Queen's Speech

Lord Bhattacharyya Excerpts

Wednesday 2nd June 2010 Lords Chamber

[Lord Bhattacharyya]

My Lords, I offer my congratulations to the new Government, and to the noble Baroness, Lady Wilcox, on her appointment. I am lucky enough to have known her for some time, and I am sure that she will provide intelligence, experience and vision to her department.

Time is limited and the topic is huge, so I shall limit myself to a subject I know about—technology and manufacturing. From the minimum wage to the science budget, Britain is a better place today than it was 13 years ago. For all the rhetoric from the coalition, there is much that the new Government will not undo. I am pleased that thoughtful Ministers such as David Willetts accept that Britain has changed for the better. In that spirit, I welcome the measures in the gracious Speech to support industry and the Prime Minister's speech last Friday, in which he called for a rebalanced economy. I have long been a voice in the wilderness on that topic, and it is pleasant to have such support. The question is how we achieve balanced growth while reducing the deficit as the Government propose. If we improve our manufacturing exports by 10 per cent and cut manufacturing imports by 10 per cent by import substitution, this would contribute £50 billion each year to our balance of payments, which will ensure real growth.

An example is the steel industry. The vice-chairman of Tata Steel, which includes Corus, has said that in 1970 the UK consumed 25 million tonnes of steel; 95 per cent of this was produced at home. Today we consume only about 8 million tonnes, just half of which comes from the UK. Why? Because we have limited demand due to our industrial decline. Britain is the only European country to have had such a dramatic fall. We therefore need an integrated manufacturing policy that brings together all sources of funding, from banks to RDAs to research councils, in order to secure growth. Merely discussing industrial activism does not deliver business growth. I declare an interest: I am the director of the Warwick Manufacturing Group at the University of Warwick. Our funding is largely from the private sector from throughout the world and we contribute to the finances of the university, so I hope that the Business Secretary will not be too harsh on me.

As the coalition begins work, there seems to be some discussion of the role of “impact” in university research. It is true that in areas of blue-sky research and the humanities, impact can become a box-ticking exercise. In applied science and in technology, however, impact is precisely the right measure to judge research. Applied science is successful only if it is useful. For technologists, impact is not a way to secure value for money but a path to economic growth and productivity. The Engineering and Physical Sciences Research Council is already looking at impact, and it should be encouraged to do more.

I am no interventionist—there should be no return to a bailout culture—but we must not turn away good, profitable businesses looking to invest for the future. We have excellent manufacturers in Britain. Two years ago Jaguar Land Rover made a huge loss, but today it exports £6 billion-worth a year. The turnaround has been remarkable, but when the company was in trouble there was no one there to help. There are other excellent industries too: JCB, Rolls-Royce aero engines, British Aerospace and so on. We must not lose them.

As David Green, director of the think tank Civitas, has said, cutting industrial investment now, whichever way you want to cut it, would be like eating seed corn to get through the winter. I welcome the proposal for a green investment bank but a green economy will require contributions from every sector, from automotive to energy to healthcare.

I am a regular visitor to China and India, and industries in those countries are climbing the value chain at an alarming rate. We must help our industries compete and partner with these expanding sectors. Given the near double-digit growth of both China and India, we must move fast. Considering Britain’s historical decline in manufacturing, some, including our partners abroad, think that this cannot be done. Yet in my home region, Advantage West Midlands is helping firms build the skills and technology that will bring investment from the manufacturing giants of the new economies, while supporting productivity and innovation at home.

There appears to be a question mark over RDAs. Yes, they should look carefully for savings, but RDAs can make a vital contribution to future growth. The Government should retain RDAs that work well, because there is no substitute for them.

I come from Birmingham, where we have a long history of Liberal and Conservative coalitions, mergers and unions. I say to the Benches opposite that they will be best served by the radicalism of a Joseph Chamberlain, not the caution of a Neville. We need growth. We should focus on creating the jobs, technology and products that will increase revenues, reduce costs and attract investment. I look forward to the Government’s proposals on that.