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4.25 pm
Mr. Nigel Evans (Ribble Valley) (Con): It is apposite that we have the opportunity to debate UK manufacturing industries at this moment, during a deep recession. Somebody spoke earlier about political amnesia, but one thing is for certain: people are not going to forgot the hurt that has been felt during this recession.
My hon. Friend the Member for Weston-super-Mare (John Penrose), the shadow Minister, spoke about the need to make absolutely certain that we do not resort to protectionism—a view with which I agree heartily. The last thing we want is a wall built around the European Union as some sort of protectionist device. Even if we were to build a wall around it, I suspect that we would put the contract out to tender and the Chinese would win it. We know that they are pretty good at building great walls, but it would be of no benefit whatever to us. We really do believe in free trade.
Before I move on to the impact of manufacturing and its importance to us, I wish to make a brief point about trade missions and exhibitions, which I feel are vital. I am a co-chairman of the all-party export group, and I believe that the attempt to save a bit of money by cutting trade missions and exhibitions throughout the world has been rather foolish in the long term.
Frankly, I thought that we made a grave mistake when we got rid of the royal yacht and did not replace it with anything. We could have had a new yacht, manufactured in Britain, as a showpiece throughout the world on which to exhibit goods made in the UK, supported by our trade ambassador, Prince Andrew. We did not, and at the same time we cut the number of missions and exhibitions we support throughout the world. Other countries are not doing likewise. Our so-called European friends are also our competitors, and they are getting out there in the world and promoting the goods that they manufacture. I do not blame them for that; I blame us for not matching them.
We have taken the same attitude towards our embassies, high commissions and consulates throughout the world. We are cutting and closing missions right, left and centre and bringing the flag down. We might think that that is associated with our colonial past, but it has nothing to do with that and everything to do with our trading future. The Chinese are also our competitors in manufacturing, and they are doubling or trebling missions. I hope that the Minister will look again at our attitude to trade missions and exhibitions throughout the world.
It was asked earlier how many manufacturing jobs have been created recently. The only figure that I have compares the number of people employed in manufacturing in 1997, when we left office, with today. In 1997 it was 4.53 million, and today it is 2.7 million. There has been a huge reduction. Manufacturing is still important to the UK, and it is not simply at the hands of this Government that it has reduced. It has happened over successive generations. However, we have to realise that there is a problem and that we cannot base the future of this country simply on the service sector.
It is absolutely right that we have to invest in research and development. We talk about innovation, which we are pretty good at, but we have to be pretty good at
production as well. We have to build on the fact that we are good at innovation and research and development. Some of us managed to see the Lightning, the electric sports car that will hopefully be built in the midlands, in the House a few weeks ago. It has had a lot of research and development here, and it will be manufactured here as well. It will do 198 miles before it needs to be recharged. That is the future, but we must not turn our back on the car industry of the past in the midlands and other parts of the country, which is suffering greatly.
We support the car scrappage scheme, which works in France and Germany. I think that the Government made the right decision—we will have to monitor the scheme to ascertain whether it needs to be extended when the time comes, rather than turning our back on it.
BAE Systems operates in my constituency, where we have a superb plant. As I am sure the Minister knows, it employs 4,500 in the Samlesbury plant in my constituency, and 7,000 in the Warton plant, which is not far away. Thanks to the company’s putting so much investment into the two plants in the north-west, many other jobs have been created in small enterprises. Frankly, many people could not name those small companies, some of them are based in lock-ups, and would not even know what they were doing, but the existence of BAE means their existence. It would therefore be short-termist of any political party that takes over in 2010 or earlier and is trying to save public funds to cut defence expenditure and procurement. We need to ensure that our troops have the equipment that they need to protect the country and that there is sufficient investment in future in projects such as the Lightning, and in the joint strike fighter and other aircraft.
4.31 pm
Nia Griffith (Llanelli) (Lab): I am glad that we have the opportunity to discuss such an important subject. I welcome, as well as the Minister, his new colleague from Wales, the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Wrexham (Ian Lucas). I know that he will be very helpful in providing additional assistance to manufacturing.
It is easy, when faced with the press, to focus only on the negative. I should like briefly to make a couple of positive points about my constituency. We are pleased to welcome the company Thales, which will provide approximately 80 jobs by the autumn in manufacturing an impressive vehicle, for which is there is much demand nationally. That is a great story. We also have the Proact scheme, which is working well with our local college, Coleg Sir Gâr, and helping 12 local companies to use time productively. If those companies cannot sell as many products, and therefore cannot do as much manufacturing, they can at least upskill the workers.
We should not only improve workers’ skills for an upturn in the economy, but invest in infrastructure. As the Minister explained, and as my hon. Friend the Member for West Bromwich, West (Mr. Bailey) said, programmes for schools and hospitals help steel and other manufacturing industries, which are supplying all the good construction work, but we must also examine the infrastructure that we need for our industry. We are lucky in my constituency to have rail and the M4, which means that we have excellent manufacturing sites within a few minutes of road and rail.
