Manufacturing Sector

Debate between Alison McGovern and Caroline Dinenage

Wednesday 18th May 2011 Westminster Hall

[Alison McGovern]

My hon. Friend’s intervention is important. I will come to some of my specific questions for UKTI, about how it recognises not just the sectors that are already successful at a high level, but the sectors that are strategically placed for the future, even though they might be small at the moment. Green energy is certainly one of those. How are we going to ensure that Britain is selling green energy technology to Brazil, Russia, India and China in the future? We do not do much of it at the moment, but do we want to do it in the future? That is an important question to ask in terms of strategy.

I shall shift away from the supply chain specifically and on to UKTI’s strategy, which is contained in an interesting document that is important for all of us. I want to ask the Minister the following questions. The strategy identifies five groups with subsectors relating to five parts of the economy, one of which is manufacturing. Of those five groups, what will the resource balance be across UKTI?

It is easy to say that what we want is success and to drive resources towards the bits of the economy where we already have success in exporting parts abroad. We might also say that if we are really going to rebalance the economy, we need to take somewhat more of a risk with our resources and invest in those things with which we might not have had a history of high-level success over the past 10 or 15 years but in which we know we need to invest for the future. I would be interested in understanding a bit more about resource balance.

On monitoring, when we develop the strategy, how will we watch what happens and who will feed back to Parliament and to businesses on the ground? There has sometimes been a bit of a disconnect in terms of understanding to whom UKTI is responsible, who its customers are and how it feeds back successes. When will that happen? We do not want to spend all our time bearing the costs of monitoring, with a thousand tick boxes and charts.

[Caroline Dinenage (Gosport) (Con)]

I thank the hon. Lady for securing this valuable debate. As the owner of a manufacturing business, I have an enormous interest in everything that she has to say. One question that I would like to add to her list of things to mention is about cash flow. Although that is not a new problem, small manufacturing businesses are suffering from badly extended payment terms, with the average number of days until payment being around 88. That is astonishing and is affecting some good local manufacturers in a very bad way—some have been forced out of business. A European late payments directive has come into force, but it does not seem to be addressing the issue. I hope that she agrees that that matter needs addressing.

[Alison McGovern]

I thank the hon. Lady for her intervention. She is absolutely right. She has reminded me of an important point that I wanted to make about UKTI—how we check its work and ensure that we, as Members of Parliament, have full oversight. She is right about payment times; they can be absolutely make or break. I have seen that with companies in my constituency.

If there is a European directive, we, as a country, need to make Europe work for us. I suggest that in the British civil service, there has been a culture of applying directives absolutely to the letter in a way that is very formulaic, rather than saying, “Great, we’ve got this European system. How do we make this work for us?” I gently suggest that other European nations have done rather better than us. We need to see Europe as an opportunity. If there are such directives, that is fantastic—let us make them work for business, rather than just accepting them being handed down and administering them to the letter without watching what impact they have on the ground for business. It is important for us, as a community of politicians, to watch that. Businesses often point out to me how British civil servants tend to treat the rules on state aid and state intervention differently from how civil servants do in other countries. That is an important issue to watch because we can disadvantage ourselves without even meaning to.

Aligned to that is the matter of how the UKTI strategy will affect different parts of the UK. I mentioned that only nearly 3% of people work in manufacturing in London, whereas one in 10 in the north-west and more than one in 10 in the north-east do; there is clearly a differential need. Many more people work in manufacturing in places close to the constituency of the hon. Member for Gosport (Caroline Dinenage). We must recognise that if we have one strategy for the whole UK, we have to continue to watch how that helps different parts of the UK with different needs.

The strategy mentions working alongside the Welsh and Scottish Governments and the London Mayor on their plans for exports. That is fantastic and I support that approach. However, we obviously need UKTI to work with somebody in the English regions—the city regions. If UKTI is not working with regional development agencies, it needs to be working with local enterprise partnerships, which do not have anything like the same resources. They also do not have the same staff to call on the services of UKTI.

I have a final question. How will we check that we are not disadvantaging those parts of the country that do not have their own Parliament or Assembly? How empowered will UKTI staff be to add resources to the parts of the country that need them? I have heard anecdotal evidence that in the past UKTI has been quite centralised around Whitehall. It would be much better to see that service as a network of people embedded in local economic clusters. I hope that the Minister will support less bureaucracy from the centre and more empowerment to people working alongside companies to deliver the strategy. That is important.

In conclusion, I hope that the Minister will be able to respond to those specific questions—if not now, at a later date. Manufacturing has a huge amount to offer this country. I know that the Government agree and I am grateful for that support. There is every reason to think that now is the time for a new impetus. Strategically and globally, we are well placed to improve our manufactured exports. They have a huge amount to offer the country—not just next year, but in the next 20 or 30 years.

In recent years, we have seen manufacturing go through a high level of productivity improvements, so we are very well placed at the moment to maximise impact. However, if we leave things to chance and have a do-nothing option, it will be business as usual and only the sectors that are already strong and influential will be so. I hope that we can all take this opportunity not to have business as usual and to empower both UKTI and the rest of Government really to work alongside manufacturing.