Manufacturing (East Midlands)

Lilian Greenwood Excerpts

Tuesday 12th February 2013 Westminster Hall

[Mr Spencer]

I recognise those challenges. Energy supply will be vital if we are to see our way through and ensure a thriving manufacturing sector. The Government need to address it and are addressing it. We must ensure that we have energy security as we move forward.

[Lilian Greenwood (Nottingham South) (Lab)]

Does the hon. Gentleman think that it is important for the Government to provide certainty about their direction of travel on energy? In my constituency, we have a fantastic engineering company, Romax Technology, which relies on providing service to the automotive industry and offshore wind. I know how important it is for the industry to have certainty about where the Government are travelling, in order to have the confidence to invest.

[Mr Spencer]

I recognise that challenge, but I feel that we are 15 years behind the game. We should have addressed these problems a long time ago. The nuclear decision was put off by previous Governments. Had we bitten that bullet much earlier, we would not be as concerned about energy security as we are today. I am glad to see that the current Government are trying to address the issue and get a clear direction. Of course, being a coalition Government brings its own challenges. Sometimes there is disagreement within the coalition about the best way to procure energy security.

I have been open about my view that nuclear is a great option that we should be pursuing. I also think coal has a role to play. Sherwood sits not only on a former coal field but on great reserves of shale gas, which could assist us. We also have a great deal of water, which can be important to manufacturing. Nottinghamshire sits on Bunter sandstone with aquifers. However, at the top of the list must be a willing and ready work force, which we in the east midlands have. We have great skills. As we have a thriving manufacturing sector, we already have a high skills base for any company that wants to relocate to the east midlands.

I hope the message of this debate will be that the east midlands is open for business to manufacturers of any sort looking for somewhere to relocate. The east midlands is the ideal place, and we would welcome manufacturers with open arms. I hope the Minister, as he goes around the country in his many dealings, will recognise how important the east midlands is and what it has to offer. If he is having discussions with any foreign or other companies looking to relocate, I hope he will recommend the east midlands. It would assist us in procuring more companies to come and make use of the area.

There is a lot more that we can do, and I want to emphasise what Government and local authorities can do. Broadband is important. People trying to run businesses in rural locations need access to good-quality broadband, and we must do more to get it out into rural locations so that companies can relocate to those areas as well. Infrastructure and traffic are a constant battle. Every time one improvement is made, it knocks on to another area. We must keep doing more to improve infrastructure to remove bottlenecks, so people can get around the country.

Finally, on training, we need the best-quality engineers and the most highly skilled individuals, which requires the work and support of some of our great training institutions, such as Loughborough university, Nottingham university and the many others that educate people to a high degree. Some colleges in and around our constituencies deliver courses on food and drink manufacturing, welding skills and so on. Such skills will be absolutely vital to our companies as we go forward. We have a little bit further to go.

Many of the businesses I talk to are crying out for good quality, highly skilled staff and they do not want to look to eastern Europe to procure those people; they want UK-based, qualified people and we need to keep pushing that door to ensure that they are coming forward.

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[Lilian Greenwood (Nottingham South) (Lab)]

Mr Hollobone, it is a great pleasure to have an east midlands Member of Parliament in the Chair for this debate, particularly one who makes such a fantastic contribution every time he introduces a speaker.

I congratulate the hon. Member for Sherwood (Mr Spencer) on securing today’s debate and on giving us the opportunity to highlight the strengths of, and the challenges faced by, the manufacturing industry in the east midlands. As he said, the industrial revolution began in the east midlands, and manufacturing there still employs a higher proportion of people than in any other region: within the D2N2 local enterprise partnership, covering Nottingham, Nottinghamshire, Derby and Derbyshire, 16.7% of full-time jobs were in manufacturing, compared to 14.5% in the east midlands and 10.5% in the whole UK. Unfortunately, that is not so in Nottingham city, where at the moment manufacturing accounts for only 6.2% of full-time employment.

The largest manufacturing subsectors in the D2N2 economy are transport equipment, metals and food and drink. I will say a bit more about the local firms involved and their needs shortly. In the 19th century, Nottingham was at the centre of the world’s lace industry, a legacy that recently once again received national attention when it was featured in Mary Portas’ “Mary’s Bottom Line” programme. Sadly, there are no lace manufacturers left in the city.

