Industrial Strategy

Jeremy Lefroy Excerpts

Thursday 20th October 2016 Commons Chamber

[Chris White]

I welcome that intervention. The hon. Gentleman and I have attended some of those very interesting institutions and worked together at Warwick University, one of our leading international universities.

I am pleased that Tata has based its new technology centre in Leamington, which shows what effect inward investment can have on our constituencies and our country. Despite the collaboration—the links between our educational institutions and business, its location and its workforce—how much more could we do as a constituency and as a country if we had the strong foundations of an industrial strategy?

Since working in the automotive sector, I have always had a passion for manufacturing, not least as co-chair of the all-party manufacturing group. I am a member of the Business, Energy and Industrial Strategy Committee—I am pleased to see its Chairman, the hon. Member for Hartlepool (Mr Wright), in his seat—and we are currently taking evidence on this concept.

We have recently heard evidence from the right hon. Member for Tatton (Mr Osborne), the former Member for Twickenham and Lord Heseltine, who all assured us in their own different and special ways that we have had an industrial strategy all along. Perhaps they are right, but I would like to use this speech to say how I think an industrial strategy could be reformed to meet some of the present challenges that we face.

In the last Queen’s Speech debate, I spoke on industrial strategy. I remember that most of the other speakers spoke about sugar tax, an important issue at the time. I must admit that I was not entirely overwhelmed by the Government’s enthusiasm for what I was saying, so no one is more delighted than me to see the inclusion of the words “industrial strategy” in the name of a Department.

There has been a sense of scepticism about industrial strategy. [Interruption.] That was more warmth than I received for my remarks in the Queen’s Speech debate. Industrial strategy has been given negative connotations. Let us consider British economic performance, for example, in the post-war period. Britain’s relatively poor record between 1950 and 1979 has generally been blamed on the lack of competition, with traditional firms being unwilling to adopt technological or process advances. Wilson’s “white heat” of the scientific revolution was replaced by a heavy reliance on the financial sector. Neglect in the past has seen a weakening of our supply chains and a huge shortfall in the skills that a world-class industrial base requires to satisfy both demand and opportunity.

We need to have a strategy and structure in place, a need made even more urgent following the EU referendum. In addition, highly capital-intensive advanced manufacturing requires long-term planning. There is a burden on companies to invest in skills and equipment, and a burden on the state to help create stability for long-term decision making—macroeconomic, fiscal and regulatory.

For manufacturing to grow, an emphasis needs to be placed on encouraging investment and greater long-termism. Although initiatives such as the midlands engine and the northern powerhouse are laudable, they need to be supported by strong tangible policy, and that policy will be less effective if it is piecemeal. For example, capital allowances were popular with industry, but were discrete in their design. A coherent strategy can work for the midlands, the north and the south, driving growth, building economies and providing sustainable employment and the subsequent reduction in community and individual inequalities.

Any new industrial strategy must fit the times we live in, the domestic economy, the global marketplace and developing themes such as Industry 4.0. In September 1965, the then Secretary of State for Economic Affairs produced the national plan, which sought to cover

“all aspects of the country’s economic development for the next five years”.

The plan was more than 450 pages long and looked at everything from the running costs of schools to the future development of the electronics industry. The plan was comprehensive in scope, but our economy no longer operates under such a structure and the plan would have negative consequences if replicated today.

The lack of success of documents such as the national plan does not mean that there should not be a national industrial strategy now for the UK, or that there is not a case for a coherent document to be drafted by the Government, outlining the support that they intend to give the sector and Departments. In countries such as Germany, long seen as a model industrialised nation, there has been little need for the Government to pin down formal strategies or statements because this philosophy is so entrenched and embedded in all activity. In Britain, there has been a tradition of volunteerism when it comes to economic organisation.

[Jeremy Lefroy (Stafford) (Con)]

Does my hon. Friend agree that in Germany, in the Kreditanstalt für Wiederaufbau—KfW—which has been in place since the late 1940s and provided long-term support to small and medium-sized enterprises, we have a model that could be replicated here, perhaps in the form of a UK investment and development bank?

[Chris White]

I thank my hon. Friend for his contribution, but I gently suggest to him that that slightly misses the point. It is just one element of an industrial strategy.