We should look at manufacturing throughout the UK, especially in areas such as south-west Wales where every job is valued. We should not simply focus on one or two areas, where perhaps there is a greater concentration. We need the investment as much as anywhere else.
I want to consider the more complex issue of investment in our sewerage infrastructure. It is easy to understand how money for schools and hospitals is channelled—it goes via the Welsh Assembly and county councils; we know what we are doing. However, we have recently had a consultation about water pricing, which arose because of the need for water companies throughout the UK to examine investment in the infrastructure. That has affected manufacturing industry in my area because the lack of investment in sewerage means that we have a planning restriction on expanding our factories. The water companies have to raise the money from individual domestic users and there is great variation throughout the country. For example, in south-west England, a huge effort is made to keep the beaches clean and that has a knock-on effect on the domestic price. We need to consider how we right that infrastructure to ensure that no area is disadvantaged and in a position whereby it cannot build factories because the necessary investment has not been made in bringing sewerage up to the required standard. That burden should not fall only on the domestic consumer.
I should also like to bring to the Minister’s attention the matter of energy prices. We know that worldwide oil prices have been on the G8 agenda. The high-energy industries are represented in my area by Corus, and I should like to remind the Minister that the town of Llanelli is nicknamed “Tinopolis”, because Corus produces tinplate there. That product is very much in demand at the moment, and we are “lucky” that there is still a strong market for tins and cans for food and drink. However, we feel that we are perched perilously on a knife-edge, and that every cost increase makes an enormous difference to our ability to compete across the world. We need to provide companies with certainty and stability and to help them to plan for their energy costs. That is undoubtedly a great worry for them when they are trying to do their long-term planning. I stress to the Minister the absolute urgency involved in getting that right, and in getting guarantees not only on immediate pricing but in relation to our investment in providing for future energy supplies so that we can become less reliant on imports.
In that context, I reiterate that we cannot discount the importance of coal. Much as we might like to reach a point at which we did not have to use a single carbon product, that is not the reality, given that about 70 per cent. of our electricity currently comes from carbon products. We need to think carefully about whether we would not be better off making a considerable investment in coal rather than importing oil. Clean coal technology is a key part of that question. If we could get ahead in that game and produce the necessary materials and technology, we could sell them to the world rather than allowing others to overtake us. We have an ideal opportunity to lead the world in that area.
4.37 pm
Sir Nicholas Winterton (Macclesfield) (Con):
Manufacturing industry has always been my prime priority. Press articles this week entitled “Economy stuck in stagnation” and “Manufacturing output slump”
make for depressing reading. The disappointing news is that the United Kingdom economy did not exit recession in the second quarter, as had previously been predicted; instead, it is now stagnating, according to the gross domestic product estimates produced by the National Institute of Economic and Social Research. That is the reality. Last month, the institute estimated flat output growth in the second quarter and downward revisions to industrial production have stunted GDP forecasts.
I agree with the Minister, however, that we are one of the great world leaders in advanced manufacturing. We have some of the greatest companies in the world. They operate from the United Kingdom but they are global players with huge strengths in new technology and in innovation.
Mr. Evans: My hon. Friend has listed some of the problems; does he agree with me that if Sir Alan Sugar is the answer, we had better look again at the question?
Sir Nicholas Winterton: Inevitably, I share my hon. Friend’s view on Mr. Alan Sugar—or should I now call him Lord Sugar? Perhaps not yet.
Will the Minister ensure that the Government do not place additional burdens—such as an increase in national insurance, Government-generated energy price rises, fuel tax and regulation—on manufacturing industry? These are all important factors. When will he reverse the crippling £16 billion cost—that is an official estimate—of constantly changing regulations, and the £7 billion of new taxes introduced a year by his Government? When will he recognise that manufacturing industry is one of the only sources of sustainable, non-inflationary economic growth—a phrase that I have used over many years—and the key to getting out of this damaging recession? I put this to the Minister as a challenge: if the future of this country is to be built on modern manufacturing strength, when will the present Government start to encourage, and not de-incentivise, our industry and manufacturing?
Despite receiving unprecedented valuable bail-outs from the taxpayer—from the HM Treasury—the banks et. al. are all providing little or no meaningful assistance to hard-pressed manufacturing via the necessary increase in lending. I am sure that the Minister will agree. The plight of small to medium-sized businesses is very serious, since the commercial banks still refuse to lend to struggling businesses, which are, after all, the powerhouse of a modern economy.
I know that individual businesses in my Macclesfield constituency are finding it extremely difficult to secure the affordable credit that is so vital for their present survival. Sadly, I have to report to the Minister that the situation in the constituency, as witnessed by the Macclesfield chamber of commerce, continues to deteriorate. That situation, as my hon. Friend the Member for Ribble Valley (Mr. Evans) would confirm, is repeated throughout the north-west.
Autac, a company in my constituency that manufactures cables and connectors for heavy-goods vehicles and fork-lift trucks, is just about coping with the downturn, but is having to produce very small orders at short notice in order to survive. The management believe there has been major de-stocking and that customers are now keeping minimum stocks. The company has been particularly hit by the drop in demand for commercial vehicle parts and commercial vehicles, while vehicles as a whole have featured strongly in this debate.
