Oral Answers to Questions

Adrian Bailey Excerpts

Thursday 24th October 2013 Commons Chamber

[Michael Fallon]

It is not unusual to see some share price volatility in the immediate aftermath of a sale. Let us be clear: this sale was popular, oversubscribed and successful. When the Labour Government tried to sell Royal Mail, they failed.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Will the Minister tell us how much money was paid to Lazard for so comprehensively undervaluing Royal Mail?

[Michael Fallon]

The fees paid to the Government’s advisers will be disclosed in the normal way to the National Audit Office, which is of course looking at this sale as they looked at the Northern Rock sale, but they compare favourably to the fees paid to advisers by the Labour Government in the sale of QinetiQ 10 years ago, when 10 senior managers were allowed to walk away with £107 million and no shares were sold to the public.

--- Later in debate ---

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

What assessment has the Secretary of State made of the impact of the funding for lending scheme on investment in small businesses?

[Vince Cable]

The funding for lending scheme has had a very significant impact on the mortgage market. It has had a much lesser impact on small business, but it has recently been adapted, and I believe it has been used by some of the new competitor banks such as the Aldermore. We certainly welcome that.

Manufacturing and SMEs

Adrian Bailey Excerpts

Wednesday 4th September 2013 Westminster Hall

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

It is a pleasure, Dr McCrea, to serve under your chairmanship. I congratulate the hon. Member for Carlisle (John Stevenson) on securing this debate and the cogent and well-reasoned way in which he spoke. There was very little to disagree with. I will keep my comments brief as quite a number of hon. Members want to speak. It is a reflection of the importance of the matter across parties that so many hon. Members want to contribute.

In the past couple of weeks, there has been euphoria about manufacturing. There has been a revival, but we must put that in context because the current level is below what it was in 2010, when it was described as a disaster. There are welcome signs of a significant upturn that might be sustained, but the situation is still not good.

In so far as it is possible to discern what has provoked the sudden surge in confidence and production, it is led partly by an increase in confidence in the housing market, which is rising largely because of the funding for lending scheme, and an improvement in exports. Both are welcome, particularly the increase in domestic construction in the housing industry. However, exports are particularly difficult at the moment with the problems in the eurozone, although there are welcome signs of revival. There is a danger in basing a rise in domestic consumption and confidence on a housing boom that may be temporary and is fragile. Many of the criticisms levelled at the previous Government were that consumption was based on that.

I will not reiterate our debates at that time, but although there is a welcome revival, the long-term sustainability of a manufacturing industry must be based on two things, or three if exports are included. First, a sustained and rising standard of living domestically will underpin demand for manufacturing products in this country. Secondly, an appropriate level of investment in the manufacturing industry in the private sector will ensure that we remain competitive, that value is added to improve exports and our domestic consumption, and that cheap foreign imports are resisted.

The hon. Member for Carlisle rightly outlined investment issues. The funding for lending scheme is generating confidence in the housing market, but the indications are that, like the enterprise finance guarantee scheme and other well-intentioned Government schemes designed to boost bank lending to small business, that is not yet happening. When I talk to banks about that, their reaction is that they want to lend and they have the money but companies will not come forward. When I talk to companies, they say that they do not have the confidence to invest because of the current economic situation.

The recent improvement in confidence may stimulate further demand from small manufacturing businesses, and may make the banks look differently at the risk parameters on which they base their loans and improve bank lending.

[Mr Blunkett]

I will not detain the Chamber long. Surely one of the difficulties with the enterprise finance guarantee scheme—which, in theory, is an extremely good idea—is that many major banks are asking of small businesses, and particularly of the owners, far more than they can give in personal guarantees, given that the banks can recover not only from the individual owner, but the 75% from the guarantee scheme, if they believe that the business is no longer viable. I think that the term is the “going west route”, whereby the banks end up owning the business. That is bound to put the fear of God into entrepreneurs, no matter how brave and confident they are.

[Mr Bailey]

My right hon. Friend raises a valuable point. I talked about the risk profile. A huge body of evidence demonstrates that banks are excessive in the security they demand in order to lend to businesses, and that is one of the main barriers to businesses wanting to apply for loans. If there is a criticism of the Government, it is that while the Government have provided cheaper money for banks to lend to businesses, I do not think that has addressed the obstacles that are far more significant in terms of getting the money out where it is needed, into investment in small businesses.

[Caroline Dinenage]

Will the hon. Gentleman give way?

[Mr Bailey]

Certainly. I have to give way to my colleague from the Select Committee on Business, Innovation and Skills.

[Caroline Dinenage]

I apologise for interrupting the hon. Gentleman’s brilliant speech. Does he agree that it is also up to the local community to look at ways in which they can help businesses grow and invest? In my area, the local newspaper, The News, made a regional growth fund bid, which they used as a “bridging the gap” fund for small start-up businesses and those that wanted to grow, as a way of helping them to get access to the finance that they needed. Will the hon. Gentleman join me in welcoming that sort of initiative?

