Lord Young of Norwood Green
Main Page: Lord Young of Norwood Green (Labour - Life peer)
Lord Young of Norwood Green (Lab)
My Lords, I, too, congratulate the noble Baroness, Lady Wilcox, on introducing what we would all agree has been a fascinating debate. There are far too many facets for me to comment on in a relatively short speech, but I congratulate her on both the subject and her contribution. I did not necessarily agree with every aspect of it, but most of it was an excellent analysis.
The characteristics of successful 21st-century British manufacturing embody much of what we want to see in the modern economy—not a race to the bottom based on low-cost, low-value and low-skilled work. That is not a race that British manufacturing nor the British economy can or should try to win. However, we can win a race to the top based on an emphasis on, as many have said, high skills, innovation and competitiveness in which goods manufactured in Britain are the best in the world for technology, quality and product reliability and for which the customer is prepared to pay a premium.
I think that you can look at the statistics and find a number of different figures in relation to the performance of manufacturing. Indeed, when I looked in the Library for information on this debate I found it worrying. I do not wish to put gloom on this because I do not think this is an area for gloom. I am responding to my namesake. It is good to see in person the noble Lord, Lord Young of Graffham—I redirect a lot of his post. To be serious, the comment on page 4 of the Library’s report to us states that:
“In terms of manufacturing as a proportion of national economic output, the UK has fallen from 15th in the world in 1970 to 114th in the world in 2012”.
There is no room for complacency, but the idea that we are not a manufacturing country any more is too far on the pessimistic side. Plenty of manufacturing is taking place but, as my noble friend Lord Monks said, we could do with a lot more of it.
I would welcome the Minister’s response about the areas that the Government have rightly placed some investment in. What is the feedback on the Catapult centres? What is the return on that worthwhile investment? I ask the same in relation to the advanced manufacturing supply chain initiative and the Manufacturing Advisory Service. Are these government initiatives having the kind of impact that we know is necessary?
Throughout this debate, one area that has been shown to be fundamentally important is finance. The noble Lord, Lord Flight, suggested that everything was rosy in this area but, if that were the case, why are manufacturers still telling us that one of the biggest problems they face is access to finance? I do not wish to exaggerate this because I do not believe I have to. Manufacturing is often viewed by the banks with either ignorance or hostility. It is not often seen as a sector to lend to even though it should be viewed as one of the growth areas of the future. Many innovative manufacturers with the potential for high growth, the capture of global markets and good job creation are denied the funding they need because the bank says no. We still do not seem to have cracked that problem. In the first quarter of 2014, net lending to business from banks participating in the Government’s Funding for Lending scheme fell by £2.7 billion. I would welcome the Minister’s comments on that.
We also surely need—the noble Lord, Lord Bamford, referred to this—to call for a long-term approach. He talked about the payback on high-level investment in machinery and equipment. In other words, we have to call for patient capital instead of short-term trading because this is where both the business interest and the public interest lie. We have to argue for tax rules that encourage investment rather than provide tax dodges. We know that there is a good rate of return for investment in science. Government funding played a significant part in keeping Jaguar Land Rover going. Will the Minister tell us what the rate of return on our investment in tax credits is, for example?
Perhaps the other most important area that has been mentioned is the question of how we attract the level of people that we need in engineering, specifically in the manufacturing industry. I could not help smiling when the noble Lord, Lord Hunt of Chesterton, talked about it being harder to get into engineering than into the church. Perhaps it is a case of blue collar versus white collar. Whether or not that is really the case, throughout this debate we have realised that we have to attract more young people—both boys and girls—into engineering. That is a huge challenge.
Paying low wages subsidised by the taxpayer is no way to attract people into an industry. Central to good pay is productivity. That is where our record is not so good and worse than all our competitors. Surely the real measure of our economic progress is not just GDP but the growth in GDP per hour worked. You do not raise productivity by cutting wages and sweating the assets. That is a race to the bottom. The principal source of growing productivity is our capacity to learn to do things better, not necessarily cheaper—achieving the same objective in a completely different way because of new investment in new tools, new methods and new sources of information.
Last but by no means least is an area that I am not sure was referred to—the question of management training. One statistic I still find amazing is that only one in five of our managers has received any training at all. If we are talking about improving the way that people are managed and improving productivity and performance, surely that has to enter the equation.
I conclude on the question of how we attract young people, because it is a key part of what the noble Baroness, Lady Wilcox, has put into this debate. My experience reflects what a lot of people have mentioned today. So many schools are still pushing all young people on to the academic route, thereby implying that a vocational career is somehow second class. We all know that that is wrong. We know that we need more young people—both boys and girls—to choose a vocational career. Why do they not? It is because we still have this prevailing attitude in schools. While I support what the noble Lord, Lord Young of Graffham, said about having someone to advise on entrepreneurship, which is not a bad thing, it is not the only thing that advice is needed on. We must get successful young people in engineering back into the schools to say, “Look; this is a really worthwhile career”. The Government must insist that schools carry out what they should be doing on careers advice—that is, advising young people on the whole range of careers available. They still are not doing so. If you go into schools and talk to young people about apprenticeships, you will find that, in many cases, they know little or nothing about them, and teachers are not promoting them. What are the Government going to do about this? If we are serious about starting at that key end by encouraging young people to perceive apprenticeships as a really worthwhile career, we have to change those attitudes. One of the ways to do this is through teachers—because they are such key influences—and by inviting young apprentices back into schools.
We have colleges in the UK that provide brilliant standards of high-level apprenticeships and vocational training. The trouble is that we need more of them. Take Nelson and Colne College in the north-west. It is one of the very best colleges in the country. It has the third highest success rate for 16 to 18 apprenticeships. It has been awarded STEM assured status by the New Engineering Foundation. It recognises excellence in STEM; and it has helped more than 300 jobseekers move off benefits and 50 young people progress to apprenticeships. It has done this through a determination and belief that high-quality apprenticeships which offer genuine job prospects are a fantastic opportunity for both young people and for businesses. It has built on that success.
As the report by my noble friend Lord Adonis recently highlighted, it is exactly this type of institution that we should be encouraging and promoting. Does the Minister not think that offering better support through local enterprise partnerships for business hubs to spread apprenticeships would be a more effective way of ensuring that colleges such as Nelson and Colne can continue to meet the needs of the local economy and employers, rather than the Government’s current approach to funding, which is causing some concern to small and medium-sized enterprises?