Economy: Manufacturing

Lord Hunt of Chesterton Excerpts

Thursday 3rd July 2014 Lords Chamber

[Lord Hunt of Chesterton (Lab)]

My Lords, I greatly commend the noble Baroness for introducing this important debate about strengthening manufacturing, stimulating it and encouraging young people. I was an engineering graduate of the University of Cambridge in the 1960s. In those days, we all had to have industrial experience on the shop floor. For six to eight weeks, I worked with ICI in Runcorn and Widnes on maintenance operations. Such was health and safety at the time that I used to get extremely drunk from breathing the fumes from the leaking pipes. It is a wonder that I am here today. I worked at Vickers in Barrow tightening nuts on the diesel electric motors. All the tools said, “nuclear only, not to be used anywhere else”, so we learnt how there was cross-subsidisation in Vickers.

In France and the Netherlands, engineering students continue to have to spend much more time in industrial internships, which, regrettably, have been dropped from many British engineering courses. I met with a successful consultancy last week, which said that it often recruits people from the continent because of their practical experience. However, many British students, who are extremely able to an international standard, take various jobs. The consulting company of which I am chairman in Cambridge often uses excellent students for that purpose, but it is not hands-on manufacturing.

The present and previous Governments in the UK have increased the numbers of apprentices in engineering, which the industry welcomes. However, as many noble Lords have mentioned, there is still a great lack in the numbers of apprentices and technicians. Last evening, I spoke to a representative from Airbus at the Royal Society. He commented on the literally thousands of intermediate technicians being trained in the colleges and at the Airbus factories in Toulouse. Companies, such as JCB—we will hear from the noble Lord, Lord Bamford, next—and Rolls-Royce contribute with their excellent schemes working with local universities, although the number of top-class, practically trained technicians and engineers will not be sufficient in the UK.

It is always amusing to me that the other side talks about money, money, money but when it comes to engineers they never talk about salaries. We have not had a single contribution on that. Do they know that the starting salary of an engineer is about half what they would get in law? Most art students start with higher salaries than engineering students. It is an extraordinary situation. When Siemens hires engineers in the UK, it pays them significantly less than it pays its engineers in Germany.

I ask manufacturing bosses over here to pay their engineers more and then they will get more of them. Schoolteachers know that. They are extremely aware of salaries and they jolly well know that most people who leave university with engineering degrees and go into engineering will get a lower salary. To become an engineer in this country is almost like entering the church—perhaps I missed a comment from the Bishops’ Benches. I hope that the other side will take on that point.

The other important point is of course that all parties now agree that government can play a very major role in stimulating investment in advanced manufacturing. After the last election there were nasty remarks in taxation magazines that this Government were going to withdraw the tax relief on R&D. However, I am glad to say that sense prevailed, and doubtless will continue to do so beyond the next election, certainly if Labour is returned. This has been a very important point. I am very well aware that this arrangement of tax relief on R&D has meant that small SMEs have been able to continue a very high level of R&D activity. Indeed, in that respect we are rather better than some of the continental countries.

All parties agree that in certain areas of manufacturing technology, selection is now a desirable approach. The Government have a whole raft of these, such as aerospace, automobiles, chemicals, industry and drugs, and we heard today about some of them. However, there is very wide concern, expressed particularly by the noble Lord, Lord Heseltine, that the foreign ownership of much of UK industry means that the strategic decisions are no longer made by the UK. For example, a Japanese company is going to have a big railway facility in the UK, but was very emphatic that all the key engineering designs will be done in Japan. Through our excellent R&D, the UK can try to get its feet under the table of these strategic long-range discussions.

Noble Lords might be interested to know that, after 350 years of the Royal Society, in this year’s summer exhibition there is a joint exhibition of a British team and a French one. The French have been allowed in, which is fantastic. I am one of the exhibitors, and I am labelled under Toulouse for this purpose. This is an extraordinary exhibit of smart wings, which airbus planes will be flying with by around 2025. This shows how we have to combine new materials, aerodynamics, bird flight and control systems. However, sadly we are learning that with the withdrawal of British Aerospace as a major shareholder and a British Government position that is not completely clear, the strategic decisions in Airbus are largely taken by the Governments of France, Germany and Spain.

It is important that the very complex messages we have been giving have not meant that we are right at the strategic level. As I have mentioned before in this House, when a Prime Minister—whose name I have suddenly forgotten—flies around the world, he does not seem to fly on an airbus, unlike the Prime Ministers of our major European colleagues. It is a very important point, and this is a major area of British manufacturing. We have excellent people, but commitment is required. BIS and Whitehall understand that if you have ambitious, able graduates, they want to do something that is at the top level in the world. The top level in the world is the City, so of course they go there. It is very important to underline the need for top strategic engineering areas, because that is where we will have our best people.