[Mr Bailey]

I certainly join the hon. Lady in welcoming that. In fact, one of the unintended, beneficial by-products of the problem has been the resourceful and inventive ways that communities and businesses have got together to overcome it. Peer-to-peer lending is an example of that. In my area, we have the Black Country Reinvestment Society, with which my fellow west midlands MPs will be very familiar. However, the scale of the entrepreneurial alternative lending sources still does not match what is needed for our manufacturing base as a whole.

I turn to a specific issue that applies not only to my constituency, but to the whole of the west midlands and the black country—other west midlands MPs may refer to this, too. First, I pay tribute to the Tata brothers for their investment in Jaguar Land Rover, which, I think it is fair to say, has transformed manufacturing prospects in the west midlands in a way that we have not known for 30 years. It is an indication of the value of our relationships with the Indian subcontinent and that growing market and growing access of capital, and of the historic association between the Indian diaspora in this country, and of course, the native India.

[Jeremy Lefroy]

I entirely agree with the hon. Gentleman. It is also testament to the wonderful co-operation between Wolverhampton city council and Staffordshire county council, which, together, put £40 million forward to build a motorway junction on the M54, without which that project might not have been able to go ahead.

[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.

EU-US Trade and Investment Agreement

Adrian Bailey Excerpts

Thursday 18th July 2013 Commons Chamber

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I congratulate my right hon. Friend the Member for Wentworth and Dearne (John Healey) on securing this debate. It is fair to say that, although the issues we are discussing have exercised the financial press, their implications have not yet achieved high levels of visibility among the general public. I hope that this debate will at least go some way towards rectifying that. Given the limited time available, I will not talk about the more general issues. Instead, I shall focus on the implications of an EU-US trade agreement for my own area. My right hon. Friend mentioned the need for the Government to demonstrate what the potential impacts would be in local areas, and the fact that some of the issues would be of particular importance to the west midlands and the black country has not hitherto been recognised.

Historically, the area’s manufacturing has been dominated by the car industry, which has suffered for many years but is now undergoing a renaissance, largely as a result of the foreign direct investment by the Tata brothers and the revival of Jaguar Land Rover. It gladdens my heart when I see those vehicles queuing up at the docks awaiting export. About 80% of the cars we produce are exported, and the US is the second-largest market after Europe for those exports. Jaguar Land Rover holds second and third place with its Land Rover and Jaguar models, but if they are considered together, it holds first place.

[Mr Spellar]

I thank my hon. Friend and good neighbour for giving way. As a fellow black country MP, I know that it is good that foreign buyers are buying from Jaguar Land Rover, but would it not be even better if British public bodies, especially the police, bought from Jaguar Land Rover rather than from Mercedes and BMW, which they tend to prefer?

[Mr Bailey]

I know that my right hon. Friend has campaigned on this issue for many years and I totally agree with him. We need to look properly at procurement policies to realise that point, but I will not get tempted further down that path now.

As far as I can see, the big issue for the motor industry is that, for the UK and the US, tariff barriers are relatively low but that is not quite the same as the barriers between the US and the EU. One of the challenges for the British negotiators as part of the US team is to ensure that the EU does not concentrate only on overt tariff barriers. If that is the case, there will be a general benefit, but the EU will benefit disproportionately. In case anyone considers this to be an anti-EU argument, let me make it absolutely clear that I think we have a far better chance of prosecuting a good deal as part of the EU negotiation than we would if we were not part of it—but this particular issue does need to be addressed. The fact is that the removal of non-tariff barriers within the US is considerably more important for stimulating exports or reducing costs, and the British Government must concentrate on those as part of the EU negotiating team.

Let me highlight a few areas where I believe the British Government need to get behind those who are already engaged in this work. The first relates to how the myriad of technical regulations—quite understandably in respect of road safety and the environment—dictate a range of different regulations in different countries. Standardising them provides a big challenge. I know that the European Automobile Manufacturers Association and the American Automotive Policy Council are working on this at this moment, but it is up to the Government to see that that work comes to a positive conclusion and give it all the support they can.

Secondly, on the global scale, the United Nations is working on standardising global technical regulations. Although this might not be part of the specific brief of the EU negotiating team, it would be helpful if the EU and the US, working with the UN, standardised their approach so that the standardisation of regulation applies not just within the EU and the US but throughout the rest of the world. That would provide a further impetus for both sides.

Another issue affecting our dealings with the US is the disparate and federated nature of its regulatory bodies. There are national federated bodies involved in regulations on environmental protection and road safety, but there are, of course, state bodies as well. That provides a specific challenge to get the sort of coherence and pace of reform that we need to conform to the timetable.

[Mr Cash]

rose—

[Mr Bailey]

I could not possibly resist the temptation to invite the hon. Member for Stone (Mr Cash) to intervene.

[Mr Cash]

Would the Chairman of the Business, Innovation and Skills Committee consider whether there will be a fast-track agreement in Congress, as this has been an issue of some contention? In that context and within the framework of the constitutional arrangements of the United States, it is important to bear in mind that the commercial rights of the states themselves are important, too.

