Manufacturing

Barry Sheerman Excerpts

Thursday 24th November 2011 Commons Chamber

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

My sincere apologies for arriving two minutes after the hon. Member for Hexham (Guy Opperman) started his speech, but I think I caught the gist of it. We have worked harmoniously in calling for this debate, and I am delighted that we are having it today, and that it is cross-party. The group of us who are associated with the all-party manufacturing group are very pleased about that. My interest in manufacturing has obviously been a total failure. I have been in this House for more than 30 years, and I started the manufacturing group not long after I got into Parliament. Ever since the original all-party manufacturing group started, our manufacturing sector has shrunk and shrunk, under all parties and all Governments.

I represent Huddersfield, the cradle of the industrialisation of our country. Anyone who knows anything about my part of the world will know that even today it is a centre for the highest-quality wool textiles—super-100 and super-110 worsteds and so on. It is also very well known for its engineering, for David Brown gears and many other manufacturing companies, and of course for chemicals, which come from the traditional industry of dyestuffs for textiles.

Huddersfield became an industrial town because of power. The energy coming from the fast-flowing streams from the Pennines—the Holme, the Colne and the Calder—attracted industry because that is what made the mills work. That is how we got industry in our part of the world. It was a manufacturing town. There was not much in Huddersfield; there was the old village of Almondbury, which is a bit of a market town, and an ancient place, but the modern town is 18th and predominantly 19th century. Some 70% of the population would have been in the manufacturing sector. We are now down to about 8.9% manufacturing employment in the constituency, whereas 86.7% of employment is in various forms of services; 33% is in health, education, or working for the local authority. We are lucky to have a large and successful university, Huddersfield university, which is pre-eminent in engineering, textiles and design innovation, but that does not disguise the fact that we are pre-eminently in the service sector; 87% of employment is in services of various kinds. Unemployment is at its highest level since I became a Member of Parliament.

[Gordon Birtwistle]

Does the hon. Gentleman agree that the collapse of manufacturing in Huddersfield, which has gone from 30% or 40% of employment to 8%, is significant given that youth unemployment is so high? Huddersfield’s colleges are training young people to be engineers and manufacturers, yet the collapse of manufacturing industry means that the jobs are not there any more for them to do. Manufacturing has been overtaken by the services sector. Does he agree that it is high time we reversed the trend towards the services sector and returned to a buoyant manufacturing sector, which could employ those young people?

[Mr Sheerman]

I would go 90% of the way with the hon. Gentleman, but I would not accept the word “collapse”, because we still have a vibrant, though much smaller, manufacturing sector in engineering and chemicals. The textiles, engineering and chemicals industries are still there, and have very high productivity, but the capability now is such that we turn out an enormous amount of worsted in a crinkly shed—not one of the magnificent old stone mills—that is working 24/7. I think we underrate the productivity of some of those industries.

I do not want to make Members suicidal, but let us compare the decline of the UK’s manufacturing sector with that of other countries before moving on to something more cheerful. In Great Britain around 8.8% of employment is in manufacturing. Some figures for 2008 indicate 9.8% for manufacturing and 80.8% for services. Things are very similar, if not worse, in the United States, where employment in 2009 was 8.9% in manufacturing and 83.4% in services. The decline of manufacturing in the UK has very much gone in parallel with the experience of the US. By comparison, Germany still has 18.5% in manufacturing and 73% in services, and China has 27.8% in manufacturing and 53% in services.

I want to draw the House’s attention to the UK’s balance of trade, particularly the trade deficit with Germany, which last year was £16.8 billion, and with China, which was £21.6 billion. Whatever is happening today, and despite the depressing interview with Chancellor Merkel last night, which persuaded me that we are on the precipice of a world recession, we must remember that Germany has been very fortunate and that the eurozone has been very kind to German manufacturers over this period. The renminbi, the Chinese currency, which the Chinese conveniently manipulate to give their manufacturing exports every possible advantage, has done the same for China.

I want to dwell on the future and what kind of society we want. It seems to me that we want a wealth-creating society that produces the goods and wealth that can then be shared. Some of us disagree about the levels of individual and corporate taxation, but we all agree that we have to produce the wealth in order to share it, whatever way we choose to do so. I am concerned that if we do not do something in the manufacturing sector we will not have very much to share.