During the 19th century, world-famous names were founded in the city, some of which have been mentioned already, including Boots the Chemist, the Raleigh Bicycle Company, and John Player and Sons. I cannot resist mentioning Frederick Gibson Garton, who recorded his secret recipe for HP Sauce in the Meadows in my constituency in 1894.

Life in those industries was immortalised by local writers, including D.H. Lawrence and Alan Sillitoe. Although we do not make bicycles in Radford now, the Saturday nights and Sunday mornings of Arthur Seaton are still familiar to the city. Thousands of visitors come to Nottingham every weekend for a great night out in our purple-flag city centre. That shows that it is not just the manufacturing industries that are important; there is knock-on for the other industries in the area.

In the 21st century, Nottingham faces both opportunities and challenges. Government policy has led to the loss of some 53,000 public sector jobs in the east midlands. With three in 10 people in Nottingham city employed in public service, we must diversify if we are to become more resilient and avoid the damage wrought by high unemployment and a lack of opportunities for our young and growing population.

“The Nottingham Growth Plan”, published in 2012, aims to reconnect the city with its proud history and create a manufacturing renaissance, rebuilding our international reputation as a place that designs and makes things. Some of the elements needed for that renaissance are already in place. We are fortunate to have two universities that produce world-class research and a highly educated work force, and we already have highly successful companies and emerging sectors in areas such as digital content, life sciences and clean technology, which can provide prosperity and sustainable employment if we give them the right support as set out in that plan.

One of the city’s new growth sectors is digital content—a far cry from the grease and noise of the Raleigh factory, perhaps, but it already employs 6,400 people. That sector offers huge opportunities for growth. The games developer, Crytek, located on Canal street in the heart of my city, employs almost 100 people in the lucrative video games market. Many smaller gaming industry companies are locating in the Lace Market area, now the centre of Nottingham’s creative quarter, backed by the city deal.

Crytek stood to gain from Labour’s tax break for video games developers, but the incoming Government scrapped it in 2010, only to reconfirm it two years later, by which time the UK’s advantage had been lost to competitors in other countries. It would help if the Minister said how we can avoid such a stop-start situation in future.

Also in Nottingham’s creative quarter is BioCity, the UK’s leading bioscience incubator, established 10 years ago as a joint initiative between Nottingham’s two universities and the regional development agency. BioCity builds on Nottingham’s long-standing expertise in biosciences. It is on the site where ibuprofen was discovered by Dr Stewart Adams in the 1960s, and provides lab accommodation, facilities, expertise and access to finance. It currently sustains more than 80 fast-growing businesses —biotech, pharmaceutical and health care start-ups—and is looking to expand further to meet demand. The Government’s decision to cut total science spending, including in research and development, is exactly the wrong decision for the future development and expansion of this sector.

On the role of Government and support for regeneration, the Smith Institute recently published a report that identified the low levels of public investment in the region. That was the subject of discussion by the all-party group on the east midlands. The report’s authors describe how they realised in 2012 that

“something was going seriously wrong in the allocation of central government investment in the East Midlands”.

In the first two rounds of the regional growth fund, the east midlands received just 4% of the total funding available, the lowest share of any region. In round 3, the east midlands again received the lowest share of funding; it was allocated just £14 million, compared to £105 million for the north-east and £88 million for the north-west. That put it in a worse position than before the scrapping of our regional development agency; we were allocated 8.9% of total regional funding in the RDA’s last three years—more than the south-east, the south-west, or the east of England. I hope the Minister will say what he can do to address that under-investment, which, as the Smith Institute report says,

“in terms of jobs and growth and in rebalancing the economy, makes no sense whatsoever”.

Finally, let me return to one of our most historic sectors—food and drink, and specifically brewing, which is dear to not only my heart, but the hearts of many thousands of my constituents. I am fortunate to have four breweries in my constituency, Castle Rock, Nottingham Brewery, Trent Navigation, and a little micro-brewery, Magpie. They are responsible manufacturers who have continued to grow despite the recession. They are being hit, however, by a combination of higher VAT and the beer duty escalator. The escalator was introduced in different economic times. Should not the Government review alcohol taxation to support those vital manufacturers and the pubs that serve their produce?

