Economy: Manufacturing

Lord Willis of Knaresborough Excerpts

Tuesday 30th November 2010 Grand Committee

[Lord Willis of Knaresborough]

My Lords, I, too, thank the noble Viscount for introducing this debate. In the true style of the noble Lord, Lord Brooke, this is my first innings in one of these debates. I have to say to the noble Lord, Lord Haskel, that for 13 years the previous Government did not have any manufacturing strategy whatever, so it is a bit rich to say in the first six months of this Government that they have failed to produce one, but I shall return to that later.

We are without doubt successful as a manufacturing nation. The noble Lord, Lord Bilimoria, is absolutely right. To pretend that somehow manufacturing is dead and that it went out when Mrs Thatcher left Downing Street is quite frankly ridiculous. As noble Lords have said, we are the sixth-largest manufacturer in the world; 53 per cent of our exports are accounted for in manufacturing, and 2.3 million jobs. It is very striking, too, that in high-tech areas we outstrip Germany, France and Japan in the amount of high-tech goods we not only produce but export. Those are things that we should celebrate. Manufacturing is not dead.

When the Prime Minister made his rallying call to create, innovate, invest and grow a few weeks ago, he was describing what UK manufacturing was all about. He was recognising that in every major economic recession in the past two centuries, the one sector that leads a drive out of recession is manufacturing. The noble Lord referred to that. The industrial revolution was built on the backs of great engineers and scientists, but it was making things that the UK and the rest of the world wanted that made the industrial revolution successful. Inventions on their own were of little consequence.

It was the same in the 1930s and the 1950s after a second great war, and it will be the same in the second decade of the 21st century. In the past three quarters, manufacturing has averaged 3.5 per cent growth, which is a remarkable record beaten only by construction, and there were particular reasons for that. We produced 124,000 more cars last month than we did a year ago. We should be celebrating that as part of this debate. Real barriers need to be overcome if the UK is to achieve its economic recovery on the back of manufacturing. The first is ambition. We have been content over the years to see manufacturing as a small or medium-sized operation. That is the problem. There is a belief that manufacturing, by definition, has to be somewhere else and it should not be here. That assumption is fundamentally wrong.

I applaud many initiatives that this Government are making to encourage small companies, as did the previous one. I put that on the record. The chief executive of the EEF, Terry Scuoler, said that while the current attention on young business and start-ups was helpful, we must not ignore the wider benefits to the economy that larger companies bring. He is absolutely right, as was the noble Lord, Lord Bilimoria. If we are serious about growing our economy on the back of manufacturing, to pretend that we can do it by growing a number of small start-up businesses is absolutely wrong. Of course, they are vital but it is growing live businesses out of SMEs that is so important. Germany has twice as many manufacturing companies with more than 250 employees than the UK. The noble Lord made it clear that in the United States, 2.9 per cent of manufacturing companies have more than 500 employees, compared with 0.6 per cent here in the UK.

The excuse in the past was that America is a big country, but Europe is a huge market for us. Indeed, so are the new emerging markets of China, India, Brazil and Africa, where large numbers of exports can be made. Not only do we have large-scale manufacturing companies, which make significant investments in research and development—pharmaceuticals is a classic example, and aerospace is another—we also have, at the Institute for Manufacturing in Cambridge, the global leader in manufacturing research and Mike Gregory, who I regard as the leading academic in the whole world, at our disposal. We need those people to get on board.

I was hugely disappointed that the new manufacturing framework has been pulled. Will the Minister explain what is coming in its place? We do not want another collection of small initiatives. We want a big initiative that says to the largest manufacturers that we want them here in the United Kingdom because that is where our future lies.