Manufacturing (West Midlands)

Debate between Iain Wright and Gavin Williamson

Tuesday 15th January 2013 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Williams. I congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing the debate and thank him for the consensual tone that he set, which has been characteristic of the debate. Today’s debate is on promoting manufacturing in the west midlands, and from listening to hon. Members today, I think there is much to promote. Hon. Members’ contributions have strongly brought out the region’s clear strength in automotives in particular and manufacturing in general.

I join other hon. Members, particularly my hon. Friend the Member for Birmingham, Northfield (Richard Burden), who brought his considerable expertise in the automotive industry to bear, in welcoming the great news announced in the past 24 hours that Jaguar Land Rover is to create 800 new production jobs at its plant in Solihull. That is a welcome counter to last week’s grim news that Honda will cut 800 jobs from its factory in Swindon. Jaguar Land Rover sold almost 360,000 vehicles last year—an increase of 30% on the previous year—and is rightly recognised, as we have seen today, as a true success of British manufacturing.

My hon. Friend the Member for Dudley North (Ian Austin) mentioned the potential for the west midlands of the development of advanced low-emission vehicle technology. It is similar to my region of the north-east, which was at the heart of, and the spark that brought about, the industrial revolution—I want to put that on the record. It is an example of how a modern industrial strategy should work: businesses and Government working not in silos, as the hon. Member for South Staffordshire rightly said, but together to identify the sectors in which we have a competitive advantage and the potential for high growth in the future; and Government enabling and facilitating the principal actors to come together through investment and co-ordination to realise that potential.

[Gavin Williamson]

I appreciate the time, so I thank the hon. Gentleman for giving way. Does he think it is important for every Department, not only the Department for Business, Innovation and Skills, to encourage manufacturing?

[Mr Wright]

The hon. Gentleman is spot on. The Department for Business, Innovation and Skills should not be the only Whitehall Department with responsibility for business; every Department in Whitehall should be responsible for business. I pay tribute to my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) for trying to press that point when he was doing fantastic work in the Department. It would be wrong for UK manufacturing and the UK economy as a whole if we thought that business resided in Victoria street. That is not how it should be and that should be impressed on every Whitehall Department. There also needs to be a degree of consensus across the House and Whitehall on the importance of manufacturing, which would facilitate the suggestion made by the hon. Member for South Staffordshire.

As was mentioned, continuity of policy is important. It is pleasing that much of the good news from Jaguar Land Rover and other parts of the automotive sector is the fruition of policies laid down by the previous Government as part of the new industry, new jobs initiative, the low-carbon vehicles sector initiative and the points made in government by my right hon. Friend the Member for Wolverhampton South East. Such continuity and certainty over the next 20, 30 or 40 years would help British manufacturing and must be a hallmark of good industrial policy.

Despite the good news and positive figures from Jaguar Land Rover and the consensual tone of this debate, there are concerns, which I would like to flag up. Office for National Statistics figures published last Friday show that a manufacturing-led economic recovery has stalled; manufacturing output on a seasonally adjusted basis fell by 2.1% in November 2012 compared with November 2011, and that month’s figure in 2011 was itself a fall of 0.6% on the previous year. For all the talk from the Chancellor and others of a march of the makers, manufacturing output is significantly down, even from the recession—on ONS figures, the index of manufacturing is 6% below the level of summer 2010.

The national picture is confirmed in the west midlands. The survey published last Monday by the West Midlands chamber of commerce showed, for the last quarter of 2012,

“most companies, especially manufacturers, struggling to maintain their performance levels”.

In the survey, only 31% of manufacturers—down 10% on a year ago—reported an increase in domestic sales. Exports, which should be the lifeblood of an economic recovery, also showed a dip from their position last year. Steve Brittan, president of Birmingham chamber of commerce, said at the time of the survey’s publication last week:

“These figures are a concern and demonstrate that the government must act on its priorities.”

Given the huge potential of manufacturing in the west midlands and across the country, and the stalling, disappointing and deteriorating position for manufacturers, what will the Minister pledge to do differently to realise the potential?

The hon. Member for South Staffordshire mentioned the regional growth fund, and the Minister will no doubt be aware of the Public Accounts Committee report that shows that only £60 million of the £1.4 billion allocated has been spent on front-line projects. The west midlands was awarded 31 grants in the first two rounds of the regional growth fund, but as of October last year, some 18 months after the first round, only eight schemes had received funding. My right hon. Friend the Member for Wolverhampton South East eloquently raised that point; there is a huge difference in Whitehall culture between announcing an initiative and getting the money to the people on the front line. Will the Minister update the House on how he has speeded up the process to ensure that money is provided as quickly as possible? What lessons have been learned for round 3? I understand that the west midlands secured £124 million for 17 projects in October 2012. Three months after the announcement, how much of that £124 million has found its way to those 17 projects?

The survey by the chamber of commerce, to which I referred, shows that the cash and financial position for manufacturers was getting worse over the last quarter. Only 16% of west midlands manufacturers registered an improved cash-flow position compared with 31% in the previous quarter. The survey also marked low investment in plant and machinery and training, which shows, according to the chamber, a general lack of confidence among manufacturers. Given the concern of manufacturers, the past performance of the regional growth fund and perennial concerns regarding cash and access to finance, what will the Minister do differently to realise the potential? Could he say a little more about how a British investment bank, announced in September by the Secretary of State, might have a regional dimension to assist west midlands manufacturers?

Hon. Members have spoken about the successes of manufacturing and how successful foreign direct investment can transform industrial performance. Jaguar Land Rover is the obvious example, but there are others and I hope we are not complacent. We need to determine how to help the English regions. The Minister may have seen Ernst and Young’s attractiveness survey for 2012, which showed London and the south-east securing more FDI projects than the rest of England put together, and that grip is intensifying. The west midlands showed year-on-year falls in FDI of about a quarter. The report tentatively suggests that it is “worth noting” that the closure of English regional development agencies, including Advantage West Midlands, occurred in 2011.

The report states that only 12% of respondents say that they would use UK Trade and Investment for queries regarding FDI. Foreign investors are unclear as to whom they should go to in the regions if they were considering investment in manufacturing. Given that the debate is on promoting manufacturing in the west midlands, it is a crucial question: who does a potential investor from Singapore or China contact in the west midlands to get things done and facilitate investment?