Industrial Strategy

Rebecca Long Bailey Excerpts

Wednesday 18th April 2018 Commons Chamber

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

According to the Government’s own declaration, the industrial strategy sets out their plan to create an economy that will boost productivity and earning power throughout the United Kingdom. The Secretary of State has just presented a very rosy picture of his Department’s industrial strategy, but I am afraid those spectacles he is wearing may be a little bit rose-tinted.

The key questions that must be asked today are whether the strategy is working and whether it addresses the huge problems that our economy is facing. The first of those problems is productivity. I agree with the Secretary of State’s comments about investing in the foundations of productivity, but we have just seen the productivity figures for 2017, and they are not good. Two negative quarters were followed by two positive quarters of growth. The two quarters of growth were caused by GDP growth slowing, but hours worked slowing even further. In other words, productivity has increased through the worst possible means. Even incorporating the 2017 figures, the productivity growth that has taken place over the 10 years since the crash has been the worst since 1820, just after the Napoleonic wars.

The second problem is GDP stagnation. For the 60 years preceding the financial crash, rising GDP meant broadly rising living standards. When GDP rose, unemployment came down and wages went up. However, over the course of 2017, UK GDP growth was weaker than GDP growth in any other G7 nation, standing at 1.4% compared to a G7 average of 2.4%. The figures were 2.9% in Germany and 2.5% in France. The situation is not forecast to improve: yesterday the International Monetary Fund forecast that we would be the slowest in the G7 bar Italy over the next two years, and the OECD predicts that we will grow more slowly than France, Germany and the United States in both 2018 and 2019. Worse still, among major advanced economies since the crash, Britain is the only one to have grown slightly while real wages have fallen.

The third problem is wage stagnation. In real terms, average weekly earnings are lower now than they were in 2007, 10 years ago. Working people, particularly those on low to middle incomes, have suffered the worst decade for a generation in terms of living standards. That is unprecedented since at least the end of the second world war. The quality of work is also an issue, as we have heard from some of my hon. Friends. The Secretary of State lauded employment figures in his opening remarks, but he must acknowledge that insecure employment is rife. According to the TUC, there are 3.2 million people in insecure work—about one in 10—and the number has risen sharply over the last half-decade, by 27%.

The Government tried to paper over those bleak realities with rhetoric in their recent response to the Taylor review, but I am not as optimistic or as excited as the Secretary of State was when he responded to comments earlier. Launching four consultations, merely considering proposals, failing really to act on the review’s recommendations, and tweaking the law here and there is simply not good enough.

The fourth problem is uncertainty. Britain is facing an uncertain future—we are about to leave the European Union, and businesses are craving a deal that will put the economy and jobs first, with as much access to Europe as possible—but Europe aside, parts of our economic framework do not encourage certainty. Our takeover regime leaves many companies deeply uncertain about their future and prey to predatory and hostile takeovers. We have already heard about GKN today. Under our takeover laws, that fantastic manufacturing company was bought up by Melrose. It was clear that our takeover regime needed more teeth and more clarity, but I must add that even in that case the Government had grounds to intervene on matters of defence and still failed to act. As the Financial Times suggested recently, the failure to equip our takeover regime adequately may be partly why a great company such as Unilever decided to make its legal home the Netherlands. How many other companies will follow?

The fifth and final problem is inequality. Sadly, the UK is one of the most unequal countries in Europe in terms of household income. As the Resolution Foundation recently revealed, inequality is projected to increase after 2016-17. On some measures, it is projected to rise to record highs by 2023. Furthermore, there are clear inequalities between our regions and nations. The Institute for Public Policy Research Commission on Economic Justice has found that Britain is the most regionally imbalanced country in Europe.

All these problems are not just abstract, general issues; they have recently manifested themselves in concrete examples—a barometer of the health and efficacy of the Government’s industrial strategy going forward. We started this year with the insolvency of Carillion, but that is not an isolated example. Our retail sector shows signs of strain: Toys R Us has collapsed; Maplin has gone into administration; New Look is fighting to avoid it; and Carpetright is planning a company voluntary arrangement. Workers have also felt the pain of a stalling economy: in the last week alone, literally thousands of workers have been threatened with job losses at Jaguar Land Rover and Shop Direct, yet we have received no statement whatsoever from the Government on what they are doing to protect those jobs, so perhaps the Minister will outline in his summing-up speech the action he is taking.

[Ruth George]

I met many businesses in my constituency last week. Does my hon. Friend share my concern that several of them are already having to move trade to EU countries because they are worried about the cost of a visa system when they cannot guarantee that they will hang on to the staff they pay for, the ending of preferential tariffs at the EU rate—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The hon. Lady is not making a speech; she is also taking away from the time for other Members.

[Rebecca Long Bailey]

My hon. Friend made some pertinent points and I will talk about skills shortly, and the extreme worry that many of our business leaders across the country have voiced about both Brexit and the quality and adequacy of the supply we have currently in the UK.

