Engineering Skills (Perkins Review)

Debate between Iain Wright and Jeremy Lefroy

Tuesday 10th December 2013 Westminster Hall

[Mr Iain Wright]

Absolutely. I was about to mention how important Airbus was as well. However, there are other sectors; we are not just wings and wheels. We have food and drink manufacturing—the biggest manufacturing sector in the country—as well as construction, life sciences, chemicals and great engineering in the energy sector. There is also a real ambition to have 10% of the global space industry by 2030. Those are all things that we will be using for our competitive advantage in the future.

[Jeremy Lefroy (Stafford) (Con)]

In JCB, there is also one of the major construction equipment manufacturers in the world. Just last week, it announced 2,500 extra new jobs in Staffordshire, bringing some of its supply chain back to the UK. It is a privately owned company —a world-beating one at that—investing right here in the UK.

[Mr Iain Wright]

That is certainly something to be encouraged. I want to see how the supply chain of manufacturing can be enhanced to ensure that we can have that reshoring back to the UK as much as possible. We have the need for an economic, competitive edge, but we will also be trying to solve big social issues in the 21st century such as climate change, the transition to a low carbon economy, an ageing population and tackling resource scarcity for food, clean water and energy. All that requires engineering skills, so the ambition must be nothing short of making 21st-century Britain an engineering nation.

However, that enormous opportunity is not being matched with a commensurate supply of engineers coming on stream. As the hon. Member for Mid Worcestershire said—I want to reiterate the figures, because they are striking—EngineeringUK states that the UK will need 87,000 people a year at level 4 over the next decade to meet demand, let alone to make sure that we can have expansion. However, the country has seen only about 51,000 and the number of level 3 engineering-related apprenticeships has actually dropped. We have an annual demand of about 69,000 but, as the hon. Gentleman said, the numbers are about a third of that and are falling.

Research by Matchtech in the past couple of weeks showed that three quarters of engineers lacked confidence in the Government’s action to encourage innovation in the UK—that is up from last year—and more than half said that they were willing to leave the UK and find work abroad. Despite the welcome news about economic statistics, 54% of engineers believe that the state of the British economy is negatively affecting the industry—up a full 10 percentage points on the previous year. There is an immediate and urgent need to do something about the issue.

There have been four broad themes today and I want to touch on those. Every speaker has mentioned the perception, image and culture of engineering, and they have been right to do so. Britain is the nation of James Watt, Richard Arkwright, Isambard Kingdom Brunel and Frank Whittle, but I fear that this country does not value the status of engineers. It is deeply dispiriting that, when people are asked to name an engineer, the most recognisable in our country is Kevin Webster from “Coronation Street”. That sort of view reinforces stereotypes and prejudices that engineering and manufacturing are often literally backstreet, low skilled and low paid, rather than highly skilled, well paid and innovative.

Manufacturing and Engineering

Debate between Iain Wright and Jeremy Lefroy

Tuesday 6th March 2012 Westminster Hall

[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.”