What do we depend on? A core element at every level of activity is the fact that in every facet of human experience success depends on the quality of the people who do the job, their skills and commitment and their desire to do a good job. In the 10 years that I chaired the Education and Skills Committee, that came home time and again. The history of our country is one of clever and skilled people with ingenuity, determination and a hunger to do something. We have had an amazing crop of entrepreneurs. At the heart of our manufacturing problem is the fact that too many people in our country who go to university do not go into manufacturing. I remember walking across the hallowed lawns of Magdalen college with the master some years ago. I asked him whether any of his graduates went into manufacturing or public service. He replied, “Oh no, they all go into the City.” If we continue to make the City and banking the profession of choice, we will be in even more trouble than we are in at the moment.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

My hon. Friend is drawing attention to the place of engineering in academic ambition. Does he welcome, as a corrective to the problem, the recently announced Queen Elizabeth prize for engineering, a £1 million prize overseen by the Royal Academy of Engineering, which is designed precisely to elevate the status of engineering, creativity and innovation for the next generation of young people?

[Mr Sheerman]

I agree absolutely, and was going to mention that. I was also going to mention the Aldridge Foundation and Rod Aldridge, who founded Capita. He puts a great deal of money into education and is absolutely obsessed with finding entrepreneurs and giving them a chance to become successful.

We must ensure that there is reward for the risk of being an entrepreneur. We have to be open about the fact that that is what we want to reward. No one on either side of the House should fail to realise that. I do not mind seeing entrepreneurs getting super salaries. I have a great deal of sympathy with some aspects of the 99% campaign, but I do not mind people earning a great deal of money and being rewarded if they are entrepreneurs who produce jobs and wealth. I am worried when people in pretty safe and comfortable jobs, who are never going to risk anything, get millions of pounds a year. That is what I do not like.

On skills and training, the STEM subjects are neglected in our country, and we need more young people to stay with science, technology, engineering and mathematics longer.

[Tony Cunningham (Workington) (Lab)]

Many engineering entrepreneurs, past and present, started out as apprentices, so does my hon. Friend agree that if we put more energy, resources, money and time into apprenticeships we might see more entrepreneurs?

[Mr Sheerman]

I absolutely agree, and I will come on to that issue.

The slight disagreement between me and the Secretary of State for Education has occurred because I believe that young people who are not very academic but quite good at practical subjects will lose out on an opportunity if we remove design and technology as an option, focus on the more rarefied academic subjects and push the more hands-on subjects to one side.

After the Tomlinson report we lost diplomas, and that was the fault of the Blair Government, but the role of our universities is one thing that we can say is brilliant. If it was not for our universities, I would despair. They are increasingly working with entrepreneurs and the manufacturing hinterland, and that must be rewarded. We need more links between universities and further education colleges, of which there are about 450 in this country, and they really need to work much more closely, so that they turn out the young people that local industry needs. We should not pretend that all apprenticeships are three-year courses in engineering, because they are not; the average length of an apprenticeship is one year to 15 months, but they are not good enough; they are not proper apprenticeships.

On design, anybody who wants to know or who cares about the creative industries should look at Sir George Cox’s review of them and their relationship with enterprise, innovation and manufacturing. If we were to ask him, “What is the one thing that could transform this country’s manufacturing success and wealth creation?” he would tell us, “It’s the supply chain and how this country and its Departments procure. At the very heart of making a great change, it’s procurement that will do it.”

I could have covered other things today, but I finish on this point. In this country, we are still pussyfooting around competition. I have grown up to be a free trader, with the belief that we are a trading nation and should not have any barriers to trade, but I am changing my mind. I do not believe that this country, at this moment in time, with the imbalance in exports and imports between ourselves and Germany and China, can possibly accept the situation for much longer. Something pretty dramatic has to be done, especially when research increasingly shows that China, that wonderful, not very democratic industrial nation that is growing very fast every year, conducts a form of economic warfare against any area where it feels there is competition.

Let us look at the way in which the Chinese seek raw materials, resources, minerals and rare earths. An expert from a university told me yesterday, “If you want to know who’s going to move into Afghanistan in 2015, it will be the Chinese, because Afghanistan has more of the rare earths that China wants than anywhere else.” The Chinese will be there in 2015, as they already are in Africa and throughout the world, and they are also manipulating currencies and targeting specific industries in a way that we have only just begun to comprehend.

So there is economic warfare, and it is about time that the Treasury, with other Ministries, was conscious of this: manufacturing matters in this country. We need skills and entrepreneurs, but we have to have fair competition with competing nations.

