Economy: Manufacturing

Lord Bilimoria Excerpts

Tuesday 30th November 2010 Grand Committee

[Lord Bilimoria]

My Lords, there seems to be a widely held perception that Britain is now purely a services and financial sector-driven economy with agriculture, for example, amounting to just 1 per cent of GDP. The perception is very much that manufacturing in this country is dead. I thank the noble Viscount, Lord Montgomery of Alamein, for introducing this crucial debate at a crucial time. The reality is, as we have heard, that manufacturing remains at the heart of Britain’s economy, accounting for 13 per cent of GDP and over £150 billion—again, I would be interested to see what the exact figure is, according to the Government. It is 50 per cent of exports, 10 per cent of total employment and 75 per cent of all research and development.

We are not only the sixth largest economy in the world but the sixth largest manufacturer by output. Of course, manufacturing directly and indirectly creates jobs in the service, financial and education sectors. However, how much of a priority is manufacturing to the Government? The sad realities are that in 1977 manufacturing was 26 per cent of GDP, double the proportion that it is today, and that the share of people in the economy working in manufacturing has gone from 30 per cent 30 years ago to 10 per cent today.

We all know that we cannot just cut our way out of the deficit and debt problem that we are in today. As an economy, we have to grow. But what has happened to the Government’s proposed growth White Paper? It has supposedly been postponed—why? Because,

“the government did not have enough serious content to warrant”,

one. In my two remaining minutes, I will try to give some serious content; in the one hour that we have together, I am sure that we can all come up with some. Is that some sort of a joke? Right on our doorstep Germany, a major manufacturer, is roaring ahead. China is roaring ahead. Even in India—from where I have just returned this morning—as president of the UK India Business Council, supported by UKTI, I see manufacturing in India roaring ahead. It is over 25 per cent of GDP over there.

In Britain, we are so lucky. We are fortunate to have the cutting-edge, world-class manufacturing that the noble Lord, Lord Bhattacharya, spoke about in every sector, producing products that are global. I see them everywhere on the road in India, for example: Smith’s security equipment at every airport and JCBs at every roadside. Jaguar Land Rover is now owned by an Indian company, Tata. Yet while we have spent hundreds of billions supporting our banks over the previous years, when the Tatas approached the noble Lord, Lord Mandelson, for help he lent them not one penny. It was so determined that it raised the money itself and now, from everything that I have heard, including from the noble Lord, Lord Bhattacharyya, Jaguar Land Rover is flying again—a shining example of cutting-edge, world-class and world-beating British manufacturing, design and innovation.

In my own industry, as the founder and chairman of Cobra Beer, it gives me great pride to visit Burton on Trent, where Molson Coors, our joint venture partners, own the largest brewery in Britain and one of the three largest breweries in Europe. Whenever I go there, I see British manufacturing at its best.

When it comes to education and skills, we have the finest available in this country. I remember with pride showcasing Cambridge University’s manufacturing and science capability to the top team of Tata, who were seriously impressed. I attended the business growth programme at the Cranfield School of Management. I maintain that if every SME in this country had the opportunity to attend that sort of programme, the GDP of this country would go up substantially. Why do the Government not think of having a competition and sponsoring 1,000 places for SMEs every year on courses such as that? It would encourage lifelong learning and management and leadership skills.

One area where we fall down badly in Britain is that we have very few large manufacturers compared with our competitors. For example, firms employing more than 500 people account for 0.6 per cent of our manufacturing firms in the UK. In the United States, the figure is 2.9 per cent, which is five times the number that we have. We need growth and we need scale in manufacturing. Of course, there is too much red tape and our taxes are too high; there is a madcap immigration cap and of course we have the problem of a lack of bank finance. However, unless the Government consciously and visibly make manufacturing a priority, we will be left behind. Like the noble Lord, Lord Bhattacharyya, I despair that our companies do not go out and sell more, participating more in growing markets such as those in India, where there is so much opportunity for our manufacturers. As I have said before, we export more to Ireland than we do to the BRICS countries combined.

In conclusion, most importantly we as a nation need to have pride in our manufacturing sector—pride that when a product is stamped “Made in Britain” it means that it is made with world-beating, world-class quality, excellence in design and non-stop innovation. Who says that British manufacturing is dead? It is a beacon of our economy, but the Government must help to keep that beacon shining.