Iain Wright
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Neil Carmichael
I thank my hon. Friend for his correction about the name of his seat. I was slightly confused about it, because I know it is getting a new name in the boundary review, and I was discussing that with him yesterday. I apologise for my misunderstanding.
My hon. Friend is right. The UTCs are important. I fully support that initiative and I know that Lord Baker has been pivotal—as, indeed, has Lord Adonis—in supporting those projects. We want more of them. In my constituency, I have been vigorously promoting the engineering centre in Stroud college. Funnily enough, there is another link there with the constituency of my hon. Friend because the college has merged with the one in Filton—and quite right too, because is a good strategic alliance. The point I want to make is that it is necessary for engineering to be promoted in organisations, including colleges.
Mr Iain Wright (Hartlepool) (Lab)
I am enjoying the hon. Gentleman’s speech immensely and agree with much of it. What does he think about the decision of the Secretary of State for Education to downgrade the status of the engineering diploma? How will that help to promote engineering among young people?
Neil Carmichael
I thank the hon. Gentleman for that interesting intervention. Alison Wolf’s report is clear on the need for proper training in STEM subjects before beginning to worry too much about qualifications. It is right that there should be qualifications in engineering—and those are available in Stroud—but, as I have said, the STEM subjects need to be rigorously promoted in schools and colleges. Alison Wolf made a strong case for taking that line, and I hope the Government will pursue it with rigour.
I want to return to the subject of ABB, which is a member of the Enhancing Value taskforce launched by the Council for Industry and Higher Education. A report is coming out in July on how to make the most of UK research. I hope that the Government will read it and draw lessons from it, if it contains significant lessons; judging by the quality of ABB, I am sure that it will.
No discussion of engineering and manufacturing can fail to include a mention of the European Union. It is critical that we should recognise—as the Prime Minister did yesterday, powerfully—that 40% of our exports go to Europe. We are attached to Europe through all the supply chains that I have mentioned, and we must recognise that, in relation to trade development, Europe is a powerful magnet for interests and a strong promoter of our interests globally. A key point that came up in The Economist this weekend is the need to ensure that small firms can become big firms. We must look carefully at how the European Union is regulated and remove any barriers that prevent a small firm from growing.
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship, Ms Clark. I congratulate the hon. Member for Stroud (Neil Carmichael) on securing a timely and excellent debate, and I agree with a lot, if not all, of the points that have been raised.
There was a similar debate on manufacturing on the Floor of the House in November. I mentioned at the time that we do not debate manufacturing as much as we should in the House. However, we have had two debates on manufacturing in the space of about 100 days, on top of an important speech that my right hon. Friend the Leader of the Opposition is making, even as we speak, on the case for patriotism not protectionism in business policy, to the first ever manufacturing conference of the EEF, which the hon. Member for Stroud mentioned. They are testimony to the belief that manufacturing and engineering have to play a central role in our economic future, and policy makers are waking up to that.
A thriving and diverse manufacturing sector, in which British firms design, innovate, engineer and simply make things, is vital if this country is to pay its way in the world. I hope this debate has shown that manufacturing still plays an important role in the British economy. Hon. Members have quite rightly highlighted manufacturing excellence in their constituencies. We remain the seventh biggest manufacturing nation on earth. We have the largest aerospace industry in Europe and the second largest in the world after the United States. That is something to be proud of, and something that we need to nurture and support as much as possible.
The automotive industry has been mentioned a number of times in the debate. Nissan’s announcement today is very welcome news. Once, the British car industry and the phrase “British Leyland” were the epitome of all that was wrong with British industry—it was uncompetitive and obsolete. Now, however, our automotive industry is one of the most productive in the world, and we should be proud of that.
However, let us be honest: we have relied far too much on far too few sectors and too few regions in this country for economic growth. In the past three decades, Britain lost more industrial and manufacturing capacity as a proportion of its economy than any other leading developed nation. As has been mentioned in the debate, the hollowing out of the UK’s industrial supply chain over the past 30 years has made us ever more reliant on our competitors for raw materials, basic products and increasingly, as the likes of China and India move up the value-added chain, innovation, and research and development.
