Exporting out of recession - Business and Enterprise Committee Contents

Examination of Witnesses (Questions 120-139)


23 FEBRUARY 2009

  Q120  Mr Hoyle: I think we could do a lot more, and I think it is the part that we ought to be doing.

  Lord Jones of Birmingham: I would love to hear about that because that would be good news, but if Lord Mandelson is sitting there saying, "Digby, that is all very well and good, but can you please explain to me how I pick the ones that are not going to go bust from the ones that are?" and all that stuff, in other words, pick the winners, I think he has got a valid point. I think it is really difficult. If you come from the Government's heritage of the last time there was a labour administration, when you did have the baling out of British Leyland and all that went with it and the nationalisation of shipbuilding and steelworks and all the rest of it, you are going to have a heritage of this time round not wanting to be seen to be doing it. I understand fully the obstacles to doing it, but that in a way does not mean that it is not right to do it on occasion. We all forget this but the biggest investor in British Leyland was Margaret Thatcher. In intervening and picking winners and failing, I would remind Mrs Thatcher of De Lorean. Doing this is not just something which Labour Governments do. This is something that Governments of both sides did. I do understand how democratically elected politicians who want to be re-elected do not start trying to walk into the lion's den and picking winners, but what could we be doing more on manufacturing? Above all else, I think, we have to invest more of private sector and public sector money in all the means to create value-added innovation. That is what manufacturing is about. It is adding value to raw materials and people's time and how you put the two together and make six or seven. That is manufacturing. If you do not put more investment now into skilling people, getting your kids on board with the ideas so that they start thinking of careers in it, getting local governments understanding and politicians understanding this is not a milch cow that you can just constantly tax and regulate and presume it will always be here, because it is also the most mobile of our sectors. It is very difficult for Asda to make money from an Asda store in Birmingham and some of it in another country. You cannot do it. You can move a factory. I know nothing about this but I read in the newspapers that there is a big row going on in the Government at the moment about, "Let us make sure there is less regulation", and some parts of Government say, "No, we will have more". I tell you: manufacturers will just go. They will go and do it somewhere else. We really cannot afford that to happen, so what should we be doing more? Making the business environment more easy for manufacturers to invest in this country and not in another country.

  Q121  Mr Hoyle: It is interesting what you stated about Leyland but it is the same people that are coming back again—Jaguar, part of Leyland, LDV vans, part of Leyland.

  Lord Jones of Birmingham: I think that is a coincidence.

  Q122  Mr Hoyle: Leyland Trucks, part of Leyland.

  Lord Jones of Birmingham: A coincidence.

  Q123  Mr Hoyle: What we are seeing is that all the ones are suffering the same problems because they suffer the most because of the downturn. The first thing you do not buy is a replacement car or a replacement van or a replacement truck. My view is that the Government can do more and it is something that we had to remind you of when you were busy. I know you told something different in the Daily Mail, but when you came to this Committee you were happy riding round in a Japanese-built car with—

  Lord Jones of Birmingham: I was not happy. You know I was not. Do not put words in my mouth, Mr Hoyle. I was very unhappy.

  Q124  Mr Hoyle: You did not even know that you were riding—

  Lord Jones of Birmingham: I thought it was made in Swindon.

  Q125  Mr Hoyle: Exactly, so we corrected you and—

  Lord Jones of Birmingham: And I went out and got a Jaguar.

  Q126  Mr Hoyle: Quite rightly, but the point I am making—

  Lord Jones of Birmingham: Made in Liverpool.

  Q127  Mr Hoyle: So it should be.

  Lord Jones of Birmingham: I know. Do not say I was happily driving round. I was not.

  Q128  Mr Hoyle: Quite right, but what I am saying is you were busy riding round as a minister in a Japanese car with not one British job and not one British component.

  Lord Jones of Birmingham: Spot on.

  Q129  Mr Hoyle: Do you think—this is the point I am getting to—the same with the vans in Southampton and LDV vans in Birmingham? Do you think we can do more at the moment through procurement? I think it is always better to buy British manufactured cars and vans and vehicles because not only is it good for you to be seen in a British-built vehicle but also people recognise that it must be a good vehicle because if it is good enough for a minister it is good enough for the rest of us. Do you think we can do more through procurement to support British manufacturing?

  Lord Jones of Birmingham: Absolutely, yes. What amazes me, and I say this with huge respect to the green lobby, is when you see the contribution to CO2 emissions from the moment a Prius starts to be built in Japan to when it is driving a Cabinet minister around here and you see what you could do with a two-litre diesel baby Jaguar made in Liverpool, there is less carbon put into the environment in the whole equation by the small car in Liverpool. A ten-year old Ford Focus or whatever pollutes the environment far more than a modern Range Rover, but can you get that concept into people's minds? No. What we have to have at this time is a procurement process for the nation just supporting quality manufacturers. I was in Birmingham driving an Austin Allegro, so I was the one. I do understand that in the old days when a lot of British manufacturers did not make good stuff procurement on that basis was not only protectionist; it also was uncompetitive and, frankly, did the taxpayer down. Today in certain sectors we are first equal in a world of firsts at many things and we ought to be supporting it, yes.

  Q130  Mr Hoyle: Absolutely. What I would suggest is, and I do not know whether you would agree, is that we ought to have a minister responsible for government procurement that would go right across departments because some departments do not seem to understand the importance of how you can use procurement,—of course, we have to work within the European law, although we are talking about companies which are outside Europe so it does not exist—somebody who would sit in the Cabinet office, look across and say, "Right; we have got the procurement here". It may be paper clips this week but it could be trucks next week or aircraft the week after, but somebody takes responsibility to ensure that British companies know about it, and get all the right promotion and all the right support.