[Several hon. Members]

rose—

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

My constituency borders that of my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), so if my remarks echo his it is because of our shared experience of black country manufacturing and the challenges that it faces. My constituency, consisting of Oldbury, Tipton and Wednesbury, was at the heart of British metal-bashing for centuries. When Britain was the workshop of the world, the black country was the centre of that. It has a proud manufacturing tradition, and I am equally proud to say that, even given the hard times that the industry has gone through, there are still more foundries in my constituency than in any other in the country. The number of people employed in traditional manufacturing, while nothing like what it was, is still higher than in most areas of the country. My constituency is thus second to none in having an interest in the particular theme of this debate.

I know that many people, particularly within the black country business community, welcome the Government’s rhetoric on boosting manufacturing, rebalancing the economy and securing export-led growth. I certainly share both the Government’s and the local business community’s enthusiasm for all of those. I think, however, that we need to measure this with a touch of realism.

My right hon. Friend the Member for Wolverhampton South East made it clear that although we might want to extol the virtues of manufacturing, we must not do that to the detriment of the contribution made by other sectors of the economy, particularly our creative industries, which are world leaders and provide a significant proportion of our national output and a large number of employees. This applies to our service industries as well. Although manufacturing might have declined relatively, that is partly because we have an expertise in the service industries that is recognised throughout the world and provides potentially exportable market opportunities.

Manufacturing has a crucially strategic role. Although it provides something in the region of only 11% of national output, it provides nearly 50% of our exports. If we are to export our way out of recession, the service industries might play a significant part, but we cannot overlook the potential of manufacturing industry. It contributes something like 74% of research and development. The more R and D there is, the more competitive we become: the two are crucially linked.

We must recognise that without having more R and D and without providing a higher value-added manufacturing base, we might not be able to generate the levels of employment that we have had historically in manufacturing. We might well pursue policies to help businesses expand manufacturing as a proportion of our national output, but that might not necessarily result in a huge increase in the number of people employed because as we become more competitive and productive, we might be using fewer and fewer people to achieve it. That can sometimes blur the distinction between manufacturing employment and service employment—hence the reference made by my right hon. Friend the Member for Wolverhampton South East to “manu-services”. Increasingly, as our high value-added manufacturers export abroad, they follow it up with service contracts, which provide a lot of employment for people who are technically in a half-way house between servicing and manufacturing.

[Mr Sheerman]

I know that my hon. Friend, as Chairman of the Select Committee, has a great deal of knowledge on this subject. I wonder, however, whether we are avoiding the fact that Germany is also good at services and at design and many other things, yet it still has a manufacturing base that is twice as big as ours. That is why I keep coming back to “It’s Germany, isn’t it?” that we need to copy.

[Mr Bailey]

My hon. Friend is quite right—for a whole range of reasons that, unfortunately, time constraints prevent me from developing. Germany has a far stronger manufacturing base than we do, and a much stronger manufacturing culture throughout the country. I would like to discourse at length on that, but time constraints prevent me from doing so.

Notwithstanding the German experience, it is generally recognised that our expertise in some of the service industries may well give us greater export opportunities to countries such as China. Because of Germany’s expertise in manufacturing, it has done very well in what we might term the first wave of exports to China, but we may do better now because of our superiority in some service industries.

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[Chris White (Warwick and Leamington) (Con)]

Thank you very much for that warning, Madam Deputy Speaker.

May I, too, start by thanking the Backbench Business Committee for securing time for this important debate? As co-chair of the Associate Parliamentary Manufacturing Group, alongside my friend the hon. Member for Huddersfield (Mr Sheerman), I have a particular interest in this area of policy. I was pleased to hear from earlier speakers who were able to bring their own experience to this debate, for example, my hon. Friend the Member for Hexham (Guy Opperman) and the hon. Member for Burnley (Gordon Birtwistle). I am also pleased that Westminster is being visited today by the leader of my local district council, who also has a background in manufacturing industry. Perhaps it would not hurt too much if more Members of Parliament had a background or personal experience in manufacturing, engineering or industry itself.

If we do not secure both a rebalancing of our economy towards manufacturing and growth in the sector, the UK will be very much the weaker, not least in my constituency, which is home to names such as Ford. Things have changed very much over time. My area has one major manufacturing works; the reason why we no longer have soot on our food is because Flavel, which won an award at the Great Exhibition, managed to change that by an innovative process and, to this day, the factory is still producing cookers in my constituency.