We therefore need a much bigger push towards manufacturing. I was struck by the comments made by the hon. Member for Stafford (Jeremy Lefroy), who mentioned Sir Anthony Bamford, the chairman of JCB, and his report. Sir Anthony knows a thing or two about industry. His warning last week to the Prime Minister is stark:
“Germany’s focus on value-added products sets it apart. It has a manufacturing strategy which the UK doesn’t. If our politicians fail to deliver a coherent long-term manufacturing strategy, and quickly, we will fall into an economic abyss from which we may never emerge.”
That is absolutely right. The whole House needs to pull together in unity to ensure that we have a long-term economic vision with manufacturing at its heart in order to see the jobs and wealth that this country needs.
My first question to the Minister is: what is the Government’s response to Sir Anthony’s report? He made a nine-point plan to boost manufacturing and engineering, including increasing capital investment by tax incentives, expanding the Export Credits Guarantee Department to ensure that we export more, encouraging more banks to set up in the UK to boost competition, and improving in general the public image of manufacturing through media campaigns. Will the Government implement in full Sir Anthony’s recommendations?
Other senior industrialists have echoed that view. Sir John Rose, the former chief executive of Rolls-Royce, has said:
“We need a framework, or a business route map, to create context, drive focus and help prioritise public and private sector investment.”
I absolutely agree.
John Cridland, the director general of the CBI, stated in a speech in November:
“What’s needed is a new form of industrial policy, one that signals ambition, helps develop future capabilities and secures sustainable growth…A new understanding needs to run through all of Government. Industrial policy might be based at the Department for Business, but all Departments need to share the same ambition. They all need to work to join up policies and create a system that’s more than the sum of its parts.”
Again, I absolutely agree with that. We need a more joined-up and co-ordinated approach, not just in the Department for Business, but across Whitehall. The nub of much that I want to say today is that we do not have a joined-up approach to manufacturing and engineering in the Government.
It is not just senior industrialists who are calling for clarity; the Business Secretary is lobbying hard on the matter, as was seen in a letter that he wrote recently. He said:
“There is something important missing: a compelling vision of where this country is heading beyond sorting out the fiscal mess; a clear and confident message about how we will earn our living in the future.”
I could not agree with the Business Secretary more, but I fear that the joined-up approach that is being called for by the CBI and other industrialists is simply not happening.
The Government’s sole economic priority is deficit reduction. I fear that if we cut too far and too fast, far from allowing private sector enterprise to bloom, we will choke off competitiveness and undermine our manufacturing base still further. On the one hand, the Government stress the importance of science, research and development and innovation as a means of supporting our manufacturing and engineering base, but on the otherhand unlike any other developed nation in the world, they are cutting the science budget by 15%. The Government stress the importance of an industrial strategy in defence to help British industrial capability, but at the same time they have published a White Paper that prioritises the purchase of off-the-shelf, sometimes foreign, military equipment. That is why the director general of the CBI, in responding to the White Paper, urged the Government not only to get the best value for taxpayers but to
“take into account employment and industrial implications of decisions.”
My hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) mentioned the awarding of contracts for Royal Navy fuel tankers to South Korea. What was the Department doing when the process was going through Whitehall? Why was it not working with the British supply chain to ensure that UK companies could bid for such contracts? Why on earth did the Under-Secretary of State for Defence, the hon. Member for Mid Worcestershire (Peter Luff), allegedly say:
“We don’t build tankers in the UK”?
Who on earth is batting for Britain in Whitehall on major procurement decisions if that is the attitude of Ministers?
Several hon. Members mentioned the importance of procurement, and they are absolutely correct. Governments can help shape markets—the Government are often the biggest customer and can often drive innovation and competitiveness. It is frustrating that the Government are not using procurement and the power that they have to back British business and support jobs, skills and innovation, and therefore enhance British competitiveness. I agree with the TUC, which stated that the UK should have a
“procurement policy guided by the principle that every pound of taxpayers’ money should contribute to jobs, skills or the strength of the British economy.”
