The Government’s Productivity Plan

Chris White Excerpts

Tuesday 28th February 2017 Commons Chamber

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

I am delighted to follow the hon. Member for Hartlepool (Mr Wright). I want to put it on record that he is an excellent Chair of the Business, Energy and Industrial Strategy Committee, although he seems to be a bit more of a “glass half empty” man, particularly in this debate. He supports many of the measures in the productivity plan and the industrial strategy, and members of the Committee share similar views, with perhaps the notable exception of my hon. Friend the Member for Bedford (Richard Fuller).

Improving productivity in the UK has to be a priority if we are to achieve our potential for economic growth. I welcome the premise of the Government’s productivity plan and, in equal measure, suggest that it should continue to be scrutinised by Parliament and the Committee as we work to address the fact that our productivity is below the European average. It is worth noting that that is the case despite the levels of employment that we currently enjoy, and I agree with my right hon. Friend the Member for Wokingham (John Redwood) that that situation puts us in a good position to increase productivity and to move from lower-paid to higher-paid jobs. As we all know, the UK is currently ranked equal fifth among the G7 countries for labour productivity, but there is much about which to be positive, and I am sure that the trend can be reversed.

As co-chair of the all-party group on manufacturing, I know the immense value to the sector of automation and technological advances. Continuing to invest in innovation can be instrumental in improving productivity. It is vital to recognise the role that Industry 4.0—the fourth industrial revolution, as it is known—will have in rapidly developing our economy. Nations such as Japan and Germany are already embracing the concept, and the UK must develop a solid foundation on which to build our manufacturing capability.

[Rishi Sunak (Richmond (Yorks)) (Con)]

My hon. Friend mentions Germany and the importance of manufacturing. Does he agree that one lesson we can learn from Germany is the importance it places on technical education? The Government’s record of investing more in technical education and improving apprenticeships, in both number and quality, should be commended and will help with the aims he outlines.

[Chris White]

We are sometimes in danger of thinking that Germany is so far ahead and advanced that we should try to do our own thing. Germany has a number of ideas that we can borrow and from which we can learn a great deal, meaning that we can advance significantly in manufacturing.

[John Redwood]

Does my hon. Friend also agree that quite a bit of the problem resides in the public sector, not the private sector? Our best car plants are world beaters and have world-leading standards of productivity, but publicly owned Network Rail is way behind the continental railways in terms of productivity. We have the solution in our own hands in the public sector.

[Chris White]

I agree with my right hon. Friend about our automotive plants. However, I will not criticise Network Rail today because it has just announced that it will be installing lifts in my local railway stations, on which I congratulate it most profusely.

The Catapult network is a good example of what can be achieved through innovation. Some £15 of benefit is returned for every £1 of investment, and we should remember the advantages of the Catapult centres as we come towards the Budget. Some 69% of business R and D can be found in the manufacturing sector, which highlights its importance to the wider economy. The UK is also championing the idea of horizontal innovation, whereby intelligence and technologies can be shared across industries, which could have a significant impact on how sectors such as shipbuilding and construction could learn from the best practice of industries such as the automotive sector.

Through-life engineering services—TES—are increasingly on the agenda, with manufacturers going beyond production to retain responsibility for maintaining systems throughout a product’s life. I particularly commend Cranfield University for its work in that area, and I am pleased to co-chair the TES Council, which brings together industry leaders to discuss how best to develop such services. One area in which the UK leads its international counterparts is additive manufacturing, or 3D printing, which we can see at the high-value manufacturing technology centre in Ansty.

We are starting to see a recovery, but productivity in the services sector is outstripping that of the manufacturing sector. It is well documented that UK productivity is weak—stubbornly so, as the hon. Member for Hartlepool said. Job quality, whether through wages, skills and training or employment security, must continually improve for us to reverse poor productivity growth.

As a midlands MP, I take particular interest in the midlands engine initiative and look forward to the publication of the regional strategy—I hope that the Minister will shed more light on that. The midlands has a rich tradition of manufacturing and can be at the forefront of a manufacturing renaissance in this country. However, as has been noted, productivity in the west midlands has been consistently falling against the UK average. The midlands engine is a welcome initiative that can define our priorities and develop the skills we need in key industries such as the automotive sector on which we so heavily rely.

At today’s Treasury questions, I asked the Chancellor about the provision of an adequate energy supply as electric vehicles become more prevalent. Companies such as Jaguar Land Rover are developing technologies that will shape the future of the sector, but they cannot do so without the necessary infrastructure. Electric cars will be the future, and it is important that we provide the necessary power so that we can build their batteries in the vicinity of those car plants. That is the kind of joined-up approach that will be so important.

The final point of the 15 in the productivity plan emphasises rebalancing the economy and regional empowerment. London and the south-east contribute an enormous amount to the national economy, but economic growth should be powered from every corner of the UK.

