Westminster Hall
Tuesday 9 June 2009
[Christopher Fraser in the Chair]
Manufacturing and Employment
Motion made, and Question proposed, That the sitting be now adjourned.—(Mr. McAvoy.)
9.30 am
Mr. Lindsay Hoyle (Chorley) (Lab): It is good to see that you are the Chairman of the day, Mr. Fraser, and may I add that I am disappointed that you will be retiring?
We are pleased to be having this important debate. Manufacturing is important to our economy and to the UK, and Governments past and present have not given it their true support in the way that I would have liked. There is support, but we must recognise the importance of manufacturing. I should like to talk about what is being done in the automotive sector. We can see the importance of the subject by the fact that so many Members from all sides of the House have taken the trouble to turn up at 9.30 am—I say that for the benefit of those outside who perhaps do not realise that politicians start that little bit earlier than they see on television.
The debate is about what is happening and some of the big issues. Only yesterday, we had the devastating news of LDV vans when only a fortnight ago we thought that there was great hope for the company. There was talk of a Malaysian company and the Government giving £5 million to tide it over, and we thought that everything was in place to ensure that LDV manufacturing in the UK could continue. Unfortunately, what we thought was in place fell apart because of the banks, which did not put the money in.
We have potentially lost 850 jobs in LDV, and probably 4,000 from the supply chain for LDV. The situation has an impact not only on Birmingham, but on other parts of the country in that supply chain. All the parts for LDV vans go through Multipart, which is a huge logistics supply chain company based in Chorley. It is an excellent company and it has the contract for LDV vans. There is a knock-on effect for each constituency. Team Leyland International is also based in Chorley. It is the original exporter and continues to export LDV vans—the company gets LDV vans into places such as Nepal for the British Army. The effect is much greater than people see in the headlines of a newspaper or regional programme. We must consider the depth of the impact that the LDV vans situation will have on the economy and on people’s livelihoods and jobs.
I would have thought that it is now time for the Government to step in and rescue LDV vans. It seems pretty obscene to me that we can see the Mercedes-Benz badge on police van after police van parked outside in the square. That is a shame and a tragedy. Do we think that we will see a British-built van in Germany? Not on your nelly! We will also not see them in Italy, France or Spain. Why do we see that here? What playing field do those countries play on that we do not? We should be ensuring that the police want to buy British to support
British taxpayers and British jobs. The same goes for the ambulance service, which uses Renault or Mercedes vehicles, and the Highways Agency, which uses Mitsubishi vehicles, which are not even built in Europe.
There is something seriously wrong, is there not? Our procurement is a nonsense. On the one hand, we spend millions saying how good British industry is and, “Come and buy from us,” yet at the same time, our Government do not back our jobs. What is going wrong? Why spend millions promoting British manufacturing and then not buy the products? The best advert for British products is to be seen using them. What car will the Minister ride home in tonight? Is it British built? Has it got a British component? I have not checked, but I suspect that it is a Prius or a Honda.
The Minister of State, Department for Business, Innovation and Skills (Kevin Brennan): I know that it is unusual to intervene at this point, but I can tell my hon. Friend that it is a Vauxhall Vectra.
Mr. Hoyle: May I say congratulations and well done? The Minister needs a preservation order on him! He must be listed! He is fairly unique in the House. At least there is a conscience at work.
The fact is that most of the Minister’s colleagues—I hope that he will spread the word—use the Toyota Prius. There is nothing wrong with the Prius, except that it does not involve British jobs or components, and it is shipped all the way here, so it has a bigger carbon footprint than the Minister’s car, which comes from down the road.
I am not anti-Toyota, which has a plant in the UK—far from it—but I say this to Ministers: they should ride round in a British-built Aventis. Otherwise, let us have the big conversation and ask Toyota, “Why aren’t you building hybrid cars in the UK?” Manufacturing in the UK is very important to us. Australia, with 16 million people, can say, “Build here and we’ll buy your vehicles; don’t build here and we won’t.” We should be following that example. There are 60 million people in this country and we are one of the biggest car-owning countries in the world. We should lean on Toyota—and Honda—and say, “Do the right thing and build those cars here.”
Peter Luff (Mid-Worcestershire) (Con): The hon. Gentleman is a very distinguished member of the Select Committee on Business and Enterprise, which I have the privilege to chair. The theme that he is pursuing is familiar—he has pursued it with Ministers on many occasions and may he continue to do so.