  Lord Jones of Birmingham: My sympathies are entirely with you. Whether that person would thank you for the job is another matter.

  Q131  Mr Hoyle: I thin you might come back on that.

  Lord Jones of Birmingham: I think it would be a good idea. One of the problems you have in the European Union at times like this is that I cannot really believe that if I were a French businessman and you were a French MP we would be having the same conversation.

  Q132  Mr Hoyle: No, because I like the same playing field that they use.

  Lord Jones of Birmingham: They are subject to the same procurement rules as we are.

  Mr Hoyle: Yes, and somehow they seem to get the rules right. They put the French car industry first.

  Q133  Chairman: I think you are agreeing with each other at some length, so I think we should move on.

  Lord Jones of Birmingham: We are having a manufacturing love-in, Chairman.

  Q134  Mr Hoyle: I will just give you another quick example where I think cross-government does not quite work out. We have put an army unit on contract that is now manufactured in China. It is now coming up this year and we have got British companies tendering for it. Part of it was that it was lost by about a million pounds over the five years on an over-£50 million contract, but what is never taken into account is the loss of the 50 jobs that went with it last time and the amount of national insurance and tax that they had been putting into the economy and the profits from that company. Do you think somehow we ought to look at that?

  Lord Jones of Birmingham: Absolutely; for sure. I think the problem you have, and my sentiment is with you, is that you must make sure that the act of competition delivers the best value for money for the taxpayer. What frustrates me is when people are not comparing apples with apples and then do Britain down. Often, if you compared apples with apples, Britain would win. That is what worries me.

  Mr Hoyle: A state-owned factory tendering is going to win. What I would say to you is that from the defence point of view they have saved a million pounds but the loss to the Treasury through national insurance and tax was never taken into the equation.

  Chairman: I think you are starting to agree with each other again.

  Q135  Mr Hoyle: So do you think it is something we can begin to look at?

  Lord Jones of Birmingham: Yes, it is.

  Chairman: That will do.

  Q136  Mr Hoyle: Of course, it is about supporting British manufacturing. I am pleased that you have touched on the energy markets as well and the hope that we can move forward. Is there any other message that you think we ought to be putting in our report that would support British manufacturing on something you have not mentioned yet?

  Lord Jones of Birmingham: Yes. I would also use the procurement exercise to improve the skills base because what is wrong with a local authority saying, "I like your prices, I like the quality. How do you skill your people?"? They bring into the equation, rightly, about the private sector as employers of ethnic minorities and all of that, and I have got no problem with it, but why are we not also saying, "I will buy your stuff if you train your people. I want to come and see how you train them". If the future of our manufacturing base is on how good the skills base is we will endure this recession. I want the big buyers of domestic manufacturing goods, which is basically the public sector in all its forms, including central government and the army and whatever, saying, "I want to come and see whether you have got any illiterates in your workforce. I want to see whether you are training well enough. How is your supply chain about training?", and using the procurement process as an impetus to improve the skills base of the nation. Why not? There are a lot of politicians who are very quick to say to the private sector, "We insist that you employ so many of this part of society and so many of that part of society". There is nothing wrong with that, fine, but—hang about. Let us invest in tomorrow's people to deliver the goods so we pay our way in the world. If we do not pay our way in the world we are finished.

  Q137  Mr Hoyle: I have a final quick question with a straightforward answer, I believe. I can see the benefits for UK manufacturing coming from the pound being weaker and that all those component companies that went into Europe are now looking to come back to the UK. Do you think there are opportunities the Government should seize there to support that?

  Lord Jones of Birmingham: Yes. I believe the currency issue is cyclical. If we had had this conversation a year ago it would have been two dollars to the pound, so it is cyclical. It would be a dereliction of duty if, whilst we have the cycle in our favour in exports, we were not doing more about it.

  Q138  Miss Kirkbride: I wanted to pick up on a couple of things that have come up so far. We started today by saying that we face the worst economic outlook since the Second World War, and clearly there are a number of our big exporting companies, one of which you are an ambassador for, who are in a spot of bother at the moment because of the world environment. If you were in Government now what advice would you be giving to Peter Mandelson about their various requests? What should the Government do?

  Lord Jones of Birmingham: Without a shadow of a doubt make sure these initiatives are making a difference on the ground in the morning more than anything else. You have had your five minutes of initiative blitz. You have had all the news conferences. You have produced your strategy; fine. Just explain to me why there is a small business in Birmingham or Manchester or Newcastle right now which frankly would not know there was any difference. It is not getting through to the coalface. It is not making a difference on the shop floor. It is not there and you have got banks who are still not lending money, and until that changes I do not really want to see another initiative other than the one about what we were talking about, making sure that skilled people stay in work. Other than that I do not want to see any more. I just want to see the one thing declared actually make a difference. Above all else, please, Government, do not just announce it, spin it up, say, "I am doing something", and then assume the system will deliver it, because it is not delivering it. I tell you: I should think every single small business—or big business—which perchance will watch this will sit here saying, "Well done. That is exactly the issue". It is just not making a difference on the ground.

  Q139  Chairman: I have to say I put this to the Prime Minister in the Liaison Committee last week and he said no, it was, so I am grateful for your endorsement.

  Lord Jones of Birmingham: I support the initiatives. This is not an anti-Government thing. It is about the delivery.

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