[James Morris (Halesowen and Rowley Regis) (Con)]

My hon. Friend talks about the historical low productivity in the west midlands. Does he agree that the long-running under-investment in transport infrastructure, particularly in the road and rail network, is hampering the region’s strong underlying economic fundamentals on exports? We need a higher rate of investment in our infrastructure in the west midlands.

[Chris White]

I most certainly agree with my hon. Friend. We should be looking to the productivity plan and the industrial strategy, which address issues such as infrastructure. The West Midlands combined authority and our local enterprise partnerships should come together to think about how we address issues such as our transport infrastructure far more effectively.

By allowing for strong economic growth, investing in infrastructure will increase our productivity, whether in transport or digital services. As with all such initiatives, it is important that individuals feel part of regional and national growth. That can only be beneficial for job satisfaction, which in turn increases the likelihood of the productivity plan achieving its aims.

I particularly highlight the need for the plan to be measured against clearly defined objectives using metrics. A loose framework can give useful direction but lacks the necessary precise approach and timescales. Tying skills development to the productivity plan must also be a priority. Identifying the changing landscape of our economy and the skills required to keep pace with that change will be a phenomenal challenge. Encouraging greater uptake of science, technology, engineering and maths, for example, is key.

Productivity is clearly an issue that needs to be addressed urgently. I welcome the Government’s determination to put productivity at the heart of the industrial strategy and suggest that we must prioritise investment in R and D, as well as focusing on improving job quality. Embracing new technologies, such as through Industry 4.0, should be central to our approach.

Intellectual Property: British Economy

Chris White Excerpts

Tuesday 28th February 2017 Westminster Hall

[Nigel Adams (Selby and Ainsty) (Con)]

I beg to move,

That this House has considered the importance of intellectual property to the British economy.

Thank you for chairing the debate this morning, Mr Gapes. I also thank the Backbench Business Committee for allocating time to the important subject of British intellectual property. I was particularly keen to have the subject before the House again because we are in the midst of a number of important developments in the area of IP. I hope that we can report on and flesh out some of those today, but I also reiterate my desire to debate the subject in the main Chamber in due course.

Intellectual property is one of the major areas of competence that will revert from Brussels to the UK when we leave the European Union. I welcome the Prime Minister’s plan to deal with that transition in part by converting the existing body of European law and regulation applicable to the UK into UK law for Parliament to debate, amend and repeal with sufficient time to consider each piece. I also understand her intention thus to create stability for business. Legislation, in particular in a complex area such as intellectual property, takes significant time to put in place, so it behoves us to start preparing to manage our own affairs in the area now, establishing what works, what does not and how we want to improve the latter.

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

I congratulate my hon. Friend on securing this important debate. He talked about the transition and legislation, but does he also share my support for the inclusion of intellectual property in the industrial strategy, given that key sectors rely on it, such as the creative industries which are so well placed to contribute significantly to economic growth?

[Nigel Adams]

Absolutely. I completely share my hon. Friend’s pleasure at IP’s inclusion. That tells us that the Government are taking IP, which cuts across so much of our country’s industrial policy, seriously. I am very much of his opinion.

The Digital Economy Bill, which is in the other place, has only three clauses on IP. I do not take the Government to task for that—it has been a long time since the previous legislation, the Digital Economy Act 2010, and there is much important ground to cover—but it serves to highlight the need to prioritise examination of the area in more detail.

To that end, I welcome the acknowledgement of IP’s importance in the Green Paper on industrial strategy, which my hon. Friend the Member for Warwick and Leamington (Chris White) mentioned, and the allocation of this important brief to the Minister for Universities, Science, Research and Innovation, my hon. Friend the Member for Orpington (Joseph Johnson), who is known for his seriousness and attention to detail, as well as his great cricketing prowess.

From established phenomena such as the Beatles and David Bowie to emerging superstars such as Stormzy and Skepta—a great favourite of the Minister for Digital and Culture, my right hon. Friend the Member for West Suffolk (Matt Hancock)—and from our brilliant film and television exports to our technological innovators, such as those who created the bagless vacuum cleaner and the worldwide web, the UK has never been short of ideas.

IP is critical to our growing our tech sector, but I will focus my remarks on the creative industries, in my capacity as chair of the all-party parliamentary group on music and as a member of the Select Committee on Culture, Media and Sport. Other hon. Members will, I hope, bring up other areas of interest during the debate. This month, for example, the all-party parliamentary group on intellectual property held an inquiry into IP enforcement, which was incredibly valuable. I believe the report has now been published. The APPG chair, the hon. Member for Perth and North Perthshire (Pete Wishart), is in his place, so I hope that he will share more of that report with us.

This debate is about the importance of IP to the British economy and, to give a brief reminder, the numbers speak for themselves: the creative industries account for approximately 7% of GDP; for £187.4 billion in gross value added, according to Department for Culture, Media and Sport estimates; and for exports worth almost £20 billion. That does not even account for the cultural soft power of having such a powerhouse in our creative and music industries. I would highlight the 35% growth in the export value of the live music sector between 2014 and 2015, and the fact that five of the 10 top-selling artists globally in 2015 were British. As anyone who has turned on the radio recently or watched the Brit awards last week will know, 2016 was surely another great year for the music industry.