Yes, procurement should be based on securing best value through competition, and sometimes some British firms will lose out, but let us have a procurement regime that looks at value in the widest and most effective sense. I quote again the TUC, which said that
“a procurement regime that is simply based on lower cost, offering nothing to the long-term development of the British economy, has no place if our industries are to reach new levels of competitiveness.”
We saw the debacle of the Bombardier decision on buying trains; let us not have the same mistake again. Let us ensure that our business policy emphasises manufacturing, but also ensures that we can back British business—patriotism is not protectionism.
Jeremy Lefroy
I am following very carefully what the hon. Gentleman is saying. Does he agree that if we allow our capacity to build ships or trains to disappear, we will be held over a barrel by other manufacturers around the world because we will not have an alternative at home?
Mr Wright
I agree absolutely with the hon. Gentleman. Many people accept, quite rightly, the importance of not being too reliant on foreign sources of energy; that is why we need to ensure that we have a diverse energy policy. Frankly, we need the same approach for manufacturing—we should not be too reliant on our foreign competitors. We need a vibrant steel industry and a vibrant shipbuilding industry to ensure that we have that capacity, and that we produce the next generation of ships and use steel for offshore wind—that is exactly what we need to do.
Let me turn to another important issue, which I mentioned in an intervention on the hon. Member for Stroud: the tie-in between manufacturing, engineering, the wider point about business and schools, and our education system. If we are to see engineering and other STEM subjects rise in cultural importance, it is vital that engineering qualifications have at least parity of esteem with more liberal arts-based subjects. That is why, as I mentioned in my intervention, the decision of the Secretary of State for Education to downgrade the value of the engineering diploma from the equivalent of five GCSEs to just one is simply wrong.
In the previous Government, I was the Minister with responsibility for 14 to 19 reform and apprenticeships. I had responsibility for the engineering diploma, so I feel protective towards it. It was, and is, a high-quality and rigorous qualification that has the support of business and backs the interests of many of our brightest young children. The downgrade is the wrong move if we are to promote engineering. Do not take my word for it. Dr Mike Short, president of the Institution of Engineering and Technology, along with 16 senior industrialists, put his name to a letter to The Daily Telegraph that said:
“The Engineering Diploma is widely recognised as a significant route to providing the crucial technical and practical skills that young people will need to build a Britain that can compete effectively and internationally where technology can make such a difference to our digital world. Industry and the professional engineering institutions have worked extensively to make this 14-19 qualification a highly robust and attractive qualification, which now appears to be being undermined by the Government's premature decision to downgrade its worth.”
Ian Swales
Does the hon. Gentleman agree that when I asked the Secretary of State for Education a question on this subject a couple of weeks ago, his answer that the engineering diploma had to be seen as level with physics, chemistry or biology showed a basic misunderstanding of what the engineering diploma actually is?
Mr Wright
The hon. Gentleman is absolutely right. For far too long, we have had a culture that considered academic subjects to be successful, and vocational and engineering-based qualifications to be somehow second rate. Germany does not have that culture, which is why it has a flourishing manufacturing sector. We need a similar parity of esteem in this country; otherwise, we will never be able to achieve our potential in manufacturing and engineering.
The world will not wait for us. We need a sense of determination and urgency in light of the fiercest competition the global economy has ever known. Instead, and to my utter frustration, we have a sense of drift and a lack of co-ordination from the Department for Business, Innovation and Skills, and across Whitehall. The time is now, as senior industrialists, the CBI, the TUC, and hon. Members here today have said, to play to our strengths, seize the opportunity and put manufacturing and engineering at the heart of the economy. The Government need to act now.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Norman Lamb)
It is a pleasure to serve under your chairmanship, Ms Clark.
I congratulate the hon. Member for Stroud (Neil Carmichael) on securing the debate on an important subject. May I also say that all the key points in his contribution were excellent? He is a keen advocate of manufacturing and engineering companies, both in his constituency and nationally. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), who has responsibility for business and enterprise, is looking forward to opening the Stroud manufacturing festival on 23 April, which is an excellent initiative that will promote the case for manufacturing. The hon. Member for Stroud demonstrated the most remarkable array of different types of manufacturing in his constituency.
