Oral Answers to Questions

Iain Wright Excerpts

Tuesday 13th December 2016 Commons Chamber

[Greg Clark]

We certainly will. It is important that the industrial strategy and business policy recognise the strengths of particular places. Yorkshire is a particularly fine example.

[Mr Iain Wright (Hartlepool) (Lab)]

Two weeks ago, GB Energy ceased trading, affecting 160,000 customers. Credit must go to Ofgem for ensuring that those customers were promptly transferred to another supplier, but does the Secretary of State believe that the regulator’s approach to risk management needs to change? Instead of carrying out little or no assessment of the viability of new entrants and then picking up the pieces if they fall, more rigorous financial health checks need to be undertaken to minimise the risk of failure, disruption to customers and a loss of confidence in switching to new energy providers.

[Mr Speaker]

The hon. Gentleman can now breathe.

Oral Answers to Questions

Iain Wright Excerpts

Tuesday 8th November 2016 Commons Chamber

[Mr Speaker]

The Chair of the Select Committee, no less: Mr Iain Wright.

[Mr Iain Wright (Hartlepool) (Lab)]

The UK has slipped to 14th place in Ernst and Young’s renewable energy country attractiveness index. It is our lowest ever placing, behind the likes of Chile and Morocco. EY states that various Government actions, as well as Brexit,

“have dealt a blow to the country’s already floundering renewable energy sector and its attractiveness in the eyes of investors.”

I know that the Minister, who is committed to this issue, will be concerned about that. What steps are the Government actively taking and what steps will be taken soon to secure energy confidence and investment to ensure that this promising and vital sector can flourish?

Steel Industry

Iain Wright Excerpts

Thursday 3rd November 2016 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

May I say what a pleasure it is to serve under your chairmanship, Mr Betts? I pay tribute to and express my admiration for my hon. Friends the Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Redcar (Anna Turley), who have made moving, passionate and eloquent speeches that demonstrated their experience. They are huge champions of the steel industry and I am very proud to call them my friends.

We have discussed steel many times in the past few months, but many of the issues—the threat to domestic producers as a result of global overcapacity, subsequent steel price reductions and Chinese dumping—remain. We have also heard about how business rates, energy costs and procurement requirements undermine the competitiveness of the sector. The uncertainty about the ownership of much of the British steel industry and the increasing fragmentation of the sector remain important issues, not to mention the impact of Brexit and the lack of clarity about what our trading relationship with the rest of the European Union will be. However, my speech today will focus on how the steel industry can have a sustainable and prosperous future in the long term. I am not downgrading, by any stretch of the imagination, the importance of the short term or how the industry remains in crisis mode, but we need to think about how steel needs to make an important and growing contribution to our manufacturing sector in the decades to come.

Several hon. Members have mentioned changes in the Tata group. The sacking of Cyrus Mistry as chairman in the past ten days obviously raises greater uncertainty, which is never a positive for business, but it could lead to a change in strategy that could boost and safeguard Tata Steel’s operations in the UK. Last week, the Financial Times reported

“a person with direct knowledge of Tata’s plans”

as

“saying that…Port Talbot…was ‘virtually safe’ following Mr Mistry’s ousting, and that the company would invest ‘whatever it takes to make it efficient’.”

Those words are very welcome, but where do they leave the steel industry or Tata Steel’s footprint in our country? What about other parts of Tata Steel, such as the speciality products and the pipe mills in Hartlepool?

I am not expecting the Minister to provide a running commentary—a fashionable phrase at the moment—on the changes at the top, but does he accept that since putting the assets up for sale earlier this year, important parts of our steel industry remain in a state of limbo? That is bound to have an adverse effect on the recruitment and retention of skilled workers, whose skills are essential to the ongoing competitiveness of our steel industry. It will also have an impact on suppliers and customers of steel products, who may be concerned about getting paid and having the orders delivered.

With this additional uncertainty on top of global pressures, will the Minister—who I very much welcome to his place—take this opportunity to set out the discussions he has had with Tata, and can he say whether further reassurances and commitments about ongoing operations have been made?

[Tom Blenkinsop]

In addition to the removal of Cyrus Mistry and the return of Ratan Tata to the board, there is the issue of ThyssenKrupp’s sale of assets in Brazil. Its removal from the South American economy is happening at the same time as Tata’s change at the top. Will that have any effect and will the Government investigate that in conversations during the trade visit to India by the Prime Minister next week?

[Mr Wright]

My hon. Friend makes an important point. He has also mentioned the importance of a proper industrial strategy. Everybody who has contributed to this afternoon’s debate has mentioned that, so what are the Government doing to put in place a proper industrial strategy—this is very important to us on the Select Committee on Business, Energy and Industrial Strategy—and how does the steel industry fit in with such a strategy? How will the Minister’s departmental responsibilities help the steel industry? Joining business, energy and industrial strategy into one Department provides a better degree of co-ordination and should help sectors such as steel by providing consistency and the co-ordination of policy, but how will that work in practice?