[Mr Bailey]

The hon. Gentleman raises an important point. Provision exists within the US constitution for a fast-track process. To conform to the timetable we are looking at, that would certainly be necessary, and it is up to our negotiators to ensure that it happens.

The standardisation of the customs procedures is another issue. Manufacturers often complain that many hours are lost as a result of non-standard procedures, so this should be a potentially fruitful area for negotiation.

Finally, let me acknowledge that although the details are all terribly difficult, extremely technical and often obscure, their impact on trade and thereby on countries’ economies, jobs and growth is very significant. The Government therefore need to do everything they can to work with the organisations engaged in resolving these highly technical problems.

I mention the BIS publication, “Estimating the Economic Impact on the UK of the Transatlantic Trade and Investment Partnership (TTIP) Agreement between the European Union and the United States” final project report, which I am sure the Minister knows by heart. It spelt out the disproportionate level of benefit that would accrue to the motor industry and companies such as Jaguar Land Rover and their suppliers in my area of the black country from a successful reduction of both tariff barriers and the sort of non-tariff barriers to which I have alluded. On an optimistic view of a 75% reduction in non-tariff barriers, car exports could go up by as much as 26%—a 26% increase on the already vigorous and buoyant production from Jaguar Land Rover in my area. That would be of enormous benefit for economic growth and jobs.

I believe that by working with the EU to expand our market to 800 million people—half the world’s gross domestic product and a third of the world’s trade—the motor industry could be incredibly successful. I hope that the Government will map out the benefits of such a free trade agreement for areas such as mine.

Oral Answers to Questions

Adrian Bailey Excerpts

Thursday 18th July 2013 Commons Chamber

[Michael Fallon]

My hon. Friend raises an important point. It will be for his local enterprise partnership, as part of its local growth strategy, to ensure sufficient space for the development of business parks, so that companies can grow successfully without constantly having to move from their premises and can expand next door.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

There is considerable concern among the further education college sector about the potential low take-up of the post-24 advanced learning loans and the impact that that will have on people’s finances. What assessment has the Minister made of this issue, and what help will he give to those colleges, if indeed there is such a low take-up?

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

Since we launched the loans in April, there has been a robust take-up, and we are working hard to ensure not only that colleges are aware of the opportunities presented by loans to help over-24s to learn at higher levels, but that people are aware of the opportunities available to improve their skills.

Apprenticeships

Adrian Bailey Excerpts

Tuesday 12th March 2013 Commons Chamber

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I will try to summarise my 11-month Business, Innovation and Skills Committee report and its recommendations within that time frame. I welcome this debate in national apprenticeship week. Notwithstanding the political differences that we may have between the parties, it is important that we take the opportunity to demonstrate and recommend to young people the advantages that come from an apprenticeship.

Recent figures show that it is anticipated that there will be about £3.4 billion-worth of additional growth per year in 2022 if we adopt a certain target for apprenticeships. Similarly, apprentices can expect to earn about £150,000 extra during a lifetime. Those are key figures that the House should be highlighting in order to underpin the Government’s drive to get more apprentices.

However, the Government have to recognise that there is also a perception problem. Fewer than one in five 16 to 19-year-olds think that apprenticeships offer the best career option for them, and the great majority still think that GCSEs and university do so. Fewer than one in 10 parents support apprenticeships. They still prefer the higher education route and still think of apprentices as being blue collar workers, whereas in fact the great majority are white collar workers.

Notwithstanding the obvious economic benefit and the drive and support from all parties in the Chamber, there is obviously a problem that has to be addressed in fulfilling the potential that is offered by this career route. With great respect to the Minister, I do not think that he did justice to some of the recommendations made by the Opposition and the Business, Innovation and Skills Committee to achieve that. I stress that the Select Committee has a Government majority and all its recommendations were passed unanimously.

The solution lies, first, in not just trying to drive up the number of apprenticeships, but in looking at our education system. The Prime Minister talked yesterday about an alternative career option. If we are to get young people to take it up, we must have some sort of parity of esteem between higher education and the apprenticeship route. The most depressing thing that the Committee heard was when an apprentice in Sheffield told us that he had the option to go to university, but when he told his school he wanted to take an apprenticeship, it ignored him and did not even invite him to its awards ceremony. That is symptomatic of a culture within our schools and education system that must be addressed if we are to change.

[David Simpson (Upper Bann) (DUP)]

There has been a system through the years where there has not been that close working relationship between educationists and industry, and educationists need to provide the courses that are relevant to today’s industry.

[Mr Bailey]

I agree entirely with the hon. Gentleman, and if I have time I will come to that very point.

One of the Select Committee’s recommendations was that the Ofsted assessment criteria should include the number of students that a school puts into vocational and further education. It is only by changing school targets that teachers will change the culture of schools to overcome this discrimination between higher education and the vocational route. Unfortunately, the Government declined to take up that invitation.