The hon. Gentleman also highlighted the importance of inspiring young people. I heard recently of a survey of youngsters, aged 11 or 12, on what they wanted to do when they grew up. None of them talked about manufacturing, making or designing things. We have to change to that culture and it will take a while. The National Careers Service, which is being launched in April, will work with STEMNET, a body that promotes STEM subjects in schools. It is running a scheme of STEM ambassadors—industrialists, academics and so on—who go into schools to talk to children to try to inspire them, and to think about manufacturing as an option.
Various people have raised the importance of getting women into manufacturing. The hon. Member for Stafford (Jeremy Lefroy) made a comparison with Germany. If we are to make the maximum use of the skills available in this country, we must open up engineering and manufacturing to both sexes, rather than it being the almost exclusive preserve of men.
Mr Iain Wright
Does the Minister think that the downgrading of the engineering diploma qualification is a good and positive thing that will promote engineering to our young people?
Norman Lamb
I absolutely agreed with the hon. Gentleman when he talked about parity of esteem between the vocational subjects, including engineering, and the more academic subjects. In recent years, including during his own party’s tenure in government, that has not existed—there has been no parity of esteem. The vocational, practical subjects have been downgraded in the public mind, and the Government are doing a lot to re-establish them. The university technology colleges initiative is valuable in that regard. On his particular point about the engineering diploma, it is a complex issue with the interaction of school tables. However, the principal learning in engineering—the engineering core of the diploma—will be recognised. That in itself is a vote of confidence. I therefore reject absolutely any idea that the Government do not see the importance of parity of esteem.
I want to mention the fantastic news from Nissan in Sunderland—mentioned by a number of hon. Members—which offers the potential for 2,000 jobs. The shadow Minister was generous in applauding that great news. There are a number of challenges and we hear stories that go in the other direction. However, when we have news that demonstrates a very clear vote of confidence in the UK economy, we should applaud it. The extent to which the automotive industry in this country now leads the way—hon. Members have talked about the fact that we are a world leader in motor vehicle engines—means that we have an enormous amount to build on.
The future of manufacturing is an issue being debated not only in the House, but, as we have heard, at high levels elsewhere today. My right hon. Friend the Secretary of State for Business, Innovation and Skills will address the inaugural EEF manufacturing conference today, as will the Leader of the Opposition. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford, has been speaking at the automated Britain conference this morning and will address the Institute of Mechanical Engineers manufacturing conference tomorrow. He and my right hon. Friend will make it clear that manufacturing growth is one of the highest economic policy priorities for the Government. It is important to stress that.
The UK is recovering from the biggest financial crisis for generations and the deepest recession of almost all the major economies. We are still feeling the shocks from the eurozone’s sovereign debt crisis. The recent agreement with Greece, although welcome, is not a panacea. One of our first decisions in government was to place manufacturing at the heart of our economic strategy. I reject the shadow Minister’s charge that there is any sense of drift. The Department is focused on manufacturing. The Minister of State leads on manufacturing: he devotes attention to it, and he is closely interested in doing everything he can to support growth in manufacturing.
In placing manufacturing at the heart of our economic strategy, we were under no illusion about the challenge that we faced in turning UK manufacturing around. In the UK, manufacturing as a percentage of the economy fell from just over 22% in 1990 to around 10% in 2010. The decline of manufacturing has been significant, in marked contrast with Germany, which has sustained that share of the economy much more successfully. We have learnt from the mistakes of previous Administrations
Norman Lamb
I applaud my hon. Friend’s work promoting manufacturing, not only in his region but nationally.
Norman Lamb
May I deal with the previous intervention?
My hon. Friend the Member for Redcar (Ian Swales) is right to stress the importance of manufacturing in its own right and in respect of services. If we are to get out of economic difficulties, building exports partly based on smart manufacturing is essential. I am conscious that time is tight and I have already given way to the shadow Minister—
Norman Lamb
I would prefer to continue to make my points, despite the hon. Gentleman’s tempting.
There is an absolute necessity to shift activity away from consumption and public expenditure, towards investment and exports. The hon. Member for Montgomeryshire (Glyn Davies) made a good point about rural areas and small companies that can grow. In my very rural constituency, more people are employed in manufacturing than in agriculture. Manufacturing is important in all communities throughout our country.