Just over a year ago, on 15 October 2015, a steel summit was held. Three working groups, on competitiveness and productivity, international comparisons, and public procurement, were set up to address some of the challenges facing the industry. What is the current status of those groups? Did they survive the new Government and the change in the business Department? What are the findings arising from the work and how are they being incorporated into a proper industrial strategy? The universally well respected Community union, which has the long-term interests of the steel industry at its very heart and its core, and which is not prone to hysteria or exaggerated pronouncements, recently stated:

“After an initial flurry of activity and plenty of rhetoric we are becoming increasingly frustrated at the lack of urgency demonstrated by the UK government. To date very little meaningful support has actually been delivered—certainly we have not seen the game-changing intervention our industry desperately needs.”

That is a crucial quotation from an important stakeholder in our steel industry. Where is that meaningful support? Given the policy co-ordination under one departmental roof, how will Ministers take forward action on the energy costs that undermine the competitiveness of our industry? Crucially—this has been mentioned several times —will Ministers resolve to address the concerns raised about the business rates that disincentivise manufacturers, not just steel manufacturers, from investing in more efficient plant and machinery by raising what is essentially a tax bill?

Procurement is also a major way in which a co-ordinated industrial strategy can provide meaningful support for the steel industry. We have heard already about the hulls of the Trident submarines being built with French steel. That is immensely disappointing and really does not show a joined-up, co-ordinated Whitehall approach to industrial strategy. What lessons are being learnt from this to ensure that the British industry is able to address the needs of the customer, in this case the Ministry of Defence, and that local steel content can be increased?

On commercial operations, many hon. Members have quite rightly mentioned last week’s welcome decision that Nissan is to build the new Qashqai and bring the manufacture of the X-Trail to the factory in Sunderland. That should also provide more opportunities for local British-based steel producers.

We found in our Select Committee inquiry last year that Nissan, one of the most productive car plants anywhere in Europe, used British-made steel for three quarters of the steel content needed for the Qashqai. Vauxhall buys 50% of the steel it needs for production of the Astra at its factory in Ellesmere Port from Port Talbot. Given the strength of the UK automotive industry, what active steps are the Government taking to ensure that more of that successful sector’s requirements in metals are being provided in a competitive manner by British-based firms?

The UK automotive industry currently consumes about 17% of British manufactured steel. There is surely scope for a successful and winning automotive sector to take more of a growing pie. How are the Government identifying commercial opportunities for British steel? How are they encouraging and incentivising investment in technology and innovation and in the higher quality, higher value steel required in the automotive and aerospace industries? I hope the Minister will respond directly. The Materials Processing Institute can provide the means by which technology, innovation and support can be given to producers to make sure they can move up the value chain. That is vital.

This is not only about automotives; this week is offshore wind week. Offshore wind currently generates about 5% of the UK’s electricity needs. This will double to a tenth of electricity generation in five years. Firms in my constituency such as JDR Cables are winning great big orders in this field. The steel content for offshore wind is immense, but it is often imported from France and the Netherlands. How will we ensure that British-based and British-made steel provides steel content for the offshore wind industry? Are the Government working in the proactive and collaborative way needed in the modern industrial age to ensure that as much of the value in the offshore wind supply chain—more than £18 billion of new projects in the pipeline in the next five years—is captured by domestic content?

The steel industry remains a vital and essential part of our manufacturing base. It cannot and must not be viewed by anybody as a sunset industry. I hope we will see the implementation of a proper industrial strategy to ensure that the opportunities arising in the next few years are captured as much as possible by our British steel industry and that the barriers preventing a proper level playing field are addressed and resolved. That is possible only through active work by the Government, in close collaboration with the industry. With the greatest of respect, that work seems to have gone off the boil in recent months, at a time when we need it more than ever to sustain the long-term viability and prosperity of the British-based steel industry. I hope the Minister will use the opportunity today to state that the Government recognise the importance of the steel industry and will act accordingly, not only to save steel but to make sure it has a proper and fitting future in our manufacturing sector.

Nissan: Sunderland

Iain Wright Excerpts

Monday 31st October 2016 Commons Chamber

[Greg Clark]

I am grateful for my right hon. Friend’s endorsement. As the Prime Minister said, we are going to make a success of Brexit, and we want every sector of our economy, including the automotive sector, not to be disadvantaged by Brexit, but to reap the benefits and be more competitive in the future.

[Mr Iain Wright (Hartlepool) (Lab)]

I commend the Government and the Secretary of State on this piece of great news; it is a welcome example of targeted Government commitment to a successful company in a strategically vital sector in the most important region on earth. However, will the same sort of targeted investment be available to other firms and sectors? If so, how will these be selected in the context of a proper industrial strategy, and will such companies and sectors be given similar reassurance and support to that provided to Nissan?

[Greg Clark]

I am grateful for the generous compliment the Chairman of the Select Committee pays me. I am certainly not going to disagree with him on what he said about the north-east, but I should say that Kent ranks equally. I am looking forward to coming before his Select Committee, not only to answer questions but to talk about the industrial strategy. The approach I not just intend to take but am already taking is to take time to meet the firms in our economy and understand the different needs of different sectors, so that we can be informed by them as we form our negotiating mandate. Those needs will obviously be different from sector to sector, and my commitment, which we will share when we meet in his Committee, is through our industrial strategy to make sure that we have confidence both for individual sectors and for individual places, because there is a very interesting confluence there. Investment in Nissan is good for the sector and good for Sunderland and the north-east.

