Viscount Younger of Leckie
Main Page: Viscount Younger of Leckie (Conservative - Excepted Hereditary)
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)
My Lords, I am grateful to my noble friend Lady Wilcox for initiating this important debate. It has been very encouraging to see that there is agreement across the House about the importance of manufacturing in the UK. As the noble Lord, Lord O’Neill, said, there is much more to do. I am also encouraged that so many of the issues raised here today are being acted upon. As my noble friend Lord Shipley indicated, for far too long there has been a misplaced assumption that we are a nation of grocers, bankers and lawyers. My noble friend Lord Horam provided a slightly more colourful anecdote to illustrate this point. There is an assumption that countries such as Germany, China and South Korea excel at manufacturing, but we do not.
UK manufacturing has a proud record of innovation and achievement and I will first reflect on some national statistics. My noble friend Lord Chidgey raised some interesting points when he spoke about the Markit figures. Some recent figures came out from Markit’s senior economist, who said:
“UK manufacturing continued to flourish in June, rounding off one of the best quarters for the sector over the past two decades”.
The sector delivered around £140 billion in gross value added last year alone. It produces over half our exports in goods; invests more than any other sector in R&D, and employs an increasingly skilled workforce of more than 2.5 million highly skilled people.
The UK aerospace sector is the second biggest globally, and Britain now has the most productive car sector in Europe. By 2017, UK industry predicts that Britain will be producing 2 million cars a year, beating our all-time peak of 1.92 million in 1972. In contrast to 1972, these will be cars that people actually want to buy. Remember the Hillman Imp? I do not know whether my noble friend Lord Young ever drove one, but I pay tribute to the work that he has done over so many years, including introducing foreign investors into the automotive sector, not only to effect change but to contribute so much to its success. That is a point which the noble Lord, Lord Lyell, highlighted. We are also developing new industries. Earlier this year, Siemens announced a £310 million investment in offshore wind at Hull, creating more than 1,000 jobs.
However, there is no use manufacturing if you cannot sell what you make. Earlier this year, my noble friend Lord Livingston, the Minister of State for Trade and Investment, accompanied the Deputy Prime Minister and 40 businesses to Mexico and Colombia. To reassure my noble friend Lord Sheikh, linking Britain to fast-growing new markets such as these—beyond Europe—is a vital part of the Government’s plan to provide sustainable growth and to compete in the global race. For example, in May this year Chinook Sciences secured an infrastructure deal worth more than £300 million to build the world’s largest advanced thermal energy-from-waste facility in the United Arab Emirates. Back in Europe, UKTI helped Augusta Westland seal a £1 billion deal to supply 16 helicopters to the Royal Norwegian Air Force, safeguarding at least 3,000 jobs.
My noble friend Lord Carrington spoke about the importance of free trade and the need to prevent protectionism. The Government favour the expansion of free trade around the world, for example through the Transatlantic Trade and Investment Partnership that is under negotiation at the moment and for which I have high hopes.
The noble Lord, Lord Monks, emphasised the role of the trade unions in manufacturing in the UK and made some important points about it. I agree with the noble Lord that there is a positive role for unions to play—for example, Unite’s part in securing the future of Ellesmere Port, both for the products and for the people who work there.
I should like to touch on the subject of intellectual property, which my noble friends Lord Bamford and Lord Sheikh, raised. The immense creativity and openness to innovation that runs through the UK’s manufacturing industry will be key to sustaining the positive signs of recovery we have seen in recent months. As Minister for Intellectual Property, I am committed to making sure that businesses are able to reap the rewards of their creativity.
My noble friend Lord Bamford raised the importance of research and development and my noble friend Lord Lyell highlighted the importance of the pharmaceutical sector. The House will know that the UK has a strong comparative advantage in pharmaceuticals and life sciences which builds on our world-class research base. Our catapult centres in cell therapy and stratified medicine support our life sciences sector. Through the Research Partnership Investment Fund, we are also supporting new research. A £34 million partnership between the University of Strathclyde, GSK, AstraZeneca, Novartis, Cancer Research UK and others, will accelerate innovation and establish new supply chains for medicines.
Many small businesses are unaware of the different types of intellectual property and how they apply to their business. In the last year the Intellectual Property Office spoke to 18,000 small businesses, helping them to understand IP and how they can best protect their innovation and—most importantly—use it to generate revenue.
Our innovative manufacturers are making products for today’s and tomorrow’s global markets and this is delivering UK jobs and growth. Only last month I was honoured to be invited to Berlin by the European Patent Office to present an award to Professor Chris Toumazou of Imperial College. He received the award for research and production of a “lab on a chip”. This is a ground-breaking development in the field of medical diagnostics which allows rapid diagnosis of life-threatening conditions.
People such as Professor Toumazou are inspirational figures for young people considering a career in science. He left school at 16, qualified as an electrician and graduated from the then Oxford Polytechnic—now Oxford Brookes University—before he found his niche in research at Imperial College, London. He then went on to become their youngest professor at the age of 33.