As the right hon. Member for Wolverhampton South East (Mr McFadden) said, we need to look forward. What does a prosperous manufacturing sector need? It needs a large skills base, a strong communications network, a focus on exports and the opening up of new markets. There has been progress on the first point. In Warwick and Leamington, we have 210 additional apprenticeships compared with last year. Great thanks must go to places such as Warwickshire college for managing to secure that.

Young people need to be encouraged to make a positive choice to take up careers in manufacturing. As the hon. Member for Huddersfield said, if that is to happen, design and technology must play a much greater part in our schools. We need to build on it through our entire education system. We cannot just wait until young people are 16 before they begin thinking about careers in the sector—it should thread right through our education system.

We cannot afford to fall behind other countries in this vital area. We should be under no illusion: competitors like China and India will be doing more, not less, to educate their young people in those subjects. The national curriculum is under review and I hope that the Department for Education will consider the importance of design and technology for the future of our economy and work with organisations such as the Design and Technology Association to ensure that D and T remains at the heart of the curriculum.

I believe that if we are to see long-term progress for manufacturing, we need the Government to be at one with the sector as a whole. Given the importance of manufacturing to our economic future, it makes sense that, as has been mentioned, the Government should create a dedicated Minister for manufacturing, and I would support the creation of such a Minister.

[Mr Sheerman]

Does the hon. Gentleman agree that if that Minister for manufacturing was linked to a clear long-term strategy for manufacturing, that would be even better?

[Chris White]

I very much agree. A Minister and a strategy could go hand in hand.

We need a strategic vision for manufacturing, with measurable targets of success so that we can see how our efforts at rebalancing our economy make headway and whether more needs to be done to help the sector. A Minister for manufacturing, tasked with creating a cross-departmental manufacturing strategy with targets and measurement tools to plot success or failure, would be a good start.

The Government, for example, could make it their goal to boost manufacturing to 15% of our GDP by 2015. This “15 by 15” target would send a powerful signal and boost confidence in the manufacturing sector as a whole. The mere creation of a Minister and a strategy will not bring about growth and jobs, but it will signal the Government’s intent, give manufacturers a voice in the decisions on economic policy, better co-ordinate Government manufacturing policy and ensure that manufacturing is properly considered across all Departments.

The UK is now the ninth biggest manufacturer in the world, unfortunately down two places on the previous year. We need to recognise that although we need to promote high-tech manufacturing we cannot ignore the rest of the industry. To quote a recent report,

“‘low-tech’ does not mean ‘low-value’”.

A Minister with responsibility for all manufacturing could ensure that it was not ignored and that we had a strategy in place that benefited all manufacturers.

If we are to remain at the forefront of manufacturing globally, businesses need to be able to access the funds that they need to compete and grow. I therefore also support the creation of a bank for industry, similar, perhaps, to the green investment bank. We should not be content to allow Britain to slip down the league any further and we should make it our goal to climb back to the top of the table.

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[Mr Willetts]

Perhaps such a meeting could be arranged through BIS or the Treasury. Lowering barriers to entry is one way of ensuring that a market is dynamic, that new entrants can come in and that innovation happens, and that is as true in banking as it is in the rest of the economy. My hon. Friend’s suggestion of a meeting is very welcome.

We heard a range of excellent speeches. I congratulate the hon. Member for Huddersfield on his contribution and welcome his support for Huddersfield university. Although my hon. Friend the Member for Weaver Vale (Graham Evans) is no longer in his seat, I pay tribute to the excellent work that he has done in support of Daresbury, which I have been happy to visit with him. It is a crucial R and D centre for the future where we are committed to strong investment and which has enterprise zone status. We heard from the right hon. Member for Wolverhampton South East (Mr McFadden)—

[Mr Sheerman]

The Minister said that we have a Minister for manufacturing; we will have to think about that, because some of us were not convinced. Two themes that have come out of the debate—I am sure that the Minister will get round to them—are the need for a long-term strategy for manufacturing and the role of Made by Britain. Does he endorse Made by Britain, and does he think that all Members of Parliament should find a fine design or product in their constituency? We are over halfway there, so will he support our going even further?

[Mr Willetts]

The hon. Gentleman says that he is not convinced. I think that if the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford, who has responsibility for business and enterprise, were here, he might have shed a quiet tear at that, because there he is, doing all this work in the Government and being responsible for all these sectors, including manufacturing and delivering the advanced manufacturing growth review. There are arguments about the titles that people should have, but the reality is that he does an enormous amount for manufacturing.

