UK Manufacturing Industry

Lord O'Neill of Clackmannan Excerpts

Thursday 8th December 2011 Lords Chamber

[Lord O'Neill of Clackmannan]

My Lords, I am happy to follow the contribution from the noble Lord, Lord Northbrook, and I will pick up on a couple of his themes. I also congratulate my noble friend Lord Haskel on securing today’s debate and for providing us with such a helpful introduction. It was a tour d’horizon of British industry in the round, and it was very useful. It is perhaps significant that this is the second Thursday in a row that we have dealt with industrial matters in the Chamber, and we have seen in excess of 20 contributors applying to speak on each occasion. I want to make a point here.

As a House, I do not think that we deal with this subject in the methodical way we ought to in terms of a Select Committee. I know that we have the Science and Technology Committee, and indeed I have served on it, and that there are a number of economic committees, but we do not have a committee that is devoted to enterprise and innovation, a topic that I believe is the subject of an annual report from the Council of Birmingham University, or certainly from the Midlands. I have already spoken to, as it were, the Labour bit of the usual channels, and when we consider future developments for Select Committees, this topic should be given an opportunity. I say that because, having served on the Science and Technology Committee, it tends at times to be a bit theoretical and has an understandably heavy agenda. The needs of enterprise, engineering and manufacturing could be dealt with more effectively by another such body looking at them.

At this point I should declare an interest in that I am a consultant to the Manufacturing Technologies Association which likes to think of itself, with some justification, as the provider of seedcorn for British engineering. It is the body that by and large provides most of the machine tools required by our engineering and industrial activities. This is done sometimes through imports and sometimes from the UK. The bulk of the association’s membership comprises companies that are relatively small, so the association is not skewed towards the big companies.

Perhaps I may raise a consideration touched on by the noble Lord, Lord Northbrook, the R&D tax credit. I think that there is a slightly different aspect to it. This is working very well for small and medium-sized enterprises because the point of application is also the point when annual accounts are produced. If you are making a profit, then you are able to benefit from the credit. It would be good to widen the scope of the credit to allow bigger enterprises to apply at different points in their profitability cycle, because we know that businesses do not make profits every year, much as that is to be desired. If we had a one-size-fits-all application system, it would probably mean that the credit could not be applied for when annual accounts are being produced, and that could impose a burden on some smaller companies. I make the point in the context not only of an additional burden on business, but also because at a time when we are talking about red tape challenges, this would introduce a bit of red tape that we could usefully avoid. I do not want to scupper what is a worthwhile attempt—in the past we have all argued for R&D tax credits and the like—but it would be unfortunate if a unified system made it more difficult for many of those who are benefiting from it quite considerably at the present time. That was the first point I wanted to make.

Secondly, I want to echo the sentiments which have been expressed in relation to the design and technology campaign. It seeks to try to sustain the design and technology component within the compulsory part of the 11 to 14 curriculum in schools. We talk in a pious way about encouraging young people to get into engineering. If you catch young people of 11 to 14 years of age and interest them in this subject, they will carry on with it. Indeed, one of the important successes of the new-style design and technology curriculum is that it is now one of the most popular non-compulsory subjects at GCSE level. Some caution should therefore be shown, particularly by advocates of the classics against everything else, because not everyone is going to spend their life in contemplative study, and at the moment far too few young people are moving towards productive activity in our manufacturing economy.

I do not wish to appear harping, carping or unduly critical, but we must be cautious about making changes to the tax credit system, worthwhile though they may be. We should also think twice about the possibility of removing the compulsory element of D&T from the school curriculum. It is designed to encourage youngsters to go into engineering, which so many of us consider to be a career and a profession that the country requires and which in itself is intensely satisfying for those involved.