Industrial Strategy

Paul Sweeney Excerpts

Wednesday 18th April 2018 Commons Chamber

[Greg Clark]

That is very important. One of the commitments in the industrial strategy is to increase the number of visas and studentships for international researchers coming to work in the UK. Nobel prizes were mentioned earlier. I had the privilege, when I was Science Minister, to go the Nobel prize ceremony. What is notable is not just that a lot of Brits receive these awards, but that most Nobel prizes in the sciences are given to teams of researchers and that those teams are usually international. That embodies the fact that the best ideas come from the connections that are made between researchers from different cultures and different countries.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

The Secretary of State mentions the critical need to attract high-quality education graduates from across the world to British universities. Does he also recognise that that is a critical part of growing our population? In Scotland, we had a declining population. The Labour Administration under Jack McConnell introduced a post-study work visa scheme, which reversed Scotland’s historic population decline. That is why today we have a great legacy of an expanding population in Scotland that is adding value to our economy.

[Greg Clark]

The overall population of the UK is growing, as the hon. Gentleman knows. It is important that our immigration system is set in a sensible way that recognises the needs of the economy and the needs of our society, and that is the approach being taken.

I talked about grand challenges. Let me turn to another important aspect of the industrial strategy, which is, candidly, to address areas of historic relative weakness in the UK economy. I talked about our strengths, but it is well known to every Member of this House that for many years now our productivity performance has not been as good as that of some of our competitors, and since the financial crisis it has been slower to recover. In recent quarters we have seen an acceleration of productivity growth, but I think everyone would recognise that it is the responsibility of this House and those of us in government to act on the foundations of productivity, so that we can maximise the productive capacity of the economy. A big part of the consultation was to consider what we can do to drive up our productivity performance.

There are five areas in which clear commitments and progress are required across the whole economy—indeed, across society, to go back to the comments made by the right hon. Member for Wolverhampton South East (Mr McFadden). This is not simply, if at all, in the gift of the Business Department. It requires a whole-country commitment to investing in the foundations of productivity. We have set out our plans and ideas on research and development, as I mentioned earlier. As new technologies are developed, the skills required by the workforce to make use of them clearly need to change as well. It is no good doing one if we do not do the other, so the skills element of the strategy is very important. It is important to recognise the different needs of different places, as I mentioned in response to an intervention from the hon. Member for Stockton North (Alex Cunningham).

We want to make sure that our business environment is not only competitive and open, but recognises the need to ensure that when companies start up—we have a great record of start-ups—they can attract the funding that they require to grow into medium and larger businesses. We want to make sure that the infrastructure on which our whole economy depends is competitive with the best in the world. Through the industrial strategy, we set out action across all five of those contributors to productivity.

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[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

Although it is easy to adopt a declinist outlook about Scotland’s long-term industrial trajectory over the past century, it is important that we do not view the loss of the once iconic staple industries of shipbuilding, steel and coal, which had their genesis in the first industrial revolution, as part of a terminal decline of our manufacturing capability. Indeed, it is a sector that we urgently need to reposition at the heart of our economic future to maximise our country’s productive potential.

Currently, Scotland’s productivity ranks in the third quartile of OECD countries, and although productivity growth has been better than the UK average since 2009, the rate of productivity growth in Scotland lags behind many of our competitors. To catch up, Scotland must expedite a significant increase in that rate. Achieving the required growth would be truly transformational. Increasing Scotland’s productivity to the level of the top quartile of OECD countries would grow GDP by almost £45 billion—an increase of 30%—and annual average wages could be more than £6,500 higher. That would be an increase of 25%, which is a huge prize.

It is in Scottish manufacturing that we can find the prime mover towards any significant realisation of that opportunity for enhanced productivity. The firms in that sector continue disproportionately to drive innovation, investment and international exports.

On some measures, Scotland’s innovation performance is improving. However, performance still significantly lags behind many other countries on key innovation measures. Despite some signs of improvement, Scotland’s research and development performance continues to be below that of the UK and most OECD countries. Although business enterprise R&D increased by 45% to £905 million per annum between 2010 and 2014, which was faster than the OECD and UK average, Scotland’s performance is near the bottom of the third quartile of OECD countries. To reach the top quartile, Scottish R&D investment would need to be 200% higher—an increase of £1.8 billion. The need to close that gap is critical. Although 2,790 businesses in Scotland invested in R&D in 2014—an increase of 23% since 2012—R&D remains heavily concentrated, with just 10 businesses accounting for 45% of the total investment in R&D in Scotland. Almost 70% of R&D investment is by non-Scottish-owned businesses.

Labour plans to support the growth of Scottish engineering and manufacturing in a number of ways. It would create a national investment bank that would see £20 billion of capital structured in Scotland for industrial strategy and investment. The SNP has recently announced the creation of a Scottish investment bank, but it will be capitalised to the tune of a mere £322 million. If the SNP is so inspired by our policies, it might as well do it properly and ensure that the Scottish investment bank is appropriately and properly scaled, so that funding is made available in this vital area.

It is also Labour policy to set up a national transformation fund, which would see £40 billion of capital investment in Scotland, in areas such as infrastructure and house building, creating jobs and boosting the economy. In total, Labour policy in Scotland would see £70 billion of investment in industry in Scotland. That is the scale that is needed—it needs to be to the tune of billions of pounds of investment, not just millions of pounds.

The country stands on the cusp of a great disruptive opportunity with a new industrial revolution emerging. It is therefore imperative that the nation’s industrial base is encouraged to adopt the characteristics required to advance growth by being more innovative and international, while investing adequately in the most advanced plant and processes. These are not alien ideas; they are some of the very same ones that originally drove Scotland’s capacity to lead the world in industrial development through the 19th century.

We must seize the opportunity to issue a clarion call to reindustrialise Scotland. The country does have one distinct advantage over most others, in that it has done most of this already, albeit quite some time ago, although it may have failed to learn the most challenging lessons about its weaknesses as well as its many strengths. The trick now is to learn from both and do it all over again.