Returning to the problems that are a barometer of the issues in our economy, will the Minister update us in his summing up on the Government’s rabbit-in-the-headlights approach to the risks currently faced by our steel industry as a result of recent discussions and the global crisis of overcapacity and dumping? This Government have been in power for eight years—the best part of a decade—and they must own these problems if they are to make any progress; they must own the fact that they have not solved the five problems I outlined earlier, and that instead they have festered.

The Secretary of State and I are in clear agreement on the need for an effective industrial strategy. I applauded the Government for adopting to some extent Labour’s mission-orientated policy approach and the Secretary of State outlined the challenges again today, but I am afraid that this is where the consensus ends. As I set out late last year, the detail and investment proposed in the industrial strategy White Paper simply did not match the surrounding rhetoric and fell far short of what was needed truly to boost our economy. Indeed, a Government source was recently quoted as saying:

“It’s all perfectly worthy, who could oppose any of it? But there is no money, and even if there was, no one has a decent idea of what to do with it.”

So for the benefit of the House let us look briefly at a few key snippets again.

The Secretary of State touched on innovation. Raising total R&D investment to 2.4% of GDP by 2027 is certainly better than where we were, but the UK has been below the OECD average of 2.4% of GDP for years, and we are way behind world leaders who spend over 3% such as Japan, South Korea, Finland and Sweden. Why are we simply aiming for average? It must also be noted that the R&D investment of many of our regions and nations is also well below average. Over half of all research funding goes to the south-east, for example.

[Eddie Hughes (Walsall North) (Con)]

I just cannot contain my anger: settle for average? We have some of the best universities on the planet in this country and investment by this Government in some of the most world-leading, cutting-edge technology. I visited Birmingham university and saw its work on quantum computing; it is absolutely world-leading. We are not average at all, and it is so dismissive of this country to say we would settle for average; we are excellent.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The hon. Gentleman is not making a speech either, but I think the hon. Member for Salford and Eccles (Rebecca Long Bailey) has got his point.

[Rebecca Long Bailey]

The hon. Gentleman makes his point very passionately, but I do not think he has really listened to what I have been saying. We are certainly—[Interruption.] Please! If Government Members would listen rather than chunter, they might actually learn something.

We are far from average, as these comments from the Commission on Economic Justice illustrate quite articulately:

“We have vast ingenuity and creativity among our people, where enterprise and industry have deep roots going back to the Industrial Revolution. Many of the most important scientific discoveries in human history have taken place in Britain, advancing not only this country but also the entirety of humanity.”

We are far from average—I agree with the comments that the hon. Gentleman made in a, shall we say, quite haphazard and incoherent way—so why should we have to trail behind the world and settle for mediocrity from this Government in terms of investment in research and development?

[Vicky Ford]

Will the hon. Lady give way?

[Rebecca Long Bailey]

I will make some progress, if I may, then the hon. Lady can make further interventions.

In relation to skills, we were promised about £500 million of investment. That is frankly pitiful and does not even begin to repair the damage done to the adult skills budget between 2010 and 2015, when over £1.15 billion was cut. With research by PWC finding that 77% of CEOs worry that skills shortages could impair their company’s growth, and with the CBI stating that 69% of businesses are not confident about filling their high-skilled jobs, the Government’s actions have done little to show that they are creating a workforce truly ready for our industrial renaissance.

On infrastructure investment, we were promised £31 billion of investment through the national productivity investment fund. Again, that is below the levels seen in other leading industrial nations. As TUC analysis shows, the sums promised will simply increase investment to just 2.9% of GDP, whereas the average spend on investment by the leading industrial nations in the OECD is 3.5%. It is also clear that the Government have made no attempt to halt the skewing of infrastructure spending towards London, which is due to get more transport spending over the next five years than the rest of England put together.

That brings me to local industrial policy. Labour has been clear on the need for a national industrial strategy, but we are also clear about the need to be regionally powerful and distinctive, with the resources to match, and to build on the already world-class universities and businesses in our regions and nations. Since last November, the Labour party has been convening roundtables in every region and nation of the UK to discuss what businesses in those regions need from an industrial strategy. Alarmingly, in one region I heard that the responsibility for formulating a local industrial strategy had simply landed on the desk of the local enterprise partnership’s chief executive, with no additional resources. Could the Minster confirm whether there is a team in his Department working on local industrial strategy or whether that is simply now the responsibility of LEPs? Last month, the Local Government Chronicle argued that the Government should put more resources into agreeing a local industrial strategy if they did not want to risk concentrating their efforts on improving the economy in just a handful of areas.

[Rachel Maclean (Redditch) (Con)]

Further to the point made by my hon. Friend the Member for Walsall North (Eddie Hughes), I wonder whether the hon. Lady would like to visit the west midlands and meet the Conservative Mayor of that devolved authority, who has most certainly come together with a local industrial strategy. There are resources there, backed by this Government and their friends on these Benches, and that is making a real difference in our region. I would be happy to host the hon. Lady and enable her to speak to those successful businesses that are backing our Conservative Mayor.

