Outsourcing of Public Services

Chris White Excerpts

Tuesday 18th December 2012 Westminster Hall

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

I called for a debate this afternoon on the outsourcing of our public services. I am grateful to Social Enterprise UK, in particular Celia Richardson, for putting together the report, “The Shadow State”, and for raising this important matter and providing fresh insight.

Although politicians can easily become fixated on the high-level discussions in politics, we need to remember that one of the most important roles of government for most people is the provision of high-quality, front-line public services. Over the past 200 years in Britain and throughout the world, Government have become more and more central to the delivery of services vital for millions of people: health care, child care, policing, prisons, helping people back to work, education and transport are just a few of the areas that the public sector reaches. Since 1945, Britain has seen a vast centralisation of such responsibilities away from the local level and from independent organisations and towards central Government. In 2010 prices, the budget has gone from £234 billion in 1945 to £660 billion.

A large proportion of the budget has been spent on public services, and we have seen massive improvements in many areas. I am proud of some of the achievements that have been secured, but we face difficult economic times and cannot expect to keep spending large quantities of money in order to increase the quality of public services. The vast structures of the public sector, which were appropriate in the 1940s and ’50s, are now starting to struggle to deliver the improvements in services and the productivity increases that we need for the decades ahead.

Over the past 20 years, Governments of all colours have increasingly turned to the private sector for delivery of public services, in order to reduce costs and to provide better outcomes. Oxford Economics has estimated that the current outsourced market for public services has an annual turnover of £82 billion, representing 24% of the total spend on goods and services by public services. Rightly, therefore, in July 2011 the Government released their “Open Public Services” White Paper, which sought to lay out the future direction of public services through five key principles: first, wherever possible to increase choice; secondly, to decentralise public services to the lowest appropriate levels; thirdly, to open public services to a range of providers; fourthly, to ensure fair access to public services; and, fifthly, to make public services accountable to users and taxpayers alike.

[Jim Shannon (Strangford) (DUP)]

Is the hon. Gentleman aware that a recent Confederation of British Industry report stated that more opportunity for private and independent sourcing of public services could produce savings of £22.6 billion, while maintaining the quality of service? Is that what we should be looking at?

[Chris White]

I appreciate both the point made by the hon. Gentleman and the CBI’s report. I will be coming to some of those issues later in my comments.

I support those five principles, which I am confident that Members in all parties support as well. The Government have been clear that they are seeking to increase the amount of public services delivered by independent organisations. Seymour Pierce has predicted that the value of the public services sector will increase to £140 billion by 2014. That is a huge amount of public money and, rightly, we should be concentrating on how that money is spent and on how we ensure maximum benefit for our community. A concern, however, is that the principles outlined in the “Open Public Services” White Paper, to make our public services more accountable, more transparent and more in the control of communities, have not been realised in practice.

One deep concern is explained in the Social Enterprise UK report, “The Shadow State”, which has highlighted a significant lack of transparency and accountability, with information from those delivering our public services hard to come by. It also highlighted the increasing dominance of our public services by a small group of large multinational businesses and the difficulties that small business, charities and social enterprises have experienced in accessing provision of our public services.

[Richard Fuller (Bedford) (Con)]

My hon. Friend is a champion of social enterprise in the House, and we pay great tribute to his work. He is making a point about large private sector organisations. Is he, like me, sceptical about the big state, but also sceptical about big private corporations? The Government are making some strides in promoting local organisations, but does he believe they are being somewhat timid in their agenda to promote social enterprise locally?

[Chris White]

My hon. Friend is also a champion of such issues. My speech is about that very subject: the change from public sector monopolies to, perhaps, private sector monopolies. We should be sceptical about that, as he said.

We need to be clear that, if we are opening our public services, we are doing so to achieve what is best for our communities, in a way that gives choice to commissioners and service users and that ensures appropriate levels of accountability. Unless the Government are able to deliver on their principles, we will not get the outcomes that we want from public sector outsourcing.

Over the past two years, through my work on the Public Services (Social Value) Act 2012, I have had the opportunity to speak to many community organisations and social enterprises about the Government proposals for opening up public services. Most are keen to engage in the process and to deliver services that are important to their local community. There appears, however, to be a number of obstacles to their involvement, some of which have been highlighted in the report.