I pay tribute to the hon. Member for Beverley and Holderness (Mr Stuart) for a very good Select Committee report that highlighted the problems of the careers service. By delegating careers advice to schools, the existing bias within the education system to encourage students to take the higher education route rather than the vocational route is being reinforced. We need careers advisers who are aware of apprenticeships, aware of the benefits of vocational education, and prepared to advise students in schools that that is the best possible route for their particular range of aptitude.

[Mr Graham Stuart]

The point that the hon. Gentleman makes about careers advice is absolutely right. Does he agree that one of the Government’s successful initiatives has been the National Careers Service, and there could be a role for that service, working with schools, to ensure that they fulfil the duty that they have been given? All too often the institutional interest of the school and the individual interest of the young person are not the same, and that is why we need some kind of arbitration to make sure that the interests of the child are put first.

[Mr Bailey]

I read the recommendation of the hon. Gentleman’s Committee on that, and in the current situation I think it is probably the best option. I await the Government’s response to it with interest.

Work experience is another topic that has been raised. Removing the obligation on schools to have their students involved in work experience removes from those students an experience that potentially will enthuse them to pursue an apprenticeship. In my area, many of the apprentices in the foundries went there as a result of work experience they undertook. Removing this obligation undermines the overall thrust of the policy, which is to get young people into vocational education.

The hon. Member for Upper Bann (David Simpson) raised the issue of business involvement. That is another crucial element in developing a strategy that works. I believe that, first, there must be a vocational qualification, and the BTEC, as outlined by my hon. Friend the Member for Blackpool South (Mr Marsden), should provide that. I support the Government’s employer ownership scheme as I believe that our vocational qualifications must be determined, monitored and assessed by business, in conjunction with the education service. I also believe more group training associations and apprenticeship training associations should be developed so we can reach the smaller small and medium-sized enterprises, which are the hardest to reach and which otherwise would be unable to provide the resources for apprenticeship training.

I am not going to repeat my hon. Friend’s arguments in support of the Business, Innovation and Skills Committee recommendations, but I will emphasise that my local authority of Sandwell is pioneering in this area, and has so far obtained 250 apprentices, is playing a brokering role for students with local businesses, and has taken 300 people off the unemployment register by giving them work experience in a pre-apprenticeship scheme.

If local government can do this, why cannot the Government? The half-hearted response of the Government is to be lamented, and I hope we will get something more positive in future.

--- Later in debate ---

[Mr Bailey]

I thank the hon. Gentleman for his kind words. Does he agree that because we have a system in which teachers are judged on their ability to get pupils into higher education, rather than into apprenticeships, we cannot really blame the teachers or the system for doing so? It is the Government who need to change the system. That is not a party political point, because it existed under the previous Government as well.

[Mr Walker]

I heartily agree with the hon. Gentleman. We have to change those incentives and provide better ones and support from outside the teaching profession for the careers service in order to handle that better.

Oral Answers to Questions

Adrian Bailey Excerpts

Thursday 7th February 2013 Commons Chamber

[Vince Cable]

No, it certainly is not a silver bullet but it will make a significant difference in increasing diversity in the system, in providing wholesale financing for some of the new entrants into the market, and in making Government support more concentrated and easy to access. It will be an important contribution, and the plans are already under way. The expert committee met for the first time a couple of days ago, and we are already looking at products and projects that hopefully will provide some £300 million, geared substantially with private money, over the course of this year.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Banks tell me that small businesses will not ask for money because of their lack of confidence in a flatlining economy. Small businesses tell me that banks will not lend to them because of the risk factor and the desire to increase their capital balances. The Government say they are going to introduce a business bank. When will the business bank be up and running to address these problems, and in what different way will it operate to overcome them?

[Vince Cable]

The business bank has already been organised and as I just mentioned, the expert committee met for the first time a couple of days ago and its products are already being prepared. As the hon. Gentleman will know, we have to go through the state aid process before it can operate fully. In the meantime, it can operate within constraints—pari passu lending, for one thing—and I can assure him that it will make a significant contribution.

Oral Answers to Questions

Adrian Bailey Excerpts

Thursday 20th December 2012 Commons Chamber

[Vince Cable]

We are pursuing this not through legislation but through practical action and we are working with the developers’ forum to try to ensure that at least 50% of supply chain work comes back to the UK. We cannot do that unless we have the capacity, which is why we have established the catapult centres in the north-east and Glasgow to develop basic technology as well as the six renewable engineering centres, which will develop our engineering capacity.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

A small business in my constituency conveyed to me that it has considerable doubts about the implementation of the green deal and is therefore reluctant to invest in training for new employees and to make any other investment that might be appropriate to meet the demands of the green deal. What reassurance can the Minister give that the green deal will be implemented and that those opportunities will be there for small businesses?

[Vince Cable]

I know that my colleague the Secretary of State for Energy and Climate Change attaches enormous importance to the green deal. It is, as I understand it, completing its state aid clearance in Brussels. When it is launched there will be a major incentive for people to improve their homes and to develop jobs on the back of that.