One of the first things that we had to do as a Government was deal with the deficit. There is a divide on this matter between this Government—the coalition parties—and the Opposition. We believe that to re-establish confidence in the UK economy it is essential that we deal with the deficit effectively. We are clearly starting to succeed in that effort. On those foundation stones it is possible to rebuild. The actions we have taken have helped to restore stability and consolidate the UK’s triple A credit rating, which in turn will make this country more attractive to investors. Our job is to help manufacturers maximise their competitive advantages, thereby stimulating economic recovery and reanimating the spirit of industrial enterprise in this country.
Hon. Members have mentioned the importance of finance. In that regard, there are comparisons to be made with Germany, again, which has a large number of local banks, as does America. The concentration of banking in just a few hands in this country is a problem that is well identified. We have to ensure that our successful growing businesses have access to the finance that they need, including equity finance—another matter mentioned by the hon. Member for Stafford.
Hon. Members, including the hon. Member for Montgomeryshire, mentioned the importance of planning. The Government are taking steps to reform radically our planning system, introduce a presumption in favour of sustainable development and ensure that local authorities recognise the importance of facilitating growth in that way.
Last year the Government issued a plan for growth alongside the Budget, which set out a range of actions to stimulate growth in the manufacturing sector, and over the past year we have made progress in a number of areas. I want to deal quickly with some examples.
We are supporting the technological innovation that underpins competitiveness, which is critical. First, we are setting up a network of technology and innovation centres, known as catapults, to smooth the path from original research to commercial success. The first catapult, launched by the Secretary of State at the Technology Strategy Board’s innovate conference last year, is focusing on high-value manufacturing, funded with £140 million over six years. Catapults for offshore renewable energy, an important sector for the UK economy, were launched last month and will be created in 2012, along with catapults for cell therapy, satellite applications and the connected digital economy. The full network of seven catapults will be completed and fully operational in 2013. Many of these initiatives are in accord with Sir Anthony Bamford’s report, which we welcome and are considering. There is a lot of common ground in that report and what the Government are doing.
Secondly, we have modernised the manufacturing advisory service and increased its funding, including an extra £7 million to support supply chains, as mentioned in the debate. The revamped service will work with businesses, especially small firms, to improve their productivity, which is still a challenge for this country.
Thirdly, we have introduced a £125 million supply chain initiative, working with major UK-based manufacturers to rebuild capacity and ensure that more of the components and associated services they require can be sourced in this country. Fourthly, we have introduced a £250 million support package for energy-intensive industries, which the hon. Member for Stafford and my hon. Friend the Member for Redcar mentioned, to help offset the costs of the carbon price floor. The Government want to ensure that those industries can remain in this country and remain competitive.
Finally, we are establishing the Green investment bank, an innovative and exciting new concept, and expect to make an announcement about its location shortly. The bank will invest up to £3 billion, initially in five priority areas: offshore wind power generation, which is essential for this country’s energy security; commercial and industrial waste processing and recycling; energy from waste generation; non-domestic energy efficiency; and the green deal.
Norman Lamb
I have not got time.
On exports, the hon. Member for Stroud mentioned engaging with the EU and ensuring that our largest market—the single market—is exploited effectively by this country. Whatever our views about the EU, we must recognise the importance of taking every opportunity we can to export through the EU. We must also focus on emerging markets, where there is enormous potential to grow our exports.
Let me mention the regional growth fund. An important element in rebalancing the economy is the use of limited public funds to leverage in private investment in areas of the country that have relied too heavily, under previous Administrations, on the public sector. Nissan is a perfect example of how a bit of public money can leverage in substantial amounts of private funding for this successful initiative.
We are working hard to encourage and support British manufacturers and create an environment where they are free to thrive and compete in a global marketplace. Two weeks ago, we held a second manufacturing summit, which gave ministerial colleagues and me the opportunity to discuss and agree what more should be done to help us meet these challenging ambitions. We want UK industry to be our partner in achieving economic transformation and recovery. This strategy places world-class manufacturing at the heart of a healthy and balanced UK economy.