I am pleased that my noble friend Lady Wilcox and the noble Lord, Lord Whitty, recognised the significant measures being implemented through the industrial strategy. It was launched in September 2012 by my right honourable friend in the other place, Vince Cable. There have been some significant successes. As my noble friend Lady Wilcox said, we have announced a co-investment of £2 billion over seven years for the Aerospace Technology Institute to keep the UK at the leading edge, not only on wings—if noble Lords will excuse the pun—but also on engines, aerostructures and advanced systems.
Together with the automotive industry we are investing £1 billion over 10 years in a new Advanced Propulsion Centre. This will bolster our capabilities in the research, development and commercialisation of low-carbon technologies, thereby securing 30,000 jobs. The High Value Manufacturing Catapult was mentioned by my noble friend Lady Wilcox and the noble Lord, Lord Broers. It has secured more than 1,500 projects with private clients and has seen a similar number of engagements with SMEs.
The noble Lord, Lord Broers, stated that the TSB should be prepared to scale up the catapults. Technology entrepreneur and venture capitalist Hermann Hauser has been asked by Vince Cable to make recommendations to Ministers on how the Government can take forward the successful catapult network. Hermann Hauser’s report will feed into the science and innovation strategy, which is due to report in the autumn. Just this week, the TSB outlined plans for a further £400 million of investment in British innovation, including £72 million for new initiatives to support high-value manufacturing.
I will now focus on supply chains and reshoring. On the latter point, the noble Lord, Lord Giddens, gave some interesting examples from the United States. The subject was raised by my noble friends Lord Carrington and Lord Flight. We are taking action to ensure that we have the manufacturing supply chains needed to create strong, sustainable, balanced growth.
I hope that I can now answer some questions raised by the noble Lord, Lord Young of Norwood Green. Through the Advanced Manufacturing Supply Chain Initiative—AMSCI—we are providing funding for capital investment, skills and innovation to support the repatriation, anchoring and growth of manufacturing supply chains in England. Forty-four successful AMSCI projects have secured half a billion pounds of public-private investment, creating or safeguarding more than 15,000 jobs directly and a further 15,000 indirectly. More than 180 organisations have been involved, including many SMEs. A fifth round of AMSCI was announced by Vince Cable on 9 June. This will make available a further £100 million of funding for which companies can bid for support. The recently launched Reshore UK provides a one-stop-shop service, jointly delivered by the Manufacturing Advisory Service and UKTI, which helps British business return to and reinvest in the UK.
Many Peers spoke on the important subject of innovation. Creativity and innovation are in our DNA. Some of the world’s most exciting, cutting-edge technologies are being developed here in the UK. Forty per cent of the world’s small satellites are made in Guildford, and we are making great strides with graphene, composite materials and 3D printing. We have invested £600 million in the eight great technologies, which will be an important source of growth by transforming existing products and by creating entirely new products and industries.
For example—my noble friend Lord Young of Graffham made this key point—effective automation and use of robotics and autonomous systems will be key to the future of manufacturing productivity. We have therefore set up a special interest group bringing together industry and academic experts to outline a future vision for the UK. Its strategy was published on 1 July.
The world is seeing phenomenal levels of growth in the volume and speed of data being created. The internet of things, which allows devices from heart monitors to kitchen appliances to communicate through wireless internet connections, is real and with us now. The advent of 5G and smart cities will broaden possibilities even further.
The Government are working closely with businesses and academia to ensure that the UK can capture value from “big data”. Noble Lords can be forgiven for not knowing what that is. Big data is a term describing the analysis of complex and often large-scale data sets to convert raw data into knowledge. I hope that that is clear. The £42 million Turing Institute announced by the Chancellor in the Budget will help the UK remain at the forefront of this rapidly moving, globally competitive discipline.
I now focus on the important subject of skills, which has been a key theme of the debate this afternoon. It was raised by my noble friend Lord Young, the noble Lord, Lord Young of Norwood Green, the noble Lord, Lord Shipley, my noble friend Lord Jenkin, the noble Lord, Lord Monks, my noble friend Lord Carrington and others.
The UK cannot sustain growth in advanced manufacturing and innovation unless we have people with the right skill set to develop, exploit and embrace new technology. My noble friend Lord Young of Graffham spoke passionately about teaching enterprise. That is very much noted. That means having a skills pipeline at all levels from technicians through to postgraduates. The Perkins’ Review of Engineering Skills, published in November 2013, was a call to action to ensure the long-term supply of engineering skills. In response, the Government have announced up to £30 million in funding for employers to bid for to address engineering skills shortages in sectors with specific needs.
We have committed an additional £185 million over four years for the teaching of high-cost subjects such as science, technology and engineering. We have developed traineeships to give young people the skills and work experience that they need to compete for jobs or apprenticeships. We are developing a network of new national colleges to provide specialist vocational training up to degree level for critical sectors facing skills gaps. Colleges announced so far include advanced manufacturing, high speed rail, and nuclear. Since 2010, we have opened 17 university technical colleges providing high-quality technical education for young people aged 14 to 19, with a further 33 in development. My noble friend Lord Flight rightly paid tribute to my noble friend Lord Baker—and of course, not forgetting Lord Dearing.
