Economy: Manufacturing

Debate between Lord Brooke of Sutton Mandeville and Baroness Harris of Richmond

Tuesday 30th November 2010 Grand Committee

[Lord Brooke of Sutton Mandeville]

My Lords, in a debate where, due to its popularity, Procrustes has reduced most of us to speeches of four minutes, I hope that I shall speak for everyone when I thank the noble Viscount, Lord Montgomery, for his choice of subject and his introduction of it. My only hesitation is that the wording of the Question carries a mild ambiguity as to whether the answer expected is to be quantitative or qualitative.

I am, however, taking it as a given that, in our present parlous circumstances, it is a case of all hands to the pumps and that any enhanced contribution to the economy by the manufacturing sector is profoundly to be welcomed. Although, after leaving Harvard Business School, I made my living across the whole face of the economy and, within that, across a wide range of manufacturing, it is easier if I confine these remarks to a particular part. I shall dwell on engineering, not least because it has had a notable role in Britain’s industrial past, but also because Germany, now the premier European exporter, is still so powerful a force within it.

It is awesome even in this Ashes week to be batting immediately before the noble Lord, Lord Bhattacharyya, who has a personal cricketing reputation as well, and I risk being told that I am wholly out of date, but I am genuinely impressed, diminished though our engineering sector is, at the health of those British engineering companies which have survived the industry’s decline. I put it down to survivors surviving because of the quality of their products in market niches where product quality and utility are at a premium.

When in the 1960s and 1970s in the private sector I was assisting companies such as Rolls-Royce, we were wont to be told that Rolls-Royce’s American competitors enjoyed the advantage of a component manufacturing sector which could produce to the most precise of specifications in an industry where such were required, often in new materials, whereas Rolls-Royce had to design and manufacture its components itself. If there is anything in this hypothesis, even in a global market, then the growth that we are seeking beyond exports will be assisted by an expansion in self-sufficiency in components at home and by entrepreneurs who create new leads for them. I am also assuming that there are still market opportunities similar to those experienced in the United States in the application of electronics to what I shall call the rust belt industries.

An encouraging example that applies to both my hypotheses is the recent decision of the Department for Transport to fund 1,200 new trains on the Thameslink line, specifically with up-to-date and innovative signalling instrumentation, taking us away from the historical poverty of obsessively British-built signalling technology. One sad characteristic of British industry, not only at the time of the original Brookings Institute inquiry of 1968 but lasting to revisiting the issues in the 1980s, was the charge that we were short of engineers to an extent whereby we were using scientists to do the jobs of engineers, thus robbing the science base. The Division Bell is ringing. Do you want me to finish the speech or stop? I think that I have one more minute.

[The Deputy Speaker (Baroness Harris of Richmond)]

One more minute, and then we will have 10 more minutes.

[Lord Brooke of Sutton Mandeville]

Thus we are robbing the science base of the scientists that it could otherwise have used in research. The institute attributed it to the low value that our economy put on the utility of engineers in the 1970s. It always disturbed me that the financial incentives of industry were so comparatively low. Although in those days, the accountants were more of a salary competitor than the totality of the financial sector, the explosive effect of the big bang compounded the problem thereafter, taking engineers straight into the City. In this respect, globalism has helped by introducing international salary arrangements into our marketplace.

Finally, in the four-year period when I was a Treasury Minister, I was the only one of the eight of us in that overall period who had never worked in the City. Shortly after I went there, Douglas Wass asked me what I was responsible for and categorised my answer as the housekeeping end of the Treasury. Of course, I understood then my colleagues’ views that the decline of manufacturing did not matter if the financial sector was growing as fast as it was, but happily—in some ways—we now know different, and the terms of economic trade are moving back to what we were always once good at.