Manufacturing (East Midlands)

Andy Sawford Excerpts

Tuesday 12th February 2013 Westminster Hall

[Mr Spencer]

I must confess that I have never banged a Premier drum, but I shall endeavour to do so at some point in future.

The east midlands also has energy supply, which is important to businesses—

[Andy Sawford (Corby) (Lab/Co-op)]

I congratulate the hon. Gentleman on securing this debate. It is a pleasure to serve under your chairmanship, Mr Hollobone, particularly as you are my constituency neighbour. On the subject of energy, one of the great industries of Corby in east Northamptonshire, as I am sure the hon. Gentleman knows, is the steel industry. That, along with boot and shoe, made communities in my constituency, but Tata Steel’s particular concern at the moment is energy prices, which are much higher in this country than in France and Germany. Does he not agree that it is important that the manufacturing industry in my constituency and his can compete on a level playing field, including on energy prices?

[Mr Spencer]

I agree, and it is important that we as a Government address those concerns, but the hon. Gentleman will recognise how difficult it is to strike a balance between energy prices to consumers and to industry. It could be argued that logically, the more energy one buys the more cheaply one should get it; that would have a knock-on effect on our consumers and constituents. It is difficult to strike that balance and ensure that energy-consuming industries get a reasonable price, as well as our constituents who are struggling to pay their energy bills.

It comes down to energy security as well as price. Within the east midlands, the Trent valley provides a lot of electricity generation, so at least we are not far away from a power station, but we need to do more. The Government particularly need to consider carbon leakage. Energy-intensive industries are under pressure and looking to relocate elsewhere in the world. We talk about reducing the carbon footprint of industry and manufacturing, but it would be wrong to push out industries to other parts of the world where energy is probably bought from higher-carbon sources than in the UK, and then to import the goods. We should be aware of that.

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[Mr Spencer]

I recognise that challenge, but I feel that we are 15 years behind the game. We should have addressed these problems a long time ago. The nuclear decision was put off by previous Governments. Had we bitten that bullet much earlier, we would not be as concerned about energy security as we are today. I am glad to see that the current Government are trying to address the issue and get a clear direction. Of course, being a coalition Government brings its own challenges. Sometimes there is disagreement within the coalition about the best way to procure energy security.

I have been open about my view that nuclear is a great option that we should be pursuing. I also think coal has a role to play. Sherwood sits not only on a former coal field but on great reserves of shale gas, which could assist us. We also have a great deal of water, which can be important to manufacturing. Nottinghamshire sits on Bunter sandstone with aquifers. However, at the top of the list must be a willing and ready work force, which we in the east midlands have. We have great skills. As we have a thriving manufacturing sector, we already have a high skills base for any company that wants to relocate to the east midlands.

I hope the message of this debate will be that the east midlands is open for business to manufacturers of any sort looking for somewhere to relocate. The east midlands is the ideal place, and we would welcome manufacturers with open arms. I hope the Minister, as he goes around the country in his many dealings, will recognise how important the east midlands is and what it has to offer. If he is having discussions with any foreign or other companies looking to relocate, I hope he will recommend the east midlands. It would assist us in procuring more companies to come and make use of the area.

There is a lot more that we can do, and I want to emphasise what Government and local authorities can do. Broadband is important. People trying to run businesses in rural locations need access to good-quality broadband, and we must do more to get it out into rural locations so that companies can relocate to those areas as well. Infrastructure and traffic are a constant battle. Every time one improvement is made, it knocks on to another area. We must keep doing more to improve infrastructure to remove bottlenecks, so people can get around the country.

Finally, on training, we need the best-quality engineers and the most highly skilled individuals, which requires the work and support of some of our great training institutions, such as Loughborough university, Nottingham university and the many others that educate people to a high degree. Some colleges in and around our constituencies deliver courses on food and drink manufacturing, welding skills and so on. Such skills will be absolutely vital to our companies as we go forward. We have a little bit further to go.

Many of the businesses I talk to are crying out for good quality, highly skilled staff and they do not want to look to eastern Europe to procure those people; they want UK-based, qualified people and we need to keep pushing that door to ensure that they are coming forward.