Industrial Policy and Manufacturing

Adrian Bailey Excerpts

Thursday 22nd November 2012 Commons Chamber

[Jonathan Reynolds]

The hon. Gentleman makes some good points. Careers advice is variable. As I understand it, we are moving away from face-to-face interactions and more towards website-based and telephone-based careers advice services. Whether that will have the effect we would want is probably a matter of concern to us all.

We need to make apprenticeships work for the long term. I know Government Members are always well armed with statistics on new apprenticeships, but I would say to the Minister that there is a quantity versus quality debate to be addressed here, and an issue to do with how many apprenticeships are effectively developing the skills of our next generation. This is an area where more needs to happen.

When I visit manufacturing businesses in my constituency, I am always struck by just how many skilled people started off at British Aerospace. Whether we meant it or not, it seems to me that in the past British Aerospace acted to all intents and purposes as an active industrial intervention, but with that role diminishing we do not have anything that really fills the gap.

As for investment, I am sure that nearly every Member in the Chamber could report the same conversation with local businesses about the banks’ lack of interest in what they do. Businesses say that funding halved overnight during the financial crisis, but that it was never that good beforehand. It seems that, as banks nationalised their business operations and their heads were turned by sectors of the economy that may have been more lucrative in the short term, they were no longer interested in the steady success of their manufacturing clients.

We must find a way of securing for our manufacturing businesses the investment that they need. It seems to me that there is a growing consensus on the need for a British investment bank, whether it is modelled on Germany’s KfW or on France’s Financial Stability Institute, and I am attracted by the idea of a regional or sectoral structure. The proposed green investment bank could form part of a wider strategic investment bank, with a remit to generate long-term returns based on investment in infrastructure and businesses across strategic sectors.

When it comes to procurement, I could simply use the word Bombardier, but there is plainly a view throughout industry that the United Kingdom’s current attitude to procurement represents a wasted opportunity for British business. Let me make it clear that I do not endorse protectionism. Some of the local firms in my constituency have been extremely successful in the export markets, particularly the aerospace businesses, and I think that talk of protectionism at home fails to recognise their achievements. A company delivering a contract here in the UK does not have to be British, but it should be possible to consider how we might be able to make procurement policy work for the UK economy in an intelligent way while still honouring our commitments to the single European market.

I was recently made aware of the problems of Manganese Bronze in Coventry, which could lead to the disappearance of iconic British cabs from the streets of London. The Mayor’s clean air strategy means that as many as 2,000 cabs may have to be replaced in December this year. With Manganese Bronze in administration, the market is now wide open for Mercedes vehicles manufactured in Germany. Surely there could have been a better way.

Another problem is the image of manufacturing. Modern manufacturing is clean and safe, but that does not seem to be widely understood. In fact, at a recent event held by the all-party group in Rochdale, some businesses reported struggling to convey the message that it was also well paid. I did not consider the problem to be particularly significant until I listened to the evidence that industry leaders gave to the group. If we are to try to increase the share of the economy that manufacturing represents, we will need to tackle that. I am not thinking of short-term rebranding or anything that smacks of a gimmick; I am thinking of a long-term campaign—similar to that requested by the hon. Member for Burnley—to get the message across to schools and make them understand what modern British industry is really like.

Finally, I want to say something about employer-employee relations and employment law in the UK. I have deliberately left that subject until the end of my speech, because I suspect that it is the one on which there will be the least consensus. Let me explain my view by giving an example from my constituency.

Kerry Foods, in Hyde, is the largest private sector employer in Tameside. It makes, among other things, Richmond and Walls sausages. Food manufacturing, incidentally, is a much undervalued part of British industry. A few years ago, Kerry needed to adopt the principles of lean manufacturing. It needed to be able to scale its production up and down much more quickly in order to remain competitive, and it therefore needed to consider moving from a five-days-a-week to a seven-days-a-week working pattern. That had big implications for the work force, who were strongly unionised, so Kerry decided to work with them and with Unite, the recognised trade union, to deliver it. In effect, Kerry told the union what it needed, and the union asked the work force to design a shift system that worked for them.

The staff knew that the company’s bottom line was staying profitable, and the company knew that there had to be something in it for the staff. They agreed on the new shift system and a 3.5% wage rise for two successive years, dropping to 2.5% in the third year. That is more than most of our constituents are getting at the moment. My constituents who work for the company have told me that they felt that the consultation process had been extremely sincere, inclusive and open to recommendations, and that input from the union had made it into the final proposals. Unite also sent its reps at Kerry Foods to “change at work” courses which would help them to understand the company’s objectives and deliver the agreement of the work force to the new system. I should add that the company pays for a full-time convenor at the site through facility time, in line with a great deal of best practice.