Now to the problems. Piracy is obviously one of the biggest threats to creators being allowed to capitalise on their own efforts and to see returns on any growth in interest in their work. Without that, not only will they not be able to continue to create, but they will certainly not be able to invest in mentoring or developing new talent. We should keep in mind that all such issues are interconnected for the industry. We encourage record labels to advance social mobility through pioneering apprenticeship schemes or engagement with at-risk youth, for example, but it is harder for us credibly to ask them to put into society when we are not also making serious inroads into getting our laws and regulatory regimes up to scratch in dealing with the new threats to creative industry revenues.

In that vein, I welcome the agreement announced last week between the search engines, such as Google and Bing, and the Intellectual Property Office, with the aid of the DCMS, on an industry code of practice for tackling piracy. In changes that are expected to be rolled out by the summer, search engines will modify their algorithms to demote piracy sites in results, making them harder to find. That is a good first step.

Statutory Pubs Code and Pubs Code Adjudicator

Chris White Excerpts

Thursday 26th January 2017 Commons Chamber

[Greg Mulholland]

The hon. Lady is absolutely right. I am afraid that the intention is not the reality, and that is why this House and the Government must take action.

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

As the hon. Gentleman mentioned, I have seen some of these things at first hand, and it has been an unsatisfactory experience. I would like to share with the House the following quote from a pubco:

“Moving to a Market Rent Only commercial free of tie lease agreement, means larger upfront payments and the loss of our award-winning, business-friendly services and support, aside from business insurance.”

Without naming the pubco or the pub involved, does he agree that this could be interpreted as threatening, and is not a business-friendly approach at all?

[Greg Mulholland]

The hon. Gentleman is absolutely right. I welcome the support that he is giving to his publican constituents. I have that quote in my speech.

Let me remind right hon. and hon. Members that the pubs code and the adjudicator were introduced in the Small Business, Enterprise and Employment Act 2015. The code came into force last year. It applies only to businesses owning 500 or more tied pubs in England and Wales, of which there are six, and governs their relationship with their tied pubs. The quasi-judicial statutory Pubs Code Adjudicator was created to uphold and enforce the pubs code so that it is properly implemented, and to act as an impartial arbiter when there are disputes on certain issues.

I wish to praise the current Government and the civil servants in the Department—formerly Business, Enterprise and Skills, now Business, Energy and Industrial Strategy—for their very hard and diligent work in bringing through the pubs code, which is a strong, clear document. At this stage, six months in, Ministers and civil servants should not have to intervene given that the adjudicator’s role, as laid down in primary and secondary legislation, is to implement and enforce the code. The role of Ministers should now be to oversee and scrutinise that activity, but I am afraid that they now have to intervene because the Pubs Code Adjudicator is not doing the job as laid down in the pubs code and in the law.

Regulation 50 of the pubs code specifically states:

“A pub-owning business must not subject a tied pub tenant to any detriment on the ground that the tenant exercises, or attempts to exercise, any right under these Regulations.”

This regulation is being routinely ignored and flouted by pub companies. Let me give some examples.

Pub companies are refusing to allow a simple deed of variation to leases if tenants suggest that they want to exercise their right to a market rent only option. This forces them to accept a new lease, which is offered only on unfavourable and clearly detrimental terms, clearly flouting regulation 50. Enterprise Inns is doing this systematically and then telling tenants that they will have to go to arbitration over what is clearly not an arbitration matter but a legal breach of the code’s regulation.

Tenants seeking the market rent only option are being presented with unreasonable charges and terms by pubcos, making it unviable to take or even pursue the option—for example, unreasonable and unaffordable demands for up-front, quarterly payments of rent, or unjustifiable and excessive dilapidations charges. Pubcos are also, as the hon. Member for Warwick and Leamington said, presenting so-called free-of-tie offers, sometimes calling them MRO offers as though they were the same thing as the market rent only option, which they are not; they are deliberately confusing the two. I remind the House that the market rent only option gives the tenant the right to an independent assessment of the market rent, and the right then to take the option on an existing lease with no other changes to the lease or the terms. Yet pubcos are insisting on shorter leases on detrimental terms, clearly breaching the pubs code. In addition, I can tell the House that that document being given to tenants is a Punch document.

Brigid Simmonds, the chief executive of the British Beer and Pub Association—the trade association of the pubcos—has said that it is “inevitable” that free-of-tie agreements would have

“terms that more closely reflect commercial rental agreements elsewhere in the marketplace”.

With the market rent only option, that is not allowed; it constitutes detriment. The lease has to continue on a free-of-tie basis, with the payment of independently assessed rent.

