Lord Monks
Main Page: Lord Monks (Labour - Life peer)
Lord Monks (Lab)
My Lords, I congratulate the noble Baroness, Lady Wilcox, on initiating this debate and on championing the cause of modern manufacturing in Britain today. I am pleased to see that manufacturing is getting attention in this House. It got some a few weeks ago with the excellent maiden speech of the noble Lord, Lord Bamford. Most of us who are interested in manufacturing very much welcome his presence in this Chamber, providing a new, strong voice for British manufacturing.
As the noble Baroness, Lady Wilcox, rightly said, manufacturing is going rather better than it has done for some time. She mentioned the role of employers, managers and employees. I may not have been listening carefully enough, but I did not hear any appreciation of the role of trade unions in her litany of people who are to be congratulated. However, unions have not got enough credit for the agreements made by them to preserve jobs and capacity through the dark days of the recession in 2008, 2009 and 2010. It was a terrific period of British industrial relations. It is worth noting that a lot was done, responsibly and quietly, and there is still capacity around, unlike in previous recessions when we lost it.
The noble Baroness, Lady Wilcox, put her case in a generally balanced way. UK manufacturing is certainly not a basket case. The problem is it is simply not big enough. There is not enough of it and what there is is not particularly well distributed. The very poor balance of payments, which has been negative since 1983, should be at the front of our mind. The noble Baroness made one or two rude remarks about the 1970s but we did run a balance of payments surplus for most of that decade. It is worth remembering that the trend really reversed in 1983. There have been many reports, from Richard Lambert and others, about what we need to do about British manufacturing, so we know we have to rebalance our economy more in that direction, with investment in infrastructure and boosting the weaker regions. I declare an interest, as a member of the advisory committee of the regional growth fund, which is very much engaged on this work. As a country, we know we should save more, invest more, borrow less and live less on debt. We know that we cannot continue to treat the City of London with exaggerated reverence, adopting an almost protectionist zeal which we do not apply to any other sector of the British economy. The City can be an asset, but the banks can be near lethal to the country, as they were in 2007-08. We need banks that lend to the real economy. Industrial investment was about 2% of bank lending last time I looked. This is, again, not a new problem. In the late 1920s, Winston Churchill said that the problem with Britain was that finance was too proud and industry too humble. He had a point then and it is even more the case today.
In his report No Stone Unturned, the noble Lord, Lord Heseltine, had a go at some measures to try to get the UK more match-fit than it is now. I will emphasise one or two points that he made. We want, at least, to get up to the level on the other side of the North Sea. Similar countries with similar living standards such as Germany, the Netherlands, the Flanders part of Belgium and the Nordic countries have high productivity economies, with good records on their balance of payments and exports. They combine this with strong social states, excellent training systems and, by the way, influential trade unions. They are savers, innovators and investors. They are not by any means perfect: in certain areas, we have people who match them and exceed what they do but, again, not enough. The critical mass here is not large enough.
We have tended to cover up our weaknesses rather than face them squarely. We did this with North Sea oil revenues and then we did it with the boom in financial services. Manufacturing did not really matter in the 1980s and 1990s because we had another way of earning our living. There are no further windfalls like those in view. There are no more short-term fixes except, perhaps, another dose of devaluation, of which there have been seven since the end of the war. We cannot rely on devaluation as a centrepiece of our future strategy, as we tended to do in the past. By the way, the last thing we need is a self-imposed exile from the EU unless it bends to our model—a sort of voluntary Dunkirk. Would we be better alone? We need to work with others to learn how they do it and what we can apply ourselves.
Looking at what other countries do—some do it very well—is central to our future. We should look not just in the direction of Germany but in the direction of the Asian economies. South Korea spends five times the amount on innovation and research than we do. There are a lot of competitors who know what they are doing and they are doing it with great purpose and determination. We need to match that.
I add a German-Dutch-Nordic lesson as regards the advantage of co-determination over the more adversarial system that has prevailed in this country in terms of relationships at work. The co-determination principles seem outrageous to many in British business but they keep managements more long-termist and a bit less inclined to help themselves to a disproportionate share of company profits. It is no accident that much of our successful manufacturing is in foreign ownership. The foreign takeovers of British businesses and their presence in many key strategies is a lesson to the rest of us. I welcome them very much. They have filled a gap rather than ousted good British managements. However, we need to be aware that these companies’ head offices and R&D centres often are somewhere else rather than here.
On the public interest test, we need to look at France in terms of takeovers and mergers. The way in which it is dealing with Alstom and the assurances that it is getting from General Electric are a real object lesson. We would not have been in anything like the same position had the takeover of AstraZeneca by Pfizer gone ahead. We need to be as tough as other countries tend to be. It is interesting that the Business Secretary will be at the Economic Affairs Select Committee next week.
Lord Ahmad of Wimbledon (Con)
I am sorry to interrupt the noble Lord but he has spoken for eight minutes in a seven-minute time-limited debate.
Lord Monks
I apologise to the House. I congratulate the noble Baroness, Lady Wilcox, on introducing this very important subject. This is not the end of the debate.