The Macclesfield chamber of commerce is seeing the usual reduction in spend by businesses on training and marketing—very dangerous for the future—with several manufacturers also having had to reduce R and D spend, which is also critical for the future. Several are concerned about the change in rules on tax relief, for example, and are waiting while HMRC investigates claimed costs.
Locally, as in many parts of the world, there is concern over PAYE, business rates and employment legislation; and the pension protection levy is also an issue. The printing industry in my constituency has been particularly hard hit—initially by competition from China and increasing material costs, which has now been exacerbated by the fall in demand for marketing and printed material. A local firm, for instance—this is not untypical—has had dramatically to reduce its work force and, what is more, renegotiate terms and conditions with the remainder of its staff. Large vacant premises are becoming a major issue due to the lack of demand for such property, while current business rates, as the Minister knows, are a very serious problem indeed.
The final major point made to me by the local chamber of commerce was that it is suffering from increasing demand for its services with a lack of any Government support. I have to report to the Minister—I say it with some regret—that the Macclesfield chamber of commerce has failed to secure a contract with the Northwest Regional Development Agency, which has once again gone to a large commercial provider, despite the fact that the chamber of commerce is so closely in touch with industry in the area. I hope that the Minister will pay some attention to this matter and make some inquiries into it.
Let me tell the Minister that I feel passionately about manufacturing industry. Over all my years in the House, I have been an advocate of manufacturing industry because of the role it plays in the economy of any successful country. Will the Minister please take the burdens off industry and not add to them; will he understand what industry is about? The fact is that businesses need money at this time, so why cannot the Minister and the Government do more to encourage the banks to provide the liquid capital and the resources that industry so desperately needs to survive until the economy turns up? We rely on the Government to take very positive steps.
4.43 pm
Mr. David Drew (Stroud) (Lab/Co-op): The Minister will have heard my earlier intervention and my continuing plea, together with those of my hon. Friends the Members for Birmingham, Northfield (Richard Burden) and for Chorley (Mr. Hoyle), for wage compensation. I shall say no more about that now as I want to move on to more positive things, for which I thank the Government, but the Government need to recognise that the pleas will not go away.
In January this year, I approached a number of people in Gloucestershire to seek help with problems I faced at that time. Two major companies in my constituency, Delphi and Renishaw, were laying off some members of their work force and putting others on short-time working.
Following an initial meeting with Business Link’s south-west skills service, we were able to fasten a partnership together, and I am extremely proud of the way in which we have worked.
At that stage, the skills service was considering whether Train to Gain could be used to deliver business improvement techniques, in accordance with national vocational qualifications level 2, to those who would be on short-time working. The aim was to ensure that we used rather than wasted the time that those good people sadly had on their hands, and that if and when the recession ended they would be ready to go out and compete with their European and other rivals.
We had a number of meetings with a huge number of partners. We met representatives of the South West regional development agency, and I thank Ann O’Driscoll for helping us with the paper that she prepared. We also met representatives of the Learning and Skills Council, Jobcentre Plus, Gloucestershire Training Group—the key vehicle for the training to take place—the Government Office for the South-West, Gloucestershire First and Business Link itself. As a result, we have been able to develop very effective training packages. I thank the Government for the resources that they are potentially investing, and the way they have followed up the work of those organisations.
We have offered support to both Delphi and Renishaw, and are about to launch the training packages for real. At first we envisaged quite a small number of positions, but the number rose to 1,100. It is likely to stabilise at about 450, but because the scheme is voluntary, the door is open for others to “upskill” themselves so that they can take advantage of what the Government have offered. We believe that this is a model that could be adopted in other areas. It is the south-west’s equivalent of Proact. As I said to my right hon. Friend the Minister, it is disappointing that Proact seems not to have taken off as effectively as it might have.
I am immensely proud of what has been done in my constituency. When people think of Stroud, they tend to think of rolling green hills, the creative industries and tourism, but in fact it is still a major manufacturing centre, which is why I have been so keen to ensure that we keep as many people as possible in employment.
Now that the scheme is up and running, it is important to ensure that it develops. I want to make a number of points about it. I do not expect my right hon. Friend to respond to them all now, but I hope that in due course I can meet him with some of the representatives. Alternatively, he might choose to write to me.
First, some employers fear that they will have to pay if people do not complete the course, which is to be supervised by Ofsted. It must be made clear that neither those who train nor the employers who allow them to train will be penalised. We must underwrite the cost. Secondly, the awarding bodies—the qualifications academies—must recognise that if they charged individually the cost could become onerous, and that they should drop their price for the collective numbers involved. Thirdly, given that Train to Gain is capped, I hope that my right hon. Friend will tell us how we can allay people’s fears and reassure them that the funds will be there for both adults and young apprentices if we choose to expand the scheme, as I hope we will.
As I have said, the scheme is innovative, and it shows the Government working at their best. I hope that the compensation and contribution arrangements will still operate, but if this scheme works, it will be something of which everyone should be proud.
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