First, the size of many contracts is a problem. I appreciate that commissioning on a large scale can create efficient economies of scale, but those are not the only economies that we should be focusing on; the most useful economy is secured through successful outcomes. Large contracts do not always lead to better outcomes, and can increase costs in the long term. For example, the UK Border Agency issued £1.7 billion in contracts for asylum-seeker services in March this year, but each of the contracts was for more than £100 million, completely locking out our charities, social enterprises and small businesses. The Work programme, in which £3.3 billion of contracts were awarded, saw one quarter of the contracts go to one company. That is not the opening- up of public services. Only a handful of organisations can bid for contracts of such size. More accessible contract sizes would go a long way to change the situation, as well as enabling a larger degree of social value, as such contracts are able to target additional benefits to be created through the commissioning process.

Secondly, there is an issue of governance and transparency. Despite extensive research, it is difficult for the public to access information about many public sector contracts. If I or my constituents have questions about state-delivered public services, we may ask questions in this place or through correspondence with Departments to get the appropriate answer. Private companies, however, are often not so willing or forthcoming with information, leaving a sense of unease among the public. Only greater levels of transparency and accountability can change that. I fully support the Government’s efforts to provide details on public spending over £100,000 at both central and local government level. That transparency should and can be extended to all public service providers. We cannot have one rule for public sector organisations and another for private sector providers. I appreciate that some information will be commercially sensitive, but I am confident that we can find a method that balances the public’s right to know with commercial privacy.

There should also be a central register of public sector contracts, both local and national, that are being provided by independent organisations, whether private sector companies, social enterprises, or charities, both past and present. That should outline the size of the contracts, their length, the expected outcome, and information about their success. All that should be online for ease of public access, and would not involve significant cost, because such information should be collected by commissioners in the regular course of their work. That would enable the public to see not only who is providing what services, but how successful providers have been, and could be a useful tool for commissioners.

The Government have rightly championed the cause of transparency to improve our public services, but that must be carried out across providers. I hope that the Government will work with commissioners, private businesses, charities and social enterprises.

[Richard Fuller]

My hon. Friend is making a good point about the role of national Government and supporting local commissioners. Is there a role for national Government to name and shame commissioners who are too slow in opening up to local providers, and to name those who are doing a good job and are at the forefront of the breakthrough of social enterprise, but shame those who just want the default of taking what had been a public service and giving it to the large national contractors?

[Chris White]

Absolutely. Naming and shaming is always a useful tool in such circumstances. Our commissioners should be encouraged to have a greater sense of urgency in dealing with such matters.

The Government have rightly championed the cause of transparency, and public sector commissioners should take a closer look and a closer interest in the corporate structure of the organisations they are commissioning from. Traditional large multinational companies may have some advantages, but the social enterprise model may also have the potential to deliver better outcomes for our communities. At a time when we are seeking to spend every penny possible on better outcomes, there is concern that traditional private sector models that seek to deliver large returns for shareholders may lead to money seeping out of our public services that might otherwise be spent on improvements to those services.

Social enterprise combines the need to deliver profitability, to innovate and to deliver better outcomes with a sense of community purpose. Not only that, but most social enterprises reinvest their profits either back into the services they provide, or into the communities where they are based. Moreover, through the structure of community interest companies, which are a model that many social enterprises are adopting for public service delivery, communities are directly involved in the governance of the organisation. That gives communities greater levels of accountability than if those services are provided by larger organisations with less accessible governance structures such as multinational corporations. Sometimes that will not be possible, but the Government should encourage commissioners to be creative and to experiment with differing governance needs.

Thirdly, the Treasury can help directly by ensuring that small businesses, social enterprises and charities can have access to the finance they need to bid for these contracts directly. The creation of Big Society Capital has been an excellent example of the Government taking a direct approach to stimulate the social investment market, and social impact bonds also have great potential. However, those methods do not resolve all the issues that are in the way of civil society organisations, which is why the Treasury’s internal review of social investment is so important.

We must ensure that we create a new climate of confidence in the social investment market, so that mainstream lenders and institutional investors feel that they can participate. Big Society Capital is an important step forward, but on its own it will not be able rapidly to expand the social investment market. That will take place only when our banks, pension funds and venture capitalists take a full part in the market, so I hope that the Minister will give us an update on the progress of that internal review, and the main policy areas that the Government seek to address. Broadening community investment tax relief into social investment tax relief that gives incentives for direct investment into social enterprises and their intermediaries could be transformational, and relatively inexpensive.

