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9 Jun 2009 : Column 180WH—continued
“has chosen not to be competitive. Britain has caused this industry to export its capabilities”
Despite talk from Ministers, it is clear that industry is unimpressed by the Government’s inaction.
It has been clear since the fall of Lehman Brothers last September and the collapse of world markets last autumn that urgent action has been needed, particularly in introducing working capital into businesses, so last November my party—the Conservatives—set out a plan for a single, national loan guarantee scheme worth £50 billion for all viable businesses, whatever their size and sector. It was easy to access, clear, and simple to understand, and it would underpin conventional bank lending. That is also why we are committed to cutting the main corporation tax rate from 28p to 25p by simplifying the tax system. We want to reverse the Chancellor’s policy of raising the small company corporation tax rate from 20p to 22p. In that way, we can directly help manufacturers, large and small, to invest with confidence for the future. As several hon. Members said, we also need to consider skills in the sector. We are committed to cutting payroll costs for the smallest employers for at least six months. That is the sort of practical action that industry wants, and it is what my party intends to provide.
All of us in politics must be clear about how manufacturing is changing, as the hon. Member for Manchester, Central pointed out. First, we must recognise how globalisation has led to international fragmentation of production. The production of components and parts is spread increasingly not throughout countries, but throughout continents. That creates opportunities and threats. On one hand, global sourcing gives our manufacturers the chance to cut costs and to be competitive. On the other, British firms have no choice but to be globally competitive in their specialisation simply to survive.
The Government can help small manufacturers in the challenge of accessing global value chains—we debated that earlier—especially in emerging high-growth markets. To be fair, they recognise that need, particularly in areas such as India and China, but it is not clear whether their policies are working. Perhaps the Minister will tell us what progress is being made to help small manufacturers in emerging markets.
The second challenge for public policy is the increasing importance of intangible assets, such as design, branding and software, and it is important to consider carefully how they can be encouraged. It may seem counter-intuitive that such intangibles should matter to manufacturers, but the difference between a key manufacturer and its competitor often lies in its know-how and creativity. Fortunately, we have great strengths in design, whether in computer games or luxury car brands. We should
have confidence in our belief that we can build on those strengths. A crucial issue—it would be helpful if the Minister responded to this—is the Government’s progress in protecting our intellectual property. Leading manufacturers cite intellectual property’s critical role in their ability to maintain their position. Perhaps the Minister will tell us what the Government have done about that during the past six months.
Perhaps a more pressing question that many manufacturers raise with me is the growing gap between schemes that the Government have announced and the money that businesses have received. There seems to be a gulf between Ministers’ rhetoric and the reality in the business world. Instead of our plan for a single loan guarantee scheme, Ministers have launched a plethora of schemes, but have failed to make them work. We have the working capital scheme, the enterprise finance guarantee scheme, the capital for enterprise fund, the transition loan fund, the European Investment Bank’s supported loan scheme for growing firms, the EIB-backed automotive industry loan scheme, and the £1 billion non-EIB-backed automotive loan scheme. All have different rules and criteria. They have different forms and require different business data. The result is confusion for businesses, and failure to deliver in Whitehall.
The capital for enterprise fund, for example, is worth £75 million for expanding firms. It was launched in November, and we were told that it would invest from January, but in June reports from the Government suggested that nothing had been invested. Perhaps the Minister will confirm whether any business has received money and, if not, why not.
The automotive assistance programme comprises two elements: a £1.3 billion loan guarantee from the European Investment Bank, and a £1 billion additional loan guarantee to help the car industry to develop low-carbon technologies. The programme was announced in January, when the French and German Governments had already delivered money to their car makers. Since then, Ministers have dithered and delayed in working out schemes and negotiating with companies. In February, The Birmingham Post, frustrated by the lack of progress, wrote an open and critical letter to the noble Lord Mandelson asking when Ministers would act. February went, and March came and went, but in April Ministers proudly announced a loan of £340 million for Jaguar Land Rover and a £370 million loan for Nissan. That was good news, but on 6 May it became clear that the talks with Tata were slipping and struggling, and in danger of collapse. So here we are, five months on, and it is still unclear exactly what has happened to the money. Will the Minister tell us whether a British company has received funds under that programme? The German Government have delivered, and the French and Italian Governments have delivered. Why under our Government are British manufacturers the last to receive the help that they have been promised?
