Manufacturing

Gordon Birtwistle Excerpts

Thursday 24th November 2011 Commons Chamber

[Guy Opperman]

It is, indeed, flushed with success, as my hon. Friend so ably quips from the sidelines—as always, he is on the money. The wood pulp goes in at one end of the factory and paper products come out at the other. The machinery is highly technical; this is modern manufacturing in the modern age.

In this time of austerity, I am extremely proud that the north-east has a positive balance of trade and is the only region consistently to do so. We should trumpet the fact that the North East chamber of commerce is the only regional chamber of commerce in the country. It represents more than 4,000 businesses and covers more than 30% of the region’s work force. If I had to single out one local concern that it has highlighted to me from the multitude of things it would like to be done, it would be to urge the Minister to conduct the review that it is hoped will be undertaken of the planned carbon floor price and other climate change and energy-related matters.

How are we to address the manufacturing deficit? I have three main suggestions. First, we need a Minister for manufacturing. That is not to decry the efforts of the Minister with responsibility for business or the Business Secretary, both of whom are worthy men, or those of any parties in that Department. However, the fact remains that, according to the House of Commons Library, there has not been a Minister for manufacturing since 1945.

[Gordon Birtwistle (Burnley) (LD)]

In my constituency, I get a lot of requests from local manufacturing companies for advice on various issues, mainly in relation to exports and where to go for help with them. Does my hon. Friend agree that a Minister with responsibility specifically for manufacturing would be a major asset to the Government and the manufacturers of this country? Businesses would be able to go directly to the person who could give them the answer they required rather than having to go through myriad Departments. People get lost in that process—even Ministers sometimes, I imagine—and if we had someone who could be accessed directly and who reported directly to the Prime Minister, that would be a major asset to the Government.

[Guy Opperman]

I completely agree. To put it in the vernacular, we need a go-to guy who is the one person looking after manufacturing.

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[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

My sincere apologies for arriving two minutes after the hon. Member for Hexham (Guy Opperman) started his speech, but I think I caught the gist of it. We have worked harmoniously in calling for this debate, and I am delighted that we are having it today, and that it is cross-party. The group of us who are associated with the all-party manufacturing group are very pleased about that. My interest in manufacturing has obviously been a total failure. I have been in this House for more than 30 years, and I started the manufacturing group not long after I got into Parliament. Ever since the original all-party manufacturing group started, our manufacturing sector has shrunk and shrunk, under all parties and all Governments.

I represent Huddersfield, the cradle of the industrialisation of our country. Anyone who knows anything about my part of the world will know that even today it is a centre for the highest-quality wool textiles—super-100 and super-110 worsteds and so on. It is also very well known for its engineering, for David Brown gears and many other manufacturing companies, and of course for chemicals, which come from the traditional industry of dyestuffs for textiles.

Huddersfield became an industrial town because of power. The energy coming from the fast-flowing streams from the Pennines—the Holme, the Colne and the Calder—attracted industry because that is what made the mills work. That is how we got industry in our part of the world. It was a manufacturing town. There was not much in Huddersfield; there was the old village of Almondbury, which is a bit of a market town, and an ancient place, but the modern town is 18th and predominantly 19th century. Some 70% of the population would have been in the manufacturing sector. We are now down to about 8.9% manufacturing employment in the constituency, whereas 86.7% of employment is in various forms of services; 33% is in health, education, or working for the local authority. We are lucky to have a large and successful university, Huddersfield university, which is pre-eminent in engineering, textiles and design innovation, but that does not disguise the fact that we are pre-eminently in the service sector; 87% of employment is in services of various kinds. Unemployment is at its highest level since I became a Member of Parliament.

[Gordon Birtwistle]

Does the hon. Gentleman agree that the collapse of manufacturing in Huddersfield, which has gone from 30% or 40% of employment to 8%, is significant given that youth unemployment is so high? Huddersfield’s colleges are training young people to be engineers and manufacturers, yet the collapse of manufacturing industry means that the jobs are not there any more for them to do. Manufacturing has been overtaken by the services sector. Does he agree that it is high time we reversed the trend towards the services sector and returned to a buoyant manufacturing sector, which could employ those young people?

[Mr Sheerman]

I would go 90% of the way with the hon. Gentleman, but I would not accept the word “collapse”, because we still have a vibrant, though much smaller, manufacturing sector in engineering and chemicals. The textiles, engineering and chemicals industries are still there, and have very high productivity, but the capability now is such that we turn out an enormous amount of worsted in a crinkly shed—not one of the magnificent old stone mills—that is working 24/7. I think we underrate the productivity of some of those industries.