One thing that is putting people off is the fees proposed by assessors for carrying out that independent assessment. I have been sent a document from a surveyor that suggests that the fee can be up to £6,000. Under self-regulation, the maximum fee was £4,000, which was split into a maximum of £2,000 for the tenant and a maximum of £2,000 for the pub company. That was transparent and fair, unlike what the Royal Institution of Chartered Surveyors is presenting. Who is a member of the Royal Institution of Chartered Surveyors? Mr Paul Newby, the Pubs Code Adjudicator. It is a clear case of jobs for the boys, because the people demanding those unjustifiable and excessive fees are his former colleagues, associates and friends. I have to say to the Minister that that shows us again why a surveyor was a wholly inappropriate choice to be the adjudicator.

Pub companies are confusing and misleading tenants so that they miss their trigger point—the very limited window in which they can seek to take the market rent only option. Pub companies are putting pressure on tenants by sometimes bribing and sometimes bullying them into signing on the dotted line, so that they stay tied and do not have the chance to exercise their rights.

Returning to the adjudicator, I remind the House that Paul Newby, the director of pub estate agents and surveyors Fleurets, was appointed as Pubs Code Adjudicator and started work in March 2016, despite the majority of tenants’ groups objecting to his appointment, and despite the fact that he had ongoing financial links to the pubcos that he is supposed to regulate. Mr Newby failed properly to declare the conflict of interest when he applied for the role. As well as being a former director, which he did declare, he astonishingly —and completely unacceptably for someone in a quasi-judicial role—retains shares in Fleurets and has outstanding loans of more than £200,000 to it, with a repayment agreement that is set to last until 2023. That information had to be dragged out of him, and he published it only in December. Just to be clear, Fleurets declares that 20% to 23%—a fifth or more of its income—comes from the regulated pubcos.

To make matters worse, Mr Newby has been allowed to construct his own conflict of interest policy, and—surprise, surprise—it falls well below the industry standard for such documents. Surprisingly, it even falls well below the standards of his own professional body, the Royal Institution of Chartered Surveyors. The conflict of interest policy should be similar to that of the Groceries Code Adjudicator, but, unlike the GCA, the Pubs Code Adjudicator has chosen to publish a separate register of interests, along with an explanation of how his conflict of interest policy will be applied in relation to the register and, specifically, to his own conflict of interest. Mr Newby is setting his own rules to avoid having to disclose fully his conflicts of interest when he takes on cases.

The Select Committee was clear in July 2016 that not only was Mr Newby evasive, but he could not command the necessary confidence of pub tenants, and the appointments process should be reopened. Mr Newby also misled the Select Committee on important points, and has not responded properly to letters asking him for an explanation.

To return to the key point that the right hon. Member for West Dorset made, Mr Newby is the adjudicator, and his job is to uphold and enforce the pubs code. The Government state on the website:

“The Pubs Code Adjudicator (PCA) is responsible for enforcing the statutory Pubs Code.”

He is failing to act as an adjudicator; he is refusing to make rulings on important, basic matters such as the deed and variation versus new lease issue; and he is failing to uphold, never mind enforce, the code. Does he not understand the role—does he not properly understand the code and the legislation—or is this a deliberate attempt to undermine the whole statutory code, as many tenants now fear? The case-by-case approach that he is taking means that there will be no opportunity to look at many of the issues being raised repeatedly by tenants about the way in which pubcos are trying systematically to flout and thwart the code.

--- Later in debate ---

[Mr Wright]

The right hon. Gentleman makes an incredibly important point. The adjudicator has to redress the balance in the power dynamics in the industry and there is evidence to suggest that that is not happening.

I want to be clear: Mr Newby’s professional credentials and expertise are not disputed. His knowledge of the industry, having worked in the pub property business for something like 35 years, is not in doubt and cannot be questioned. However, having looked at the matter in the Select Committee, we believe that there is a significant reason why Mr Newby will find—and is finding—it difficult to command the confidence of all parts of the industry, namely a strong perception of a conflict of interest, made worse by Mr Newby’s ongoing financial interest in his former firm.

[Chris White]

During the speeches of the hon. Member for Leeds North West (Greg Mulholland) and the Chair of the Select Committee, a number of criticisms have been made of the Pubs Code Adjudicator. Does the hon. Gentleman think that he should be called before the Select Committee again?

[Mr Wright]

The issue has attracted enormous interest, not just from our Select Committee but from predecessor Select Committees, which helped to change the law. As Chair of the Select Committee, I maintain that, given the hard-working and determined members of the Select Committee such as the hon. Gentleman and the hon. Member for Cannock Chase, the issue will not go away, but continue to command our attention. We want to put pressure on the Government to look again and reopen the appointments process so that this important appointment is seen as fair and impartial, and that is not happening.

I want to touch on an issue that came up in the Select Committee’s consideration. Simon Clarke is a tied tenant and a surveyor, and both he and Mr Mountford expressed surprise and concern that Mr Newby, as a chartered surveyor, even applied for the job. Both said that someone from outside the industry was needed. Mr Mountford told us that they had said to the Department that the post required

“a judge, a retired lawyer or somebody with legal experience. We definitely said it should not be a surveyor.”

Mr Clarke said that it definitely should not have been a chartered surveyor, because there would always be a conflict of interest as surveyors would, in all likelihood, have advised one of the parties.

