Defence Industry and Shipbuilding

Rebecca Long Bailey Excerpts

Wednesday 11th July 2018 Commons Chamber

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

The World cup semi-final starts in less than half an hour, so I shall make sure that my comments are uncharacteristically brief.

I thank all Members who spoke today; I apologise for not referring to them individually. I give a special mention to my hon. Friend the Member for Llanelli (Nia Griffith), who made the case for why greater Government intervention is necessary not only for defence manufacturing in the UK, but, in a broader sense, for manufacturing as a whole.

Manufacturing accounts for 10% of output, 44% of exports and 70% of business investment in research and development. Output per hour is £4 higher in manufacturing than the average for all sectors, and the average annual earnings of somebody who works in manufacturing are nearly £4,000 higher than average earnings from across the whole economy. Over the past 35 years, though, the UK has lost 3 million manufacturing jobs, which is 53% of all manufacturing jobs. Compared with 66% in 1991, some 81% of all jobs in the UK are now in service sectors, and only 8% of employment is in manufacturing.

The industries that, as we have heard, provided our parents and grandparents with employment are no longer an option for our children and grandchildren. There are many reasons for this shift, including Thatcher’s big bang deregulation of 1986 and the movement of production overseas in search of cheap labour. However, as time goes on the longer-term costs of this shift have become increasingly apparent, especially in three key areas. First, there is the loss of jobs and the rise of lower-skilled, lower-paid jobs. Young people growing up now are more likely to find work in services such as retail, hospitality and other low-skill, low-wage industries that often have poor terms and conditions.

The second key area is regional imbalance between areas devastated by the loss of industries and key service industry hubs such as London and the south-east. The shift to a largely service economy has not only impacted people on an individual level, but has profoundly affected entire communities. Industries that were once the sole employer and engines of local economic growth have disappeared, tearing the heart out of communities.

Let us look at Rossendale in Lancashire for example. In 1984, 58% of employees worked in textile manufacturing, but now that industry has almost completely disappeared in that area. A more recent example is Redcar, where steel runs through the veins of local people. The closure of the steelworks there has meant that thousands have lost their jobs. It is not enough to let industries fall by the wayside and simply rely on the financial sector to provide growth and then redistribute it to other areas of the country.

The third area that our industrial strategy must address is our deteriorating balance of payments. Our current account deficit currently stands at almost £18 billion, or 3.4% of GDP, and we import 41% of our manufacturing inputs. Research suggests that a rise of 10% in goods exported, and a 10% decrease in goods imported, would contribute £45 billion to the UK economy. It has been estimated that a £20 billion increase in domestic production would directly create between 100,000 and 200,000 high-quality jobs. What could the Government be doing to support British manufacturing and to encourage the building of products here in Britain? A key policy lever for supporting British industry is obviously infrastructure investment. Upgrading the nation’s infrastructure—

[Mr Kevan Jones]

This is all very interesting, but when is my hon. Friend going to reply to this debate? Some very serious points have been raised about defence issues, which are very relevant to defence workers across this country. I am sorry, but this is simply not answering them.

[Rebecca Long Bailey]

I thank my right hon. Friend for his contribution, but it has somewhat delayed my speech and stands in the way of the World cup semi-final. I am coming to those points.

What should the Government be doing to support British manufacturing? As I have said, infrastructure is a key tool in driving investment upwards. Upgrading the nation’s infrastructure in projects such as the Swansea Bay tidal lagoon, which the Government shelved recently, would have created more than more than 2,300 jobs in Swansea and paved the way for the creation of a new domestic industry with substantial export potential. Of course, the Government must ensure that they negotiate the best deal possible, but they must also, on projects such as this, start seeing beyond the short-term basic cost calculations and realise the wider benefits of infrastructure projects such as Swansea.

The most obvious start, so obvious in fact that it is shining like a Belisha beacon, would be using the enormous power of Government procurement to support British industry. The public sector currently spends more than £200 billion every year in the private sector, but sadly this Government have failed effectively to use procurement as an economic lever for supporting manufacturing. There are many examples of this, not least the failure to support British steel. It was revealed last year that the renovation of Big Ben clock tower is using steel from Germany, Brazil and the United Arab Emirates.

[Mr Kevan Jones]

On a point of order, Mr Deputy Speaker. I thought that it was customary in a wind-up to reply to the debate. I am sorry, but Big Ben has not been mentioned this afternoon. The many defence workers who lobbied Parliament yesterday on this contract expect us to respond to this debate.

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

It is part of it, and I am sure that the hon. Lady is leading on to the debate that we have had.

[Rebecca Long Bailey]

I am leading on to that issue. It is a debate not only about the ships in question, but about wider manufacturing procurement strategy.

Given the severity of the crisis facing British steel, this is simply shocking. The Government need to take a long-term approach to procurement, appreciating the wider economic and societal benefits of their decisions, rather than simply driving down the upfront costs. The Minister said that this is what the shipbuilding strategy states, but what I have read so far in the strategy is extremely ambiguous, and there is no detail as to how these wider socio-economic benefits are measured or quantified. Perhaps the Minister can respond to that point in his summing up. It would also be helpful to have confirmation that reports that a deal worth £2.5 billion in relation to the AWACS—airborne warning and control system—contract has been awarded to Boeing with no UK content.

Our motion recognises the wider socioeconomic benefits of procuring wisely. We have sought to place the fleet solid support ship order with domestic shipyards, creating or securing 6,500 jobs, including 1,805 shipyard jobs, which are highly skilled and 45% better paid than the average for all jobs. It would also mean that £285 million of the estimated cost of the order could be returned to the Exchequer through taxes. Many people across Britain clearly see it as right, moral and economically sound to take this course of action. The Government have a duty to use their enormous spending power to support British industry and its workers. Tonight, football’s coming home; we need a commitment from the Government that the same will happen to British manufacturing.