I gave that example in order to demonstrate that trade unions are not in themselves anti-competitive, and do not constitute a blockage to our economic prosperity. Given the right approach, they can make a very significant contribution to British industry. They should not be demonised. The Ford work forces in Dagenham and Southampton were given very little notification of the recent announcement, let alone a chance to serve as part of a solution to the problem. That was a missed opportunity.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

It is the trade union involvement with Jaguar Land Rover that has done so much to secure investment in the west midlands in new models and the new i54 development and, to an extent, the new Vauxhall Motors development at Ellesmere Port. Perhaps they could serve as a model for industrial communication for the purpose of promoting investment.

[Jonathan Reynolds]

Those are powerful and timely examples, which illustrate the positive role that trade unions can play in an industrial strategy.

There are many other issues with which I could deal if I had time, including our relationship with Europe and the devolution of power and spending from Whitehall in the UK. I hope that other Members will refer to those. Let me end by saying how pleased I am that we are having this debate. I hope that it constitutes the beginning rather than the end of a conversation in the House about the future successful operation of the country’s industrial policy.

--- Later in debate ---

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for Warwick and Leamington (Chris White) and my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), who are members of the all-party group on manufacturing. I think it is indicative of the consensus that is emerging on industrial policy that I heard little that I disagree with.

I welcome the debate and the Government’s publication of an industrial strategy. Indeed, the Department for Business, Innovation and Skills has published any number of strategies so far, and I would find it difficult to disagree with any of the major points in them. The problem is not so much with the industrial strategy— I think that a consensus on that is emerging on the Back Benches—as with the priorities in the culture of the Government, which is not necessarily aligned with the Department’s priorities and the strategies.

I could not help but notice the comments made by the Secretary of State for Business, Innovation and Skills in September:

“The Government shapes the British economy with its decisions every day. It makes many decisions about skills and universities, on research, on technologies, and on infrastructure. Through what it buys, and how it goes about buying it, the regulations that exist, the markets it oversees, and tax policy. All of these send messages to the economy.”

[Huw Irranca-Davies]

Will my hon. Friend give way?

[Mr Bailey]

I will, but briefly, because my hon. Friend the Member for Corby (Andrew Sawford) is going to make his maiden speech.

[Huw Irranca-Davies]

My hon. Friend is right that Government decisions shape industrial strategy. I hope he might have some thoughts on where we go on carbon capture and storage as part of the strategy. It was with great regret that we found out this week that there is uncertainty over future funding and a drawing down of European funds because the Treasury was unable to provide guaranteed funding. Does he hope that CCS will be part of the industrial strategy in phase 2, which will come up next spring?

[Mr Bailey]

My hon. Friend tempts me with an issue that is worthy of a separate debate, but broadly I agree, and I will make some allusions to the green economy later.

The problem is basically that although the Minister outlines the impact of different Government policies on the economy, the Department, in its delivery in those different areas, does not necessarily seem to be signed up to the same economic and industrial priorities. For a start, on the fiscal strategy, our ability to eliminate the deficit depends crucially on our ability to generate investment in economic growth, yet at the same time the Chancellor’s strategy has effectively squeezed consumer spending and failed to recognise that in many areas public spending and private engagement with it are crucial to economic performance. That, coupled with various apocalyptic utterances about the state of the British economy, has generated a feeling of insecurity and uncertainty that has had a knock-on effect on consumers’ confidence to spend money and the willingness of businesses to invest. I hear that many businesses are currently sitting on piles of cash, but they will not invest it because they fear that the investment would not pay off. Similarly, with such uncertainty, banks are less likely to lend because they obviously sense a higher risk in doing so than they would if there was greater confidence in the economy.

Also, the Government’s tax policies have concentrated on reducing corporation tax. All the messages I get from manufacturing—I know that the hon. Member for Burnley (Gordon Birtwistle) has strong views on this—indicate that money to generate investment would be much better focused on research and development and capital allowances than on corporation tax. Much more needs to be done to assess the relative impact of reductions in corporation tax, rather than investment in R and D and capital allowances, and where future Government policy on that should go. Given the number of foreign businesses that have invested in this country and seem to have paid very little corporation tax, I wonder how relevant the reduction in corporation tax set out in the Chancellor’s first Budget was in attracting foreign investment. I need only repeat the comments the chair of my local enterprise partnership made this week: he said improving capital allowances would be a quicker and more effective step than creating a business bank. I do not decry the long-term significance of a business bank, but right now we need some shorter-term policies that can have a more immediate impact.

[Guy Opperman]

One such short-term policy that would have an impact is the liberalisation of small local community banking, as that would mean there would be lending directly to small and medium-sized businesses, which is what the hon. Gentleman would like. This Government are doing that, but the Opposition voted against it. Can he explain why?

[Mr Bailey]

The hon. Gentleman tempts me to address a much bigger debate about the appropriate ways of financing industry, but I am not going to do that. I have been involved in local organisations providing access to finance for small businesses, and I know that the perception of risk is crucial. It does not matter where the money might come from, because if the risk is considered too high any funds will only be available on very expensive terms.

