Economy: Manufacturing

Lord Haskel Excerpts

Tuesday 30th November 2010 Grand Committee

[Lord Haskel]

My Lords, I add to what the noble Lord, Lord Wade, said about the north-west that it is also a leading area in technical textiles, a business that I was in for 30 years. Noble Lords are right that manufacturing is an important part of our economy and will play an important part in our future, if we are competitive. To secure this future, there is an important political argument that the Minister and her department have to win. It is about debt. Her Government are giving debt a bad name because they say it is an unreasonable burden on our children, but that is a damaging generalisation. We should certainly avoid burdening our children with unproductive debt, but productive debt is not a burden but a blessing. As Martin Woolf pointed out, Professor Helm's paper for the Social Market Foundation is very convincing on this. Now that interest rates are so low, it is the time to build up productive assets. What could be more productive than manufacturing assets and the infrastructure that supports them? I am talking not just about the physical infrastructure but the infrastructure that bridges manufacturing and skills and bridges the gap between research and technology and commercialisation. It is the task of the Technology Strategy Board to provide the infrastructure to bridge that gap. It is the task of our training organisations and colleges to provide the infrastructure to bridge the skills gap. It is the task of the financial services industry to bridge the financial gap. So I hope the Minister and her department will argue that getting into debt to bridge those gaps is productive debt which is a public good and not a burden on future generations.

The noble Lord, Lord Bilimoria, told us that last week there was a headline in the Financial Times that said, “Growth Master Plan Dropped for Lack of Content. Long Awaited White Paper Abandoned”. That gave the impression that the Minister’s department had little idea on how to get growth back into the economy. I am afraid that the paper published yesterday by her department confirms this headline. Perhaps the noble Lord noticed that directly below that article in the Financial Times was an article about a report from McKinsey entitled From Austerity to Prosperity. I am no particular friend of consultants, but the report identifies seven priorities, priorities which are practical and achievable and many of which have been mentioned by noble Lords in this debate. They are in fact common-sense actions dealing with raising productivity sector by sector instead of the general aspiration to raise productivity that is in the Government’s paper. On how to release new money to invest in the infrastructure, the Government's paper speaks only of existing sources. On concentrating innovation in large clusters to make it more effective, the Government's paper speaks only of being “innovation friendly”. The report refers to how to capitalise on the huge potential for economic growth in education and health, and generally on how to make Britain a better place for business, in ways that the Government’s paper ignores but other noble Lords have mentioned.

The Minister and her department have to start to do better and to start being serious and more radical about our future prosperity, even if some of the ideas come from outside government. Otherwise, there will be a vacuum in government thinking and the manufacturing sector will suffer most.