May I encourage the hon. Gentleman to go a bit deeper? Is he aware that the French and German Governments have acted much more decisively than the British Government to support the component supply industry in those markets? It is not just the Toyota and Nissan badges that matter; the stuff that goes into those cars also matters. Our component industry is generally strong, but at present it is threatened, and more decisive action is being taken elsewhere to support component industries.
Mr. Hoyle:
How could I disagree with the Chairman of our Committee? He is a great man, and I accept the knowledge that he displays. Supporting and creating jobs in the supply chain is an important factor. However,
we do not want to end up with a kit factory. We have to go deeper. We should be drilling down to find out where we can create jobs.
Bob Spink (Castle Point) (Ind): I am delighted that the hon. Gentleman has brought this subject to the House. He has the vast majority of British people on his side, but they, like us, know that European competition rules are the problem. In procurement, the British Government must follow European rules, which they seem to do to the letter. Other countries in Europe do not do so to quite the same extent. That is one of the problems.
Mr. Hoyle: I cannot disagree. This country is unique in its gold-plating—it is absolutely gold-plated all the way through. As I said, we are on a different playing field from the rest of Europe. Toyota vehicles are produced in Japan, where European competition rules do not apply. Ministers ought to question their own judgment and have the guts to stand up for British industry—the Minister is rightly standing up for British industry and Ellesmere Port by using a Vauxhall. We want to see more backbone and Ministers saying, “I don’t want a car that’s been shipped round the world with a bigger carbon footprint. I want one that’s built in the UK. What’s good for France is good for the UK.” That is the kind of motivation that we want.
David Taylor (North-West Leicestershire) (Lab/Co-op): I would be cautious about focusing entirely on Toyota. It has a plant in south Derbyshire that employs many people in my constituency, and it has a good reputation as an employer. Surprisingly, the highest proportion of manufacturing jobs as a proportion of the economy is not in the great west midlands or the north-west, but in the east midlands, where 15 per cent. of our GDP is linked to manufacturing—Toyota is a part of that.
Mr. Hoyle: I do not disagree. My hon. Friend listens carefully, so he will have heard that I am asking Toyota to consider building in the UK as it did for Australia. I was also saying that Ministers should be buying the Toyota Aventis, which is built in the east midlands. It is an excellent car—it is good on economy and good for the environment. Buying cars that are built in the UK is surely better for the jobs that my hon. Friend wants to create and support in his constituency and the east midlands region. We should buy the cars that are built here rather than the cars that are built in Japan with no British parts and involving no British jobs, which are shipped around the world and which are not good for the environment. That is what I am saying.
David Taylor: The car components industry, which feeds Toyota and others, is a significant employer in North-West Leicestershire. About 20 per cent. of 18 to 24-year-olds were employed in manufacturing in 1997. That figure has more than halved over the past 10 years, and a generation of young people who feel frozen out of the job market are now showing an interest in the politics of the far right. That is one of the lessons that we learned last Thursday.
Mr. Hoyle: I cannot disagree. There is a big question for all parties when people are driven to the fringes in voting. I will not go into that political issue, but I agree that it involves jobs. We must tune in to people and ensure that they have opportunities. They must not be frozen out, or frustration will result. I agree totally.
We have touched on the importance of LDV vans. It is not too late. Yes, people are being made redundant as we speak, but there is a mothballed factory for which there is still hope and opportunity, because it has invested heavily in electric vehicles. Some LDV vans are being trialled by a leading supermarket. LDV is a world leader. If it were in France or Germany, would those countries allow it to close? No. They would put in investment to drive it forward, because the future is in electric vehicles. We should be investing to save the company. That is where we should start.
It is bad news. Household names such as Jaguar and Vauxhall, which I thank the Minister for mentioning, as well as other, smaller manufacturing companies are facing an uncertain future. There is good news out there—the market is experiencing a bit of an upturn—but the credit crunch is beginning to ripple far beyond the financial sector, where it started, and is having a devastating effect on manufacturing. It has exposed our overdependence on financial services and highlighted the need to restructure our economy for the future. We need a vibrant manufacturing base. It is essential for the prosperity of the UK economy. We must not make the same mistakes that were made in the past.