The report—“The Shadow State”— highlights a number of key policy areas, such as child care, prison, welfare to work, and adult social care, which need to be addressed. The report is constructive and proposes solutions. I hope the Minister will take the time to read the report, and I am happy to give him a copy if he has not already read it.

As we embark on a change in how we deliver our public services, it is vital that we do so in the right way so that the public feel engaged in the process and we deliver services not only with the best outcomes, but in the right manner. Confidence in our public services is important because, without confidence, there is a danger that people will not access the services they need, leading to more expensive interventions down the line. Communities need to feel a strong relationship with the provision of those services, and that is why social enterprises, charities and small businesses are often better placed to deliver them.

The Government have rightly identified a problem in our banking sector about institutions that are too big to fail, yet there is a danger that by relying on a small clique of large multinational organisations to deliver our public services, we end up creating the same problem in public service delivery. The way to combat that is through changing the contract process so that we make contracts more winnable for smaller organisations, helping to build supply chains that are resilient and have a plethora of providers. That will not only reduce costs in the long term through proper competition on costs, but will spur forward innovation and enable greater personalisation and localisation of services.

The White Paper, “Open Public Services”, was a step in the right direction, building on a set of principles that have wide-ranging consensus. All parties went into the election promising to open the door for delivery of our public services, particularly to social enterprises, mutuals and charities. We must now all work together to ensure that implementation matches the rhetoric.

“The Shadow State” report has been useful in helping to refocus minds in this debate, and we must consider the issues now, while we are in the process of reform. We have a fantastic opportunity to change our public services for the better, to realise a future in which people feel ownership of the services they are using, and to spur innovation and creativity. The Government have rightly seen the need to reform public services, despite a period of considerable economic difficulty, but we now need to deliver on the principles that we have outlined.

[Jonathan Lord (Woking) (Con)]

I congratulate my hon. Friend on an excellent speech, and on his leadership in this matter. This debate contrasts enormously with another on the same subject in which at least two Opposition Members were decrying any involvement of private companies in the public sector. My Surrey community health care contract has gone to Virgin Care, and even within the first six months of operation, using much the same staff, but lifting the bar and using new working methods, the average waiting time for referral for a first appointment has gone down from 31 days to 19 days, and the waiting time to see a community nurse has gone down from seven days to two days. Customer satisfaction has risen from 71% to 82%. Is that not the sort of improvement that, if it were across the whole public sector, would do enormous good for all our residents?

[Chris White]

My hon. Friend makes a good point, and we should applaud such improvements. The same team is delivering the same products and achieving very different results. We should be able to see that across the sector.

To conclude, I hope that the Government will engage with all sides and work with our civil society organisations to help deliver our public services. We have a window of opportunity; let us use it.

Small Charitable Donations Bill

Chris White Excerpts

Tuesday 4th September 2012 Commons Chamber

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

I am pleased to follow the hon. Member for Banff and Buchan (Dr Whiteford), because of what she said and the many excellent points she made.

Let me begin by congratulating the Government on introducing the Bill and the measures in it that will help our small charities. Like many hon. Members, I spend a lot of time visiting some of the fantastic local community organisations in my constituency. Most are small, with only a handful of people working and volunteering in them, but they make a big difference, and I am always impressed by their passion and dedication. However, these are difficult economic times, and it is the smallest charities—organisations that rely on perhaps a few thousand pounds in donations and grants each year—that are coming under the greatest pressure, yet they make up the backbone of our civil society. They generate hundreds of thousands of volunteering hours every year, and are often set up to champion local issues and causes that might not be considered by the Government or the big charities. I am thinking particularly of local community facilities and local environmental charities.

Despite the fact that more than half of all voluntary organisations are micro in size—that is, with less than £10,000 income—they receive only 0.6% of the total income of the voluntary sector. There are 474 major organisations—those with an income of more than £10 million—that take in nearly half of all voluntary sector income: about £17 billion in 2009-10. In contrast, 87,683 micro voluntary organisations shared just under £240 million. So, when the Chancellor announced last year that he was going to make gift aid easier for small charities to claim, thousands of organisations across the country were delighted with the news.

It is often difficult for charities to get gift aid declarations for small cash donations, and a top-up payment scheme will provide a real incentive to smaller charities to get out there and seek new ways of raising funds. The British public are incredibly generous. I know that at first hand, as I am proud to say that Leamington was named the most generous town in the UK by Oxfam last year. In 2009-10, charities made nearly £8 billion in individual donations, including gift aid and membership subscriptions. That is equivalent to about 0.5% of our gross domestic product.