[Rebecca Long Bailey]

rose—

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. I just remind people that we have a lot of speakers in this debate. Short interventions, please.

[Rebecca Long Bailey]

I thank the hon. Lady for her comments, which are rather illuminating. I wonder whether she could share with the House how her region managed to secure those additional resources, so that we could let our colleagues know about it. That simply does not seem to be the case right across Britain.

Now, there was also a clear failure in business support. The Government’s proposals recognised that we need both public and private investment. Similarly, the Labour party has pledged to mobilise £250 billion of lending through a national investment bank and a network of regional development banks. However, the Government’s proposals fall far short of that. I said in the House last year that sector deals, a £2.5 billion investment fund incubated in the British Business Bank and yet another review into encouraging SME growth were simply not good enough. There was a clear failure to recognise the impediments that many businesses face when attempting to access finance and, indeed, there was a failure to protect businesses more generally.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

Does my hon. Friend agree that we lost a lot of support after 2010 when Business Link was shut and the regional development agencies were closed down? Business support has gone backwards. We need to take it forwards, but we have lost eight years.

[Rebecca Long Bailey]

I completely agree. Unfortunately, what I see as I travel around Britain is a bit of a postcode lottery in business support, and the Government need to address that urgently.

As I said, the Government failed to recognise the impediments facing many businesses and to outline any more general protections. That could not have been displayed more clearly than in the Government’s handling of the Carillion scandal, where key requests by business organisations to mandate 30-day payment to suppliers and instigate the use of project bank accounts were effectively ignored. The Government simply looked on as Carillion and other big players like it abused the businesses that they contracted with and passed on financial liability and risk down the supply chain. Labour pledged to mandate 30-day prompt payment and the use of project bank accounts for all Government projects, and I will be grateful if the Minster will do the same today when summing up.

[Peter Kyle (Hove) (Lab)]

My hon. Friend rightly points to the failures around the collapse of Carillion, which was a disaster for the many thousands of people who worked for it. The other organisations that failed were the regulators, so does she agree that we need a root-and-branch think about how we regulate the private sector, particularly when organisations are delivering public services at vast cost to the public purse?

[Rebecca Long Bailey]

I completely agree again.

Another issue that has been brought to my attention relates to sector deals. I understand that sectors are ready with proposals for such deals, but there is no clear structure or process in place for them to follow. For example, the rail industry has had a proposal for a sector deal ready since October, and the plan would deliver transformation across rail over the next 20 years, including new approaches that will cut the cost of digital signalling, addressing capacity issues and reliability. Perhaps the Minister will explain to the House what the delay is. How many proposals for sector deals has he received and how many have been agreed? Perhaps he will also commit to setting out in clear guidance, accessible to all businesses, how to go about pitching for a sector deal? Finally, will he update us on the implementation of the “Made Smarter” review? It was effectively ready to go, but I am sad to say that it received only a few cursory lines in the Government’s industrial strategy White Paper.

In short, Mr Deputy Speaker, as I am sure you have gleaned from my comments, the Government's industrial strategy, as drafted, is inadequate. While they now recognise the importance of an industrial strategy—well done—they are not prepared to use the full policy levers at their disposal to achieve it.

[James Heappey]

Following the shadow Secretary of State’s consultations with businesses around the country, will she name just one that agrees with Labour’s plans for nationalisation?

[Rebecca Long Bailey]

I would not want to put on the record in public the names of any specific companies without their consent, but there has been resounding support for Labour’s approach to the industrial strategy, because we are prepared to invest in our country’s future and to provide the support that businesses deserve. I am afraid that I hear time and again from businesses that the Conservative party simply does not listen anymore.

[Several hon. Members rose—]

[Rebecca Long Bailey]

I will make some progress as I am coming to the end of my comments.

One of the key responsibilities of any Government is to deliver the best quality of life to every single person in Britain, and this Government have failed to do that. Labour knows that key to that responsibility is the delivery of a truly prosperous, ambitious and locally focused industrial strategy. We see a fourth industrial revolution that, with bold and focused Government investment and support, presents an opportunity for Britain to harness the power of technological and scientific innovation to achieve higher productivity and high-paid, high-skilled jobs in an employment landscape that values and protects workers.

We also see the need for an economic model that deals with the big issues of our time and the need to build an economy around missions so that we not only lead the world economically in these areas but deliver real social and economic benefits to our people. We recognise that industrial strategy must be a true collaboration between business, the Government and society, not a wild west that picks winners and losers, that pits region against region and that leaves businesses and workers to fend for themselves in a dog-eat-dog economy in which only the largest and most powerful survive.

That is the economy that Labour Members are intent on building, but sadly, it is not the economy that the Government are building. Although I am fiercely adamant that industrial strategy should not be political, from what I have seen so far from this Government, until we get a Labour Government we will not see an industrial strategy.