I do not want to make Members suicidal, but let us compare the decline of the UK’s manufacturing sector with that of other countries before moving on to something more cheerful. In Great Britain around 8.8% of employment is in manufacturing. Some figures for 2008 indicate 9.8% for manufacturing and 80.8% for services. Things are very similar, if not worse, in the United States, where employment in 2009 was 8.9% in manufacturing and 83.4% in services. The decline of manufacturing in the UK has very much gone in parallel with the experience of the US. By comparison, Germany still has 18.5% in manufacturing and 73% in services, and China has 27.8% in manufacturing and 53% in services.

I want to draw the House’s attention to the UK’s balance of trade, particularly the trade deficit with Germany, which last year was £16.8 billion, and with China, which was £21.6 billion. Whatever is happening today, and despite the depressing interview with Chancellor Merkel last night, which persuaded me that we are on the precipice of a world recession, we must remember that Germany has been very fortunate and that the eurozone has been very kind to German manufacturers over this period. The renminbi, the Chinese currency, which the Chinese conveniently manipulate to give their manufacturing exports every possible advantage, has done the same for China.

I want to dwell on the future and what kind of society we want. It seems to me that we want a wealth-creating society that produces the goods and wealth that can then be shared. Some of us disagree about the levels of individual and corporate taxation, but we all agree that we have to produce the wealth in order to share it, whatever way we choose to do so. I am concerned that if we do not do something in the manufacturing sector we will not have very much to share.

What do we depend on? A core element at every level of activity is the fact that in every facet of human experience success depends on the quality of the people who do the job, their skills and commitment and their desire to do a good job. In the 10 years that I chaired the Education and Skills Committee, that came home time and again. The history of our country is one of clever and skilled people with ingenuity, determination and a hunger to do something. We have had an amazing crop of entrepreneurs. At the heart of our manufacturing problem is the fact that too many people in our country who go to university do not go into manufacturing. I remember walking across the hallowed lawns of Magdalen college with the master some years ago. I asked him whether any of his graduates went into manufacturing or public service. He replied, “Oh no, they all go into the City.” If we continue to make the City and banking the profession of choice, we will be in even more trouble than we are in at the moment.

--- Later in debate ---

[Gordon Birtwistle (Burnley) (LD)]

I congratulate my colleagues who called for this debate and thank the Backbench Business Committee for accepting and giving us a lengthy amount of time for it at short notice.

The future of manufacturing products is inextricably linked to the future of manufacturing growth and wealth. If we have a strong manufacturing sector, we will have a strong economy that will create growth and prosperity for the country.

I have a personal interest in manufacturing. I left school at 15—I did not pass my 11-plus or get any GCSEs—and went to be a craft apprentice at a local company in Accrington that manufactured textile machinery. That was an enthralling event. I had to go to night school three nights a week until I was 25, where I secured two HNCs. Unfortunately, that does not happen any more, but young people go into manufacturing and get other types of education.

[Mr Willetts]

I should like to assure the hon. Gentleman that I meet young people who are doing HNCs and HNDs at their local colleges to be trained to work in British business, including in manufacturing. We should take pride in the fact that people still get those qualifications, which are valued and recognised. Indeed, part of the Department for Business, Innovation and Skills commitment is to continue to recognise those qualifications.

[Gordon Birtwistle]

I am grateful to the Minister for that assurance and I hope that that continues.

When I started in manufacturing some 53 years ago, manufacturing was 40% of the country’s gross domestic product and a balance of payments surplus was delivered every month. What on earth would the Chancellor think of having a constant balance of payments surplus now rather than the negative position we have? As manufacturing was so big, lots of apprenticeships were available through local companies that delivered the products that the country needed. The unemployment rate for young people was very low. When I left school, I applied for many apprenticeships throughout Lancashire. Most young people with whom I went to school achieved an apprenticeship in some industry or other. The vast majority of people in those days did not go to university; many people would have liked to have gone, but they could not, so they spent their time being apprentices and learning skills in the old-fashioned way by making things and having a trade.

I do not want to make this political, but I have to point out that under the last Labour Government, manufacturing fell from 22% to 11%. Even Mrs Thatcher did not achieve such a drop—she only managed to get it from 25% to 21%. Manufacturing has a number of variables to overcome. They include how the industry is perceived by young people, the lack of skills, and the lack of investment and of research and development. One of the biggest challenges to manufacturers in my constituency is finding enough skilled workers to carry out the incredibly technical jobs that are available. More must be done to change the image of industry to make it attractive to young people. I know that those who undertake skilled apprenticeships will end up with great jobs working on interesting projects, earning decent salaries and probably with a job for life.

