Industrial Policy and Manufacturing

George Freeman Excerpts

Thursday 22nd November 2012 Commons Chamber

[Mr Iain Wright (Hartlepool) (Lab)]

This has been an important, passionate and, dare I say it, industrious debate. I thank the Backbench Business Committee for choosing the topic, which is very much in the long-term economic interests of our country and I particularly thank my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) and the hon. Member for Warwick and Leamington (Chris White) for the manner in which they advanced their arguments. I look forward to hearing the hon. Member for Burnley (Gordon Birtwistle).

I pay tribute to the excellent maiden speech that we heard today from my hon. Friend the Member for Corby (Andrew Sawford), as one by-election victor to another. I have known him for a very long time and he has always been passionate about manufacturing, industry and his local area. He was extremely gracious to his predecessor, as the whole House will have recognised. He mentioned his passion for co-operatives and co-operation. That is a necessary value in an industrial strategy. Industrial policy is often simplified or dismissed as picking winners, but it is fair to say that in my hon. Friend the people of Corby have definitely picked a winner.

I will be as quick as I can, because there is an awful lot to get through after such an important debate. It is clear from this afternoon that there is a welcome consensus about the need for an industrial strategy with manufacturing at its heart. We in the north-east know all about the importance of manufacturing. Both advanced and emerging nations are repositioning or developing their industrial and manufacturing capabilities—we have just heard from the hon. Member for Stroud (Neil Carmichael) about Leipzig—with the aim of enhancing comparative advantage for their key sectors and maximising opportunities for growth.

We should not blindly follow our competitors into the latest economic fashion. We cannot replicate off the shelf the German model, still less the Singapore model, but it is clear that in the 21st-century global economy, business and Governments are working together to ensure that potential is realised. We can exploit our values, our tradition and heritage and our current sectoral strengths to create a bespoke one-nation industrial strategy, helping all regions achieve their potential.

As the CBI stated only this month:

“Rebalancing the UK economy must consist of boosting our productive potential, which means reviving business investment and trade as key drivers of growth. The debate is no longer over whether the UK needs an industrial strategy, but about what form this should take.”

We would all agree with that. The message from today’s debate is clear: we need to see clear leadership on an industrial strategy. I therefore fully applaud what Lord Heseltine said in his review when he stated:

“The Government must have a clear blueprint for the future to support wealth creation. This approach should then be applied without exception across the whole of government.”

I support the TUC when it said:

“If we are to move forward, government, industry and unions must agree between them what a renaissance for manufacturing actually means. . . a strong manufacturing sector, across a variety of high skill, high value industries, is both achievable and desirable”.

The CBI said this month that we should

“adopt a shared vision . . . for the UK economy, with the government reporting back regularly on how this vision is being delivered”.

We would all agree.

We hear warm words from this Government. They often talk a good game, but their actions fail to match their rhetoric, and this country’s industrial potential suffers as a result. So I welcome the Secretary of State’s 16 speeches on the need for an industrial strategy; I just wish he would implement one. I fully support what the Prime Minister said in 2010 in his CBI conference speech—that the Government should be

“getting behind those industries where Britain already enjoys competitive advantage. All over the world governments are identifying dynamic sectors in their economy and working strategically to strengthen them”.

He said something similar only this week at the 2012 CBI conference:

“Government gets it…To have a proper industrial strategy to get behind the growth engines of the future.”

I fully agree. Yet in response to the speech the director general was forced to ask, “Where’s the beef?”

I welcome the honest appraisal by the Secretary of State in his leaked letter of February 2012 in which he said that the Government do not have

“a compelling vision of where the country is heading…and a clear and confident message about how we will earn our living in the future”.

However, I remain anxious that only last month Lord Heseltine felt the need to say in his report:

“The message I keep hearing is that the UK does not have a strategy for growth and wealth creation.”

Earlier this month, the CBI stated the position even more bluntly than that.

[George Freeman]

Will the hon. Gentleman give way?

[Mr Wright]

No, if the hon. Gentleman will forgive me, because I have a lot to get through.

The CBI said that

“the current hands-off approach to growth is failing to provide the confidence necessary for businesses to compete for the biggest opportunities out there”.