On strategy, if the hon. Gentleman looks at the growth review that we published with the Budget, he will see that there was a range of specific commitments, ranging from our advanced manufacturing review to commitments across a host of manufacturing sectors. We are doing further work on the future of manufacturing through the foresight exercise that my right hon. Friend the Secretary of State is leading. Manufacturing was a crucial strand of the growth review and there is now a forward-looking exercise in the foresight framework.

I will briefly take the House through some of the things that we are doing to strengthen manufacturing, which as I said were covered in the Government’s “The Plan for Growth”. Lowering business taxes is fundamental. That is why we are planning to cut corporation tax year on year. Although some people have criticised our decisions on the structure of corporation tax, it is worth remembering that we have legislated to extend the capital allowances and short-life assets scheme for plant and machinery from four years to eight years to improve the tax incentives.

We are also backing innovation. Several Members from both sides of the House have referred to the importance of the research and development base. I am particularly pleased that we have been able to draw on the lessons from Germany, which has been referred to favourably on both sides of the House, and to learn from its Fraunhofer institutes. Those were a model for the technology innovation centres that we are setting up with £200 million, even in these tough times. We have already identified some of those centres, notably in advanced manufacturing. Indeed, my right hon. Friend the Secretary of State is opening the National Composites Centre in Bristol today. That is the new home of world-class innovation in the design and manufacture of composites. We have also announced that there will be technology innovation centres in cell therapies and offshore renewables, and that there are more to come. We are trying to plug the gap between the pure research in universities and the commercialisation for which individual companies are responsible—the so-called valley of death. The technology innovation centres are one way in which we can plug that gap.

We are also committed to improving our performance on exporting. That is why we launched the national export challenge, a series of initiatives to help SMEs take the first steps to break into new markets. Currently, only one in five companies in Britain export. We want to increase that to one in four. That means reaching out to mittelstand businesses, or SMEs, that have not thought about exporting. That is why we have set UK Trade & Investment the target of doubling its client base to 50,000 businesses in the next three years.

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[Mr Willetts]

I can assure my hon. Friend that the Department is very well aware of the particular pressures facing energy-intensive industries, and we are considering them very carefully.

[Mr Sheerman]

The Minister has mentioned tax twice. When I talk to manufacturers and people in the business sector, they ask why the Government want a blanket cut in corporation tax rather than something that would actually give a tax break to innovators and entrepreneurs.

[Mr Willetts]

We are also providing specific support for innovators and entrepreneurs, for example by increasing the value of the R and D tax credits. We are doing specific things, but the coalition’s overall philosophy is that if possible, we like to bring down the basic rates of tax in a simpler tax system. I think that is an admirable objective.

I do not want to take up too much time, because I know that other Members still wish to speak, but I will briefly go through some of the other things that we are doing, in addition to the lengthy list that I have given—I will not repeat it, but I am sure hon. Members agree that it is very impressive.

Several hon. Members have mentioned apprenticeships, and we can be very proud of the rate of growth in their number that we have delivered. We now estimate that the really extraordinary figure of 440,000 apprenticeships have started in 2011. I pay tribute to my hon. Friend the Minister for Further Education, Skills and Lifelong Learning, who we all know has an intense personal commitment to apprenticeships. We are absolutely committed to their being of high value. Level 3 equivalent is a minimum, and in July the Prime Minister announced a £25 million fund to support up to 10,000 advanced and higher-level apprenticeships in companies, particularly SMEs.

Of course, we announced only last week a package to encourage small firms to take on their first apprentice, with an incentive payment of £1,500 for up to 20,000 apprentices aged 16 to 24. There are still too many regulatory burdens and too many problems of red tape, and we have made it clear that companies do not need to add extra health and safety burdens to the basic framework that all employees should have. We are committed to reducing bureaucracy, speeding up processes and boosting employer engagement in apprenticeships.

We are also committed to supporting and improving the image of manufacturing and engineering, which several Members have mentioned. There is much mythology about manufacturing and engineering. I am sure that Members of all parties find when they go around manufacturing facilities that they are very different from the oily rag image of manufacturing that too many people still have. They are sophisticated places in which highly skilled workers work with large amounts of sophisticated equipment. That is why, with my responsibilities as Minister for Universities and Science, I am very pleased with the increase in the number of science, technology, engineering and mathematics graduates.