Manufacturing matters, not only to the 3 million people that it employs directly but to the further 2.4 million employed indirectly in supply chains and related services, as the hon. Member for Mid-Worcestershire (Peter Luff) rightly said. We must look after the components sector and protect it better. Manufacturing helps the wider economy. Many of our towns, cities and communities rely on it as their main economic driver, and 50 per cent. of our exports come from the manufacturing sector.
These are difficult times for manufacturing. The pressure of operating in an ever-increasing global economy has been compounded by the global recession. Most notably, the automotive sector has been severely affected since 1997. More than 1 million manufacturing jobs have disappeared, and that trend is due to continue to the end of the year.
Bob Spink: I am sure that the hon. Gentleman will agree that small and medium-sized enterprises are a most important sector within manufacturing. They generate sustainable jobs and new enterprises. The problem for SMEs is that regulations affect them disproportionately, because they do not have the resources that big companies have to deal with them. I welcome the Government’s procurement plan—they are leading us out of recession—but it is not available in small bites that SMEs can access. The Government need to target their procurement at SMEs as well as big companies.
Mr. Hoyle:
The hon. Gentleman is absolutely correct. Procurement contracts could be broken down into smaller pieces, which would allow SMEs to bid for them. That is why we should have a procurement Minister, not just in defence but across all Departments, to ensure that everybody is aware of procurement contracts and that people are helped to win them rather than being omitted
because they are too small or do not have the capability. It is about encouragement, help and support. The appointment of a procurement Minister could make a difference for UK jobs.
Peter Luff: The hon. Gentleman is being generous in giving way. I am sure that he would not want to leave the House with the impression that manufacturing in this country is anything other than thriving in many respects. We have world-class technology in many sectors, including aerospace, automobiles, pharmaceuticals and so on. We are the sixth-largest manufacturing nation in the world. Yes, the sector faces problems at present, and it is wonderful that he is highlighting them, but equally, this is a fantastic opportunity for what remains a successful manufacturing base in this country.
Mr. Hoyle: I do not disagree. As I go on, I will mention some of the benefits. The hon. Gentleman is anticipating what I am going to say. I am talking about the downside, but I also want to talk about the pluses. We should build on what we do best.
Recently, the Engineering Employers Federation raised its job loss forecast for 2009 to 188,000. If those jobs are lost, skills will be gone for ever as workers struggle to re-enter the labour market. We must face up to that problem as well.
When we talk about the automotive industry, people often think exclusively of cars. However, I am keen to highlight the needs of all vehicle manufacturers, particularly Leyland Trucks, which employs many of my constituents. It is a world leader and the last major truck manufacturer in the UK. It meets the environmental targets that we expect of major truck manufacturing. It makes the trucks that we want on our roads. It needs support. The company has invested heavily in meeting environmental needs and reducing emissions from its trucks, but it is struggling. It is still building trucks, but it has had to reduce its work force significantly, and staff are working on reduced hours. Now is the time for the Government to step in. The Government can do a lot, perhaps through a short-time working subsidy to ensure that Leyland Trucks retains its skilled labour and can compete when the market improves. We do not want the company to wither on the vine.
It comes back around. Who has been given the contract for our new Army trucks? Has it been given to Leyland Trucks? No, it has gone to MAN, in Germany. A lot of promises were made. MAN said, “We own ERF in Cheshire now, so we’ll bid for the Army contract.” What has MAN done? It has closed ERF. I understand that ERF now has a little garage based in Stafford. That is its footprint. The vehicles will be built in Germany and shipped over. It is that sort of nonsense that we must overcome. It is no different from Army uniforms being made in China and shipped back here. That is not about European competition; it is about bad judgment.
Leyland Trucks is important, and we could do much more for it. We have given tax advantages to the car industry—I will mention more about that—but we need to do something for manufacturers of vans and larger vehicles to help them through the recession. Why are we not giving tax breaks up front and incentives to sell trucks? Fleet buyers will always be there. Royal Mail will be there for ever and a day. No one will ever make money on Royal Mail, but they can make money on
small buyers—the people who drive one, two, three or four wagons. Those are the people who matter. Helping the manufacturers would help them, because new vehicles would give them better efficiency, but it would also keep jobs and skills in place. That is what we need to support. Will my hon. Friend the Minister consider it? We have done a good job on the car scrappage scheme, but we need to do something for trucks that will bring benefit. I hope that he will take that on board. Leyland Trucks is important.
