Industrial Strategy

Barry Sheerman Excerpts

Thursday 20th October 2016 Commons Chamber

[Chris White]

I thank my hon. Friend for his contribution, but I gently suggest to him that that slightly misses the point. It is just one element of an industrial strategy.

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

Will the hon. Gentleman give way?

[Chris White]

I would be delighted to give way, so long as the hon. Gentleman keeps to the subject.

[Mr Sheerman]

Is Germany the only model that the hon. Gentleman is examining? The challenge that we face, with only 10% of our people in the manufacturing workforce, is that with a smart bit of kit it is possible to manufacture anywhere in the world. That is a wonderful opportunity. Does he not think that Germany is an outdated model to follow?

[Chris White]

With the economic advances in our technology and with institutions such as the Warwick Manufacturing Group and other such groups, including in the hon. Gentleman’s constituency, we need to invest in research and development to make sure that we maintain the cutting edge and lead in those technologies.

Central Government, or perhaps more accurately Whitehall, generally responds well to objectives and targets, which provide focus and concentrate minds. A cohesive document would allow the public and business to hold the Government to account. Debate would be unavoidable and long-term consensual policy would prevail. The document, or statement, would lay out policies to support manufacturing for the medium term—around 10 years, say—giving clear objectives for the economy.

[Chris White]

The Government should intervene before a sector is failing. We always seem to miss the problem when it occurs, which makes it much more difficult to resolve, not least in some of our strategic industries.

The Government need to state how they intend to achieve their objectives through a long-term framework. Although it is recognised that manufacturing does not make up the majority of the economy, it can be seen as a driver for other sectors in respect of efficiencies, processes, skills, exports and so on. It requires more explicit planning than other sectors, which can be seen as interdependent, with the state playing a more active role. This should not come, however, at the expense of creativity or productivity, and it should assist rather than hinder.

One of the most consistent calls from manufacturing has been for the Government to articulate a long-term commitment to the sector and to give an indication of the policy framework they are likely to operate in the medium-to-long term. That should be a rolling document, updated regularly and taking into account fluctuations in the wider global economy and in the sector in the UK. It should be debated in Parliament to provide transparency and accountability. It should address a wide range of challenges. How effective is the British Business Bank in terms of access to finance? What capital is required to radically change manufacturers’ investment decisions? Can incentives be created to encourage business to invest? What progress is being made with green manufacturing?

Education is a vital component of the strategy. There is currently little planning associated with supporting the development of STEM subjects—science, technology, engineering and maths—in primary education, which is a major factor in creating the skills gap the industry is now experiencing. Those subjects are the bedrock of degrees and apprenticeships, but they are left to the latter stages of education—often too late to influence a child’s decision-making process.

[Mr Sheerman]

Does the hon. Gentleman know that tens of thousands of young people in further education colleges up and down our land are desperate to get into apprenticeships, but they cannot, because they cannot get their GCSEs in English and maths? When will the Government introduce a practical maths GCSE to unblock that blockage? Will he persuade them to do that?

[Chris White]

I will leave the Minister to answer that question in his remarks.

In a truly global trading nation, more provision should be made for studying languages. What is the number of children at school studying Chinese or Russian? How can it be improved? A welcome manifesto commitment—the hon. Gentleman has touched on this—was to increase the number of apprenticeships to 3 million by 2020. How are we going to take down the barriers that prevent that from happening?

Infrastructure is an essential part of the strategy, not least in improving the quality and reliability of supply chains. That should include the comprehensive development of a digital infrastructure that is fit for purpose. Other elements of the strategy would, of course, include an energy policy, procurement, immigration, export—including the role of supporting bodies such as UK Trade & Investment—catapult centres, research and development, through-life engineering services and the wider contribution from Whitehall.

Social enterprises may not be the first issue that springs to mind in this context, but they are a sizeable part of our economy. The positive impact social enterprises have on local communities is of huge value, and it is through an inclusive approach to shaping our industrial strategy that such sectors can be supported.

--- Later in debate ---

[Mr Wright]

I think that smart procurement can engineer proper prosperity, but I warn the hon. Gentleman that what I have to say next will give him spasms. It relates to the link between a proper industrial strategy and foreign takeovers, and how the state can intervene to perhaps limit the range of foreign takeovers.

In her speech launching her campaign to be Conservative party leader in July, the Prime Minister said:

“A proper industrial strategy wouldn’t automatically stop the sale of British firms to foreign ones, but it should be capable of stepping in to defend a sector that is as important as pharmaceuticals is to Britain.”

I welcome that approach. One of Britain’s virtues is its openness and the fact that that openness lends itself to dynamism and a willingness to consider new ideas and innovate new products. That ultimately leads to better competitiveness, yet there is a risk that this country will sell off the crown jewels, which would be detrimental to the long-term success of British business. We are at the heart of a dynamic and connected global economy, but we are at greater risk of investment in capital allocation decisions that affect British industry being made far away from these shores by parent boards headquartered overseas.

Indeed, within days of the Prime Minister entering No. 10, it was announced that SoftBank was buying Cambridge-based Arm Holdings for £24 billion. That was not an old-fashioned, obsolete, loss-making businesses, and it did not require a bail-out from the state. It was a successful British company in the growing global tech revolution. If the tests for stepping in to defend a sector that is important for Britain were not at work in that instance, it is difficult to see when they would be applied. Indeed, what would those tests be? For every instance of a welcome takeover, such as Tata’s purchase of Jaguar Land Rover, there are numerous examples of takeovers where industrial capacity was moved offshore, such as Kraft’s takeover of Cadbury. What are the criteria for stepping in and intervening?

[Mr Sheerman]

That is music to my ears. When I was a young man, I worked for Imperial Chemical Industries. These days it is called Syngenta and it has a big plant in my constituency. The leading agritech company in the world was taken over, including all its sites, not by a normal company, but by ChemChina, which is a part of the communist Government of China. That is not a normal takeover, but what are this Government doing about it? I have not heard anything.

[Mr Wright]

That is a fair point and it gets to the heart of what we mean by foreign takeovers and their link to industrial strategy.

I am conscious that colleagues want to make their own speeches, so I will finish. The Government have yet to articulate what is meant by picking winners, whether they be individual companies, sectors or technologies. There seems to be a move away from our previous sectoral approach, but there is no clarity with regard to the criteria. It is increasingly obvious that the Government are not entirely clear about what an industrial strategy looks like. Starting with a blank piece of paper gives the Select Committee a welcome opportunity to contribute meaningfully to the development of policy, but it does not provide much reassurance or certainty to the firms that are working hard to create wealth and prosperity for this country—and certainty is what they are crying out for at the moment.