UK Manufacturing Industry

Lord Cope of Berkeley Excerpts

Thursday 8th December 2011 Lords Chamber

[Lord Cope of Berkeley]

My Lords, it is very good that the noble Lord, Lord Haskel, has turned our attention away from the financial crisis and the eurozone, and given us the opportunity to talk about the real basics of the British economy. I agree entirely with him about the excellence of British manufacturing, and about the unsatisfactory nature of the economists’ definition of manufacturing.

When I was first a Member of Parliament, the Rolls-Royce factory in my constituency in Patchway employed 10,000 or 12,000 people. Now it employs a tiny fraction of that. A lot of the people employed were servicing the factory in one form or another. Now the catering is outsourced to an external caterer, which would count as a service industry, and all sorts of maintenance jobs which were done in-house before are now being put out. That affects the way the statistics look, in total. I am an accountant by profession, and we accountants do not always see things the same way as economists do. It frustrates me that the statistics get distorted in this way.

The other thing that has happened to this factory, and many others over the same period, is that whereas there were enormous workshops full of hundreds of men—nearly all were men—at lathes and milling machines, with supervisors and inspectors checking everything to make sure that very high-tech standards were being adhered to in the machining of the metal, there are now enormous machines, with one man sitting in a little glass box beside them, doing very little except gazing at a computer screen. This means, of course, that there are fewer people employed, even though they are producing more, and pouring out even more high-tech goods.

Despite all the immense challenges of the world today, I am full of optimism over the position of British manufacturing in the world. I agree with the noble Lord, Lord Haskel, that we have lost our capability as far as nuclear power is concerned. However, that is a 10-year story, and more attributable to the last Government than to anything that can be done at this stage. It was lost because of the attitude to nuclear power, which I never shared.

However, I am full of optimism. We remain an amazingly inventive people, full of entrepreneurs. We know that from history, but it remains true today. Businessmen, when asked what they want the Government to do, often say, “We want it to get out of our way”. That is a very understandable attitude, but there are some industries—and the aerospace industry is one which has already been referred to—where the Government are inevitably involved, with a role as a huge purchaser on both the civil and military sides. The UK aerospace industry is second only to that of America. It has a turnover of £23 billion, and good order books on both the civil and defence sides.

Of course, as the noble Lord, Lord Bhattacharyya, reminded us, the MoD has had some spectacular problems in its purchasing, but it is crucial that MoD purchasing is first class, not only for the Armed Forces but for the defence industries. The defence industries employ about 300,000 people. That is half as much again as the whole of the Armed Forces, so that area of the MoD’s responsibility is of great importance. The MoD’s R&D budget is about a quarter of the total spending on R&D in defence, but it is important, as is the support given later on. One could make similar remarks about the pharmaceutical industry, which has been mentioned, and about many other industries that I do not have time to cover.

It is one thing to make things and sell them, but intellectual property is of the greatest importance. I know that my noble friend has an important role to play in this. I noticed the very important article by Sir James Dyson in yesterday's Times about the difficulties his company has in China. Anything the Minister can say about that would help to update us. The single European patent is also being developed and will be important to all our industries.

Overall, I remain optimistic about British manufacturing industry. We should not talk it down, as occasionally happens. On the contrary, we should be proud of the achievements of very many sectors of manufacturing industry and of what the Government are doing through the Plan for Growth in all kinds of ways to encourage it.