely throughout the industry. As the hon. Lady rightly says, this is an industry that is worth talking about and that perhaps does not always get the profile that it deserves in this place.

Today, the country is home to leading designers of menswear, womenswear, childrenswear and babywear who export their products worldwide. We are also a leading centre for the manufacture of clothing and high-quality fabrics, as well as a truly global hub for fashion retailing.

Many UK companies are thriving by supplying top-end, exclusive products. British designers such as Stella McCartney, Paul Smith and Vivienne Westwood continue to lead in global markets. The UK’s economic success is due in large part to our ability to participate in global trade and investment. We should be proud of our heritage and our reputation for quality and excellence, which forms the foundation of our international success.

From a Government perspective, we want to ensure that this sector continues to grow. Sustainable growth hinges on ensuring that we have manufacturing capacity, a skilled work force, and support for the many small businesses emerging in the sector. Those key challenges were all outlined in the hon. Lady’s speech.

Manufacturing is crucial to economic recovery. Working with business, we are taking steps to strengthen UK manufacturing capability. We want to create a better business environment that will address barriers to growth; encourage innovation and technology commercialisation; increase exports and business investment; improve skills; and build UK supply chains. Last October, as part of the Government’s “Make it in Great Britain” initiative, my Department hosted the UK fashion and textile manufacturing showcase. It was designed to dispel the myth that the UK does not make anything any more.

We are encouraging manufacturers and retailers to work more closely together to identify opportunities to bring business back to the UK. Already we have seen some retailers sourcing products from the UK, where they have opportunities to benefit from shorter lead times. Debenhams, for example, recently pledged to increase its use of UK manufacturers as it launches a new “Made by Great Britons” range.

Lord Alliance from the other place has recently commissioned work to look at the feasibility of bringing back textile manufacturing to the UK, and the early signs are positive. Manchester, with its key history in textiles and manufacturing, is leading that strategic programme. It is working in collaboration with key bodies including the London College of Fashion.

UK Trade & Investment is also helping to boost economic growth by promoting UK products and services to customers abroad and encouraging foreign companies to invest in the UK through the GREAT campaign, which focuses on exactly why the British fashion industry has been considered No. 1 on the world stage, with its well-established tailors of Savile row and its exciting young start-up designers. Learn their names now and who knows whose wedding dresses they will be designing in the future.

The hon. Lady was right to say that skills are essential to support the UK fashion industry, and that apprenticeships, in turn, are at the heart of our skills ambition. Just last week, Creative Skillset, which is the sector skills council for the creative industries, launched its first higher-level apprenticeship in fashion and textiles to meet skills needs in advertising, creative and digital media, and fashion and textiles. Working with the industry, including with companies such as Burberry, Creative Skillset is planning to deliver 500 apprenticeships. The hon. Lady was right to say that employers are best placed to know the skills that they need, which is why apprenticeship funding is demand-led. Companies and employers in that sector need to come forward and commit to employing and training an apprentice; then they can access the funding.

I am also pleased to note that the UK Commission for Employment and Skills has provided nearly £7 million to Creative Skillset to develop targeted skills interventions. That will bring greater collaboration between the industry and higher education to overcome structural barriers to new skills acquisition, tailor products and services for the sector, and benchmark the very best training that is available.

The Government are giving business access to a significant skills funding opportunity through the “employer ownership of skills” pilot programme, the first round of which saw more than £2 million awarded to the Textile Centre of Excellence. Round 2 of the pilot is now open, and we welcome and encourage bids from companies in the fashion sector that are seeking to identify innovative solutions to their, or the wider sector’s, skills challenges. The deadline for bids is Thursday 28 March 2013.

Higher education also plays a vital role, with our internationally recognised universities offering a wide range of fashion courses. Figures for 2011 show that there were almost 18,000 students registered on fashion and textile courses. Of course London is seen as a global centre of fashion, with our universities, including the campus in the hon. Lady’s constituency, attracting students from around the world. Higher education is also leading the way on supporting positive body image. The Edinburgh college of art’s centre of diversity project, which is a collaboration of fashion colleges from up and down the country, is working with All Walks Beyond the Catwalk to develop innovative educational methods and to promote a positive attitude to body diversity within fashion education. They are teaching student fashion designers how to cut to a wide variety of body shapes, sizes and styles. Given my campaigning on this issue, the scheme has particular resonance for me.

Fashion has the power to inspire and define whole generations. The images that are created are iconic, and if we harness that power, we can achieve great things. I pay tribute to All Walks Beyond the Catwalk, and to Debra Bourne and Caryn Franklin, who set it up. Of course Caryn rightly and deservedly received an MBE for services to diversity in the fashion industry in the new year’s honours list.

Exploitation is an important issue to address within the fashion industry.

[Meg Hillier]

I hope that the Minister will address the issue of visas later in her speech. If she is not planning to do so, it would be good if she could address that point before she moves on from higher education.