The intentions behind the Bill are to be applauded, but there remain a number of concerns about the details, and I hope that the Government will pay close attention to the submissions that have been made by the Charity Finance Group and the National Council for Voluntary Organisations. I know that the details will be dealt with in Committee and on Report, but I would like to touch on just a few of the Bill’s provisions.

First, concern has been expressed about eligibility. Charities will have to have claimed gift aid for three years before they can take advantage of the scheme. That is a long time for many smaller organisations to wait, and if we are going to encourage smaller charities to get on board, we need to reduce that time or at least create a probationary period so that the Bill can make an impact in the shorter term.

Secondly, there is concern about the matching principle. I understand that the Treasury wishes to target the scheme, and to link the amount of gift aid that can be claimed to the amount that charities have already claimed in a year, but that provision will disadvantage many of the smaller charities that we are trying to help. A 2:1 matching principle will benefit only those charities that are already good at claiming gift aid. It will not encourage those that do not have the necessary resources to do so. I hope that the Government will consider scrapping that provision, so that we can encourage as many small voluntary organisations as possible to take part in the scheme.

Thirdly, there are concerns about the community building rules. I appreciate that the Government are keen to ensure that charities do not abuse the scheme by splitting into smaller organisations, and to ensure that independent local groups that are part of small charities are not excluded from the scheme. However, the rules might have unintended consequences. For example, they could disadvantage charities such as support groups that work with vulnerable people.

I am confident that those details can be ironed out, and that if all parties work together in a constructive, non-partisan manner, we will get the legislation on to the statute book in a form that prevents abuse and ensures that benefits are targeted at those organisations that need them most. Time is of the essence, however, and we should not make the voluntary sector wait too long for the scheme to come into effect. I hope that all parties will therefore ensure that the Bill gets a speedy passage through this House and the other place while also ensuring that its provisions receive proper scrutiny.

The Bill could make all the difference for small charities up and down the country, so I have no hesitation in giving its Second Reading my full support. I look forward to discussing it in more detail when it comes back to the House, and showing that, despite the challenges our country faces, we still appreciate and support the invaluable work that these organisations do.

Community Banks

Chris White Excerpts

Tuesday 10th July 2012 Westminster Hall

[Guy Opperman]

I completely agree with my hon. Friend and I entirely applaud the Government’s approach—by way of the Vickers report—to addressing the problems with the larger banks. Everyone can see that there is a fundamental problem with large banks and their failure to lend. The fact is that they are almost operating as a monopoly; the largest six banks run the show completely.

The other end of the telescope and the other end of the problem is the lack of local banking. My hon. Friend talks about a two-tier banking system and I agree that, instead of having a single monolithic and almost monopolistic banking structure in which only the five or six big banks lend money, we need the larger banks—of course—but we also need the smaller banks operating at a local level.

Quite frankly, we have lacked that system in this country. Ever since the 1930s, approximately, the banks and building societies in the UK have become ever larger as some of them have been swallowed up by their neighbours and by their more predatory rivals. Consequently, we have gone from having a large variety of banks and building societies to having fewer and fewer banks and other organisations working in the banking community. Of course, that has the effect of reducing competition, reducing the ability for a new entrant to gain access to the market and reducing the ability of businesses to gain access to credit.

I must stress at the outset of my speech that the present crisis in banking and in bank lending is not in any way the fault of local branch staff. I assure the House that those staff are just as frustrated as I am at their inability to run accounts as they used to in the old days. I come to this particular debate with a background in business and with two years of experience as a constituency MP in Northumberland, where I have repeatedly seen decisions on lending being made by a Hexham bank manager, or another local Northumberland bank manager. Those decisions then become part of the responsibility of the credit risk team whenever there is any difficulty with the account.

If an individual SME has a problem with its account, such as a bad debt or a problem with cash flow, it is almost impossible for it to go back to the same manager and argue the case that it is a viable, proper business going forward. That is because the decision-making process has been taken away from the individual local bank manager in Hexham, Ponteland or wherever. What happens now is that the decision is not even taken in Newcastle or anywhere else in the north-east but by a credit risk team that is many miles away. I have attempted to go to those credit risk teams to make a case, but of course it is almost impossible to do so. That system must change. Again, I make it clear that what I am saying today is not a criticism of local bank staff who are working throughout the country. It is a criticism of the board members in London, who seem to have totally forgotten their fundamental role.

