UK Manufacturing Industry

Debate between Baroness Rawlings and Lord Morris of Handsworth

Thursday 8th December 2011 Lords Chamber

[Lord Morris of Handsworth]

My Lords, it is a privilege to add my name to all those thanking the noble Lord, Lord Haskel, for securing this timely and important debate.

As we see the balance of our economy weighted in favour of what we import against what we produce, there is no doubt that we need to rebalance our manufacturing priorities in favour of home production and exports. The reality is that we urgently need a new strategy for British manufacturing, in the absence of which we will end up taking in each other's washing and, sadly, we will have to do it using our Japanese washing machines.

It is my hope that in this debate we will not just concentrate on what has gone wrong, but we will seek to focus on some of the solutions, as the noble Lord, Lord Haskel, did in his introduction. But first let us talk about the problem. The scale to which the British manufacturing sector has shrunk in the past 30 years was highlighted in a recent Guardian article under the headline “Why doesn’t Britain make things any more?”. I do not quite subscribe to that. We do make things. The issue is that we need to make more things and make better things, and most of them should be things to serve other markets. The article asserts that in the past 30 years the UK manufacturing sector has shrunk by two-thirds—a factor described as the greatest deindustrialisation of any major nation, all done in the name of economic modernisation. Let us be clear. The impact of deindustrialisation on our manufacturing sector has swept through our country with the force of a hurricane.

Much has been written about it and our experience has been enhanced by the Industrial Revolution, but today it is the deindustrial revolution that carries the heavy social and economic burden. But what is the driving factor behind the flight from manufacturing? In the 1980s, we were told that in the future we would hire brains, not labour, and that the role of Governments was to get out of the way and let a thousand creative flowers bloom in the knowledge economy. Silicon Valley was the inspiration and Britain would become the e-commerce capital of the world. Sadly, the so-called economic modernisation has led to a large degree of industrial decay.

When the noble Baroness, Lady Thatcher, came to office as Prime Minister in May 1979, manufacturing accounted for almost 30 per cent of our national income and employed 6.8 million people. But when the previous Prime Minister left office in May 2010 it was down to just over 11 per cent of the economy and employed just 2.5 million people. While Britain's manufacturing household brand names disappeared, what a contrast it is that Germany and France have managed to retain their household names such as Renault, BMW, Bosch and many more.

The impact of deindustrialisation on the balance of our trade means that, last year, Britain actually bought £97 billion more in goods from abroad than we sold—the biggest shortfall since 1980. In the north-east, manufacturing jobs have nearly halved since 1979. Deindustrialisation attacks the base of our manufacturing sector and, by extension, the strength of our economy. For example, the majority of the 6,000 workers who lost their jobs when MG Rover closed in 2005 have by now found alternative employment. But a recent study shows they are on average earning nearly £6,000 less per annum. That is an economic negative to the UK economy. The danger is that a greater proportion of our citizens now earn their living from the state as an employer. That is no wonder when we give train contracts to German factories rather than to workers in Derby.

I pause here to assure the noble Lord, Lord Lee, that the contribution to British manufacturing is not exclusive to the boardroom. The Mini motor car would never have been built but for the designers at Hardy Spicer who designed the first constant velocity joint, enabling the Mini to be driven off the front wheels. I know because I was there for 18 years, but I visited the boardroom only when I had bad news.

I went to a reception recently to celebrate the rise and progress of Triumph Motorcycles in Leicester. As I stood there I thought, “If I get arrested on the way back to this House, the motorcycle that the police officer will be riding will be a BMW, and possibly also the car his colleagues are driving as well”.

[Baroness Rawlings]

My Lords, this is a timed debate and we are running out of time. Please will the noble Lord wind up his remarks?

[Lord Morris of Handsworth]

I will merely say that we must align our procurement policy with our manufacturing policy because manufacturing really does matter.