Most concerning was the verdict of Sir John Parker, one of Britain’s pre-eminent industrialists as chairman of Anglo American and president of the Royal Academy of Engineering, when he said last month:

“It has been two years since this Government came to power but it still has not set out a vision for Britain’s industrial future. There has been no leadership from the top—and by that I mean David Cameron—which has given a signal to society that Britain values industrial activity.”

[George Freeman]

Will the hon. Gentleman give way?

[Mr Wright]

No. I hope that the hon. Gentleman will forgive me, but I am keen to make progress.

Business is unconvinced that the Government’s warm words have materialised into firm leadership and tangible action. People want to see action and a sense of urgency, but they have not seen that. Will the Minister at least acknowledge this and outline his plans to do something about it?

[George Freeman]

Will the hon. Gentleman give way?

[Mr Wright]

Since the hon. Gentleman is being very persistent and because this is about a long-term vision, of course I will give way.

[George Freeman]

I am extremely grateful; I will be very brief. This time last year, the Prime Minister announced the strategy for the life sciences, which was warmly welcomed across industry—not least by GlaxoSmithKline, which then announced a £500 million investment in advanced manufacturing in the north-west—and has been lauded internationally. Does the hon. Gentleman accept that at least in that sector the Prime Minister personally and this Government, including the Secretary of State, have set out exactly the leadership that he is asking for?

[Mr Wright]

The hon. Gentleman raises an important point about consensus. If we are to have an industrial strategy, we must ensure that it has a long-term strategic focus. Political and business cycles are not aligned—we often have a four or five-year cycle while businesses, certainly in the manufacturing industries, tend to have a 30-year or 40-year cycle—and it would be good to have as much consensus and policy certainty as possible. I hope that this debate has demonstrated that.

Manufacturers’ organisation the EEF has called for

“An industrial strategy”

that

“needs to endure beyond the latest political fad or any one political party. All our politicians need to recognise the value of having a clear vision, gearing the whole of government to delivering that vision, and setting clear accountability arrangements.”

I fully agree.

In certain sectors, there has been a degree of continuity of policy. The previous Labour Government set up the Automotive Council UK. The current Government have continued with that, and we have seen substantial investments in the automotive industry as a result. We fully recognise and welcome that approach. I have said to the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), who is now in his place, that his formation of the Aerospace Growth Partnership is very welcome, and I would like a future Labour Government to pledge to continue to provide certainty for that key industrial sector. We have seen success in close relationships between Government and business in a number of sectors; the hon. Member for Mid Norfolk (George Freeman) mentioned life sciences. Will the Minister say whether the Government plan to replicate that across other key industrial sectors such as chemicals, the construction industry and pharmaceuticals?

There is concern about long-term policy certainty, which investors in manufacturing require. Energy policy has rightly been mentioned a lot in this debate. In the summer, the CBI said in its report on maximising the potential of green business that

“while business wants to keep up the pace, they are equally clear that the government’s current approach is missing the mark, with policy uncertainty, complexity and the lack of a holistic strategy damaging investment prospects.”

Will the Minister acknowledge that such policy reversals are damaging to business investment, especially for manufacturing? What is he going to do to make sure that he can put arrangements in place within Whitehall to minimise the policy reversals and procrastinations in decision making that are damaging to our long-term industrial prospects?

In the remaining time that I have, I will focus on two important points. The first is that the key to the implementation of a long-term industrial strategy must be an emphasis on business policy across Government; it must not reside just in the Department for Business, Innovation and Skills. Other Departments cannot wash their hands of growth.

As we have heard, energy policy has profound implications for our manufacturing base. The manner in which the carbon floor price is implemented will have significant repercussions on our industrial competitiveness. Our aviation and transport policies also have an impact on our competitiveness. Local government can be a driver of economic regeneration and development. The Ministry of Defence should be working closely with the Department for Business, Innovation and Skills to ensure that we have a defence industrial strategy. Of particular relevance to the Minister is the close link, which we have heard about today, between an industrial strategy, skills and what is being taught in schools. I recall that the hon. Member for Burnley made an intervention on careers advice. We must see clearer signs that there is proper co-ordination on business and industry across Whitehall. What is the Minister doing to implement the Heseltine recommendations on creating better co-ordination, accountability and commitment across Whitehall on wealth creation?

My second point relates to procurement. The Government intervene in the markets by buying things every single day, and yet Government procurement does not maximise Britain’s industrial capability or enhance the UK supply chain. What else will the Minister do to push for smarter procurement across Government to help British industry, and to encourage innovation and create jobs in this country?

