Industrial Policy and Manufacturing

Lord Evans of Rainow Excerpts

Thursday 22nd November 2012 Commons Chamber

[Graham Evans (Weaver Vale) (Con)]

I start by congratulating my hon. Friends the Members for Warwick and Leamington (Chris White) and for Burnley (Gordon Birtwistle) and the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on securing this debate.

The manufacturing and industrial sectors have a vital part to play in developing the UK’s economy. They are also very important to me, as I spent more than 20 years working in the manufacturing industry. I started out working for BAE Systems at Woodford on airborne early-warning Nimrods in the 1980s. The chemical industry is of particular importance to my constituency, where Tata and INEOS Chlor are still major employers in Northwich and Runcorn. What have the Romans done for us? They started the chemical industry in Cheshire when they discovered salt deposits in Northwich. I am therefore very pleased that this issue has been chosen by the Backbench Business Committee for today’s debate.

I wish to address Britain’s historical relationship with manufacturing industry, where the industry sits now, and what we must do to ensure that our great tradition adapts and flourishes in a changing market. Manufacturing industry has seen a steep decline since 1997. The number of jobs in manufacturing halved between 1997 and 2009. The manufacturing industry accounted for 20% of the UK’s total economy and a gross value added of £186.6 billion in 1997. That plummeted to £139.5 billion by 2009, accounting for a mere 10.5% of the economy. The reduction was £3.5 billion per annum in real terms. Only since 2010 has there been an increase in the figures, but progress is limited and growth rates have been mixed this year.

Despite the decline, manufacturing has a vital role to play in our current economy, with 46% of the value of all exports in 2011 accounted for by manufactured goods. I represent a north-west constituency, so I am acutely aware that manufacturing industry directly benefits all the regions. Some 97% of manufacturing jobs are based outside London. We have been left with the appalling legacy that under the Labour Government only one in 10 of the jobs created were outside London and the south-east. For Britain to thrive we must redress that balance, and it is clear that manufacturing is part of the answer.

So what areas should we focus on? As some of my hon. Friends may recall, this is not the first time I have spoken in the Chamber on the subject of manufacturing. The hon. Member for Coventry North West (Mr Robinson), who is no longer in his place, alluded to the debate we held on 24 November last year. On that occasion, I set out some of the ways in which I believed the Government could proactively develop and promote the industry. I am, therefore, delighted to report that several of my suggestions have appeared, perhaps less by design than chance, as part of Department for Business, Innovation and Skills policy.

I made considerable reference to the Germans’ long-term support for manufacturing, which has given their industry real economic clout from far humbler beginnings after the second world war, when the country had been devastated. Germany’s recognition that manufacturing was the backbone of its economy has resulted in political infrastructures set up to nurture industry, especially the mittelstand—the small and medium-sized enterprises. Foremost among those tools stands KfW, the state-backed bank that ensures the mittelstand can access funding, even when the commercial banks are unwilling to lend. In 2010, KfW financed a record €28 billion for SMEs. The latest SME finance monitors show that in the UK over the past year 33% of businesses that applied for a loan were rejected. If the Government do not take up the mantle of supporting SMEs, we cannot expect any of our industries, and especially not manufacturing, to grow.

Hon. Members can imagine my delight when the Secretary of State for Business, Innovation and Skills announced the launch of the funding for lending scheme to encourage banks to invest; the enterprise capital funds and enterprise finance guarantees to help early-stage business to access capital; the £1.2 billion business finance partnership; and the £2.5 billion business growth fund.

I also spoke in the earlier debate on encouraging education and how to engage young people so that they think of manufacturing as a future career. I set out my concerns that part of the problem of youth unemployment is that many are simply not equipped with the skills or given the aspiration to engage in the manufacturing industry. Again, I am very pleased that the Government have made a long-term commitment to world-class skills.

It is clear that new technologies are emerging, particularly at the fantastic Sci-Tech Daresbury in my constituency. It is clear that many factors will contribute to the success or failure of the manufacturing industry and I am pleased that once more we are debating this important topic. The interest shown by so many colleagues on both sides of the House is heartening, but we all have a responsibility to ensure that “Made in Britain” is something that future generations can say with pride. I sincerely hope that we will tackle the challenges of manufacturing head on.