Industrial Policy and Manufacturing

Debate between Guy Opperman and Adrian Bailey

Thursday 22nd November 2012 Commons Chamber

[Guy Opperman]

One such short-term policy that would have an impact is the liberalisation of small local community banking, as that would mean there would be lending directly to small and medium-sized businesses, which is what the hon. Gentleman would like. This Government are doing that, but the Opposition voted against it. Can he explain why?

[Mr Bailey]

The hon. Gentleman tempts me to address a much bigger debate about the appropriate ways of financing industry, but I am not going to do that. I have been involved in local organisations providing access to finance for small businesses, and I know that the perception of risk is crucial. It does not matter where the money might come from, because if the risk is considered too high any funds will only be available on very expensive terms.

On green issues, the decision on solar panels, the dispute that still exists at the heart of Government on the future of wind power and the delays in the implementation of the green deal make for uncertainty in an industry that needs certainty above all else, and the Government must resolve that. In the submissions I have received from bodies representing manufacturing industry, two measures have been highlighted, which I think the all-party group would also call for. First, any industrial strategy must have at its heart a degree of certainty. That requires building a cross-party consensus that will outlive any Government, so that business can invest for the long term. That is especially relevant for green industries. Secondly, there must be changes in the culture and structure of Government that will allow economic, and in particular manufacturing, priorities to be considered across Departments. That was touched on in Lord Heseltine’s recent report, and it has featured prominently in submissions from organisations representing manufacturing. If we are to convince industry that there is a future in investing in our manufacturing, there has to be general confidence that the Government recognise these priorities and that project economic growth must be a key priority for any Government.

Having an industrial strategy that highlights the most important measures and stimulates debate will go some way towards achieving what we want, but I have yet to be convinced that other Departments accept the logic of this argument. However, there is an emerging consensus in Parliament, especially on the Back Benches, and in industry that the two key issues of long-term certainty and having a driver within Government to prioritise economic growth are crucial. That fact, allied to an emerging public consensus that economic growth must be a priority, could provide the public opinion background to enable any Government to drive forward this agenda. There is therefore a challenge for both the Government and the Opposition to have such policies in place for the public to decide on at the next general election. That is crucial for the British economy and for the future welfare of everybody in this country.

Manufacturing

Debate between Guy Opperman and Adrian Bailey

Thursday 24th November 2011 Commons Chamber

[Mr Bailey]

That issue was recognised by the previous Government, and measures were being put in place to replicate that approach in the context of the British industrial scene. The current Government are, to their credit, taking that up.

Bank lending is a hugely significant issue for small and medium-sized enterprises in my constituency and nationally. The Merlin targets are not being met. That, combined with low consumer confidence and low business expansion expectations on the basis of the domestic market, means that companies are not applying for loans because they do not feel positive about future market opportunities and because they are wary of the banks making their credit lines even more difficult than they already are. That is having a stultifying effect on the ability of small businesses to expand.

Quantitative easing in order to address that issue may, indeed, keep interest rates low, but I have yet to meet a bank that knows how that will help SMEs directly, and I have yet to meet a business that knows how it would make any difference to its relationship with its local bank. Although lower interest rates may be welcome in general, that will not necessarily feed through to more investment in small businesses. I am concerned that the effect low interest rates are having on pension fund incomes could lead to some manufacturing businesses having to pay more into their pension funds, thereby diverting money from other areas in order to sustain their pension levels. This could be a counter-productive step, therefore.

There is now a lack of provision in the crucial area of small grants and loans for small businesses that want to expand to take the market opportunities that will be available to them. The regional development agencies will not be reintroduced—that is a debate for another day—but they did provide small loans to businesses that wanted to expand. Those loans are gone now, and they are not being replaced by the banks. The regional growth fund is not yet delivering for small businesses. If we are to expand the capacity of manufacturing SMEs in the time that they have available to make an impact on employment, that vacuum needs to be filled. Either local enterprise partnerships must be given more powers or the RGF needs quicker and more localised means of distributing money.

[Guy Opperman]

Will the hon. Gentleman give way?

[Mr Bailey]

No; I am sorry, but I am running out of time.

I reiterate the points made about research and development tax credits and capital allowances—they might go some way to dealing with that problem. As they have been mentioned, I will not repeat the discussion of the issue.

The second issue to address is skills. As has been said, Tata has invested £300 million in Jaguar Land Rover in a site to the north of Wolverhampton, with enormous employment potential locally. The concern within the industry is that the extended supply chains of small and medium-sized enterprises that could service JLR may have a shortage of skilled apprentices, and I have already mentioned the potential need for capital investment to improve the capacity to meet the demand from JLR. I have no doubt that JLR will attract all the people it needs, because it is a high-paying iconic company that is very attractive to everybody. It will be the SMEs in the area that will need to recruit, and we need to expand our vocational skills base to ensure that that happens.

The Government have rightly concentrated on apprenticeships. However, there is emerging a picture of apprenticeship provision that will not necessarily address that need. First, a high proportion of the new apprentices are over 24, and there is considerable concern that these are just Train to Gain people rebadged. There is nothing wrong with Train to Gain, because it has an important role to play, but it will not necessarily meet the skills need that it is directed at. Secondly, there is increasing evidence of private providers coming in with short-term courses, which do not meet the historically longer-term need for training in a particular industry to meet capacity. I believe that the black country local enterprise partnership is examining the issue to try to scope out the skills provision that will be needed and ensure that it is provided. That LEP will be able to its job far more effectively if the Government were prepared to back their localism agenda by providing it with the resources to assess the skills need and to deliver on it locally.