The Prime Minister likes to talk about providing real help, and I suspect that he needs it at the moment, but he and his ministerial colleagues need to realise that talk is cheap. At the moment, their record is one of press releases, not practical action. It is a tale of dither and delay, of bold promises and then timid deeds. I have no doubt that Ministers wish to help, but my fear is that the gap between their rhetoric and the reality for businesses is one through which hundreds of manufacturers and thousands of workers could yet be lost.
10.50 am
The Minister of State, Department for Business, Innovation and Skills (Kevin Brennan): It is a pleasure to serve for the first time under your chairmanship, Mr. Fraser; I welcome you to that role. I thank the hon. Member for Hertford and Stortford (Mr. Prisk) for his generosity in wishing me a long period in post. I am not sure that that is officially his party’s policy, but I thank him in any case.
I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing this timely and important debate on manufacturing and employment. In the very short time that I have been in post, I have already learned that he is very active in this field. He raised a number of issues, which I shall come to in my remarks, including wage subsidies and whether it is too easy to get rid of workers in the United Kingdom.
I also congratulate my hon. Friend the Member for Stroud (Mr. Drew) on his contribution. He gave examples of successful manufacturers in his constituency, including Renishaw and Delphi, and talked, importantly, about the help that Train to Gain has been able to offer those companies during the current economic downturn. He asked a series of specific questions. I shall have to write to him about those; I have put that on the record to ensure that it happens.
I also congratulate my hon. Friend the Member for Manchester, Central (Tony Lloyd), who made the important points that his city would not exist as we know it if it had not been for free trade, and that in supporting British manufacturing we need to ensure that we note the importance of international trade. He made very good points about procurement and about further education and apprenticeships.
This has been an important and interesting debate. The Government are deeply conscious of the importance of the manufacturing sector to all our constituencies and to the country as a whole. After all, it is what catapulted this country on to the world stage in the first place. Long before globalisation was a term in common usage, Britain was regarded as the workshop of the world, exporting more than half its iron, coal and cotton cloth. The constituency of my hon. Friend the Member for Chorley played a vital role in the cotton industry as part of that.
Of course, times have changed and manufacturing is changing with the times, shifting its base towards more and more high-tech manufacturing. Companies are developing in exciting new areas such as fuel cells, plastic electronics and Bluetooth technology. Traditional sectors have reinvented themselves through information and communications technology, software and new technologies such as robotics and materials. Nevertheless, our capability in advanced engineering remains world class.
Despite the changes in manufacturing industry, it remains in some ways the unsung hero of the British economy. The statistics only partially indicate the significance of the manufacturing industry to our economy. However, as the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) said, we remain a major manufacturer in world terms. We are the sixth-largest manufacturer in terms of value. At the end of 2008, the manufacturing industries in this country employed close to 3 million people and accounted for 12.6 per cent. or
£157.7 billion of our national output. In addition, as my hon. Friend the Member for Chorley said, manufacturing is responsible for 75 per cent. of our business research and development. Even taking account of the global economic downturn, productivity in manufacturing has been growing at a rapid rate in the UK; it has grown by more than 50 per cent. since 1997. As the hon. Member for Caithness, Sutherland and Easter Ross pointed out, that is growth in real terms, albeit at a time when other sectors of the economy have been growing more rapidly because of the changes that we have seen in the structure of our economy.
However, we are here today because of the points that my hon. Friend the Member for Chorley made about the way in which manufacturing, along with other sectors, is suffering in the global recession. The latest data show that manufacturing output has fallen for 13 months in a row. That is also happening in other countries, but as he pointed out, that is no consolation to the hard-working men and women in our communities who have jobs in manufacturing and who are affected by those changes. Nor is it any consolation to those who have had to switch to short-time working or who have had to lose their jobs as a result of the economic downturn.