That brings me to the central concern about Mr Newby’s appointment. Before becoming the Pubs Code Adjudicator, Mr Newby was a director of Fleurets, a firm of business property valuers and surveyors. As the hon. Member for Leeds North West mentioned, in giving evidence to the Select Committee Mr Newby said that about 20% to 23% of the firm’s fee income—a material amount—derived from advice provided to the large pubcos. That alone lends itself to accusations of potential and perceived conflicts of interest. However, Mr Newby also continues to have financial interests in the company. He gave evidence to the Committee in May and then clarified some of his self-confessed inaccuracies in a letter to me in November—at, he said, the instigation of the Minister. Mr Newby has both shares in Fleurets Holdings Ltd and debenture loan notes owed to him by the company.

The Committee asked Mr Newby if he would provide a clean and definable break with his old firm by divesting himself of those financial interests. He stated in his November letter to me that the company is unwilling to do so in order to avoid putting

“undue strain on capital resources”—

it is probably more accurate to call it the firm’s cash flow. That is very serious and really undermines the ability of the adjudicator to command the trust and respect of all sides of the industry. He has a significant financial interest in shares and loans from the company, which derives a significant part of its revenue from large pubcos, but he cannot alter that situation because that would put strain on cash flow. In other words, he retains an ongoing financial interest, and it is in Mr Newby’s interest for the firm to do well to secure the moneys owed to him. That could mean that his judgments would assist large pubcos that have commissioned Fleurets to advise on tenancy arrangements so as to maintain the firm’s cash-flow position and profitability, and thus allow payments to be made to Mr Newby.

When Mr Newby came before the Committee, he said:

“I have taken off my previous hat and thrown it away.”

But he has not: the ongoing financial interests mean that he is still clearly wearing that hat. There is a clear perception of conflict of interest. This is like a referee officiating at a football match between Chelsea, who are top of the premiership, and Newport County, who are bottom of league two—

Industrial Strategy Consultation

Chris White Excerpts

Monday 23rd January 2017 Commons Chamber

[Greg Clark]

The Green Paper invites comments and proposals, so I look forward to seeing the right hon. Lady’s response to it. As I said earlier, the Government have taken very seriously the importance of childcare in allowing women and men to return to work in good jobs, and we have made great progress. I will be interested to read her response to the consultation.

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

I welcomed the opportunity to join the Secretary of State on Friday for his visit to the Warwick Manufacturing Group, an institution that represents many important elements of this industrial strategy. Does he agree that the midlands can play a leading role in the development of such a strategy, as it is home to world-class research, advanced manufacturing and a skilled workforce?

[Greg Clark]

I agree with my hon. Friend. One of the things that I found striking when visiting the National Automotive Innovation Centre, a fantastic centre that is being built, is the fact that as well as having research and development facilities that will be available to large companies and small challenger firms, there is on the same site a school that will take in 1,000 apprentices a year to equip them with the skills the motor industry across the west midlands can benefit from. That is a very good example of how research and development can tie in with the agenda of driving improved standards of technical skills.

Exiting the EU: Science and Research

Chris White Excerpts

Monday 19th December 2016 Commons Chamber

[Joseph Johnson]

My hon. Friend is exactly right. It certainly boosts not only the confidence of our research communities, but that of the business community, which sees that we are putting innovation at the very heart of our industrial strategy. For every pound of public investment in research, we get back more than £7 of net economic benefit, both at local and national level. When we invest in research, we invest in our wider prosperity.

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

Although the Chancellor’s announcement that the Government will continue to fund EU projects such as Horizon 2020 was welcome, it is still important to make sure that our universities continue to collaborate. What further measures will the Minister take to ensure that that happens?

[Joseph Johnson]

Our universities are successful in winning European funding bids. In fact, we have the top four slots of all European institutions, in Oxford, Cambridge, Imperial and University College London—[Interruption.]—in terms of the share of participations. That underscores the strengths of our university system and we want them to continue to be able to bid successfully for as long as we are members of the European Union.

We want that level of economic benefit to continue long after we leave the EU, which is why we are setting up the industrial strategy challenge fund. It will back priority technologies such as robotics and biotechnology where, just as in the space sector, the UK has the potential to turn research strengths into a global, industrial and commercial lead. Although our research and innovation system is world leading, we are working to ensure that it stays that way by being even more effective. That is why we are implementing Sir Paul Nurse’s recommendation that we should establish a single strategic research and innovation funding body—UK Research and Innovation —which will be a strong and unified voice, championing UK research and innovation nationally and internationally.

The EU is, of course, important for the UK’s research base, but it is not the only game in town. The UK was a place of learning before many of the EU’s member states even existed. Some of our universities have been centres of research excellence for nearly a millennium. The UK will, of course, continue to play a leading role in major, non-EU research collaborations that take place here—from CERN in Switzerland, to the European Space Agency. We are a major partner in the new Square Kilometre Array, the world’s largest radio telescope, whose global headquarters will be based at Jodrell Bank. In the LIGO Scientific Collaboration, it was UK researchers, working with their counterparts, who made the dramatic gravitational waves discovery possible.