BHS

Iain Wright Excerpts

Thursday 20th October 2016 Commons Chamber

[Mr Iain Wright (Hartlepool) (Lab)]

It is a genuine pleasure to follow the hon. Member for Bedford (Richard Fuller), who played such an important part not only in the BHS inquiry but in all other inquiries carried out by the Business, Innovation and Skills Committee. I am really proud of the work carried out by the members of my Committee and the Work and Pensions Committee. We came together extremely well to work forensically and diligently on the hundreds of hours of oral evidence and to consider thousands of pages of written evidence. It is significant that the final report was agreed unanimously, without a single vote being required. Such work was made possible only because of the professionalism and hard work not only of the members of the Committees but of their Clerks. I am very proud of the report and stand by every single word.

What came out of the evidence was a story of massive contrasts and of huge inequality—of tens of thousands of low-paid workers, and those trying to get by in retirement on a small pension, losing out because of the greed of a very small number of people who enriched themselves and gorged on BHS to the tune of millions of pounds.

BHS folded this year, a year after Sir Philip Green sold it to Dominic Chappell, but its demise was on the cards a lot earlier than that. In the three-year period between 2002 and 2004, BHS Group paid dividends of £423 million, even though operating profit for that period was significantly less than that amount, at £325 million. In 2004, BHS Group had dividends of £199.5 million, which exceeded the group’s operating profit of £137 million for that year. The dividends of £199.5 million also coincided with a long-term loan of £200 million being taken out that year.

That dividend policy is revealing, and it set the scene for the eventual demise of the company. The payout to shareholders—predominantly the Green family—did not reflect a corporate turnaround and good transformation in business. BHS did not have the cash flow or the profits to fund the dividend. It denuded the company’s reserves and, in the case of that final dividend in 2004, had to be funded by a long-term loan.

Sir Philip could say, quite reasonably, as he did to the Committee, that he received dividends for only a short period of time early on in his period of ownership. It was a long time ago, that is true, but the dividend policy is crucial to understanding the whole sorry business of BHS and the wider lessons that we need to learn.

Green was to enrich himself, his family and his friends at the expense of long-term and sustainable growth for the company. Certainly profits were made, but they were more akin to a short-term sugar boost than a nutritious diet that aided the long-term health and strength of the business. Upon taking over the company, he was able to cut costs—an achievement that should not be easily dismissed—but he was never able to boost turnover throughout his ownership of BHS. So much for the king of retail.

It is true that Sir Philip Green owned the company for a total of nearly 15 years, and that he retained ownership a full decade after taking the last dividends. In that regard, he cannot be described as a short-term corporate raider. But raid the company he did, and his ability to do so meant that he was then in a financial position to obtain the debt to acquire Arcadia and, through the same modus operandi that he operated at BHS, pay his family the biggest corporate dividend in British history. He took the rings from BHS’s fingers, beat it black and blue, starved it of food and water and put it on life support, and then he wanted credit for keeping it alive.

BHS’s balance sheet was made considerably weaker during Sir Philip Green’s tenure of the company. His extraction of value early on in his ownership made the company less able to innovate, to retain a market share or to have a competitive place in the retail market that would allow the firm to generate profits and be in a better position to survive the growing pension deficit. That drip-drip decline provided the backdrop to Sir Philip’s wish to sell the business.

It would be difficult to come up with a more unlikely or incredible knight in shining armour than Dominic Chappell. He was a former bankrupt, with no experience either in retail or in running a company of any sort of comparable size to BHS. He was introduced to the deal by a convicted fraudster for whom he was carrying out driving duties. He boasted that he had senior retail figures on board for key roles in the new business, when that was not the case. He stated that he would be investing his own money in the deal and that he had £120 million of working capital available, when that was not true. His own investment bankers walked away when they discovered that he had lied about the nature of the deal.

Yet the due diligence carried out by the myriad advisers on the transaction did nothing to stop or even pause the deal. There was a remarkable amount of group-think among the supposedly independent advisers. Grant Thornton received four times the fee that it normally receives from similar transactions. Retail Acquisitions Ltd did not have the means to pay advisers for their services unless the deal with BHS went through. The fact that RAL did not have the cash to pay the invoices, let alone to provide the working capital for a loss-making £600 million business with a half-a-billion-pound pension deficit, should have rung alarm bells up and down the City as to whether the engagement should have been taken on. The fact that it did not clearly gives rise to questions about whether impartial advice was provided, or whether blind eyes were turned to ensure that the fees would be paid through a successful transaction, regardless of whether the company toppled over soon after that.

Goldman Sachs provided Sir Philip with “preliminary observations” and was not paid. The lack of any clear letter of engagement showed appalling levels of informality, given that tens of thousands of jobs were at stake. As the hon. Member for Bedford said, the fact that Dominic Chappell was able to say that Goldman Sachs was on board gave his bid credibility. There is a certain irony in the fact that the firm that was not paid, that had an ambiguous role in the transaction and that claimed that it was merely providing preliminary observations was the only one that really expressed concern about the transaction, noting that

“there were risks attached to the proposal in light of the lack of retail experience, the bankruptcy and the highly preliminary nature of the proposals and so on and so forth”.

