Manufacturing (East Midlands)

Chris Williamson Excerpts

Tuesday 12th February 2013 Westminster Hall

[Mr Mark Spencer (Sherwood) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. It is also a pleasure to be here to discuss the manufacturing sector in the east midlands.

We have a great deal to be proud of. Nottinghamshire has been at the heart of manufacturing for centuries. Members will be familiar with brands such as Raleigh, which started in the city of Nottingham in 1887, but they might not be familiar with William Lee, the reverend who invented the knitting frame in the village of Calverton in my constituency, starting the industrial revolution. That is something of which we can be proud. We have many claims to fame.

[Chris Williamson (Derby North) (Lab)]

Will the hon. Gentleman concede that the world’s first factory was the silk mill in the centre of Derby?

[Mr Spencer]

I am keen that we remain as a team in the east midlands. I do not want to get into the Nottinghamshire-Derby rivalry, because—[Interruption.] I forget there are other counties in the east midlands.

As a region, we have a great deal to offer and a proud history. Many other Members will go on to talk about some of the great companies such as Toyota and Rolls-Royce in Derby. Of course, in the town of Hucknall in Sherwood more than 800 staff work at Rolls-Royce making parts for jet engines assembled in Derby. Rolls-Royce has invested more than £40 million in the Hucknall plant in the past 10 years, with more to come for the industrial estate.

Manufacturing is not only about greasy metal, but a range of different manufacturing processes, including drugs—we have Boots in Nottingham—food, hosiery and many other products to which value is added.

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[Jonathan Ashworth]

I thank my hon. Friend for a point he puts well. However, we in Leicester have fought off York and will certainly fight off his constituency when it comes to Richard III.

On balance, the lack of a major dominant conurbation is a strength for our region and its development opportunities, even if it does sometimes mean that we tend to lack a regional identity. That brings us one or two disadvantages that I will touch on in a few moments.

Although the debate has been conducted in a good cross-party spirit, there are problems in our economy, in the cities and former coalfield areas. Unemployment rates remain too high, and are much higher than they were at the 2010 election, even if they have come down a little in recent months. Youth unemployment rates are still too high. Let us be clear: we are seeing a huge squeeze on incomes and many changes to benefits, such as the bedroom tax and the council tax benefit changes. Regardless of the rights and wrongs of that debate, that will suck money out of the local economies of the east midlands. Household consumption will be depressed again.

In the past, Ministers have talked about wanting to rebalance the economy, and we would all agree with that. However, we would like more details about what that rebalancing means. I know that Ministers want to move away from an economy that is solely dependent on public investment and household consumption, towards one that is more in favour of export-led recovery.

[Chris Williamson]

Does my hon. Friend share my disappointment that, although the Prime Minister came with his whole Cabinet to Derby in March 2011 to make the point about the importance of rebalancing the economy towards manufacturing, three months later a decision was taken to appoint Siemens as a preferred bidder for the Thameslink rolling stock programme? Will he join me in calling on the Government and the Minister, even at this late stage, to think again about that decision? If they cannot reverse it, can they at least ensure that, whenever Government contracts are concerned, notwithstanding EU procurement rules and so on, they take appropriate steps to ensure that British manufacturing has a fair chance of winning them?

[Jonathan Ashworth]

I thank my hon. Friend; he is absolutely right. I want to pay tribute to the work that he has done on Bombardier. The Bombardier decision was tragic not only for Derby and Derbyshire, but for manufacturing in the east midlands. The whole supply chain was affected by it.

I agree that trade and increasing exports are an important part of the rebalancing of the economy that we want to see, and supporting our manufacturing base is vital to our exports. The regional growth fund is supposed to be part of driving that rebalancing, as my hon. Friend the Member for Nottingham South (Lilian Greenwood) mentioned, yet, consistently and sadly, the east midlands has lost out. In round 1, £450 million was allocated. The east midlands made up 13% of the bids and won just 4% of the successful awards. In round 2, £950 million was allocated. The east midlands made up 11% of the bids and was given just 8% of the awards. In round 3, over £1 billion was allocated to private sector projects. East midlands was allocated just £14 million, or 2%.