All that said, it will, of course, not be lost on many hon. Members that there are many valuable interactions between UK and EU scientific institutions. We work closely with our European neighbours on issues that affect our planet as well as everyone on it.

Oral Answers to Questions

Chris White Excerpts

Tuesday 8th November 2016 Commons Chamber

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

Will my right hon. Friend confirm that he will publish discussion papers on the industrial strategy as soon as possible and that they will reflect contributions made by Members who took part in the recent debate in the House?

[Greg Clark]

I will indeed. I thank my hon. Friend and other hon. Members, including members of the Business, Energy and Industrial Strategy Committee, which is doing an inquiry into this. If an industrial strategy is to endure in the long term, it needs to be rooted in as great a consensus as can be achieved around it, and of course that will include contributions from Members of this House, and organisations and individuals outside it. I will engage them in those discussions over the months ahead.

Industrial Strategy

Chris White Excerpts

Thursday 20th October 2016 Commons Chamber

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

I beg to move,

That this House has considered industrial strategy.

May I thank what we call the BBCom for approving my application for this debate? Let me also thank the hon. Members for Hove (Peter Kyle), for Edinburgh West (Michelle Thomson) and for Hartlepool (Mr Wright) for supporting this debate. We often debate policy in this Chamber, but it is rare for us to debate the creation of a new Department and what it will in fact mean.

In my maiden speech, I referred to my constituency, Warwick and Leamington, as being at the centre of the country, both geographically and demographically. We have good schools, colleges and two highly respected universities on our doorstep. We have many businesses, which are household names, a skilled workforce and low unemployment. The constituency has a strong reputation in the technology sector, particularly in the video games industry, and the wider region has a heritage firmly based in manufacturing.

This month, on a visit to my constituency, I was pleased to see the site that will house a new factory for Vitsoe, the furniture manufacturer and exporter. It is on the very spot that was home to the Ford foundry until it sadly closed in 2007.

[Mr Jim Cunningham (Coventry South) (Lab)]

The hon. Gentleman’s constituency is next to mine, and he will know that Jaguar Land Rover has its main development plant in Coventry, probably employing around 5,000 to 6,000 employees. Equally, he will also know that the Chinese have put more investment into the black cab company, which is constructing a new site in Coventry. That gives us a good demonstration of some of the industries that have been created in the midlands.

[Chris White]

I welcome that intervention. The hon. Gentleman and I have attended some of those very interesting institutions and worked together at Warwick University, one of our leading international universities.

I am pleased that Tata has based its new technology centre in Leamington, which shows what effect inward investment can have on our constituencies and our country. Despite the collaboration—the links between our educational institutions and business, its location and its workforce—how much more could we do as a constituency and as a country if we had the strong foundations of an industrial strategy?

Since working in the automotive sector, I have always had a passion for manufacturing, not least as co-chair of the all-party manufacturing group. I am a member of the Business, Energy and Industrial Strategy Committee—I am pleased to see its Chairman, the hon. Member for Hartlepool (Mr Wright), in his seat—and we are currently taking evidence on this concept.

We have recently heard evidence from the right hon. Member for Tatton (Mr Osborne), the former Member for Twickenham and Lord Heseltine, who all assured us in their own different and special ways that we have had an industrial strategy all along. Perhaps they are right, but I would like to use this speech to say how I think an industrial strategy could be reformed to meet some of the present challenges that we face.

In the last Queen’s Speech debate, I spoke on industrial strategy. I remember that most of the other speakers spoke about sugar tax, an important issue at the time. I must admit that I was not entirely overwhelmed by the Government’s enthusiasm for what I was saying, so no one is more delighted than me to see the inclusion of the words “industrial strategy” in the name of a Department.

There has been a sense of scepticism about industrial strategy. [Interruption.] That was more warmth than I received for my remarks in the Queen’s Speech debate. Industrial strategy has been given negative connotations. Let us consider British economic performance, for example, in the post-war period. Britain’s relatively poor record between 1950 and 1979 has generally been blamed on the lack of competition, with traditional firms being unwilling to adopt technological or process advances. Wilson’s “white heat” of the scientific revolution was replaced by a heavy reliance on the financial sector. Neglect in the past has seen a weakening of our supply chains and a huge shortfall in the skills that a world-class industrial base requires to satisfy both demand and opportunity.

We need to have a strategy and structure in place, a need made even more urgent following the EU referendum. In addition, highly capital-intensive advanced manufacturing requires long-term planning. There is a burden on companies to invest in skills and equipment, and a burden on the state to help create stability for long-term decision making—macroeconomic, fiscal and regulatory.

For manufacturing to grow, an emphasis needs to be placed on encouraging investment and greater long-termism. Although initiatives such as the midlands engine and the northern powerhouse are laudable, they need to be supported by strong tangible policy, and that policy will be less effective if it is piecemeal. For example, capital allowances were popular with industry, but were discrete in their design. A coherent strategy can work for the midlands, the north and the south, driving growth, building economies and providing sustainable employment and the subsequent reduction in community and individual inequalities.

