Industrial Policy and Manufacturing

Huw Irranca-Davies Excerpts

Thursday 22nd November 2012 Commons Chamber

[Chris White]

I thank my hon. Friend for his intervention. It is fortuitous, and something I did not realise until he mentioned it, that a similar debate was held this time last year. I hope we have made more progress and that that will continue. One issue on which we have made progress is the business bank concept, about which I know that he spoke in that debate.

[Huw Irranca-Davies (Ogmore) (Lab)]

I welcome the hon. Gentleman’s remarks, many of which I agree with. May I point out to him that there is something we could do right now about industrial strategy? A year ago, we were bemoaning the fact that the large energy companies did not have the market certainty to invest in large infrastructure, which would have had a ripple effect on all the smaller suppliers across the UK. Three weeks ago, seven of the largest worldwide energy companies wrote to the Chancellor to say that they still do not have certainty. Will he urge the Government, as I do, to put that certainty in place? There will be a ripple effect of tens of thousands of jobs in this country once we know that we are heading to a decarbonised future.

[Chris White]

All I will say is that energy and how we deliver on an energy strategy must be part of any industrial policy.

One of the most pressing concerns for manufacturing is access to finance. At meetings of the all-party group and with constituents, bank lending is a theme we return to time and time again. We must consider closely how we will reform our banking system for the benefit of our manufacturers, which must be a key part of our industrial policy.

Skills are another area that the Government must consider and I welcome the work that has already been done, particularly on apprenticeships. They are giving more young people the chance to learn skills in some of our excellent educational facilities—not least Warwickshire college in my constituency. We need to do more to strengthen the whole curriculum, however, so that it supports our economy, particularly by supporting science, technology, engineering and maths—the STEM subjects —at primary and secondary schools. We also need to look at apprenticeships so that we have more of the higher level apprenticeships our country needs to compete with other rapidly upskilling economies.

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[Huw Irranca-Davies]

Will my hon. Friend give way?

[Mr Bailey]

I will, but briefly, because my hon. Friend the Member for Corby (Andrew Sawford) is going to make his maiden speech.

[Huw Irranca-Davies]

My hon. Friend is right that Government decisions shape industrial strategy. I hope he might have some thoughts on where we go on carbon capture and storage as part of the strategy. It was with great regret that we found out this week that there is uncertainty over future funding and a drawing down of European funds because the Treasury was unable to provide guaranteed funding. Does he hope that CCS will be part of the industrial strategy in phase 2, which will come up next spring?

[Mr Bailey]

My hon. Friend tempts me with an issue that is worthy of a separate debate, but broadly I agree, and I will make some allusions to the green economy later.

The problem is basically that although the Minister outlines the impact of different Government policies on the economy, the Department, in its delivery in those different areas, does not necessarily seem to be signed up to the same economic and industrial priorities. For a start, on the fiscal strategy, our ability to eliminate the deficit depends crucially on our ability to generate investment in economic growth, yet at the same time the Chancellor’s strategy has effectively squeezed consumer spending and failed to recognise that in many areas public spending and private engagement with it are crucial to economic performance. That, coupled with various apocalyptic utterances about the state of the British economy, has generated a feeling of insecurity and uncertainty that has had a knock-on effect on consumers’ confidence to spend money and the willingness of businesses to invest. I hear that many businesses are currently sitting on piles of cash, but they will not invest it because they fear that the investment would not pay off. Similarly, with such uncertainty, banks are less likely to lend because they obviously sense a higher risk in doing so than they would if there was greater confidence in the economy.

Also, the Government’s tax policies have concentrated on reducing corporation tax. All the messages I get from manufacturing—I know that the hon. Member for Burnley (Gordon Birtwistle) has strong views on this—indicate that money to generate investment would be much better focused on research and development and capital allowances than on corporation tax. Much more needs to be done to assess the relative impact of reductions in corporation tax, rather than investment in R and D and capital allowances, and where future Government policy on that should go. Given the number of foreign businesses that have invested in this country and seem to have paid very little corporation tax, I wonder how relevant the reduction in corporation tax set out in the Chancellor’s first Budget was in attracting foreign investment. I need only repeat the comments the chair of my local enterprise partnership made this week: he said improving capital allowances would be a quicker and more effective step than creating a business bank. I do not decry the long-term significance of a business bank, but right now we need some shorter-term policies that can have a more immediate impact.

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[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.

[Huw Irranca-Davies]

Briefly, and on a genuinely cross-party consensual basis, will the Minister update the House on the point raised by my hon. Friend the Member for Corby (Andrew Sawford) about energy-intensive industries such as Tata Steel? Those vital employers and big economic generators have a massive impact on the supply chain, but they consistently say that they do not have a strategy that deals with their energy costs as well as everything else.

[Matthew Hancock]

The Government have an energy-intensive industries approach, and an energy Bill will soon be published that I hope will provide some long-term certainty.

Let me return to the four cross-cutting areas. The first is finance, and my hon. Friend the Member for Weaver Vale (Graham Evans) spoke fluently about the funding for lending scheme that lowers the cost of funding. The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) called for a business investment bank, which is happening, and the green investment bank is already operating and making loans.

Secondly, and close to my heart in the industrial strategy, are skills. The call went out for more employer focus on skills, and my hon. Friend the Member for Gloucester (Richard Graham) made a passionate case for apprenticeships. I strongly agree, and I urge all Members to engage with the employer ownership pilot that was published on Monday which is about looking ahead. For example, we know that with Crossrail, High Speed 2 and broadband, more tunnelling skills will be required in the future. We now have a pipeline for those tunnelling skills—a pipeline for pipelines.

As the hon. Member for Coventry North West discussed, the third thing we need is more intelligent procurement. This Government have a more intelligent approach to procurement, and I hope it will become more intelligent still. Crucially, our national infrastructure plan identifies 500 projects. Some £70 billion of future contracts have been planned and published across 13 different sectors. We are also trying to speed up procurement.

On technology, we have protected the science budget and are focusing on eight key technologies. Links to universities are vital. Catapult centres will accelerate that. My hon. Friend the Member for Aldershot spoke about Surrey satellites. That example should go out throughout the country. Turning links with universities into business reality is critical to our future success.

I commend the cross-party approach. I urge people to look at the fact that all three parties are coming together to promote the long-term industrial strategy we need, which I commend to the House.