[Andy Sawford]

It is my hope, as I am sure it is the hon. Gentleman’s, that the manufacturing industries in our constituencies employ local people. Does he recognise many people’s concern about the role of agencies, particularly those recruiting in eastern European countries for jobs that could be done by local people? Does he agree that we ought to ask the Government and Opposition Front Benchers to consider how we can deal with that?

[Mr Spencer]

I agree; it causes a great deal of frustration. Constituents e-mailing me with a copy of a job advert published in Polish feel excluded from that process, although I have tried to argue that such an advert is probably published in English as well. Our companies need quality staff and if they cannot procure local people, I suppose they will look to the rest of Europe to try to get people with the skills they need. We need to ensure that we train our constituents in those skills, so that they can compete on a level playing field. We are starting to get there—starting to push back and improve things—but there is further to go. There has been a deficit in the past 10 to 15 years and we need to start dealing with that. I hope that we are starting that process.

I am conscious that other hon. Members want to speak, so I do not want to take up too much time. I want to emphasise the fundamental message of this debate: there is a great manufacturing sector in the east midlands and we are open for business. If people want to locate somewhere, the east midlands is a great place to come. I hope the Minister takes the opportunity to visit businesses in Sherwood. I would be delighted to be his host, should he find time in his diary.

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[Jonathan Ashworth (Leicester South) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. As an east midlands MP, I hope that you will later be eating a bag of Wotsits crisps made at the Leicester Walkers site.

I thank the hon. Member for Sherwood (Mr Spencer) for his success in securing the debate. He spoke well, and I learned something about Calverton of which I was not aware, although I will of course be checking it out later with my father-in-law, who was his geography teacher at school in Calverton only a few years ago.

I want to repeat some of the points made about the importance of manufacturing to the east midlands economy. Manufacturing makes up a greater part of the economy in the east midlands than in any other English region. According to figures I have seen, manufacturing gross value added was around £12.5 billion, or 15.8% of total regional GVA output—a higher proportion than any other region—compared with an average of 10.3% for the UK as a whole. Manufacturing employment in the region amounted to 265,000 or more than 13% of total employment—again, the highest proportion of any region, and it compares with a UK average of about 8.5%. Our manufacturing firms score highly on productivity, with many of our sectors outperforming national averages. We have already heard not only about many of the big ones, such as Toyota, Rolls-Royce, Bombardier, Caterpillar and Walkers, but about the many smaller manufacturers that make up our huge manufacturing base.

The hon. Gentleman talked about food and drink. In Leicester and Leicestershire, more than 11,000 people are employed in food manufacturing, so it is important for our region. As he said, some of the reasons our region does well is that we are central, our development in the past has been driven by coal in the north and ironstone in the south, and we have concentrations of grade 1 agricultural land. We do not have any major, dominant economic centre. I would, of course, argue that Leicester is the premier city in the region, not least because we have a former king of England there.

[Andy Sawford]

On the point of manufacturing, it is a shame for those of us who feel that Fotheringhay, the birthplace of Richard III, should be his final resting place, that my hon. Friend is manufacturing a case for Leicester.

With regard to the food and drink industry, does he recognise that, while there is a fine tradition in all parts of the region, including my constituency, in many ways Government policy has helped to shape some of the opportunities for manufacturing? For example, in the 1980s the enterprise zone helped to bring lots of food and drink companies to Corby. Will he support my case that we ought to have an enterprise zone today in Corby in east Northamptonshire, where, as he knows, there are high levels of youth unemployment?

[Jonathan Ashworth]

I thank my hon. Friend for a point he puts well. However, we in Leicester have fought off York and will certainly fight off his constituency when it comes to Richard III.

On balance, the lack of a major dominant conurbation is a strength for our region and its development opportunities, even if it does sometimes mean that we tend to lack a regional identity. That brings us one or two disadvantages that I will touch on in a few moments.

Although the debate has been conducted in a good cross-party spirit, there are problems in our economy, in the cities and former coalfield areas. Unemployment rates remain too high, and are much higher than they were at the 2010 election, even if they have come down a little in recent months. Youth unemployment rates are still too high. Let us be clear: we are seeing a huge squeeze on incomes and many changes to benefits, such as the bedroom tax and the council tax benefit changes. Regardless of the rights and wrongs of that debate, that will suck money out of the local economies of the east midlands. Household consumption will be depressed again.