Any new industrial strategy must fit the times we live in, the domestic economy, the global marketplace and developing themes such as Industry 4.0. In September 1965, the then Secretary of State for Economic Affairs produced the national plan, which sought to cover

“all aspects of the country’s economic development for the next five years”.

The plan was more than 450 pages long and looked at everything from the running costs of schools to the future development of the electronics industry. The plan was comprehensive in scope, but our economy no longer operates under such a structure and the plan would have negative consequences if replicated today.

The lack of success of documents such as the national plan does not mean that there should not be a national industrial strategy now for the UK, or that there is not a case for a coherent document to be drafted by the Government, outlining the support that they intend to give the sector and Departments. In countries such as Germany, long seen as a model industrialised nation, there has been little need for the Government to pin down formal strategies or statements because this philosophy is so entrenched and embedded in all activity. In Britain, there has been a tradition of volunteerism when it comes to economic organisation.

[Jeremy Lefroy (Stafford) (Con)]

Does my hon. Friend agree that in Germany, in the Kreditanstalt für Wiederaufbau—KfW—which has been in place since the late 1940s and provided long-term support to small and medium-sized enterprises, we have a model that could be replicated here, perhaps in the form of a UK investment and development bank?

[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.

[Mark Tami (Alyn and Deeside) (Lab)]

Does the hon. Gentleman agree that Governments have tended to intervene when a sector is failing, but they have failed to support a successful sector because we in this country step back and say, “Why should we support it? It’s doing fine on its own.”? Is that not one of the big problems that we have faced for many years?

[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.

[George Kerevan (East Lothian) (SNP)]

Will the hon. Gentleman way?

[Chris White]

I am sorry; I will not give way again.

Clearly, an industrial strategy needs to establish a framework—from how many children are studying STEM subjects at primary school, right through the industrially strategic pipeline to how many businesses are exporting. Where have targets been met, and where is further intervention required? As the strategy becomes more embedded, those things will not come as shocks, but more as minor adjustments to the levers of policy. We used to say quite a lot about the long-term economic plan. We need an economic plan, and underneath any economic plan, we need a strong and robust industrial strategy.

[Several hon. Members rose—]

--- Later in debate ---

[Chris White]

I am pleased to follow the shadow Minister. I was enjoying her speech, until it all seemed to go a bit wrong towards the end. Where I finished listening was where she said that she welcomed the Government’s initiative to have an industrial strategy. I am grateful to the Backbench Business Committee for providing time for the debate and to everyone who has had the opportunity to speak.

I take from the hon. Member for Aberdeen North (Kirsty Blackman) what she said at the beginning of her speech, which was that, basically, everyone had a different interpretation of what industrial strategy was all about. I do not think there is anything wrong with that. That is the purpose of this debate: to provide an opportunity for everyone in the Chamber who indicated a wish to speak to give their take on an industrial strategy.

I would go back one step further. I look forward to reading the book by the hon. Member for East Lothian (George Kerevan) when it finally comes out—I am sure that it will be selling round the corners. Until that time, I recommend anyone to read the book by Lawrence Freedman, “Strategy: a History”. It is important for us all to return to the definition of strategy. The shortest, most precise definition that I have come across is to get the furthest with the most. I do not think that is a bad foundation for this debate.

I would like to refer to my very good friend, my hon. Friend the Member for Bedford (Richard Fuller). I am sure that the House would agree that he was enjoying his speech far too much. He put a spanner in the works of otherwise consensual and positive debate with his desire to hold to the philosophy of a free-for-all—everything is for the best in the best possible world. I hope that he will come around to welcoming the pragmatic opportunities provided by the initiative that, through the Minister, is being formed. Discussion papers are being written. We are again going to be able to have our say, I hope. This matter will come back to the House for further debate. None the less, I imagine that all Members would agree that it is better to have this debate now.

[Kelvin Hopkins]

I much enjoyed the hon. Gentleman’s speech and agree with what he is saying, but the point that has not been answered is my point: low wages and flooding the market with cheap labour does not help investment. It keeps productivity at low levels. If we are going to see high investment in modern technology, we need to raise wages and stop flooding the market with cheap labour.

[Chris White]

I thank the hon. Gentleman for that intervention, but I suggest that a proper and full industrial strategy that looks at issues such as productivity would take those issues into account.

I thank all hon. Members on both sides of the House for their contributions, and I express my appreciation to the Chair of the Business, Energy and Industrial Strategy Committee for the work that it is doing on the issue.

Question put and agreed to.

Resolved,

That this House has considered industrial strategy.

Intelligence and Security Committee

Ordered,

That Richard Benyon and Mr David Hanson be appointed to the Intelligence and Security Committee of Parliament under section 1 of the Justice and Security Act 2013 in place of Sir Alan Duncan who ceased in accordance with paragraph 1(2)(b) of Schedule 1 to that Act to be a member of the Committee when he became a Minister of the Crown and Mr George Howarth who has resigned as a member of the Committee in accordance with paragraph 1(3)(a) of Schedule 1 to that Act.—(Michael Ellis.)

