Manufacturing and SMEs

David Ward Excerpts

Wednesday 4th September 2013 Westminster Hall

[Mr David Ward (Bradford East) (LD)]

I will do my best to finish within five minutes or so, Dr McCrea.

Bradford is promoting itself as a producer city, but the truth is that it never ceased to be one. It sits alongside many other northern cities, including places such as Carlisle, and I congratulate the hon. Member for Carlisle (John Stevenson) on calling the debate; indeed, I thank him for doing so, because we cannot have enough debates on this subject, which is crucial not only to local communities, but the national economy.

As I said, Bradford never really stopped being a producer city. It suffered dreadfully in the 1980s recession, which almost decimated the city. Bradford did not always focus on textiles; it was, of course, the wool capital of the world, and it was a fabulously wealthy place. However, its manufacturing and engineering were devastated in the 1980s.

None the less, Bradford is still a producer city. Although we still lost 15,000, or 40%, of our manufacturing jobs during the 60-odd consecutive quarters of growth from 1998 to 2008—the golden years, in many ways—Bradford still exists, and it is a cruel rumour that Bradford is no longer a producer city. Some 1,200 manufacturing SMEs still provide employment for 15,000 people in the Bradford district.

With others, I recently set up the all-party group on textile manufacturing, because it is important to tell people that manufacturing, and particularly textile manufacturing in places such as Bradford, still exist, and spinning, weaving and scouring continue on a massive scale. There are no longer 2,000 people coming out of Salt’s mill or Lister’s mill, but many small businesses, particularly in the manufacturing and engineering industries, continue to thrive.

I wanted to speak in the debate because of two contrasting stories picked up in this week’s Yorkshire Post. The first concerns manufacturing. There is a really good story to tell across the whole Yorkshire region. The purchasing managers index for the latest quarter is 57.2, which is a staggeringly good figure. The previous figure—55—was thought to be really good. Fifty is what separates growth from decline; at 50-plus, however, we are talking about exceptional performance, so this is a really good story.

The paper carried out a survey, which tells us that employment has increased for the fourth month running, while output has risen at the fastest pace since July 1994. In addition, the paper included a Barclays survey showing not only that there is growth in output and employment, but that businesses have a real intention to invest for the future, with 54% planning to increase investment over the next 12 months. Some 63% plan to invest in new machinery, 62% plan to invest in new product development and 42% plan to invest in furniture, fixtures and fittings, and buildings. That is all really good news.

What, though, are the contrasting stories? On the same day, the Yorkshire Post included an article headed, “Optimism dims in the small business sector”. According to the article, a survey of 500 UK firms showed that most small businesses

“were still having problems accessing finance despite the introduction of lending schemes.”

A further article in the same paper, on the same day, was headed, “Funding plan still failing to help SMEs”. It says that although the Bank of England lent £1.6 billion through its funding for lending scheme in the last quarter, which is really good news, the bad news is that lending to SMEs continued to fall, shrinking by a net £583 million. The article continues:

“The scheme was revamped in April in a bid to boost the flow of credit to small businesses. But bank loans to SMEs shrunk 2 per cent during the quarter on a year earlier.”

Those are the two contrasting stories. We are all really excited about one, which is about the renaissance in manufacturing. That renaissance is taking place not just in certain sectors or certain parts of the country, but across the piece. It is showing itself strongly in domestic output, customer numbers and exports; that is the good news story. The worrying factor is that that is not getting through to our small manufacturing and engineering businesses, and they are still struggling. Despite Government schemes to provide finance for those businesses, they are waiting, their energy is pent up and they are ready to explode, but they are being held back by a lack of finance. The money is there, but it is clearly going to the bigger companies, which can always access finance from other sources. The companies that critically need the finance to enable them to carry out the investment intentions I mentioned are simply being denied it. Whatever the reasons for that, we need to crack this nut if these companies are to achieve their full potential and we are to carry out the rebalancing of the economy we are all so desperate to achieve.