Another announcement just in the past week is that the university of Lancaster is reopening its chemistry department, which was closed in 1999, because of the increase in the number of students coming forward with A-levels in the relevant subjects and because the university believes that in our new regime, it will be able to attract more students as it breaks free from the quota controls of the past. We have secured further investment in skills that are related to the improvement in the image of science and engineering.

As has been mentioned, there is also the new Queen Elizabeth prize for engineering, launched by the Prime Minister, the Deputy Prime Minister and the Leader of the Opposition earlier this month. We thank the range of private sector partners who have contributed to the endowment of the prize fund. There will now be a £1 million prize, awarded biennially by the Royal Academy of Engineering.

[Mr Sheerman]

The Minister mentioned £1 million and we have 1 million young unemployed people. Will he join my right hon. Friend the Member for South Shields (David Miliband) in his call for every young unemployed person to be given training and a job? Is there not room for such an imaginative proposal, which would boost manufacturing and everything else in our country?

[Mr Willetts]

With both the Work programme and the increase in the number of apprenticeships, we are discharging our obligation to young people. Of course, more can always be done and we are absolutely committed to doing everything necessary to help young people into jobs.

Let me conclude by assuring the House that the Government are committed to encouraging and supporting British manufacturers. We are determined to create the environment in which they are free to thrive and compete in a global marketplace. The points that have been made by hon. Members, and particularly by those who called the debate, are well made. The Government absolutely understand the importance of skills, innovation and R and D, and the importance of ensuring that the barriers to bank lending are torn down. All that added up makes it clear that we have a strategy for manufacturing, which will be at the heart of our agenda for rebalancing the economy. I very much congratulate hon. Members on their interventions, which I welcome.

[Mr Iain Wright (Hartlepool) (Lab)]

I agree with the Minister that this has been a good and important debate. Manufacturing is not discussed in the House as much as it should be, which is perhaps a reflection of the perception of manufacturing more widely in the country. People could be forgiven for believing that Britain used to make things but does not any more. I therefore congratulate the hon. Members for Hexham (Guy Opperman), for Warwick and Leamington (Chris White) and for Burnley (Gordon Birtwistle), and my hon. Friend the Member for Huddersfield (Mr Sheerman), on securing this interesting and vital debate.

I agree with the Minister that the debate has been relatively consensual—the House should not worry; I will break that. The debate has been split not by party, but between optimists and pessimists. I am a bit of both. I am proud of the fact that our nation engineered the first industrial revolution. We became the workshop of the world. By the eve of the first world war, we produced one quarter of the world’s total manufacturing output.

To go back to my earlier comments, there seems to be a consensus out there, put forward by the media, that this country has somehow lost its grip on manufacturing and closed its factories one by one or sent them over to China. Today’s debate has made a good start in dismissing such myths, because we still make things. Indeed, as the Minister rightly points out, there is much to be optimistic about. Output from British manufacturing reached an all-time high, even adjusting for inflation, not in 1867 or 1907, but in 2007. In the decade 1997 to 2007, UK manufacturing achieved a 50% increase in labour productivity, which is the best rate of progress we have seen in our country’s history. Despite that perception out there, we remain the world’s seventh largest manufacturing nation. Our manufacturing is based predominantly on high value-added activity, including the production and manufacture of toilet rolls—in that high value-added activity, we are world leaders.

In high-technology manufacturing, the UK is second only to the US in the developed world. In some industrial sectors, our companies are some of the best anywhere on the planet, including in aerospace, which several hon. Members mentioned, and in automotives, oil and gas, chemicals, pharmaceuticals and bioscience.

As the hon. Member for Hexham will know, the north-east region has a world-class, efficient plant in Nissan, with all the supply chain opportunities that that provides. As the Minister rightly pointed out, today’s announcement that Toyota will build its new car plant in Burnaston is particularly pleasing, especially after the disappointments in that city for Bombardier, on which my hon. Friend the Member for Derby North (Chris Williamson) has been an absolute champion.