Goldman Sachs’ attitude to document management seemed to be on a par with that of a dodgy and ramshackle cowboy operation, rather than that of supposedly the world’s premier consulting firm. If that approach was deliberate, in the belief that an informal approach to the transaction would exonerate it of any involvement, it was wrong. Although it was ultimately not responsible for the decisions taken—that was the responsibility of Sir Philip Green—its involvement mattered. It was up to its neck in it, even to the extent of offering a £40 million credit facility.

The risk to their reputation should have made those advisers think again. Much store is placed on the high-quality advice given by such advisers—certainly, in the case of BHS, the use of such prestigious names gave parties credibility and legitimacy when they should have had none.

This was all made possible by weak and incompetent corporate governance. We on the Committee saw opaque structures, overlapping board membership of a complex web of companies and ineffective leadership at board level. Lord Grabiner, chairman of the ultimate selling company, played no effective part. He was not present at, or even invited to, a meeting of the Taveta board that took the ultimate decision to approve the sale of BHS to Chappell. Lord Grabiner showed no curiosity in the deal. He was docile and demonstrated no effective scrutiny, challenge or leadership. That was indicative of a culture, common in corporate governance scandals, in which a domineering, overbearing and bullying individual was able to get away with things with little, if any, challenge.

That is a key reason for the Select Committee’s decision to undertake an inquiry into corporate governance. Given our experience with BHS, we want to look at whether company law is sufficiently clear on the role of executive and non-executive directors and whether their duties are the right ones. We are examining how the interests of shareholders and other stakeholders are balanced, and how decisions of boards could be better scrutinised and open to challenge. Given BHS’s status as a private, non-listed company, how should we align the corporate governance arrangements and requirements between listed and private companies more clearly, so that it is not in the interests of chief executives or directors to take firms private to hide them from effective scrutiny and transparency?

It may be argued that the Green family, as ultimate shareholders, could do whatever they wanted with BHS, and they did. But a company with tens of thousands of workers and former employees dependent on its long-term viability cannot be run as a personal fiefdom or a massive piggybank—even though BHS was run in that way—and corporate governance rules and regulations should, no doubt, be adapted to reflect that.

The duties of directors are somewhat vaguely defined. Section 172 of the Companies Act 2006 states that a director of a company must promote the success of that company in such a way as to have regard for

“the likely consequences of any decision in the long term…the interests of the company’s employees…the need to foster the company’s business relationships with suppliers, customers and others”

and

“the desirability of the company maintaining a reputation for high standards of business conduct”.

[Mr Sheerman]

The BHS employees who lost their jobs in towns such as Huddersfield say to me, “Why is it that the advisers, consultants and auditors who did not do their job in the banking crisis are, all this time later, still not doing their job as auditors and professional people?”

[Mr Wright]

As the hon. Member for Bedford mentioned, we need to look at more than just reputational risk. A lot of deals go through simply because such advisers are involved. Is that good enough?

To return to my point about directors, can anybody look at BHS and say that the spirit and the intention of section 172 of the 2006 Act were being enforced? In companies legislation, directors are equal in status, but in the corporate governance code, chairs and leadership are given much more priority. Given the shocking absence of leadership or challenge from Lord Grabiner, who was truly hopeless, and the weak and impotent corporate governance operating here, there is a strong case for enshrining the requirements of the code in legislation.

As the hon. Member for Bedford said, Sir Philip received his knighthood for services to retail. During our inquiry, however, it became increasingly evident that he was not particularly good at retail at all. True, he was able, in the early days, to sniff out a corporate bargain and cut costs to boost profit. There is nothing wrong with that; that is not a criticism. But during his ownership, he did not boost BHS’s turnover, he lost market share to more nimble and even to not-so-nimble competitors and he failed to anticipate the online retail revolution. By failing to innovate and invest in the brand, he made BHS—an important anchor in the high street—look like a remnant of the 1970s and 1980s in a cut-throat, competitive sector, where grabbing the customer’s attention and retaining their loyalty are paramount.

Sir Philip lacked the success, the ingenuity and the business acumen of the likes of Charlie Mayfield, whose John Lewis group responded well to the internet and whose employee ownership model genuinely motivates staff. He could not match the virtues of Zara, which has increased market share through its superfast turnaround from design to manufacture and shop, which is based on the use of customer data and local suppliers, the rapid turnover of stock and an innovative online platform. Based on company performance, people such as Charlie Mayfield and the founder of Zara, Amancio Ortega, should, it seems to me, be classed as the true kings of modern retail—not Sir Philip Green.

BHS is one of the biggest corporate scandals of modern times. I am sure that the whole House has sympathy for the thousands of workers and pensioners who have lost their jobs and seen their pension benefits reduced as a result of greed, incompetence and hubris. The reputation of business has been tarnished as a result of that greed. The vast majority of businesses are not run and managed in such a way. It would be wrong to tar all businesses with the same brush, but it is vital that this mess is sorted.

[Mr George Howarth (Knowsley) (Lab)]

I am grateful to my hon. Friend for the cogent way in which he has presented his argument. I have no difficulty in supporting the motion, which is in his name and the name of my right hon. Friend the Member for Birkenhead (Frank Field) and others. In principle, I agree with the amendment in the name of the hon. Member for Bedford (Richard Fuller) and others. My only question—my hon. Friend may be able to help me with this—is whether now is the right time to accept the amendment, or whether it should be left in abeyance until some of the other issues have been sorted out.

