Manufacturing and SMEs

Lord McCrea of Magherafelt and Cookstown Excerpts

Wednesday 4th September 2013 Westminster Hall

[Mr Bailey]

I pay tribute to both of them. All the players in the i54 development on the borders of Staffordshire and Wolverhampton deserve credit for the united way in which they have seized the opportunity. For the benefit of non-west midlands MPs here, it is a huge expansion in the engine production capacity of JLR that will result in 1,400 jobs. It has really transformed the supply prospects of foundries in the area. In that context, I would also mention the £45 million that the Tata brothers have invested at Warwick business school’s centre for research and innovation. Collectively, they have transformed the prospects for manufacturing in the west midlands.

My constituency still has the highest number of foundries—I think—of any constituency in the country, but there are plenty in the surrounding areas as well. The prospect offered to them of being part of the supply chain to Jaguar Land Rover is very significant. In the regional growth fund applications, there have been a number of successful bids from JLR and companies locally. However—I mention this to the Minister, because it highlights some of the problems that we have with the support that the Government give industry—I understand from the Cast Metals Federation that the engine blocks for the new Jaguar Land Rover development at the i54 will have to be made in Germany, because there is not, would you believe it, the capacity for foundries to produce them locally.

I also understand that Jaguar Land Rover is happy to look at repatriating some of its supply chains, where it has to source from abroad at the moment, but obviously, that will depend on the capacity of local SMEs to deliver. Despite all the Government sources of support, the regional growth fund and the grants that it has given, a crucial gap still remains in the potential economic benefits that will accrue to the west midlands because of the failure to secure this vital market. Aluminium engine blocks for that development will be crucial.

The Society of Motor Manufacturers and Traders has identified something like £3 billion-worth of potential extra business in the supply chain—if the Government and the industry can get together to maximise that potential. Although I do not condemn any of the attempts that have been made to provide finance for business and for SMEs so far—but certainly with the regional growth fund, there are all sorts of issues relating to length of time and so on—I ask the Minister to look at working with the Automotive Council to develop some sort of package that would enable the existing gaps in provision to be filled. The potential benefits, both for regional policy and for our overall national economic situation, are absolutely enormous.

I have spoken for longer than I intended, partly because I have taken interventions, so I will cease my remarks with that plea to the Minister.

[Dr William McCrea (in the Chair)]

Six Members from Government parties desire to speak before we have the wind-ups, and there are 32 minutes before those commence. I therefore ask for Members to be considerate to their colleagues in order to allow them to speak, if possible.

--- Later in debate ---

[Richard Graham (Gloucester) (Con)]

It is a joy to join the debate rightly won by my hon. Friend the Member for Carlisle (John Stevenson). The discussion of manufacturing has gone on for some years and will go on, because it is so important to all of us. It is especially important in constituencies such as mine, Gloucester, where making things has been what the city is all about. We are in fact arguably the bellwether for what happens to British manufacturing, because the narrative, as many hon. Members have noted, is a story of decline and recovery, and now the challenge is how to take it to the next chapter of success. My constituency, as a bellwether, is one to which my hon. Friend the Minister will want to pay attention. We make things, whether for the aerospace sector, the oil and gas sectors, nuclear power, consumption, health, dentistry or container ports; and when we export tea to China and valves to offshore Australian pipelines, the Minister will want to sit up and take notice and, indeed, come to visit the great city of Gloucester as soon as possible to see what can be done in modern manufacturing.

The story of decline we will gloss over, except to note that by 2010 new apprentices were virtually extinct in Gloucester. The specialist Gloucester training group was down to 20 engineering apprentices in one year. Small engineering companies were almost dying on their feet. Science was disappearing from school exams, and 6,000 jobs in business had been lost during the 13 years of the previous Administration.

Today, the story is rather different. We have created 2,000 new jobs in business—not all of them in manufacturing, but many—and last year alone 1,240 new apprentices started in our city. Nationally, of course, manufacturing is now going through its fastest growth, in terms of order books, for more than two decades. The output index is the highest since 1994, and non-EU exports have risen by 10% according to the latest figures. The rebalancing is full steam ahead, but we must not run ahead of ourselves. There is still much more reinvestment to be done to see a sustainable increase in manufacturing. We need confidence to spread more widely across the country and in manufacturing businesses, and of course we need banks to provide support and schools to give more time for manufacturers to tell their story and inspire youngsters.

I believe that the Government have played a useful role. I am thinking of what they have done on corporation tax, on capital allowances, which my hon. Friend the Member for Warwick and Leamington (Chris White) mentioned, on R and D and on apprenticeships, and about the renewed focus on engineering and sciences. All those things, linked to steps taken by my right hon. Friend the Secretary of State for Education on careers advice, have helped. They have been a stimulus to our manufacturers, who now have greater confidence than they used to and can see that this is a Government, finally, who are backing manufacturing and urging them to help with the rebalancing of the economy, which was so badly needed, away from finance, public service and property.

There is still, though, as I mentioned, much more to be done. As individual MPs, we can do our little bit. We can, for example, take on our own apprentice. I am delighted to pay tribute to my apprentice, Laura Pearsall, who has now completed her two-year apprenticeship with me, got her NVQ level 3 in business administration and won a good job in business. Clearly, that is not manufacturing, but manufacturers can also take on apprentices in non-manufacturing subjects, such as business admin. I am delighted that, for example, EDF Energy, whose operational headquarters for its nuclear power stations is in my constituency, now has apprentices working in finance, human resources and a variety of other sectors that are not directly running nuclear power stations.

We can also help by working with the media and our further education colleges. I congratulate Gloucestershire Media and Gloucestershire college, which were the first to launch the 100 apprentices in 100 days challenge, which so many regional newspapers have taken up. They went on to get places for 100 apprentices from companies that had never had them before. They have given huge support to the rebalancing of our economy and supported manufacturers by giving them a platform of encouragement. We can also help to create or support apprenticeship fairs and jobs fairs to highlight the opportunities in manufacturing. I have helped support three apprenticeship fairs and created seven job fairs in the past three years, and there will be much more to do over the next two years.

We can create job sections on our websites, highlighting opportunities for youngsters in manufacturing and other sectors. We can encourage all our employers to take more young people into manufacturing through apprenticeships. We can create export clubs and organise events with UKTI. We can invite Ministers to proselytise and give further encouragement. The Minister’s predecessor did that successfully at Kingsholm, and I invite the current Minister, who is full of enthusiasm, to come and encourage our businesses, many of which are micro-business and manufacturing subcontractors, such as the 500 members of the Gloucester branch of the Federation of Small Businesses. I am delighted to say that its chairman, Mark Owen, is leading from the front by taking on his first apprentice. We can also visit manufacturers ourselves, and help them to expand by assisting with council problems of additional space, parking and other local issues. There is much that we can do.

I finish by congratulating my hon. Friend the Member for Carlisle on securing the debate. I welcome the measures the Government are taking. I salute the success of our manufacturers and urge them to use their capital balances to invest more in new plant and equipment. I urge large manufacturers to look at their supply chains, our schools to engage with manufacturers, and our Ministers to help manufacturers that went abroad to return to Britain with help from the regional growth fund and local councils through waiving business rates for a period, so that we may see the brands “Made in England” and “Made in Gloucester” thrive and expand.

[Dr William McCrea (in the Chair)]

Before I call the next speaker, may I thank all Members for the discipline shown, led by the excellent example of the hon. Member for Gosport (Caroline Dinenage), in allowing everyone who desired to do so to get in to the debate? I now have the pleasure of calling Iain Wright.