A lot of damage has been done over the past 10 years to the image of manufacturing and vocational courses. A priority for the Government and for our successful and well-known manufacturers is changing the perception of manufacturing, especially among the young. We have become a country relying on a fragile financial sector and on the service industries. If young people were asked what they thought manufacturing was, they would probably respond that it is dirty and grimy. That is not the case. We need to show young people that there is more to manufacturing—that it is about maths and science, about design and innovation, about robots and computers. Manufacturing and technology in the food industry, for example, are phenomenal. There are so many different areas in the manufacturing sector and they are all innovative and exciting sectors to work in.

Controlling the supply side of our skills deficit is but part of the problem. As important is ensuring that both new entrants and existing employees in manufacturing are sufficiently upskilled to meet the demands of British employers. The preparation work needs to begin in schools. We know, for example, that pupils who take three separate science subjects at GCSE are more likely to study science, technology, engineering and maths later in their educational careers. If we can tackle the problem at source, and improve the rigour of the subjects and the number of pupils studying them, it will have a cumulative impact on the calibre of graduates entering the job market.

[Lorely Burt]

Does my hon. Friend agree that a great way to get youngsters more excited and involved is to have closer collaboration between employers and schools, so that children can see what it is they aspire to do, and therefore choose to take the subjects to which he refers?

[Gordon Birtwistle]

I totally agree with my hon. Friend and I will come on to an initiative in my constituency related to that suggestion.

In my constituency we have Burnley college, a joint FE-HE campus working with local firms to train highly skilled youngsters to be ready for the world of work. We are also getting a university technical college that will bring young people into the industrial life. Burnley college has made huge leaps in changing the perception of manufacturing locally among young people, and if the model the college uses were introduced across the UK, it would go a huge way towards really changing the perception of manufacturing at a national level. More schools and colleges need to start joining up with local businesses to provide youngsters with the knowledge and experience that will help them in the world of work. Too many children do not have any experience of working, or of the personal and other skills required. I will continue to encourage the Government to introduce impartial careers advice from the age of 11. Indeed, we should start careers advice long before young people go to secondary school.

[Graham Evans]

Is the hon. Gentleman aware of the Manufacturing Institute’s Make It campaign, which is specifically designed to enable young people in what used to be year 3—now year 9, I think—to experience as they take their options the delights of working in the manufacturing industry?

[Gordon Birtwistle]

Yes, I am aware of that, and it is a great thing. I encourage the Government to encourage such things, and we should also give careers advice to young people at 11.

Manufacturing must cease being perceived as a career avenue for low achievers, and the Government must work harder to ensure that perception and reality are closely matched. The culture in our schools must change, and the Government can help with that. There is so much emphasis on how many children can get to Oxbridge but there is never a fanfare about how many get on to high-skilled training programmes in the manufacturing industry, such as those with Rolls-Royce, BAE Systems or Aircelle in my constituency. Business must recognise that a new role is emerging, and UK manufacturing must ensure that it sells its career and employment possibilities to young people.

Trade finance also plays a huge role in the export cycle, but small and medium-sized enterprises often find raising the finance overly complex because of the myriad requirements on both financial institutions and Government agencies. The manufacturing industry in Burnley would like the Export Credits Guarantee Department to work more with financial institutions on initiatives to support exporters, particularly small businesses, many of which would love to export but find it difficult. For example, What More, an SME in my constituency that makes plastic buckets, washing-up bowls and lunch boxes that are sold widely in Tesco, is taking on the Chinese. The Chinese used to control that market but the company now exports to 38 countries, including China, and would like to export further afield. What More tells me that with an export credit guarantee it could export to another 25 countries. It employs 160 people and has invested £16 million over the past few years.

It is critical that the Government, as a big purchaser of manufactured goods, buy British-made goods. I was extremely disappointed by the decision on the Thameslink contract. I do not know how it happened. I was not a Member of Parliament during the consultation and quotation on the Thameslink trains but I was concerned that the contract was placed with Germany. I do not understand the European rules but I was extremely concerned. Importing trains when we make our own does not stack up. I am pretty sure that the Germans and the French do not import their trains. They seem to find a way around these rules to ensure that the same does not happen there. Furthermore, a £1 billion order for Chinook helicopters was sent direct to Boeing despite there being a helicopter company in this country with a licence to build Chinooks. That would have saved us £500 million on our balance of payments.

I have a couple of suggestions for the Minister. First, we should return the capital allowances scheme to enable companies to invest and get the capital allowances on the new equipment that they buy. There would be a massive investment in new plant and investment if the capital allowances were returned. Secondly, as my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) said, tax rebates on research and development should be increased in line with the rest of the world and with what is needed in this country.