[Mr Wright]

Parliament will have its view on the knighthood. There is an urgent need to make sure that the pension problem is sorted. Sir Philip Green appeared before us on 15 June and said that he would sort it, but we are now four months beyond that. He is meant to be the consummate deal maker, who can buy and sell companies worth billions of pounds in a couple of days. If he is intent on sorting this, why has it not been done already? Regardless of what Parliament decides today, and regardless of the route taken by the honours forfeiture committee in respect of the knighthood, he has got a duty to sort this. Even at this late stage, Sir Philip should make amends for this whole sorry story and put right the wrongs that he engineered.

[Several hon. Members rose—]

Industrial Strategy

Iain Wright Excerpts

Thursday 20th October 2016 Commons Chamber

[Mr Iain Wright (Hartlepool) (Lab)]

Thank you for that guidance, Mr Deputy Speaker—I need to have a productivity improvement of about 20% immediately.

It is a real honour to follow the hon. Member for Warwick and Leamington (Chris White). I think we have exactly the same principles, motivations and objectives when it comes to having an industrial policy. He is a fantastic member of the Business, Energy and Industrial Strategy Committee. I thank him, other members of the Committee, and the Backbench Business Committee for allowing this important topic to be debated today.

I welcome the Prime Minister’s rhetoric about having a “proper” industrial strategy. We on the Committee have embarked on an inquiry into industrial strategy to assist with the development of policy. A number of fundamental questions need to be addressed to ensure that we have a modern, competitive, productive, sustainable and profitable business base in this country. What is the correct and optimum level of state intervention in economic and business policy? It would be ludicrous and naive to suggest that the Government do not intervene every single day through legislation and regulation that affect the prospects of hundreds of thousands of businesses.

How can that intervention be done in as strategic and co-ordinated a manner as possible? The primary consideration for business in any industrial strategy, or indeed any Government policy, is long-term certainty—something the hon. Gentleman has already mentioned. How can we ensure that the broad sweep of industrial policy transcends Parliaments and can withstand changes of Government? We have to acknowledge that there is a mismatch between the long-term requirements of business and short-term political pressures. Ministers of all Governments and of all persuasions are prone to the temptation of announcements, initiatives and reviews. Governments are keen to give the impression of action and activity, even if that is not often matched in reality. How better to give an impression of zeal and purpose than to announce a review of something?

[Richard Fuller (Bedford) (Con)]

The hon. Gentleman talks about the importance of the long term as he yet again stumbles into the same mistake that politicians make generation after generation—believing that they know what industrial strategy is but do not bother to ask their colleague for whom it might be something different. My experience of business has been in technology. The only long-term thing in technology was the knowledge that tomorrow will be different from today. How on earth are the Government, with their lumbering, slow way of manoeuvring, supposed to keep up with the entrepreneurs who have created so much progress in society?

[Mr Wright]

We can have many debates on industrial policy—we have and we will.

The hon. Gentleman touches on the second big theme of my speech, which is: What do we mean by picking winners? Let me go back to the notion of long-term business considerations and wishes for policy stability at the expense of short-term political culture. We have seen this already with the new Government. The new Prime Minister has announced that we need to have

“a proper industrial strategy”.

In doing so, she seems to have jettisoned much of what has gone before. In a letter to me this week, the Secretary of State said that there needs to be

“a much stronger relationship between Government and business. For that reason, now is not the time for the Government to set out its approach in detail”.

Although that provides clear blue water between the current Government and what went before when David Cameron was Prime Minister, it hardly provides the reassurance of certainty for business. At a time when the process of Brexit is leaving business with unprecedented uncertainty and giving pause to future inward investment into this country, greater detail should have been provided. It is a cause for concern that over three months after the new Department was formed, the Secretary of State is still insisting that he cannot set out the Government’s industrial strategy in any kind of detail. Equally, important steps on large strategic matters such as airport expansion and new energy generation are taking far too long, especially when Britain needs to demonstrate to the world that we remain open for business.

Another key principle of what we need for a successful industrial strategy is effective cross-Government co-ordination. Industrial strategy will be a failure if it merely resides in No. 1 Victoria Street. As previous Administrations have demonstrated, unless the relevant Department—the Business Department, the DTI, or whatever it is called—is headed by a big beast, whether a Heseltine or a Mandelson, the notion of effective co-ordination across Whitehall turns into dust. Early signs from the new Administration are encouraging. Most importantly, the new Cabinet Committee on Economy and Industrial Strategy is chaired by the Prime Minister herself. This should ensure co-ordination and effective leverage from No. 10 and demonstrate to other Departments that the Prime Minister is very interested in this issue and will be pushing to bang heads together if they do not demonstrate due respect to an industrial strategy.