In many of the communities affected, memories are still fresh of the 1980s and ’90s. Then, when there was a downturn and manufacturing was suffering, there was a very different response—some would say no response—from the Government. It was an approach not of trying to be fair to those communities, but of simply being laissez-faire in their attitude towards the economic downturn and towards manufacturing at that time. That has changed.
Mr. Prisk: On that point, can the Minister tell me how many British companies have actually received funds under the automotive assistance package?
Kevin Brennan: I cannot at this point. I will write to the hon. Gentleman later, if he will allow me, given that I have been in post for just a few hours. I will write to him when I have the opportunity. However, I will make the point that at least the present Government are putting forward real help for industry in a way that was not the philosophy when his party was last in power.
Mr. Hoyle:
Much has been made of our not helping and supporting the automotive industry. I can tell hon. Members that the Select Committee on Business and Enterprise, of which I am a member, has recently taken evidence from Jaguar Land Rover and other car companies and the components sector, which welcome the initiatives, help and support that Jaguar Land Rover has been given by the Government. I must reassure hon. Members
that Jaguar Land Rover is very pleased and wishes to continue with the help and support that the Government have given it.
Kevin Brennan: I am grateful to my hon. Friend for his intervention, which was, as ever, very helpful, fair and reasonable. In the short time left, I shall try to address the point that I think he wanted to get to in the debate, which is his debate, after all. I am referring to wage subsidies. That is something that the Government have carefully and extensively examined. There are two reasons why currently the Government have not decided to proceed with the idea. First, there is the question whether such schemes can be effective and would be value for money. Secondly, there is the experience of that idea in the past. My hon. Friend the Member for Stroud mentioned the 1970s, when wage subsidies were in place. The question is whether what happened represented value for money or whether firms took the subsidy and did what they would have done anyway.
That said, the Government do understand the anxiety and difficulty faced by people who find themselves out of pocket on shorter working weeks, so we are ensuring that there is support for them. We have expanded the Train to Gain scheme. Hon. Members acknowledged that during the debate. That is the Government’s flagship skills service that supports employers of all sizes and in all sectors to improve their employees’ skills. From January of this year, struggling small and medium-sized enterprises have been able to access increased training provision to help them to emerge stronger in the upturn. That includes bite-size qualifications in business-critical areas and more funding for second qualifications. In the meantime, individuals and families on tax credits will see an automatic increase in the money that they receive, to compensate for the loss of income. In March, for example, 355,000 families were receiving on average £35 a week more support through tax credits.
Where there are significant redundancies in the manufacturing sector, the rapid response service is working to move people quickly into new jobs, preventing them from becoming detached from the labour market. We have doubled the funding for the service already and will double it again. As we are particularly concerned to help the long-term unemployed, we are also making available 75,000 further education training places for Jobcentre Plus referrals after six months’ unemployment, taking on board the important points that hon. Members made about further education.
I would like to go on and outline how we are preparing for the upturn, which we hope is coming—many hon. Members referred to that—but I fear that time will not allow me to do so. Our challenge now is to ensure that our manufacturing sector is ready to lead the industrial revolution of tomorrow, just as this country led the industrial revolution of the past.
Council Tax Capping (Surrey)
11 am
Sir Paul Beresford (Mole Valley) (Con): I am delighted that you are our Chairman, Mr. Fraser. I am also delighted to have so many of my colleagues here—they look a little like a Maori Haka troupe, and I hope that the Minister will take note of that. We have a mascot as well—[Interruption.] Perhaps I should wait until the Minister is seated and listening.
I am grateful for the opportunity to raise this subject for debate. I think that I am correct in saying that every Surrey MP, whether they are here or not, backs what I have to say. We have deep concerns about the effects of capping and the re-billing of the capped council tax, which the Government have, as anticipated, demanded. We all realise that the order that is required to introduce capping has yet to be introduced, and the Minister may feel even more limited in what he can say, but I have called the debate to persuade him that if he continues with capping by introducing the order, he should do so in such a way as not to require re-billing. He also needs to recognise that all of us in Surrey believe in value for money and in protecting the council tax payer.