Frankly, that is not good enough. Given that manufacturing is so important to the east midlands region, and that it is the leading region in manufacturing, why are we not getting a fair deal on the regional growth fund bids? I would be grateful if the Minister said a word or two about that. It has been suggested in the media that the quality of our bids was not good enough. I do not accept that, given the strength of our manufacturing base. To be honest, it is a bit of an insult to our manufacturers.

Will the Minister outline some of the criteria by which those bids are judged? He will no doubt be aware of the National Audit Office report that has cast doubt on the objectivity of the criteria. The NAO argued that,

“a significant number of projects in the first two rounds performed relatively poorly on criteria such as the amount of additional employment supported and the ratio of economic benefits to public costs”.

Will the Minister shed some light on why the east midlands has done so badly? Some have suggested that the reason is that a lot of the bids have focused on the cities. The Department for Communities and Local Government has been keen to focus growth through the core cities initiative. For example, 47% of round 2 of the regional growth fund money went to core cities. Leicester, of course, went along with the great vision of the Secretary of State for Communities and Local Government and the Prime Minister. We went for the directly elected mayor model; not many places did. Although we are now in discussions about a core city deal, we were left out in the first round, although parts of Nottinghamshire and Derbyshire have been covered by a city deal. That has meant that the majority of the east midlands region has been left out. Perhaps that is another reason why we have not done so well at getting our fair share of regional growth fund money.

We no longer have a regional development agency, and I do not think that my party is arguing for its return. There may be such an argument, but everyone accepts that the development agencies have gone, and it is not our policy to argue for their return. Given that the east midlands region has 36 local authority districts, five county councils and four unitary authorities, that fragmentation leads to a lack of a consistent voice on such matters. I do not necessarily know the solution, but we should all be banging the drum as a group of east midlands MPs. We must think about what more we can do collectively to ensure that our region gets its fair share of bids.

I am conscious that I am taking a lot of time. I want to say a couple of things quickly about Leicester. It is a city with a strong manufacturing base and deep links, as everyone will know, with India, Bangladesh, east Africa and Pakistan. In Leicester, we have manufacturers exporting to those parts of the world. Asian food made in Leicester is exported to the middle east, Europe and India. When I meet exporters, they tell me of the difficulties of accessing export finance, especially for smaller volume exporters. When people raise UKTI issues with me, they talk about the fees involved in the overseas market introduction service. One matter is always being raised with me: given that cities such as Leicester have communities with deep cultural ties to parts of the world where we now want to export more, should the Department for Business, Innovation and Skills not be doing more to work with organisations such as Leicester’s Indo-British trade council and other groups to leverage the expertise of those communities?

Finally, I want to mention our higher education sector. De Montfort and Leicester universities do great work linking with local manufacturers. There are lots of great examples of how they are adding value to many firms and supporting our manufacturing base. Most of those projects, however, do not lead to any financial benefits to the universities. Given the importance of such projects to our economic future, will the Minister think about financial incentives to support the HE sector to link up more with manufacturers? I know that De Montfort university, having done a lot of projects in the past, is now thinking of scaling back, as such work is not in its financial interests.

Given that the HE sector is so important to our economy and exports—worth £15 billion nationally—will the Minister, who was brought in with great fanfare and was going to shake things up, deal with the crazy policy of the immigration cap on student numbers, which is doing huge damage to our economy? We need to support our HE sector at the moment.

[Andrew Bridgen (North West Leicestershire) (Con)]

I, too, would like to congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing the debate. I very much enjoyed the evident passion and pride in his speech and his enthusiasm for manufacturing, quite rightly not only in his constituency but across the whole east midlands.

I had better declare an interest, Mr Hollobone. I am the non-executive chairman of a fresh food processing company based in my constituency. I founded the company 25 years ago with my younger brother with £1,000, and it thrives today, turning over in excess of £25 million and employing more than 200 people.