On green issues, the decision on solar panels, the dispute that still exists at the heart of Government on the future of wind power and the delays in the implementation of the green deal make for uncertainty in an industry that needs certainty above all else, and the Government must resolve that. In the submissions I have received from bodies representing manufacturing industry, two measures have been highlighted, which I think the all-party group would also call for. First, any industrial strategy must have at its heart a degree of certainty. That requires building a cross-party consensus that will outlive any Government, so that business can invest for the long term. That is especially relevant for green industries. Secondly, there must be changes in the culture and structure of Government that will allow economic, and in particular manufacturing, priorities to be considered across Departments. That was touched on in Lord Heseltine’s recent report, and it has featured prominently in submissions from organisations representing manufacturing. If we are to convince industry that there is a future in investing in our manufacturing, there has to be general confidence that the Government recognise these priorities and that project economic growth must be a key priority for any Government.

Having an industrial strategy that highlights the most important measures and stimulates debate will go some way towards achieving what we want, but I have yet to be convinced that other Departments accept the logic of this argument. However, there is an emerging consensus in Parliament, especially on the Back Benches, and in industry that the two key issues of long-term certainty and having a driver within Government to prioritise economic growth are crucial. That fact, allied to an emerging public consensus that economic growth must be a priority, could provide the public opinion background to enable any Government to drive forward this agenda. There is therefore a challenge for both the Government and the Opposition to have such policies in place for the public to decide on at the next general election. That is crucial for the British economy and for the future welfare of everybody in this country.

[Sir Gerald Howarth (Aldershot) (Con)]

I am delighted to follow the hon. Member for West Bromwich West (Mr Bailey), for it was in 1984 that I made my maiden speech in the House as the newly arrived Member for Cannock and Burntwood on the subject of manufacturing in the west midlands, so I yield to no one in my enthusiasm for manufacturing industry.

It has been a mistake in this country that for the past 40 years there has been an over-reliance on financial services as the salvation of our prosperity. The bust of 2008 has blown that apart and revealed that there is a pressing need for the United Kingdom to have a much more diversified economy. As a former international banker, I like to tell people that I am now going straight—I am a politician. For some curious reason, they think that is rather funny.

The point has been made about the decline in manufacturing industry in Britain. Let us look at the figures. In the case of Germany, 20% of its output is now manufacturing. It has maintained its position, and of course it is benefiting from a thoroughly depressed exchange rate. Nevertheless, it has seen that manufacturing can contribute, whereas as my hon. Friend the Member for Burnley (Gordon Birtwistle) pointed out, in the United Kingdom manufacturing has declined from 18.4 % of our national output in 1997 to 10.8% last year. I hope that the Opposition will not constantly deride those on the Government Benches for the decline in manufacturing industry on our watch, as it pretty well halved on theirs. I hope we can attain a consensus on the need to do something for manufacturing. There is good reason why we should be confident.

[Mr Bailey]

I think I know what the hon. Gentleman means, but he has not reflected that. Manufacturing did not halve under the previous Government. As a proportion of the economy it may have done so, but it actually grew. That has been acknowledged in the Government’s policy.

[Sir Gerald Howarth]

It is important to make the point that the contribution of manufacturing to output halved. That is a figure that the public will understand as indicative of what was happening.

I want to be positive, because the United Kingdom has historic and current industrial manufacturing flair and capability. I single out just two companies—JCB, a brilliant private family company in Staffordshire, and Dyson, the inventor of the bagless vacuum cleaner. [Interruption.] Indeed, Hoover too, as my hon. Friend the Minister says. Formula 1 as well has been a stunning success for advanced United Kingdom manufacturing, as has aerospace, which I shall come to in a moment.

I remind the House that JCB employs 10,000 people worldwide, of whom 6,000 are employed in the United Kingdom. JCB’s revenues rose last year by 37% to £2.75 billion. Dyson sold eight out of 10 of its appliances abroad, with revenues of £770 million and profits of £206 million—a serious success story.

Higher and Further Education

Adrian Bailey Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I welcome the motion, and the opportunity to debate the issues that it raises.

Much of what has been said in today’s debate should have been said 18 months or two years ago. The range of problems that we are discussing now arose partly because of the back-to-front way in which the Government have implemented education policy. We have seen the most profound change in our education system since the war. The trebling of tuition fees, along with the cuts in higher education funding, took place without adequate consultation with all interested bodies, and without the normal process involving a White Paper and subsequent legislation. The rest was supposed to come later. Yes, we did get the White Paper—about nine months later—and it listed a range of consultations that still needed to take place. We were then promised a Bill, which has somehow evaporated, and as a result we are now having to deal with a legacy of muddle and confusion, both in the minds of would-be students and in universities.