That said, the Cabinet Committee still has to combat a silo-based and defensive approach from Departments. I think that the Secretary of State recognises that. As he said in his letter to me,

“to be successful, the industrial strategy will need to deliver an upgrade to our infrastructure”,

and yet the Treasury will not relinquish control over infrastructure spend. He also stated that a successful industrial strategy will need to

“improve our education and training system to provide the skilled workforce that will be needed in the future”,

and yet the Department has lost control over skills policy. Lord Heseltine, giving evidence to our Committee last week, said that

“industrial strategy starts in primary schools”,

and yet when we met the Permanent Secretary this week and asked, “To what extent does BEIS have influence over the design of primary school policy in order to link it with industrial policy?”, he conceded that the Department had no such influence. I am yet to be convinced, based on experience of successive Governments, and having had the privilege of serving as a Minister myself, that Whitehall Departments will have as a primary objective the effective implementation of an industrial strategy. I hope that the Minister can demonstrate otherwise.

A further key way in which effective Government co-ordination can be demonstrated is through smart procurement. There may often be a tension between Departments in securing goods and services at the cheapest cost, and in considering the use of British-based and British-made products, which may sometimes be more expensive. I would contend, however, that it is often a false economy to buy off the shelf from overseas at the long-term expense of an effective British manufacturing sector. This month’s announcement that the hulls of the replacement Trident submarines are to be built with French steel, at a time when the British steel industry has been pushed to the brink of extinction, shows vividly an acute failure of industrial policy. I am not for one moment endorsing the idea of protectionism. That approach insulates domestic companies from the harsh realities of having to compete in the global economy on cost, innovation and quality, and it ultimately dooms them to obsolescence. However, given the great success story of many parts of British manufacturing, why is not every single public organisation’s fleet using Nissan cars built in Sunderland or Vauxhall vans built in Luton? How is the procurement process nurturing British industry, and how will a proper industrial strategy ensure that that becomes the case?

[Richard Fuller]

I am grateful to the hon. Gentleman for giving way a second time. He said that he was not talking about protectionism, but then he outlined, chapter and verse, a protectionist position that we should buy British products. How is that not protectionism?

[Mr Wright]

I think that smart procurement can engineer proper prosperity, but I warn the hon. Gentleman that what I have to say next will give him spasms. It relates to the link between a proper industrial strategy and foreign takeovers, and how the state can intervene to perhaps limit the range of foreign takeovers.

In her speech launching her campaign to be Conservative party leader in July, the Prime Minister said:

“A proper industrial strategy wouldn’t automatically stop the sale of British firms to foreign ones, but it should be capable of stepping in to defend a sector that is as important as pharmaceuticals is to Britain.”

I welcome that approach. One of Britain’s virtues is its openness and the fact that that openness lends itself to dynamism and a willingness to consider new ideas and innovate new products. That ultimately leads to better competitiveness, yet there is a risk that this country will sell off the crown jewels, which would be detrimental to the long-term success of British business. We are at the heart of a dynamic and connected global economy, but we are at greater risk of investment in capital allocation decisions that affect British industry being made far away from these shores by parent boards headquartered overseas.

Indeed, within days of the Prime Minister entering No. 10, it was announced that SoftBank was buying Cambridge-based Arm Holdings for £24 billion. That was not an old-fashioned, obsolete, loss-making businesses, and it did not require a bail-out from the state. It was a successful British company in the growing global tech revolution. If the tests for stepping in to defend a sector that is important for Britain were not at work in that instance, it is difficult to see when they would be applied. Indeed, what would those tests be? For every instance of a welcome takeover, such as Tata’s purchase of Jaguar Land Rover, there are numerous examples of takeovers where industrial capacity was moved offshore, such as Kraft’s takeover of Cadbury. What are the criteria for stepping in and intervening?

[Mr Sheerman]

That is music to my ears. When I was a young man, I worked for Imperial Chemical Industries. These days it is called Syngenta and it has a big plant in my constituency. The leading agritech company in the world was taken over, including all its sites, not by a normal company, but by ChemChina, which is a part of the communist Government of China. That is not a normal takeover, but what are this Government doing about it? I have not heard anything.

[Mr Wright]

That is a fair point and it gets to the heart of what we mean by foreign takeovers and their link to industrial strategy.

I am conscious that colleagues want to make their own speeches, so I will finish. The Government have yet to articulate what is meant by picking winners, whether they be individual companies, sectors or technologies. There seems to be a move away from our previous sectoral approach, but there is no clarity with regard to the criteria. It is increasingly obvious that the Government are not entirely clear about what an industrial strategy looks like. Starting with a blank piece of paper gives the Select Committee a welcome opportunity to contribute meaningfully to the development of policy, but it does not provide much reassurance or certainty to the firms that are working hard to create wealth and prosperity for this country—and certainty is what they are crying out for at the moment.

--- Later in debate ---

[The Minister for Universities, Science, Research and Innovation (Joseph Johnson)]

By speaking relatively early in the debate rather than at the end, I want to signal that the Government do not intend at this stage to have the last word on the country’s industrial strategy. Such plans, which must command the support of successive Administrations, must be built on strong foundations of engagement, discussion and careful consultation across the Government and, indeed, across the country. As has been said, they should not be imposed from 1 Victoria Street or, indeed, anywhere else in Whitehall.

The industrial strategy is under development, as hon. Members have observed, so now is not the time to set out detailed plans for our approach. We expect to publish a discussion paper around the time of the autumn statement and then a response from the Government in the new year, 2017.

[Mr Iain Wright]

When?

[Joseph Johnson]

In the new year.