We in the north-east have always valued manufacturing. My constituency of Hartlepool has been particularly strong from the start of the industrial revolution in the 1840s and 1850s right through to the post-war era. We have huge potential now in some world-class sectors such as offshore wind, nuclear and biotechnology, but we need to grasp the opportunities. Global trends mean that British manufacturing should have considerable opportunity in the next few years. Rising incomes for households in many developing economies will create billions of extra customers to whom British firms can sell their goods—a point that was made by my hon. Friend. The need to manage global resources more efficiently and the move to a low-carbon economy will provide new markets for new and innovative products designed by ambitious firms in environments conducive to stable and certain R and D and capital investment. New technologies such as life sciences will revolutionise health care and the way in which drugs are developed, patented and brought to market. Despite the difficulties and issues that I have with the Minister about the science budget, I know that he is a champion of science, and Britain, with its strong science base, should be a leading global player in such fields.

Today’s debate has allowed the argument to be somewhat more sophisticated than is normally the case. We often see the argument in very blunt terms: we used to do manufacturing, but now we only do services, and we need to go back to making things. As my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said, there has been a tendency in the structure of such debates to look in the rear-view mirror. In the past 60 years, this country has often chosen the stark model of economic sectors, selecting a service-based economy over manufacturing. That has meant that, despite our remaining a strong manufacturing nation, the sector constitutes only 11% of our economy, compared with 20% for Germany. As my hon. Friend the Member for Huddersfield said correctly, we have lurched too far away from manufacturing over the last 30 to 40 years. Manufacturing should constitute a much bigger share of our economy, but it should not be an either/or situation; nor should it be at the expense of our service sector. There should not be an artificial distinction, because services growth boosts manufacturing, and vice versa.

I can think of no finer example than Rolls-Royce, whose Derby plant I visited last month, as did the hon. Member for Erewash (Jessica Lee). The company is synonymous with British excellence—indeed global excellence—in engineering and manufacturing, but as we found out on our visit, it now derives half of its revenues from services, in providing long-term customer service contracts. The long-term revenues to be derived from such services are reinvested in manufacturing capability.

[Mr Sheerman]

I just want to correct a possible misapprehension. The members of the all-party manufacturing group are not rear-view mirror people: we actually believe that our manufacturing sector is superb in many aspects. It is just that we want to grow it and invest in it, as well as to encourage more entrepreneurs to lead it. That is the purpose of this debate. We are not negative: we are positive, and I congratulate my hon. Friend on choosing a product made by Britain, and I hope that every hon. Member will join the Made by Britain campaign.

[Mr Wright]

I absolutely agree, and my hon. Friend and I share the view of my right hon. Friend the Member for Wolverhampton South East that we should be bold and ambitious about manufacturing. We do not hark back to the past, but we want to engender that spirit of enterprise, innovation and ambition to ensure that we are the best engineering nation anywhere on the planet, that people can go into a career in manufacturing engineering secure in the knowledge that it is rewarding and produces products that we can sell to the rest of the world, and that Britain leads the world in that area.

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[Mr Wright]

I do not know whether the hon. Gentleman has been following my comments but, over a 40 or 50-year period, we have lurched too far away from manufacturing to the service sector. In the past 10 or 15 years, though, productivity in manufacturing has risen faster than ever in this country. My right hon. Friend the Member for Wolverhampton South East touched on these matters. Given the rise of China and other players, globalisation and the fact that we were the first country to industrialise, it was almost inevitable that there would be a relative decline. However, our manufacturing industry has declined too far, too fast, and we need to do something about that on a cross-party basis. Nevertheless, there has been great cause for optimism over the past 10 to 15 years.

[Mr Sheerman]

This has been a refreshingly all-party discussion but I want to come back to feed-in tariffs. The industry in green technology and green innovation is growing dynamically and people in my constituency in the business know that the feed-in tariff had to be modified, but for God’s sake why not give them six months to adjust, rather than allowing companies to go out of business and lose all that growth?

[Mr Wright]

My hon. Friend is correct, and to conclude this part of my speech, I shall quote the director-general of the CBI with specific regard to that decision on feed-in tariffs, which was taken without notice to the industry. In keeping with our football metaphor, the director-general said:

“Moving the goalposts doesn’t just destroy projects. It creates a mood of uncertainty that puts off investors. They wonder what’s coming next…Industry trust and confidence in the government has evaporated. This bodes poorly for investment in future initiatives…A new industrial policy needs to recognise the real-term costs of bad decisions and should set out a clear path that investors understand and can believe in.”

We certainly agree with that, as the country has not got the clear strategic direction we need from this Department. We sometimes get warm words; we often get welcome, albeit ad hoc, announcements. Industry, however, is uncertain of the strategic direction in which the Government and this Parliament want to take the country in manufacturing.