Fourth Industrial Revolution

Chris White Excerpts

Thursday 8th September 2016 Commons Chamber

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

May I, too, start by congratulating my hon. Friend the Member for Havant (Mr Mak) on securing this important debate? May I also say how delighted I am to follow the hon. Member for Hove (Peter Kyle)? I thank him, as a colleague on the Business, Innovation and Skills Committee, for yet another excellent contribution.

Industry 4.0—we all call it different things—is an extremely dynamic prospect and something that the UK must fully embrace in the years to come. I do not know whether we can talk about centuries to come, as my hon. Friend did earlier, but I know what he was trying to say. As the co-chair of the all-party group on manufacturing, I appreciate the importance of raising awareness of this topic, and this debate gives us a great opportunity to do so.

In my intervention in business questions this morning, I was pleased to be encouraged by the Leader of the House to raise the issue of industrial strategy with the Backbench Business Committee, and I hope my hon. Friend will join me in making that application.

Using technology to aid production is clearly not a new idea, but the advancement of digital and machinery in the last decade has brought to light the concept of this industrial revolution. The first saw the Victorians rapidly improving their wealth and their economic outlook, and we must not underestimate the ability of state-of-the-art systems to change and have a similar impact on the way we do things now. A particular point to stress is that other nations are advancing on this issue, and that is why we must keep up. Countries such as Japan and Germany are already understanding the benefits of these technologies, and we cannot allow them to have this window to themselves.

Through-life engineering services are one way in which we can help innovation to flourish in the UK. The aims of TES are to improve the availability, predictability and reliability of complex engineering products, to deliver the lowest possible whole-life cost. This is an area where we can take the lead. I recently spoke at the launch of the new TES national strategy, and such a focus on improving the design of systems is an important way forward.

More broadly, we need to act now to compete internationally. The adoption of cyber-physical systems that are able to collect data, provide insights and be used on a large scale in heavy industries is vital for the UK manufacturing sector moving forward. Machines using self-optimisation and self-configuration allow complex tasks to be completed in a way that dramatically increases cost efficiencies and delivers better quality.

The potential is obviously immense. Businesses will be able to streamline production, reduce waste, conduct rapid prototyping, exploit new business models and dynamically engage with customers in real time. A European Parliament briefing paper estimates that improvements in efficiencies of between 6% and 8% can be achieved and that, in Germany alone, industry 4.0 will add 1% of GDP to the economy.

One of the recurring themes from meetings of the all-party group is the need to plug the skills gap. As mentioned in the group’s submission to the Business, Innovation and Skills Committee’s inquiry into the productivity plan, the current level of skills in the UK is inadequate for the future success of manufacturing. Satisfying this need for high-level skills is vital for productivity and can be done in a number of ways. Firms need to invest in increasing capacity, and the flow of talented individuals into the workforce must be continuous, with apprenticeships a notable factor in making that difference. Industry 4.0 and its associated benefits are a way of speeding up that process and improving the outlook in terms of our skills shortage. I hope the Government can enhance their support in that regard.

The backing of the UK catapult centres is proving extremely successful. The Digital Economy Bill, which seeks to improve our digital infrastructure, is an encouraging indication of the Government’s commitment, but we should continue to look at all possibilities to secure the UK’s role as a leading research nation. Investment in R and D will encourage new production in the UK, as well as further reshoring. R and D tax credits have been a major boost, particularly for small and medium-sized enterprises.

Another recurring theme in discussing the future of manufacturing is the reshoring of production and the significant impact this has on the sector and the national economy as a whole. In enhancing our efforts, an increase in intelligent automation can be a significant driver of economic growth. With such a significant change, new business models should be analysed, and the adoption of the concept of industry 4.0 fully considered. The significant investment needed may hinder small and medium-sized businesses in the medium term, considering the high level of funding needed to pursue such systems.

There are also issues of data protection. With such technologies, the large volume of data used in production will obviously be sensitive. If competitors were to access the information gathered by smart machinery, profits could be squeezed. It is therefore imperative that legislation around data protection is tight before businesses can be confident about changing their business models.

To name just one more challenge that I see in the digitisation of the market, there is a concern that our talent pool will lack the necessary skills to operate machinery encompassed by the concept of industry 4.0. It is generally accepted that there is a shortage of experts in information and communications technology, and that may be more pronounced in terms of the need for cyber-security and the transfer of big data.

If we are to push forward with industry 4.0, we need to ensure that the whole system, including education and apprenticeships, works in harmony to provide the necessary skills. The industrial strategy is particularly relevant in that respect.

It is therefore clear that we have an incredible opportunity to rapidly advance manufacturing in the UK, and this debate is an excellent way of kick-starting the discussion around how we go about embracing these new technologies and how we overcome the challenges involved in doing so.