In the past, Ministers have talked about wanting to rebalance the economy, and we would all agree with that. However, we would like more details about what that rebalancing means. I know that Ministers want to move away from an economy that is solely dependent on public investment and household consumption, towards one that is more in favour of export-led recovery.

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[Andrew Bridgen]

Absolutely. In North West Leicestershire we are a pioneering a buy local campaign whereby local companies can register, and not only will the local authority look to procure from local firms offering services, but that website facility is then open to other companies in the district, and it is hoped that they will join in. However, I bring the hon. Gentleman back to the point that we cannot have the situation we inherited, where 50% of the economy is public sector and 50% is private sector, and we are asking the latter to support itself and pay taxes to support the former. That is unsustainable. That is why we have a huge deficit and why we need to rebalance our economy.

[Andy Sawford]

The tone of the debate has been very constructive. It was set very well by the hon. Member for Sherwood (Mr Spencer) and it is to Members’ credit that political point scoring has been resisted. However, for the record, we cannot allow that point to stand. Was it the previous Labour Government who were selling sub-prime mortgages in America, for example? The hon. Member for North West Leicestershire (Andrew Bridgen) is entirely wrong on that point.

[Andrew Bridgen]

I thank the hon. Gentleman for his comments, but I will not allow him or any other Labour Member to rewrite history. The fact is that under the previous Labour Government, manufacturing as a proportion of GDP in this country fell by 50%. It is not a record that I would be proud of if I were sitting on the Labour Benches. The hon. Gentleman should think on that. It is this Government who will address the need to grow manufacturing and rebalance our economy.

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[Mr Wright]

I shall come on to that important characteristic of the east midlands economy. I mentioned the important success of Rolls-Royce, but it would be wrong to think of the east midlands as a one-company region. Every hon. Member who contributed today, including you, Mr Hollobone, highlighted successful manufacturing firms in their constituencies, and it is important to do so.

[Andy Sawford]

The largest employer in my constituency is RS Components. One of its great features, and I am sure a great feature of Rolls-Royce and the many other companies that have been mentioned, is the way that it contributes to the local community, adding additional value though fundraising, supporting schools and so on. Will my hon. Friend congratulate our industries across the east midlands on that?

[Mr Wright]

I certainly will. An important characteristic of a good and responsible company is that it realises that it is part of a community, not isolated from it, and contributes, not only directly by providing employment, but to social good.

The hon. Member for South Derbyshire mentioned Toyota, an important manufacturer for not only the region, but the UK. I am looking forward to visiting the Toyota plant next Tuesday—I am giving her advance notice—to see the investment recently pumped into building the new Auris model. The investment in the new plant totals £100 million, and is creating an extra 1,500 jobs, with a further £85 million spent in the local supply chain.

The shape of the region’s economy is distinctive. It is particularly strong on mid-sized businesses that are crucial to the growing specialisation and increased productivity that manufacturing requires. The Mittelstand in Germany is often cited as a reason why the German economy is so successful, and if there is an equivalent in the UK, I suggest that it is in the east midlands. Mid-sized firms employ 290,000 people in the region. I agree with the conclusion in Grant Thornton’s report on the mid-sized business sector:

“MSBs—many of the East Midlands’ and UK’s most dynamic organisations—are integral to the recovery prospects and long-term health of the British and local economy.”

Within that, Government’s role is to provide a framework in which businesses can flourish, and to provide resources—whether by sector, by region, or nationally—so that businesses can realise their potential and enhance our competitiveness.

I therefore have a number of questions for the Minister. My first is on how Government procurement can help manufacturers and their supply chains. I am pleased to see my hon. Friend the Member for Derby North here, because he has been a strong champion of Bombardier. We are all aware of it, because it is probably the most vivid example of Government procurement policy failing British manufacturing. The Department for Transport looks specifically at price, rather than thinking about wider value to the supply chain; that illustrates that the Government do not seem to be joined up. What has the Minister learned from the Bombardier example? How can procurement back British manufacturing? I do not believe in protectionism at all, but we can have patriotism in procurement policy to create, as my hon. Friend the Member for Derby North said, a level playing field for British companies. Other nations do it; we should too.