My noble friends Lord Jenkin and Lord Borwick raised the issue of increasing the attractiveness of engineering and improving its image. That is an important point. I agree with my noble friends: it is vital that all stakeholders work together to address misconceptions about engineering careers and increase their attractiveness to young people. The Government are already taking action and we are keen to work with those who share our aims, because we want our best and brightest young people to see innovative, high-tech, high-value engineering as a desirable, rewarding career with the status to match—and, as my noble friend Lord Borwick put it so well, the joy of making things.
That is why we launched See Inside Manufacturing, an initiative mentioned by my noble friend Lady Wilcox, which is a partnership between BIS and industry sectors that aims to highlight the exciting opportunities and careers in manufacturing and engineering. Since SIM was piloted in the automotive sector in 2011, it has been extended to 10 sectors currently, and last month we announced that it will be expanded to all manufacturing sectors.
On 7 May, my right honourable friend the Chancellor of the Exchequer launched the Your Life campaign, including a call to action to get educators, industry and government to commit to boosting women’s participation in technology and engineering. My noble friend Lord Shipley highlighted that important point. I should at this stage spare the blushes of my noble friend Lady Wilcox, who raised this issue in her speech, but I note that she was the only Baroness who put her name down to speak today on this important subject—until the female representation in the Chamber today was doubled by the intervention of my noble friend Lady Trumpington.
So far, more than 180 organisations have pledged to do more to highlight the career opportunities open to those studying STEM subjects, committing to create more than 2,000 new entry-level positions, including apprenticeships, graduate jobs or paid work-experience posts. In addition, top firms are sponsoring a new DfE scheme to recruit post-doctoral graduates to become science and maths teachers, injecting top-level expertise into state and academy schools, including those with poor progression in those topics.
Many Peers talked about inspiring people into manufacturing. BIS funds the STEM Ambassadors programme, which sends more than 28,000 volunteers from industry and academia into schools to raise awareness among children of the range of careers that science and technical qualifications offer and provide stimulating scientific activities to increase their interest in STEM subjects. That complements the changes that the Department for Education has made to the design and technology curriculum to make it an inspiring, rigorous and practical subject. Even the youngest children are now using creativity and imagination to design and make products that solve real and relevant problems within a variety of contexts, but I acknowledge that we need to do much more.
My noble friend Lord Bamford raised the important issue of the quality of apprenticeships. I can reassure my noble friend that quality is very much a top priority. We are undertaking major reforms to ensure that the programme meets the future needs of a changing economy. The reforms put employers in the driving seat by giving them the role of designing new apprenticeships. Quality will be further improved by including higher expectations in English and maths and by more rigorous testing and grading at the end of the apprenticeship.
The noble Lord, Lord Monks, raised a separate, interesting point about the importance of competing with countries across the North Sea. He mentioned Germany and the Scandinavian countries and he is absolutely right. We need not just to compete with them but learn from them—which I think was his point as well.
My noble friend Lord Carrington spoke about reshoring in addition to the quality of manufacturing. I want to add another point on reshoring. Paradoxically, perhaps this is why businesses abroad are returning to the UK: not for lower prices but for the quality of the goods and the consistency of service that they get here. In addition, as was mentioned, the Patent Box provides much needed incentives for businesses to innovate.
My noble friend Lord Horam made an interesting point about the fledgling return of the textile sector. My ears pricked up at that point because I started in the mills in Scotland. In Paisley, 12,000 people were employed in the mills and I very much hope that we will continue to encourage regrowth in this sector.
My noble friend Lord Sheikh asked what the Government were doing to promote joined-up thinking between higher education and industry. Through the Engineering and Physical Sciences Research Council, we are investing around £800 million per year in research and postgraduate training. We also support partnerships between manufacturing industry and research partners. A £43 million partnership between the University of Sheffield’s Advanced Manufacturing Research Centre and manufacturing companies is developing the technologies needed for the future.
There is still much more to do, as I said at the beginning of my speech, but I believe that the industrial strategy is starting to have a real impact. Official figures for April 2014 show that manufacturing output is rising at the fastest pace since February 2011. Companies are bringing production back to the UK because they can see that the Government are committed to a long-term path. This gives them the confidence they need to invest both in new technology and more robust domestic supply chains and in skills, through a massive expansion in apprenticeships and the creation of new national colleges, and by putting employers in the driving seat on skills.
Overarching this, we have put in place an industrial strategy founded on stability, longevity, partnership and collaboration. These are the essential ingredients. As my noble friend Lady Wilcox put it so succinctly, supported by my noble friend Lord Horam, we are determined to ensure that this clear, long-term approach survives the current political cycle to maintain the certainty and confidence that our industry needs.