Industrial Strategy

Ruth George Excerpts

Wednesday 18th April 2018 Commons Chamber

[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.

[Ruth George (High Peak) (Lab)]

The Secretary of State has not mentioned the principal foundation of productivity: the workers of Great Britain. Obviously, investment in those workers is absolutely key to making sure that they see that their own investment in their work and productivity will lead to substantive benefits for them and their families. The response to the joint inquiry by the Work and Pensions and Business, Energy and Industrial Strategy Committees into the Taylor review on modern employment practices kicks a lot of the action into the long grass and into consultation. Will the Minister please admit today that workers are the foundation of productivity and that they need the Government to commit to solid action?

[Greg Clark]

It is not a question of admitting to it—I want to boast of it. When I talk about our strengths and talents, those are the strengths of the people of the United Kingdom as workers, researchers and leaders of local economies. The prosperity of our economy is founded on our workforce. The hon. Lady is absolutely right to emphasise the importance of investment in people. I have mentioned investment in research and development, but it is important for her to reflect that much of that is about investment in people, making sure that we have research funding and opportunities for researchers so that we have brilliant individuals as well as physical infrastructure.

When it comes to investment in skills and the workforce generally, the hon. Lady is absolutely right. I have mentioned the importance of skills training. One thing that we and Members from across the UK know is that there are shortages in many parts of the country, particularly in engineering and technology skills. That is before we have the full benefit of the opportunities set out in the industrial strategy, which highlights and commits us to a long-term programme of upgrading not just investment—although that is important—but the prestige attached to technical qualifications in this country, and to emphasising the importance of that. There is, for example, nearly half a billion pounds of investment in teaching maths, digital and technical education.

I am pleased that the hon. Lady mentioned the Matthew Taylor review, because it is exactly the right kind of strategic approach that we should take. We know that new technology is changing the world of work and that it poses challenges to established ways of working. Rather than simply ignoring that and not addressing those changes, in commissioning Matthew Taylor to review the emerging economy we equipped ourselves with some very important reforms that Taylor himself advised we should consult carefully on. That consultation came from a review commissioned by the Government, who absolutely have the intention to deliver on its recommendations. The consultation is the way to proceed with legislation and regulation.

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[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.