[Mr Wright]

And the paper?

[Joseph Johnson]

At the autumn statement this year.

Let me give Members a broad overview of the context in which we are developing the industrial strategy and a flavour for some of the principles guiding us as we do so. First, however, I want to thank my hon. Friend the Member for Warwick and Leamington (Chris White) and the hon. Members for Hove (Peter Kyle), for Edinburgh West (Michelle Thomson)—who is no longer in her place—and for Hartlepool (Mr Wright) for securing the debate and making such powerful contributions.

The UK economy has delivered a huge amount of growth and employment over recent years. Unemployment has been reduced from 8% in 2010 to 5% now, while full-time employment has climbed from 70% to 74% over the same period—a faster rate of employment growth than France, Germany or the USA. But, as the Prime Minster has made clear, our economy is not working perfectly. Gains are not always shared across the country and too many people are losing out. We want to deliver an economy that works for everyone.

Faulty Tumble Dryers (Fire Risk)

Iain Wright Excerpts

Tuesday 13th September 2016 Commons Chamber

[Andy Slaughter]

It is extraordinary for someone to be asked to wait 16 months when a machine that could catch fire at any moment is in their home, yet the manufacturer is saying that they can continue to use it provided they are at home at the time.

We have also heard from Electrical Safety First, a well respected charity, and the chief executive of the Chartered Trading Standards Institute, who was on the radio, on “You and Yours”, earlier this week has told people not to buy Whirlpool products. I know that the Minister was praying trading standards in aid earlier, but she should look at what the Chartered Trading Standards Institute is saying before she does so again. Many people who are far more expert than I am in this field are concerned about this.

I also want to mention the media. It is always nice to mention them when they are doing good things. The Daily Mirror has run a fantastic campaign and put this issue on its front page many times, and ITN has run an excellent campaign. However, this multinational corporation appears to be immune to all that, and to what many Members of Parliament have said about the issue.

I hope that my hon. Friend the Member for Swansea East (Carolyn Harris), who chairs the all-party parliamentary group on home electrical safety, will have a chance to contribute to the debate. My hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick), who has more than 20 years’ experience as a firefighter, and I attended a meeting today of the all-party parliamentary fire safety and rescue group, chaired by the hon. Member for Southend West (Sir David Amess). The Chair of the Business, Innovation and Skills Committee has also raised the matter with Whirlpool. The problem is not that there are no well-informed people lobbying hard; it is that the corporation is not prepared to listen and that the Government do not seem prepared to make it listen.

Three things have shocked me. I appreciate that I am coming late to the issue, but my first point is about the scale of the Shepherd’s Bush fire. A senior fire officer said to me today that as he arrived at Shepherd’s Bush Green on 19 April and saw the flames running up the side of Shepherds Court from the 7th floor to the 11th floor, he thought that the London Fire Brigade would be dealing with multiple serious injuries and fatalities because of his experience at the Lakanal House fire.

I have tracked down 750 fires caused by Whirlpool dryers and by dryers from brands owned by Whirlpool between 2004 and 2015. We know about 127 models, but Whirlpool will not publish the full list. At least 5.3 million machines were manufactured and sold over the period. There have also been deaths. Two young men died in Wales, but I will not talk about that case in detail because it is subject to an inquest that has dragged on for two years.

Moving on to the second thing that shocked me—the hon. Member for South Leicestershire (Alberto Costa) will appreciate this—I wrote to and actually got quite a speedy response from Maurizio Pettorino, the chief executive of Whirlpool UK, asking what the company was going to do given the circumstances of the Shepherd’s Bush fire. Mrs Defreitas was in the same room as the dryer throughout and suspected that the dryer might be responsible even though there was no smoke at that time. She unplugged it and rang the fire brigade as soon as she could and then retreated from the flat, shutting the door. What more could she have been expected to do? I wrote to Mr Pettorino the week after the fire with those points. In what I think was a standard letter, he wrote back saying

“we are advising consumers that their tumble dryers can continue to be used while the repair programme is underway… We are also asking customers not to leave their dryers unattended during operation, either while asleep or out of the house.”

That is comforting. The flat was relatively small, but if someone has a large house, it appears from those instructions that the company would be perfectly happy for them to be on the second floor while the dryer is merrily catching fire in the kitchen. I simply do not understand how that can continue to be the advice. It is not right—I asked the Minister about this morning and I hope she has had time to reflect on it—that these dryers, with their known faults, continue to be in use even if someone in the house is awake and alert. We know from Mrs Defreitas’s experience that if a machine catches fire, there may be nothing that can prevent it from burning down not only the consumer’s property but neighbours’ properties, too.

The third thing that shocked me—I take no pleasure from saying this because I am trying be consensual—is the Minister’s response. I wrote to the Secretary of State for Business, Energy and Industrial Strategy—I am glad he is in his place on the Front Bench—on 1 September but have not yet received a response. I thought that I might get one today given that this debate was happening, but I am sure that I will in due course. I gave notice of the questions that I wanted answered and tried to adopt a consensual tone, but the response that I received at Question Time this morning was that there is

“an effective system of product recall”,

that a steering group has been established

“to consider the recommendations in Lynn Faulds Wood’s… review”,

and that

“a full risk assessment of the product that has been agreed with Peterborough… trading standards”.