I was interested to see that the Leader of the Opposition has commented on banking in the last few days. Like the Church, we always welcome new converts, given the past record. However, the necessary reform of the banks is being left to this Government, as we bring the banks to heel with the Vickers report, clear up the LIBOR mess and implement a much stronger system than the light-touch regulation that we saw before.

Change will not happen without competition. Yesterday the Leader of the Opposition was extolling the need to create more competition for our banks. However, on 23 April in the Financial Services Bill Committee the Opposition voted to prevent competition in banking. I was present for that debate, which saw the Opposition introduce amendment 28, which would have deleted clause 5 of the Bill, thereby deleting the requirement for enhanced competition. So I must ask the question: how can one be in favour of local banks while stopping competition?

The Leader of the Opposition is also out of touch if he thinks that the answer to this banking crisis is to force banks to close some of their high street branches. That is hardly what the voters in my part of Northumberland are crying out for; that much is certain. Residents in Haydon Bridge and Haltwhistle who are losing their local bank branches will tell the Leader of the Opposition that the problem with the banking sector was casino banking and greed, and not—as we heard from Labour this week—having too many local branches. My constituents want to see local branches providing a local service.

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

I congratulate my hon. Friend on securing this debate. I would like to know his thoughts on how our local communities can hold these banks to account. Although having local community banks is an excellent idea, if we create smaller banks out of RBS how can we ensure that the local communities will have control over those banks’ priorities? In my constituency, industries such as the green energy industry and the video games industry have big potential for growth. How can local communities ensure that local banks are given the mandate to tailor themselves to local business needs?

[Guy Opperman]

The reality is that Hampshire, for example, has done what I am talking about and set up the Hampshire bank, or Hampshire Trust. It is backed by the local chamber of commerce and by local authorities. It is regulated, so it is possible to have a county bank that is regulated, but on a lighter-touch basis—I use that phrase again—than the larger banks such as Barclays or HSBC. Moreover, if we broke up RBS, which I will come on to discuss, the individual shareholders would have a say in a local county bank.

How do we create local banks? First, one must address the barriers to entry, which are considerable. Metro Bank has recently been established in London and the south-east, but only at huge cost and only after overcoming many hurdles. The example of the Hampshire bank shows that county banks can be created. I see no reason why we cannot do the same in Northumberland, or in the wider north-east region, and set up “The Bank of Northumberland” or “The Bank of the North-East”.

However, the truth is that a banking licence is notoriously difficult and costly to obtain. To try to remedy that situation, along with my hon. Friend the Member for Chichester (Mr Tyrie), who is the Chairman of the Treasury Committee, I met the chairman of the Financial Services Authority, Hector Sants, at the beginning of March. My hon. Friend and I sat down and tried to explain the problems to Mr Sants, and I am pleased to say that under this Government the FSA is considering trying to reduce the barriers to entry for smaller local banks.

On 12 March, the FSA’s chief executive wrote to me:

“We are conscious of the balance to be struck between ensuring high standards at the gateway, and the importance of allowing innovation and appropriate levels of access for new firms.”

He added:

“there has been public debate about the potential advantages of new entrants in the area of small, regional banks focused on servicing the SME sector. In such cases we will be proportionate in our approach and would invite all firms with a viable business model and appropriate levels of resources to a pre-application meeting to help guide them through the application process”.

In those circumstances, and with the background of a banking crisis, we need to look at the elephant in the room that is the Royal Bank of Scotland. The Government are understandably impatient to sell the 83%-nationalised bank, but the health of the public finances ultimately depends on the health of the economy, which itself rests on the stability and usefulness of the banks.

The taxpayer bail-out and the subsequent problems of RBS are well documented, and it now seems clear that the chances of the Government selling RBS as it is, and making a profit, or anything like one, are but a dim flicker at the end of a long tunnel. What the Government did with Northern Rock was undoubtedly the best option and the only real one, but RBS is different. I see RBS as an opportunity—as the Americans often say, “Don’t waste a good crisis.” We have a unique opportunity to seize the moment, and to ensure that RBS is managed for the benefit of the taxpayers, who own 83% of it, thereby transforming the banking sector. I suggest that we do not sell RBS as it is, but break it up, decentralise the branch management and use it to form the basis of devolved local community banks—imagine a local bank for every city or county—linked, where possible, with the local authorities and chambers of commerce.