In looking at the effects of capping on Surrey police and of the pending requirement to re-bill all Surrey for its council tax, I need to do a certain amount of scene setting. Surrey police are a county force, but with metropolitan challenges. They describe the county as a target-rich environment, with a disproportionate number of high-risk potential targets. Her Majesty’s inspectorate of constabulary says that Surrey police are in the top half of our country’s forces in terms of the threat from organised crime. With the county being criss-crossed by some of the busiest motorways in Europe, and with Heathrow on one side and Gatwick on the other, the threats are obvious.
Surrey’s close proximity to London explains why approximately half the criminal activity in the county is perpetrated by those living outside it. To take one example from last year, Surrey tackled 17 organised crime groups, of which 12 were London based. That cost Surrey at least £40 million. The police grant for Surrey is the lowest per head in the country. As a consequence, council tax payers, unlike those in every other police authority, share the cost of our police at a ratio of 49: 51. Furthermore, there has been a year-on-year real-terms reduction in police grant over the past 12 years.
Surrey police have responded, as we would hope, by delivering more in a better way and for less. A recent Audit Commission assessment of the authority’s value for money gave Surrey police the highest rating in 2007-08. The commission’s report said:
“When compared to similar forces Surrey Police receives a very low level of grant funding from central government and has the lowest expenditure per Band D property of any force in England and Wales. The high level of performance from a relatively low level of funding demonstrates excellent value for money to the taxpayer”.
During its inspections last year, HMIC also gave the performance of Surrey police a glowing report. More importantly perhaps, ratings from victims who were surveyed and from the general public give Surrey police a satisfaction rate of more than 80 per cent. Surrey police work on the basis of being a modern, innovative
police force. They have led the way in developing neighbourhood policing, work force modernisation and common-sense policing.
Mr. Jeremy Hunt (South-West Surrey) (Con): I congratulate my hon. Friend on calling this incredibly important debate on an issue about which people in Surrey feel extremely strongly. He mentioned neighbourhood policing, but does he agree that however frustrated people in Surrey feel about the many failures of Government policy on law and order, neighbourhood policing is perhaps the one area in which they feel that there have been huge improvements in recent years? It would be an enormous tragedy if rate capping and the loss of 50 police posts led to cuts in the one area of policy that seems to have been working.
Sir Paul Beresford: I thank my hon. Friend. He has picked on one of the key points that I and, I assume, many of my hon. Friends will touch on later in this short debate.
In setting their 2009-10 budget, Surrey police have been forced to cut another 144 posts by focusing on non-operational areas and investing in new technology. They have also managed to move extra resources to the front line. Without capping, the force is, in essence, delivering unrivalled value for money for the community. The latest reductions were carefully considered and programmed early, without the urgency that will come from capping and re-billing. It is astonishing that the police authority has been singled out for capping when it clearly delivers value for money.
Mr. Peter Ainsworth (East Surrey) (Con): I, too, congratulate my hon. Friend on securing the debate. While he is setting the scene, will he explain the scale of the reduction in grant funding that Surrey has had to undergo since 1997? I believe that it is in the region of 40 per cent. in real terms.
Sir Paul Beresford: I thank my hon. Friend. He is right. In 1997, Surrey police received £96 per head of population in Government grant. Twelve years later, in 2009, Surrey residents received £93 per person in police grant. That is a real-terms reduction of 39—not quite 40—per cent.
Surrey police force and the Surrey police authority have reached their tipping point, and operational policing in Surrey can no longer be protected from the cumulative effects of more than a decade of underfunding, let alone any capping or re-billing. Last month, the former Home Secretary gave a commitment to maintain increased funding for the police grant, which she said would enable the Government at least to maintain police numbers. That may be true across the whole nation, but it is certainly not true in Surrey, and it will be even less true with capping, re-billing and the progressive annual tightening of the budget.
Of course, there is an argument over the figures. Last year, the Secretary of State set out a net budget requirement increase of 4.82 per cent., but the actual increase in the net budget requirement was 3.82 per cent. This year, the increase in the precept levied by Surrey police was 4.89 per cent., but to my surprise, I discovered that the Department for Communities and Local Government claimed that the precept had risen by 7.07 per cent. The Department based that on a notional precept, and the idea of a notional precept is key.
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