I am sorry, but that is not good enough. The risk assessment has not been published and it is the practice of manufacturers not to publish such assessments. Why are the public and the people who are being advised to continue using these admittedly dangerous machines not able to see the risk assessment? I am afraid that the response has been anything but robust. I am totally sympathetic to local trading standards departments, which have had, on average, 50% of their budgets cut. There is no equality of arms between Peterborough City Council trading standards and the Whirlpool Corporation, a multinational, multi-million-pound organisation. In many cases, trading standards have neither the resources nor the powers to deal with situations such as this. If they felt that what recall process there is was not being satisfactorily dealt with, they could take Whirlpool to the magistrates court, and if they were successful—this would take a lot of time and effort—there might be a fine running into hundreds or possibly even a few thousand pounds, for a regulatory offence. I do not believe that is enough to motivate Whirlpool to change from its current policy of waiting 16 months before effecting a repair to one where it immediately says, “You have a dangerous machine that we have manufactured in your house. Do not use it. We will come to repair or replace it immediately.” Such a change is what I would like to see.

[Mr Iain Wright (Hartlepool) (Lab)]

Customer safety is everything in business, as is the reputation of a corporation. Would my hon. Friend think about the contrast between how Whirlpool has dealt with this and the immediate recall, admittedly not in this country, by Samsung of the Galaxy Note 7? That recall will knock extraordinary amounts of value off Samsung’s balance sheet, but the company took the view that reputation is important and so is customer service. Hotpoint-Whirlpool has a responsibility to account for this publicly, because it is undermining its reputation and causing real problems with customers.

[Andy Slaughter]

My hon. Friend has hit the nail on the head; the two companies are adopting completely opposite strategies. No doubt they both have commercial motivations, but one has been benevolent and one has not. Samsung thinks, “Right, we will take the hit now, because we believe in the long-term reputation of our company.” Whirlpool is trying to go below the radar. There will have been many reports of these many hundreds of fires in local newspapers and, occasionally, in the national press, but there is not an understanding across the general population that millions of people may have these dryers in their homes and that they pose a risk. Many of these dryers are not even registered.

I wish to make just two more points, as I want a little time for not just the Minister, but other hon. Members to speak. The first goes back to the Lynn Faulds Wood review, which was an independent review set up and supported by government. The review reported, making a number of serious and well-thought-out recommendations about how a product recall system could work in this country. I am afraid to say that it has been dealt with in a very cynical fashion. Almost all the recommendations have either been ignored or pooh-poohed in some way. The only thing that has happened since it reported is that a steering group has been set up. All of us who watched “Yes Minister” will know that setting up a steering group is what you do when you do not want to do anything. This is a particularly ineffective steering group. It was given six months to meet, and they will end on 4 November. I do not how many times it has met, because it has not published any reports or minutes. I do know the membership of it, so I know that it has more representatives of manufacturers and retailers than of safety experts, from the fire service and elsewhere. I know very little else about it, so perhaps one other thing the Minister can clarify today is: what is happening with the recommendations of Lynn Faulds Wood’s report? Will the Minister look at them again? That was a serious piece of work, so will she seriously think about whether a new system of product recall should be established in this country? In the meantime, will she tell us what this steering group is doing and what happens when it allegedly finishes its work on 4 November?

There are many, many defects in this. Most of my constituents, and most constituents of other Members, will be living in a world of false security, in that they will believe that in the UK in 2016 there is a system of product recall. They will not realise that in many cases manufacturers have no idea where their products go. Part of the reason for that is that there is no compulsory registration, and there is not even an incentive to register products when they are bought because usually in the process of registering a product people are also asked to sign up to all the marketing and other guff that comes out of that. Rather than being bothered and pestered to buy all sorts of warranties that they do not want, people will say, “No, I am not going to register this product.” Consequently, between 1 million and 2 million of the Whirlpool machines have just disappeared; we do not know where they are. Before we can do a product recall, we must know where the machines are.

Oral Answers to Questions

Iain Wright Excerpts

Tuesday 13th September 2016 Commons Chamber

[Greg Clark]

I can indeed confirm that. In our projections of how we are to earn our living as a nation, we should look to our strengths. The service sector is undoubtedly one of our greatest strengths, and we must of course create the conditions that will enable it to continue to prosper in the future.

[Mr Iain Wright (Hartlepool) (Lab)]

I, too, welcome the Secretary of State to what is a fantastic, ambitious, interesting and challenging brief. I wish him and his ministerial team all the best. Will he now explain precisely how the new industrial strategy marks a distinctive change in the Government’s approach to collaboration with business and intervention in the economy—or is it merely a change to the nameplate at 1 Victoria Street?

[Greg Clark]

It is certainly not that. I would very much welcome the involvement of the new Select Committee which I expect to be formed in ensuring that we capture everything that we need to make a success of the strategy. I do not think that it is brand new, in the sense that, as I have said, we build on success. For instance, we talked to one of the hon. Gentleman’s colleagues about the automotive sector, which we know has been a significant source of strength. The environment that we have created with the firms in the sector, and with universities and scientific institutions, has been crucial to its success. We will build on those strong foundations, and will be very clear about our path for the future.