We believe that there is a need for an intelligent industrial strategy. This debate has shown that our industrial and manufacturing sectors have huge potential in the 21st century, but that to flourish, they require active co-operation. The whole House seems to have supported that today. I hope that the Minister will pledge similar support.

--- Later in debate ---

[Matthew Hancock]

That is a profound point about the need to avoid groupthink, with which I profoundly agree.

My hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) argued that we need to identify the best. He was passionate about enterprise and I heard his message. He will know that I am a huge supporter of enterprise zones.

I enjoyed listening to the historical debate between the hon. Members for Luton North (Kelvin Hopkins) and for Coventry North West (Mr Robinson), who are continuing their debate as I speak.

My hon. Friend the Member for Aldershot (Sir Gerald Howarth) asked a series of questions and brought his huge experience to bear, especially in relation to defence. The defence growth partnership is a BIS-led cross-Government partnership, which the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), leads. On the specific point about R and D tax credits moving to above the line, the Treasury has consulted on that and is deciding on the detail. I am also grateful to my hon. Friend for helping me with the answer on the joint strike fighter, which I will come to in a moment.

Everybody in the House was struck by the fluent and impressive speech by the new hon. Member for Corby (Andrew Sawford). He described passionately his membership of the Co-operative party as well as the Labour party. My grandfather was part of the co-operative movement. The hon. Gentleman will no doubt want to contact my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), who takes a lead on such issues among Government Members.

The hon. Member for Corby advanced the argument for the living wage powerfully. He spoke of the need to ensure that domestic British people have the skills to take the jobs that are available. Although more than 1 million private sector jobs have been created under this Government, we still have a huge amount of work to do. As Under-Secretary of State for Skills, my prime motivation is to ensure that British people have the skills and ability to do whatever it takes to get the growing number of jobs available. The hon. Member for Corby spoke with great passion, and all those present in the debate will have clocked that—well, let me put it like this: the attitude he showed to the Chief Whip on the Opposition Front Bench, and his ability to ingratiate himself with her, shows that he may not be on the Back Benches for long.

An industrial policy is central to achieving the goal of growth and enterprise, and there is broad consensus on that from the CBI to the TUC, as well as across the House. The reason for that is simple. Any Government in a mature economy has an industrial policy—as the hon. Member for West Bromwich West (Mr Bailey) and my hon. Friend the Member for Stafford (Jeremy Lefroy) argued, a Government cannot choose not to have one. We have an industrial strategy but the question is whether we have it by default or design.

My hon. Friend the Member for Stafford praised the Dutch system, from which we have much to learn. In my few weeks in this job I have recognised and warmly welcomed the constructive approach taken by the hon. Member for West Bromwich West to chairing the Business, Innovation and Skills Committee. He argued for a cross-departmental approach, and the growth committee on which I sit is an important part of that. He also argued for a cross-party approach, and not only do I agree with that, but I think hon. Members have demonstrated such an approach today. In particular, I pay tribute to the hon. Gentleman’s realism and ability to accept failures on the part of all past Governments. As he said, manufacturing halved as a percentage of GDP, and the passionate argument about that and the history around it was also put forward by the right hon. Member for Oldham West and Royton (Mr Meacher).

Crucially, an industrial strategy looks both at and across sectors, and we must ensure that we allow for the challenge of sectors that are yet to be dreamed of. Let me touch on four cross-cutting themes, as well as on sectors such as the automotive industry, life sciences and aerospace, in which we are pushing rapidly ahead with the publication of individual papers.

[George Freeman]

On the point about convergence, does the Minister agree that one of the most exciting things in life sciences is the way that medical, food and clean environmental technologies are beginning to merge? I recently visited a plant in Norfolk that converts agricultural waste into fuel for powering Lotuses made in Norfolk. That is a powerful illustration of convergence.

[Matthew Hancock]

Yes indeed, and across supply chains too. As my hon. Friend the Member for Stroud (Neil Carmichael) powerfully said, it is vital that we bring whole supply chains together when thinking about the sectoral approach. There is no one-size-fits-all approach. Some sectors will do well on their own; others need a long-term strategic partnership. My hon. Friend the Member for Warwick and Leamington (Chris White) called for a document that brings things together in each sector, and that is happening.