Economy: Manufacturing

Lord Whitty Excerpts

Thursday 3rd July 2014 Lords Chamber

[Lord Whitty (Lab)]

My Lords, unlike the noble Baroness who initiated the debate, I stopped working in the manufacturing industry in the 1960s. For most of my workmates at that time, I might as well say that I stopped working, full stop. In those days manufacturing jobs for both white collar and manual workers were the only real jobs, certainly for young men. The situation has dramatically changed. In those days, of course, as others have said, the proportion of our economy and workforce that was engaged in manufacturing was not much less than that of Germany. On both counts, it is now less than half that of Germany.

I went on to work for the Ministry of Technology—I am diverting slightly from what I was intending to say—which was, of course, the great intervener. Some of those interventions have paid off in the long term with high-tech, high-end manufacturing which still exists in this country.

The reason we were knocked off our perch on manufacturing at a macro level was partly North Sea oil, which helped bits of manufacturing that relate to North Sea oil but undoubtedly raised the exchange rate to price out large chunks of British manufacturing for a long period of time. In parallel with that was the development of the financial sector, as my noble friend Lord Monks has said, so that the banks became the master rather than the servants of the economy. And, of course, I also acknowledge, as the noble Lord, Lord Young, said, that in parts of the manufacturing sector the industrial relations scene had a detrimental effect; particularly in one part, the automotive industries, which I will come back to in a moment.

The history of intervention has been mixed but on balance positive. I am very glad to welcome Mr Vince Cable to the list of intervening Ministers, which started with the post-war Labour Government and continued through Tony Benn, Michael Heseltine and others. At last, the Government—or rather, the Conservative Party—have at least in part abandoned the view that the market will sort all these things out.

We need intervention. We need support from government, at local as well as national level. We need a supportive banking system, particularly for small business—we have not yet got that. We need positive engagement by the trade unions in the restructuring of jobs and of industry. We need a major commitment to raising skills. The basic education system is one problem, but lifetime re-education and reskilling is necessary for all grades of worker.

I will give a few examples of the combinations of these things that have happened and have been successful. Although the current Government tend to take responsibility and credit for it, much of this started under the previous Government. For example, my noble friend Lord Drayson started a new industrial strategy for the defence industries, which has greatly benefited their competitiveness; it was dealt with in a way that was greatly collaborative with the trade unions, including my own, the GMB, and the unions that now form Unite. In the automotive sector, as others have remarked, it was even more dramatic. From the very poor situation that we were in—hit dramatically by the recession further down the road—the revival of manufacturing in that sector has been partly down to foreign investment, partly down to clear government intervention by my noble friend Lord Mandelson and then Vince Cable, and partly down to a much more constructive relationship with the trade unions, started mainly by Unite with Tony Woodley. Without those deals on hours, pay and conditions, much of the automotive industry would not have survived the recession. There are lessons to be learnt from that.

There are smaller scale examples as well. We have managed to solve, with great union involvement, what looked like a very difficult situation with Manganese Bronze, the manufacturers of London taxis. They are now going to be produced again.

On a broader but more local scale, when AstraZeneca left Manchester it was a disaster for the area and for the potential technology and science within it. However, the local authorities, the university and the private sector, together with the workforces, have now combined to establish a science park on that site that will bring technology back to what was the heart of the Industrial Revolution and of our manufacturing pre-eminence in the north-west.

More locally still, we and local government need to support local firms. It was drawn to my attention earlier this week that in Erewash in the east Midlands, the Labour council group is being very supportive of small firms. We need to ensure that that is backed at the national level. One of the recommendations of my noble friend Lord Adonis, who has just joined us, is that 25% of all public procurement should go to small firms. All Governments should learn that lesson. Another aspect of my noble friend’s report is the key issue of taking everything, or a lot, away from national interventions and giving support to local government and new local and regional institutions. It was also the theme of the recent report by the noble Lord, Lord Heseltine; it is something that you have to do on a large scale to make work and it will fit in with the Labour Party’s commitment to greater devolved authority to the regions, particularly the city regions.

So we have to act at the local as well as the national levels, engage the workforce and the unions, and invest heavily in lifetime training. In that way, there is a future for British manufacturing, which again can compete effectively with countries such as Germany, Korea and Japan, which have done this far better in recent decades.