Manufacturing and Engineering

Chris White Excerpts

Tuesday 6th March 2012 Westminster Hall

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

Thank you for calling me to speak, Ms Clark.

I am pleased to follow the hon. Member for Paisley and Renfrewshire North (Jim Sheridan). I applaud his comments about shipbuilding, and his speech made very clear his passion for the manufacturing sector. I congratulate my hon. Friend the Member for Stroud (Neil Carmichael) on securing this debate, and on giving us the opportunity to discuss this important area of economic policy. I would perhaps disagree slightly with the previous speakers, in that sometimes in this House, it is when there is general agreement on the importance of a subject, as there is in this debate, that there is a smaller number of speakers. May I also congratulate the Minister on his new post?

As someone who has worked in the automotive sector, for MG Rover, I could not be more delighted to hear the news from Nissan this morning. Although I might be expected to say this as co-chair of the all-party group on manufacturing, it needs to be stressed that no long-term economic recovery is possible for our country without a long-term recovery in our manufacturing and engineering sector. Throughout the world, countries that have managed to protect and support their manufacturing capacity in the good years have bounced back stronger from the financial crisis that has weakened the sector. At present, 88% of our economy is in the service sector; industry comprises only around 11%, and agriculture 0.9%. In Germany, industry makes up nearly 30% of the economy, services 68%, and agriculture 2.5%.

None of us believes that we can turn the clock back completely to the days when Britain was the workshop of the world. However, if we are serious about rebalancing our economy towards a stronger manufacturing sector, we need a credible industrial policy. Only if we are able to focus the full attention of Whitehall on rebuilding our manufacturing sector will we be able to lay the foundation for future success in our economy. This is not a call for central planning or the nationalisation of industry, but a call for every Department and every official to pull in the same direction. We need the same level of consideration to be given to manufacturing as has been given to the financial and services sectors over the past 30 years. That will come about only if there is a co-ordinated strategy across Government, headed by a dedicated Minister for manufacturing, who pulls together the different strands of industrial policy, and who can be held accountable by Parliament, by industry, and by the public.

The all-party group on manufacturing will focus on the issue of the development of such a strategy in the weeks and months ahead. However, in general, the strategy will need to encompass three key areas: skills, export and finance. We need to have the skills in place to give our businesses access to the pool of labour that they need to grow and compete. We need to ensure that we give manufacturers, and particularly small and medium-sized companies, enough incentives to invest in skills for their employees, so that they feel confident in hiring new people and supporting their employees’ skills development over the whole life cycle of their careers in business.

Making our industry fit to export is vital. That does not mean that we should ignore manufacturing for domestic supply. Indeed, import substitution would be one of the best ways to enable us to reduce our balance of payments deficit, strengthen our economy and create a base for future export growth. In the long term, we need to be able to access the growing, emerging markets in China, India and south America. This means putting in place a strong system of export guarantees that match or beat those of our competitors; putting more resources into UK Trade & Investment so that it can champion the work of our manufacturers; and ensuring that we continue to push internationally for the reduction of trade barriers.

On finance, we need to ensure that our manufacturers are adequately supplied with credit. Britain historically has a low investment rate in its manufacturing sector. For example, on machine tool consumption, despite being the world’s eighth largest manufacturer, we are the world’s sixteenth largest consumer of machine tools. Without considerable investment in our manufacturing business, we will not be able to compete in the long term with emerging economies or advanced competitors such as Japan, Germany or the United States. Bold and radical policy prescriptions are necessary if we are to redress the balance; there could be a bank for industry, for example.

However, in the short term, the Government can take measures in the upcoming Budget to help support the sector, the most important of which would be to put in place 100% capital allowances for a two-year period, a proposal that has been put forward strongly by the EEF. This short-term measure would encourage companies, many of which are sitting on large cash reserves, to invest in new capital equipment to ensure not only that we make our manufacturers more competitive over the long term, but that we give a short-term boost to many businesses and improve order books. I urge the Minister to encourage the Chancellor to look favourably on that proposal. It would have a minimal cost to the Treasury, but a big impact on our manufacturers.

When it comes to manufacturers, we cannot afford to tinker round the edges indefinitely. I hope that the Government will continue to be bold in their thinking, so that we can, to quote the Chancellor, bang the drum for the “march of the makers”.