Jobs and Growth

Chris White Excerpts

Thursday 17th May 2012 Commons Chamber

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

I am grateful for the opportunity to speak in this important debate. All too often, when we talk about the economy we speak in terms of GDP figures, confidence indices and the like, and they are very important, but we should always remember that this is about people’s lives and aspirations.

Employment in Warwick and Leamington has held up well over the past few years. In May 2010, 2,002 people were claiming jobseeker’s allowance. In March 2012, that had fallen to 1,646. Warwick and Leamington has climbed nearly 100 places and has gone from having the 414th highest level of unemployment among constituencies in the UK to having the 507th. I believe that that is a tribute to the inventiveness of our local businesses, the hard work of our local jobcentres and the determination of local residents to find work. However, while there is reason for optimism, we must also be aware of the challenges.

The number of those claiming JSA over the past 12 months has risen from 265 to 310 and although that figure has fluctuated, it makes it clear that we need to continue to build an economy that can create long-term and sustainable jobs, particularly for our young people. It will not be surprising to Members to learn that, as the co-chair of the associate parliamentary manufacturing group, I believe that manufacturing is the key to creating that sustainable labour market.

Although we all agree that there needs to be economic growth, we do not wish to achieve that through just any type of growth. We should not think of our situation merely as a short-term problem that needs short-term solutions, whether that involves stimulating demand or supporting the supply side.

Manufacturing is best placed to support the objective of increased employment for a number of reasons. First, manufacturing is strongest in those areas where private sector employment has been weakest. In the midlands, the north, Scotland and Wales, manufacturing occupies a bigger part of the economy than in London and the south-east. If we can increase manufacturing growth, it is likely that employment gains will be better spread across the country and we will tackle those parts that have traditionally suffered from structural unemployment.

Secondly, the nature of manufacturing is changing. It requires greater skills and higher levels of education. The UK Commission for Employment and Skills estimates that by 2017 the percentage of manufacturing jobs in high-end occupations—mostly degree-level employment—will rise from 27% today to 37%. That means there will be about as many people in high-end occupations in manufacturing as there will be in low-end occupations.

Thirdly, work within manufacturing is often higher paid than that in services. Average weekly earnings, including bonuses, in the manufacturing sector were £532 compared with £449 in the services sector. Finally, manufacturing jobs have a significant spillover effect into other parts of the economy. They enable the creation of services and other sectors around those jobs and help to provide pillars on which other parts of the economy can build. That increase in manufacturing employment presupposes manufacturing growth, and while I do not have the time to consider that in this speech, it is something to which I hope to return in the near future.

If we want to prepare our work force, and particularly our young people, for work in manufacturing, we need to ensure that we take steps now to support that aim. One of the best ways that we can do that is to support apprenticeships. However, we must ensure that they are the advanced and higher levels of apprenticeships so that we meet the increase in the number of higher level positions. According to the latest data, there were 200,300 apprenticeship achievements in 2010-11. However, only 1,000 were higher level apprenticeships. The number of advanced level apprenticeships completed was around 33% of the total and we need to ensure that, as we increase the total number of apprenticeships, that figure is not diluted.

The best way to support jobs and growth, however, is to give more support to our small and medium-sized manufacturers so that they can take on new employees. More grants should be given to small and medium-sized enterprises and manufacturers to train the new staff they hire, particularly those who have been long-term unemployed or who are aged between 18 and 25. Unlike larger businesses, SMEs often are not able to rely on the economies of scale that can reduce training costs. This presents a significant barrier not only to increasing employment but also to growth. I hope that the Government will look at ways of increasing the support we can give to SMEs in this regard with greater financial incentives for those higher-end qualifications that will become more important in the years ahead.

I believe that any long-term improvement in our economy has to be built on manufacturing if it is to be sustainable and create the kind of jobs we need to diversify our labour market. Increasing our manufacturing sector and reskilling our labour force will not be quick or cheap but that does not make it any less necessary. Although we face times of public stringency, we should not defer investment. That will only mean that we have to wait longer for the rebalancing to happen. I am confident that if both sides of the House can work together, support the manufacturing agenda and provide the long-term political buy-in that the industry wants in order to make long-term investment decisions, we can achieve the outcomes that we all want.