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[Andrew Bridgen]

I thank the hon. Gentleman for his comments, but I will not allow him or any other Labour Member to rewrite history. The fact is that under the previous Labour Government, manufacturing as a proportion of GDP in this country fell by 50%. It is not a record that I would be proud of if I were sitting on the Labour Benches. The hon. Gentleman should think on that. It is this Government who will address the need to grow manufacturing and rebalance our economy.

[Lilian Greenwood]

I simply want to respond to the hon. Gentleman’s comment about the public sector somehow riding on the back of the private sector. Those people who are employed in the public sector doing vital work in our schools, hospitals and universities also pay tax and make a hugely important contribution to our economy.

[Andrew Bridgen]

The hon. Lady is absolutely right. Public sector workers do vital work, but the answer is that all the wealth creation comes from the private sector. We cannot ask 50% of the economy to support itself and the other 50%. That is why we need to rebalance the economy. It is simple maths and it is why we have a deficit.

In the 1980s, following the closure of the coal mines, we needed to rebalance our economy in North West Leicestershire, and as a result of that successful rebalancing it is now in the top 20 districts for business-led growth in the whole of the UK, and in the top 15 for export-led growth. I would like to cite the success of two small-to-medium-sized companies to illustrate the huge contribution they are making to the local and national economy.

Norton Motorcycles, which is based in Castle Donington in the north of my constituency, was founded in 1898 but rejuvenated in 2008, when Stuart Garner bought the rights to the brand. Success and growth has followed, with the help of the Government underwriting a loan in 2011. The company has doubled production of motorcycles, from 500 to 1,000, and it has an order book going forward of some £25 million. Some 90% of its sales are for the export market and 83% of the motorcycle components are manufactured in the UK. It has also started a Norton academy with Stephenson college, based in my constituency at Coalville. The project is focused on youngsters and limbless ex-servicemen, whom we are already working with at BLESMA—the British Limbless Ex-Service Men’s Association—to give them a chance to get settled back into our society and employment post-injury. That illustrates the wider impact and community benefit of our thriving manufacturing success in North West Leicestershire.

Another firm that I have visited in my constituency is Zeeko, a technology company based in Coalville that produces ultra-precision polishing solutions for optics and other complex surfaces. It is growing at a significant rate, taking on more staff every year, and it is exporting all over the world. In 2011, it won a Queen’s award for innovation.

Those are only a couple of examples of how my constituency and the east midlands as a whole are exporting overseas, and are at the forefront of the Government’s mission to rebalance the British economy to ensure that we can pay our way in the world. Encouragingly, as other Members have mentioned, exports from the east midlands have recently reached another record high, sending some £13.5 billion-worth of goods overseas for the 12 months to the end of September 2012.

Another very encouraging signal for the sustainability and growth of east midlands manufacturing is the fact that the latest figures from Her Majesty’s Revenue and Customs show that non-EU exports now account for 57% of exports from the east midlands. Europe may have been the future once and it is still a very sizable chunk of the market, but with its heavy indebtedness, sclerotic economies and adverse demographics, it is a market that, while important, we will have to look beyond for the future of our manufacturing export growth.

My constituency also plays an important part in distributing manufactured goods, both in the UK and throughout the world. East Midlands airport, which is located in my constituency, is the largest dedicated cargo-handling airport in the UK, currently handling over 310,000 tonnes of flown cargo every year, with ample room to grow. The airport is another advantage for our exporting manufacturers. Together with the proposed strategic rail freight interchange, which will get more freight off the road and on to rail—if HS2 does not run straight through the middle of it—that again illustrates the advantages and opportunities for manufacturers in the east midlands. It is worth pointing out that the strategic rail freight interchange will involve £500 million of private sector investment in my constituency, creating in excess of 7,000 new jobs, hopefully by 2016.

To sum up, the east midlands is leading the way in manufacturing growth in the UK, and my constituency is playing a key role. In addition to the Government, we must all do what we can to provide the conditions for that growth to continue. Lower corporation tax, increased capital allowances, and many measures in the Enterprise and Regulatory Reform Bill will help to ensure that growth is promoted not only in the east midlands, but across our country.