Manufacturing in the UK

Debate between Lindsay Roy and Iain McKenzie

Tuesday 14th January 2014 Westminster Hall

[Mr McKenzie]

I will explore later business demand for graduates and highly educated people to bring into the manufacturing process.

Jason Lippitt said:

“Research and development is of paramount importance. We haven’t yet invented the products we will be making in five years. Research and development is the lifeblood of business.”

How true that there are products we have yet to discover. In five years’ time, we could be dominating markets, but only if we prioritise and plan for the future of manufacturing in the UK. If we look at the phones or tablets in front of us now, could we have imagined them five years ago, or even believed how essential to everyday life they would become? Devices that we are doing without now will make us wonder in five years’ time how on earth we managed without them. With them will come new careers that we also could not imagine.

That vision is shared by Andrew Johnson, senior economist at the manufacturers’ group EEF, who said:

“There are countries on other continents that Britain will never be able to match labour costs with, but they will never be the dominant part of the selling equation if we continue to develop innovative new products and develop new technology.”

How true. What is the position of the Minister and of the Government on forming a partnership with manufacturers to invest in research and development to create new products and to win existing markets and create new markets? Government policies can either make or break a nation’s manufacturing sector.

For example, Germany has an interventionist industrial strategy. Public-private collaboration enables innovation and technology advancement and promotes talent development. Global leaders in innovation, such as the US, Japan, Germany and Sweden, have well-connected systems that enable the public and private sectors to work together to maximise the economic benefits of manufacturing and innovation.

What of the UK? The UK system would seem not to be as well connected or orientated to the needs of business compared with that of, say, the US Government, which plays a major role in shaping innovation. The USA has a systematic and comprehensive approach to driving innovation and to supporting small businesses through its small business innovation research programme. The Dutch Government, too, have introduced a new policy to promote innovation in strategically important economic sectors.

In contrast, the lack of any coherent manufacturing and industrial strategy from the Government can only prove to be a disaster for the UK economy, as highlighted by Lord Heseltine’s report, “No stone unturned”, which received a positive response from industry and the manufacturing unions and was welcomed by the Prime Minister. Nevertheless, the lack of any real Government economic and industrial growth policy and their failure to take urgent action in developing a manufacturing policy are worrying.

On the whole, manufacturing continues to suffer throughout the UK. We need urgently to see the green shoots of recovery spring to life in all parts of the UK. Research and development tax credits are a move in the right direction, as I said, but what else might the Government do? Education and stimulation of the next generation of manufacturers could be a start, and I recognise the focus placed on that by some education providers throughout the country.

[Lindsay Roy (Glenrothes) (Lab)]

I congratulate my hon. Friend on securing this important debate. Does he agree that the Scottish Government are hampering manufacturing growth in the UK by cutting severely the budgets of vocational colleges, in particular in the STEM subjects—science, technology, engineering and mathematics?

[Mr McKenzie]

I agree fully with my hon. Friend, but I fear that this debate is not the one in which to comment on the failures or otherwise of the Scottish Government to stimulate manufacturing or business.

In the past, universities did basic science, while companies worked separately on applications for commercial use. Today, such boundaries have blurred, and successful research and development often involves co-operation throughout the innovation process. Design and, more importantly, quality in design will also give a manufacturer the edge in competitive markets, as we have heard. We have also witnessed improvement by Jaguar Land Rover in quality and design. That is how important design and recognised quality in design are in improving market share. Furthermore, I dare say that Mr Dyson is not resting on his laurels and will continue to show competitors a clean pair of heels through design improvements.

What of the process of manufacturing itself and the innovation there? I was always told by my previous employer to take inspiration from and look no further for success in process change than the high jumper Dick Fosbury, whose revolutionary approach to high jumping is now the accepted method, or process, by which all athletes approach the bar. Similarly, many of our innovative manufacturing processes, such as constant flow, “just in time” and fully integrated supply chains, are now accepted methods.

That brings me to the importance of manufacturing clusters and supply chains. Clusters such as IT in silicon valley or high-performance cars in southern Germany can be located in a particular region within a larger nation and sometimes even in a single town. Clusters affect competitiveness in three broad ways. They increase the level of productivity at which constituent firms can operate; they increase the capacity for innovation and productivity growth; and they stimulate and enable new business formation that further supports innovation and expands the cluster.