Industrial Policy and Manufacturing

Chris White Excerpts

Thursday 22nd November 2012 Commons Chamber

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

May I say how delighted I am to follow the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) in this important debate? I must also thank the Backbench Business Committee for scheduling time for it. As co-chair of the all-party parliamentary group on manufacturing, along with the hon. Member for Huddersfield (Mr Sheerman), one of the most consistent messages I hear is that the UK needs to have a comprehensive industrial policy setting out the key economic objectives and the policies we need to achieve them. We need, as a country, to get back on a more sustainable path to growth, which means seeking to balance our books—specifically, by reducing our trade deficit—so that Britain can be more resilient against future shocks and thrives in a more competitive world. Any industrial policy needs to consider the full range of the UK’s economic strengths, from financial services to creative industries and renewable energy. However, the most effective way of achieving a more sustainable growth trajectory is to boost manufacturing and our industrial capacity.

[Gordon Birtwistle]

May I advise my hon. Friend that in 1997 manufacturing was responsible for 22% of our GDP and we had a £4.4 billion surplus on the balance of payments, whereas by 2008 that had reduced to 12% and we had a £42.6 billion deficit on the balance of payments? Does that not show that manufacturing and exports are vital to this country?

[Chris White]

I thank my hon. Friend for his intervention and I note the figures he uses. One target the Minister might like to consider in an industrial strategy is about 15% by 2015—that works in so many ways.

We cannot afford merely to dismiss a large part of our global economy. Emerging markets are focusing on production and industry already, but they will not focus on those things for ever. Soon they will seek to compete with the developing economies in highly lucrative services, as well as in research and development. Where will the UK go then? We need to compete in manufacturing, as well as in services and the creative economy, if we are to succeed in the years ahead. The narrower our economy becomes, the more unstable it will be. We need a broad-based economic strategy, and manufacturing can and must play a crucial role in delivering that.

[Andrew Bingham (High Peak) (Con)]

Does my hon. Friend agree that we must not forget the very small manufacturing companies in my constituency and elsewhere? This is not all about big factories; it is also about small niche manufacturers producing specialist goods in this country.

[Chris White]

I thank my hon. Friend for his intervention. As someone who worked for MG Rover, I had a great experience of the supply chain and some of the smaller businesses that supported it. They have a great part to play in our economic growth, certainly in terms of new jobs in this sector.

It seems clear from the statements that the Government have already made that they understand and appreciate the important role that manufacturing can play in supporting the UK economy. But I hope that the Minister will see these words turned into action, and I believe that means beginning the process of developing a formal UK industrial strategy for the next 10 years, at the very least. Countries such as Germany and Japan, where industrial policy is at the very heart of government, can perhaps operate without such a formal process. However, I believe that the UK would benefit from it, not only through the consultation, debate and consensus building that would be necessary in the formulation of such a document, but from having a document against which civil servants and politicians can be held accountable through regular reviews.

Parliament should be at the centre of the development of this industrial policy. We need a policy that can last beyond the lifetime of one Government, which means ensuring that we have policies that all parties support or broadly favour, so that we create the policy stability necessary for businesses to invest in the UK.

[Guy Opperman (Hexham) (Con)]

It is a year since we last debated manufacturing, on a Thursday late in November 2011. Does my hon. Friend agree that there is some evidence that actual change has taken place, particularly on local banking? That is now that much easier because of the Financial Services Bill, which we passed on 23 April. It means that the smaller businesses so favoured by my hon. Friend the Member for High Peak (Andrew Bingham) can much more ably be financed by local banks.

[Chris White]

I thank my hon. Friend for his intervention. It is fortuitous, and something I did not realise until he mentioned it, that a similar debate was held this time last year. I hope we have made more progress and that that will continue. One issue on which we have made progress is the business bank concept, about which I know that he spoke in that debate.

[Huw Irranca-Davies (Ogmore) (Lab)]

I welcome the hon. Gentleman’s remarks, many of which I agree with. May I point out to him that there is something we could do right now about industrial strategy? A year ago, we were bemoaning the fact that the large energy companies did not have the market certainty to invest in large infrastructure, which would have had a ripple effect on all the smaller suppliers across the UK. Three weeks ago, seven of the largest worldwide energy companies wrote to the Chancellor to say that they still do not have certainty. Will he urge the Government, as I do, to put that certainty in place? There will be a ripple effect of tens of thousands of jobs in this country once we know that we are heading to a decarbonised future.

[Chris White]

All I will say is that energy and how we deliver on an energy strategy must be part of any industrial policy.

One of the most pressing concerns for manufacturing is access to finance. At meetings of the all-party group and with constituents, bank lending is a theme we return to time and time again. We must consider closely how we will reform our banking system for the benefit of our manufacturers, which must be a key part of our industrial policy.

Skills are another area that the Government must consider and I welcome the work that has already been done, particularly on apprenticeships. They are giving more young people the chance to learn skills in some of our excellent educational facilities—not least Warwickshire college in my constituency. We need to do more to strengthen the whole curriculum, however, so that it supports our economy, particularly by supporting science, technology, engineering and maths—the STEM subjects —at primary and secondary schools. We also need to look at apprenticeships so that we have more of the higher level apprenticeships our country needs to compete with other rapidly upskilling economies.

[Kelvin Hopkins (Luton North) (Lab)]

The hon. Gentleman is talking about the importance of education and training. Is he not concerned that every year we have to import tens of thousands of qualified engineers from abroad because we cannot produce enough through our own educational system even for our diminished manufacturing sector?

[Chris White]

Yes, I share that concern. It is incumbent on the House and on partners with an interest in manufacturing and industry to spread the news and create a greater awareness of jobs in industry. It is a matter of attracting people to those jobs, and our education system has a great part to play in that. That brings us back to the question asked by my hon. Friend the Member for Burnley (Gordon Birtwistle).

The Government have also rightly focused on infrastructure, on which the UK needs to improve, and a comprehensive industrial policy would seek to address that problem. A modern industrial policy must work to increase investment, by providing the right incentives and ensuring that the allowances and tax breaks make the UK one of the most attractive places in the world to do business.

Of course, an industrial policy should also consider other areas such as research and development, energy, procurement and export support, but I believe that the most crucial thing is that we should act swiftly to work on building a new industrial policy. Sector strategies are useful, but the main obstacles to UK manufacturing are at a national level.

[Kelvin Hopkins]

Will the hon. Gentleman give way again?

[Chris White]

If I may, I will continue.

A strong manufacturing ecosystem cannot depend on a few favoured industries but must see the whole of industry succeed. We have an historic opportunity over the next few years to develop consensus on a policy that our country desperately needs, working across political boundaries with business, trade unions and policy experts. I hope the Government will take the opportunity to do that, enabling manufacturing to be the engine of the UK economy once again and putting our country back on the path of sustainable and balanced long-term growth.