In the short time available to me, I want to focus on the idea of widening participation. As a representative of a black country constituency with a legacy of low income and low educational aspiration, I think that the policies that are now being implemented had the potential to bring about profound consequences. The first and most obvious was that the headline raising of tuition fees, and the likely debt that would have to be paid off as a result, would disproportionately deter those from low-income families. That has still to be tested. Initial figures from UCAS indicate that although there has been a drop in the number of applications—the figure of 50,000 has been mentioned today—the percentage of applications among those with lower-income backgrounds has not changed significantly. However, that fails to take a couple of factors into account.

First, the cohort that is going to university now would have gone into the sixth form two years ago under a different regime, and would have had university aspirations at that time. We do not yet know whether the cohorts of subsequent years will have the same aspirations. Secondly, a worrying trend is beginning to be discerned among applicants. UCAS says that there is no evidence that applicants are opting for their local—sometimes cheaper—universities. In fact, considerable evidence is emerging in the black country that applicants are opting for their local universities so that they can study at home, although I do not know whether those universities are cheaper. The local newspaper, the Express and Star, rang a number of secondary schools, and some of the leading providers of university applicants—Wood Green in Wednesbury, Brownhills in Walsall and Wednesfield in Wolverhampton—said that the percentage of their students applying to go to their local universities so that they could study at home had greatly increased. That is good news for Wolverhampton, but it has other implications.

[Simon Hughes]

The Chairman of the Business, Innovation and Skills Committee is being very fair in his analysis. All the evidence is that, because of cost of living issues, if there is an equal choice of university, more students will want to go less far away in the future. We also ought to pay attention to the fact that there has been a drop in the number of mature students applying to universities. They are far more difficult to reach because they cannot be captured in the school context. That is a challenge in the west midlands, as in the rest of England.

[Mr Bailey]

The right hon. Gentleman mentions a number of issues that I wish I had sufficient time to deliberate upon. The point I am making is that those from lower-income backgrounds whose local university is not one that higher-aspiration students might wish to attend are suffering a disadvantage. A two-tier system may therefore be emerging. More lower-income students will want to stay at home regardless of the nature of their local university. I should stress that I think Wolverhampton university is excellent, and I would recommend it to prospective students, but it may not be the most appropriate institution for those seeking professional and academic qualifications. Not only will such lower-income students be missing out on the broader university experience of living away from home—although it is debatable how important that is—but they are less likely to have a good home learning environment.

[Mr Thomas]

If there is an increase in the numbers wanting to stay at home and go to their local university, there is also the risk of distortions in respect of choice of subject. In that context, has the hon. Gentleman seen the comments of the languages professor at Southampton university who is worried about the lack of provision of languages courses in the east of England, with the sole exception of Cambridge?

[Mr Bailey]

My hon. Friend makes an important point. I have alluded to the lack of choice such students would have. Their local university may well not offer the appropriate course for them to be able to optimise their educational development. That is a further example of potential disadvantage.

People from lower-income and lower-aspiration backgrounds will also be disproportionately disadvantaged as a result of the further education loans measures. They are more likely to have missed out on their original educational experience. They are also more likely to be in jobs where they need to upskill, so they will have greater need of support to study for enhanced qualifications. The Government are seeking to shrink the public sector in order to benefit the private sector, and the lowest-income areas are often those with the highest proportion of public sector workers, who are most at risk, and most in need of support to acquire the skills to enable them to transfer from the public sector to the private sector, in furtherance of Government policy. This is an example of disjointed government. People who will need to change jobs as a result of Government policy in one area will have the support that they need to fulfil the Government’s objectives kicked away. The end product could well be that their lives are devastated, along with the Government’s economic objectives.

I would like to discuss many other aspects of funding and the economics of this issue, but my great concern is supporting educational aspiration and fulfilment, and the need to do that to benefit our economy. That will not be achieved under these proposals.

Oral Answers to Questions

Adrian Bailey Excerpts

Thursday 6th September 2012 Commons Chamber

[Michael Fallon]

My predecessor, the hon. Member for Hertford and Stortford (Mr Prisk), can be proud that rounds 1 and 2 of the fund now involve some 149 projects and programmes, delivering about 330,000 new jobs and drawing in nearly £5 billion of private investment. The bid for Gateshead college in the hon. Gentleman’s constituency was successful in round 2. A final offer letter was sent to the college at the end of July, and the money is there waiting for the college to take it up.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I welcome the Minister to his new role and look forward to having the opportunity to question him at some stage in the BIS Committee. May I draw his attention to the fact that in the black country some companies that were successful applicants in round 2 of the RGF have still not had contracts issued, with some waiting for as long as 10 months, and that business opportunities are being lost as a result? Will he undertake to look at this rigorously in order to speed things up?

[Michael Fallon]

I certainly look forward to appearing in front of the hon. Gentleman’s Select Committee.

I am happy to look at any specific examples of delay that the hon. Gentleman can produce. I want in round 3 to accelerate the process—in particular, to shorten the gap between announcement and conditional offer and between conditional offer and completion of due diligence. He will understand that it is necessary, when public money is involved, for those due diligence checks to be carried out. However, I will look at what he has said and we will do everything we can to accelerate the approval process.