My constituency has a rich history in manufacturing, and that continues to this day. We have a diverse range of manufacturing output, from two of the leading brick manufacturers in the country to high-tech companies that are enjoying record rates of expansion. There is no doubt that the UK economy needs rebalancing, regionally and in terms of production, after the previous Government’s dependence on financial services and the public sector led to the record deficit that was bequeathed to the coalition Government.

[Chris Williamson]

Does the hon. Gentleman agree that there is a symbiotic relationship between the public and private sectors, and that many in the private sector—particularly small and medium-sized enterprises—rely on public sector procurement? Does he agree that it is important that where local authorities and other public sector bodies are letting contracts, they look, wherever they can, to support SMEs in their local economy?

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[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

I repeat what hon. Members have said in welcoming you to the Chair, Mr Hollobone. I, too, congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing this debate. As he said, the east midlands has a long, proud and—as we have learned—historical tradition of manufacturing, which is vital not just for UK manufacturing but for growth in the wider economy. Its location at the geographical heart of the UK, an abundance of natural resources, and a spirit of invention put the east midlands at the centre of the industrial revolution. As we have heard, inventions that have come out of the region include the jet engine, ibuprofen, DNA fingerprinting and the MRI scanner. My hon. Friend’s constituency has a long history of mining, and it has been home to Rolls-Royce since the 1940s. The food and drink industry is a major employer there, and it has a strong record of productivity.

Nobody in this debate has been under any illusions about the scale of the wider economic challenges we face as a country. The continuing sovereign debt crisis in the eurozone is affecting the real economy and depressing demand, which has caused uncertainty for British businesses and damaged some of our manufacturing output. That damage was already pronounced under the previous Government, which presided over the fastest ever decline in manufacturing as a share of the economy: manufacturing fell by nearly 10% as a share of gross domestic product, and almost 1.7 million jobs were lost in the sector. Under this Government, manufacturing’s share of GDP is growing again and our manufacturing capability is increasing in quality—nowhere more so than in the east midlands.

[Chris Williamson]

Will the Minister give way?

[Michael Fallon]

I will not.

I had the pleasure of visiting Toyota’s factory at Burnaston near Derby last week, and I saw for myself how a world-class work force in a cutting-edge facility can produce workmanship that is second to none. Earlier last week, I also met Rolls-Royce to hear its plans for the future. To kick-start the recovery, the first thing we had to do was to tackle the deficit, but we have not focused only on that. We have taken a wholly proactive approach to unlocking growth, reducing the red tape that holds back business and creating a competitive tax system so that businesses choose to locate and grow here.

In the autumn statement, the Chancellor of the Exchequer announced multiple measures to encourage greater investment in manufacturing. There will be a significant temporary increase in the annual investment allowance from £25,000 to £250,000. An additional £210 million will be added to the £2.4 billion regional growth fund until March 2015. There will also be an extra £120 million for the advanced manufacturing supply chain initiative. Let me reassure colleagues that the Government have never been clearer in our commitment to manufacturing, which we see as an essential building block of a more resilient, innovative economy.

A greater proportion of the east midland’s economic output comes from manufacturing than in any other English region or part of the UK. Some 12.3% of the work force are employed in manufacturing, compared with 8% across the UK. The region has a positive balance of trade in manufactured goods, and the latest figures are expected to show that it achieved its highest annual level of exports in 2012, worth some £18 billion. The iconic names that are at the heart of the region’s manufacturing base—Rolls-Royce, Siemens, JCB and Toyota, to name just a few—employ thousands of people directly, and are at the centre of the network of hundreds of smaller businesses that make up their supply chains across the region. As we have heard, the region has a thriving sector of small and medium-sized enterprises working in the advanced manufacturing supply chain, and in the automotive and aerospace supply chains in particular.

Last week, I met the private sector chairs of the region’s local enterprise partnerships and some council leaders from the east midlands. I was impressed by the common sense of purpose across the public and private sectors, across political divides and even across traditional geographic rivalries. I saw for myself the determination to ensure a strong recovery for all parts of the east midlands and to tackle some of the barriers and bottlenecks that they have identified.