During the economic downturn, we have witnessed a 60 per cent. fall in production, which highlights the huge impact of the financial crisis on our vehicle manufacturing sector. We accept that we cannot compete on price and stoop to allowing lower-skilled jobs to move to low-paid economies, but it is worrying that highly skilled and well-paid jobs are now going abroad at a similar rate. We need urgently to reassess our policy if we want manufacturing to survive. We need to end our passive manufacturing policy and the notion that factory closures do not matter. They matter, particularly to those who lose out and are forced to enter low-paid work as a result of closures.
We cannot afford to let manufacturing wither away. Now more than ever, the Government must prioritise support and invest in our manufacturing base to meet today’s challenges and ensure that we are best placed to grasp the opportunities of tomorrow. The Government document, “Building Britain’s future: new industry, new jobs”, offers a platform for doing so. It points to an encouraging shift in industrial policy.
Coupled with that, Government initiatives such as the car scrappage scheme are having an impact and helping to kick-start demand in the automotive sector. That is welcome, but it is aimed mainly at small cars. We need encouragement to buy family cars. Families need bigger cars. People cannot tow a caravan with a Nissan Micra, or fit three kids, two adults and a dog inside. We build good family cars, such as the Toyota Aventis. The powertrain of the Mondeo, including the engine and the gearbox, comes from the UK. Incentives to sell more of those vehicles would be a big bonus, because Ford employs thousands of people in the UK.
The car scrappage scheme could be extended. We do not want to fall off a cliff at the end of the 12 months. We must manage the end of the scheme and give other incentives. We must be imaginative in coming up with ideas. I welcome the scrappage scheme, which is working well and making things better. However, my challenge to the Minister is that we can do more.
David Taylor: Does my hon. Friend share the caution of many environmental and economic campaigners over the scrappage scheme? Six of every seven cars bought in this country are imported, which will restrict the impact of the scheme on the UK economy. Could the scheme be given a new direction at the end of the period that the Chancellor has put in place?
Mr. Hoyle:
That is a worry. However, other jobs are created on the back of the scheme, for example in the dealer network and the supply chain for spares. The problem is that the Mondeo is classed as an imported vehicle, even though the powertrain, and therefore most of the car, is produced through UK manufacturing. It is easy to state a figure for vehicles that come from abroad,
but, as I have said, there is a difference between a Mondeo and a Prius. The Mondeo’s powertrain comes from the UK, whereas the Prius contains nothing from the UK. We must get that balance right. If there is a way to support British car manufacturing, I am happy to look at it. However, we come back to the point about European rules. We can do more, but we should not forget that many cars from abroad have content from the UK, and many do not.
The absence of a comprehensive cross-governmental manufacturing strategy puts at risk our ability to meet today’s demands and to enable future growth. We need a jobs summit that brings together the Government and all social partners to set out a strategy. A clear direction for UK manufacturing that centres on investment, infrastructure and the work force must be agreed. There should be regional job summits where the Secretary of State brings regional manufacturers together and listens to what they say. Those manufacturers must work together to ensure that they have a future. They must state their needs and what they want to see from Government, rather than be told what is good for them, which we are very good at. The challenge is to listen to them and to work together. It is important that there is a clear direction centred on investment.
The Government, business and trade unions must work together if manufacturing is to survive. The unions must play a role in the growth of this country, as they are the best lobbyers for procurement contracts. They led the lobbying on behalf of BAE Systems on the Typhoon, the joint strike fighter and submarines. They do a great job of ensuring that UK jobs survive. We want to see a new practice of working together and do not want to return to the problems of the ’70s. New social partnerships are being built in which the unions work hand in hand with companies for the betterment of UK manufacturing.
Who would have thought that Lord Digby Jones would be seen hand in hand with Unite leaders, marching for jobs? Who would have thought it? The bastion of self-enterprise—[Interruption.] I did say “bastion”—the last bastion. Many may wish to think differently of Digby, but I know that his parents were married. He has become a champion of British jobs and of working with the trade unions. Nobody would have dreamt of seeing a march for jobs in Birmingham with Digby and Unite trade union leaders at the front. I welcome that and look forward to his application card coming through. That demonstrates the change we have seen and suggests what will happen in future.
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