Britain’s Industrial Base

Lord Bilimoria Excerpts

Tuesday 9th October 2012 Lords Chamber

[Lord Bilimoria]

My Lords, I welcome the noble Lord, Lord Marland, to his new ministerial role and look forward to many future interactions.

I thank the noble Lord, Lord Adonis, for securing this timely and indeed timeless debate. In fact, the word of the day with regard to British manufacturing is “decline”. I declare up front my interest as chairman of the Cobra Beer Partnership, a joint venture with Molson Coors, one of the world’s largest brewers. If you need evidence of Britain’s continuing strength in areas of manufacture, look no further than the brewing capital of the world, Burton-on-Trent, the largest brewer in Britain and one of the largest in Europe, where we brew Cobra beer.

I am relieved that the Government have finally woken up to the fact that we in Britain do not have a balanced economy; we have let things slip. Agriculture is now barely 1% of GDP. In 1978, as we have heard, manufacturing was 26% of GDP; today it is 12%. In 1970, services accounted for 54% of GDA and manufacturing 40%; by 2009 services had increased to 78% while manufacturing had declined to 17%. Does the Minister agree that the Government need to encourage manufacturing?

We have not lost the ability to be the best of the best manufacturers in the world, particularly in advanced engineering and design. I visited the Rolls-Royce Motor Cars factory in Goodwood and was inspired. I visited the Rolls-Royce factory in Bristol and saw the engines of the Typhoon being built, and was inspired. Cobra is first and foremost a multiple award-winning manufacturer and I am proud of it—I am sorry to boast. Will the Minister admit that the Government are not doing enough to encourage innovation? First, we have had a short-sighted cut of up to 80% of teaching funding in higher education. We have the finest universities in the world along with the United States. Higher education is one of the jewels in our crown. How short-sighted is this eroding of our competitiveness as an industrial base?

Does the Minister agree that the UK Government are hugely underfunding and undersupporting R and D? The UK’s investment in research and development is well below that of other advanced economies. Sweden spends 3.5% of its GDP on it, Finland and Japan around 3.4%, Germany 2.5%, the United States around 2.7% and the United Kingdom only 1.8%. Furthermore, according to the World Economic Forum, in skills development, about which the noble Lord, Lord Adonis, spoke, the UK workforce is 18th in the world behind Germany, Japan, Sweden and the Netherlands, to name just a few. Yet I was privileged to write the foreword for Big Ideas for the Future, published by Universities UK and Research Councils UK, and I was proud to see that despite this relative underfunding and underinvestment, British universities continue to punch well above their weight. This publication highlights 200 world-beating, world-changing innovations coming out of British universities throughout Britain, and not just Oxford and Cambridge.

Are we doing enough to encourage students at school to take up science and engineering? In 1949 an Eton biology master wrote in one of his pupil’s reports that he believed that he had,

“ideas about becoming a scientist; on his present showing this is quite ridiculous … he would have no chance of doing the work of a specialist, and it would be a sheer waste of time, both on his part and of those who would have to teach him”.

I was delighted and proud today to see that at my old university, Cambridge, yet another Nobel Prize was won by that same Eton schoolboy, Professor Sir John Gurdon, still middle-aged at 79. In my book old age is 80 onwards.

Having been born and brought up in India, and as the founding chairman of the UK India Business Council, I have seen the enthusiasm with which Indian students pursue engineering. The Indian institutes of technology are more difficult to get into than Oxford, Cambridge, Harvard, Yale, Stanford and MIT combined and multiplied by 10. There is the whole issue of funding in British industry. The irony is that we have bailed out the banks, but the banks are not lending to business, particularly to SMEs. I pointed this out to the Minister yesterday in the House and I remain unsatisfied that the Government are doing enough to make the banks lend to start-ups and SMEs. The Government need to encourage entrepreneurship and SMEs, and could institute so many more tax breaks and incentives for new business and businesses taking on new employees, such as cuts to employers’ national insurance and NI holidays. Will the Government consider this?

We are very lucky to be outside the euro, and to be one of the most open and welcoming economies in the world. I was delighted today to read that in a recent survey, British companies felt less affected by red tape than those in other countries featured in the survey. This is great news. However, in spite of our corporation taxes coming down, our tax burden overall is still too high and unattractive to inward investment and to the brightest talent.

The Government’s madcap immigration cap is sending out the wrong signals, not least by including student numbers in the overall permanent immigration figures, deterring foreign students. Does the Minister agree? I know that applications from India have been plummeting and that students there are asking, “Does Britain want us?”. We need to attract the brightest and the best foreign students, let alone the £8 billion that they bring into the economy and the generation-long links that they build with their countries, which can only help our global business reach. Foreigners make up 30% of Oxford and Cambridge academics, and the immigration rules are affecting them. Does the Minister not agree that this is madness and short-sighted?

We have so much going for us in this country. We have an industrial base that is still the best of the best and that has the potential to grow if we make it a priority. I am delighted that the Government have finally woken up to this and I urge them to set a target that manufacturing grows as a percentage of GDP. It is manufacturing and business that pay the taxes that create the jobs that pay the taxes that pay for our public services. It is our world-beating manufacturing that is crucial to keeping Britain’s competitive position at the top table of the world.