[Jo Swinson]

I am happy to address the matter of visas. The hon. Lady is right to say that talented individuals come here to study. We want to ensure that we can use that talent in the British economy. Of course discussions are ongoing between the Department for Business, Innovation and Skills and the Home Office on those issues, as with all issues to do with business and the visa system, to make sure that we have a proportionate and fair regime that enables people to contribute to the economy in a way that helps overall UK growth.

On the issue of unpaid interns, it is absolutely the case that there is, unfortunately, exploitation of young people in the fashion industry, and this Government are clear that anyone who is entitled to the minimum wage should receive it. We expect employers to play by the rules and pay their interns at least the minimum wage, as long as there is no exemption, as there is for volunteers. Anyone who finds themselves in the kind of situation that we are talking about should know about the pay and work rights helpline, which is 0800 917 2368. There is now a fast-track system in place for any calls from individuals who appear to be in an unpaid internship that is in fact a job. Any such call is dealt with promptly, and it is also important to highlight that Her Majesty’s Revenue and Customs can enforce arrears of pay going back six years. I recognise that there is an issue with individuals who are at the very early stages of their career and who may feel that it is more difficult for them to speak out. However, if this is something that has happened to them—even up to six years ago—they can still come forward and make this point.

Of course, HMRC is also working to try to ensure greater awareness of the issue, so we are working alongside Intern Aware and key stakeholders such as the British Fashion Council to inform and educate interns and employers about when someone should be paid the minimum wage. In the spring, we will be delivering a campaign to support this work, aimed particularly at educating university students about these matters. Recently, there has been a particular focus from HMRC on interns in the fashion industry, and we are expecting a report back from HMRC on that activity shortly.

There is one other element of exploitation that happens in the fashion industry that is worth discussing. It is very positive that London fashion week has now committed to featuring only models who are over the age of 16, and Vogue magazine has pledged to do the same. Unfortunately, however, that positive step has not been replicated across the fashion industry as a whole. Away from the spotlight of London fashion week, there are still concerns, as has been highlighted in a number of documentaries, about dangerous situations that vulnerable young people—many of them still children—can find themselves in, particularly when there are trends for models who are in their early teens. It is important that the welfare of people working in the fashion industry is taken very seriously. I pay tribute to the excellent work done by Erin O’Connor, who has championed this issue within the industry by setting up her “model sanctuary” to give models somewhere that they can receive advice and support, and a place to be themselves, during London fashion week. That has been so successful that it has now been taken on by the British Fashion Council as part of the model lounge, which is part of London fashion week itself.

I will turn to the potential for growth in the fashion industry, because it is of course vital that we nurture the entrepreneurship that is so important to the fashion industry. The hon. Lady was right to point out that people who have the fantastic creative skills to be world-class designers may not automatically have the business acumen to go alongside those skills. We also need to recognise some of the challenges that small businesses face in accessing finance. That is why we are continuing to make a priority of improving access to finance for small and medium-sized enterprises. We have put in place a package of measures to improve the supply of affordable credit to SMEs, including the funding for lending scheme and the £1.2 billion business finance partnership, to stimulate the development of alternatives to bank finance.

[Meg Hillier]

On that point, businesses in my constituency tell me that it is often still difficult for them to get money. We know that funding for lending is actually fuelling a lot of buy-to-let landlords, which is a different issue altogether. However, there is also a real need for the Department for Business, Innovation and Skills to look at licensing alternative forms of funding, such as crowd funding, which are popular for some of these small businesses. If the Minister cannot answer me now, perhaps she could write to me about her Department’s attitude to that issue and what it will be doing.

[Jo Swinson]

I thank the hon. Lady for that intervention. She is right to say that we need to be innovative in considering a range of different ways to free up finance. There is already a range of different ways in which the Government are doing it, but I am more than happy to take on board her suggestion and consider whether there are further steps to be taken along those lines.

Of course, we are also taking the first steps towards the creation of a Government-backed business bank, which will receive £1 billion of new Government funding, with £300 million being invested by the Government alongside private investors during the next two years to provide diverse sources of funding for SMEs. The bank will address long-standing structural gaps in the supply of finance to businesses. We also have the Get Mentoring project—getmentoring.org—which has recruited and trained 15,000 business mentors from the small business community. I encourage any young designer setting up a business to make use of that support.

In conclusion, the UK fashion industry is an important part of our heritage, and our unique and innovative designers are among the most recognised in the world. We are working hard to ensure that the climate is right for growth, to support UK manufacturing, and to ensure that future designers have the skills they need and that fledgling businesses have the support they require to grow. We are doing all that we can to ensure that the UK remains at the forefront of fashion and design, and we are confident that we can build on our world-class reputation.

I thank the hon. Lady for bringing this issue to the attention of the House today. It has been a positive debate and I will happily get back to her on those additional points that she has raised.