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2 Dec 2009 : Column 119WH—continued

Mr. Hoyle: Absolutely. We know that the car scrappage scheme will run out, because 10 years is 10 years-there is no way around that. Of course recycling is important
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and it is not right to send materials all the way to China only for them to come back as a finished product. We ought to develop manufacturing in the UK using that recycling. It would also clean up the environment by ensuring that CO2 emissions were reduced, which is why it is so important.

Mr. Watson: My hon. Friend makes a very important point about the strength of the pound. However, there is a wider point that I realise might be difficult for both Front-Bench teams to deal with. Manufacturers worry about exchange rate volatility. Many of the big manufacturers-Toyota and others-argue that the solution would be to join the euro. Mr. Dyson, the darling of the Tory conference, is on record as saying that we should join the euro, because our country's position was a factor in his decision to move jobs abroad.

Mr. Hoyle: I am not a great fan of joining the euro-I had better spell that out at the beginning. What I would say to my hon. Friend is that I have not heard Toyota in the last 18 months shouting too loudly about joining the euro. In fact, it has gone very quiet about that. He is absolutely right that we see major companies using a dollar premium in order to project where they will be. Regardless of whether there is a euro, pound or dollar premium, that will always continue for major industry.

Of course, it is right that we still have leaders. I talk about leaders-aerospace with BAE and Shorts-and we must not lose sight of where we are a world leader. We are in danger of turning our backs because we feel embarrassed. We should never be embarrassed about our manufacturing. We have got to continue to invest, whether in military or commercial manufacturing. The fact is that technology transfer will come from military aircraft to develop jobs, quite rightly, in the commercial world. We have got to take advantage of that.

BAE is important. We ought not to allow Woodford, Samlesbury or Warton-any of those sites-to close. Aerospace matters, just like transport matters. It was a bad and silly mistake for the Government to buy Japanese trains-Hitachi express trains. Would it not have been better to develop trains in the UK? People say, "What is the advantage?" I will tell hon. Members what the advantage is: it would not be short-term gain for a little bit of financial expenditure, but the fact that we could build trains for the future. We could export trains, because they would be the trains required around Europe and throughout the world. The fact is that if we do not build them, we cannot export them. A bad mistake was made, and we must learn from such mistakes when it comes to procurement. We can have great times by getting things right.

I hope that the Minister has taken on board what all hon. Members have said, because it is important that we all stand together for the future of UK jobs. I believe that the time is now right to call for a national job summit. It is important that we have a national job summit with the trade unions, industry bosses and the Government getting together and asking what we need to be best placed as we come out of the recession. That is what we, as a Government, should be doing. I hope that we will have a national job summit that brings the best together for the future.

The Government have an excellent record on investing in apprentices, but that investment must not lead to something like the youth opportunities programme under the Conservatives. This must be a real apprenticeship
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scheme with real jobs at the end of it, and that is why we must invest in manufacturing. That is why I say to the Minister that it is not too late to put in a short-time working subsidy. Such a working subsidy would make a real difference by keeping people employed in their working area-in their environ. We could retrain people and subsidise that retraining, rather leaving people to go on to a dole queue, because I see no benefit in subsidising somebody at a jobcentre who will be retrained only six months later, although they already have the skills. That is absolute nonsense. I hope that we can recognise what such a subsidy has done for France, Germany and, more particularly, for Wales, where it has made a real difference to their manufacturing. We can do this-we must do this-so I appeal to the Minister for a national job summit and short-time working subsidy so that we ensure that we have a strong manufacturing base for the future.

Of course, we still have great names in pharmaceuticals, and we have Rolls-Royce. I say to the likes of Rolls-Royce, "You claim to be a British company; prove your pedigree and your credentials." Of course it has sites around the world, but we see more and more transfer overseas. It is a retrograde step for Rolls-Royce to say on the one hand, "We are British," but on the other hand to be investing abroad.

John Thurso: Rolls-Royce is an extremely important employer in my constituency, as it does all the work at the Royal Navy training establishment, Vulcan, which is a reactor testing site. Vulcan is being decommissioned and Rolls-Royce has decided to maintain all the work force and base its civil nuclear industry there, on the sensible grounds that the human resource is most important thing that it has. The human resource lives there, so it is moving the office to the people, rather than the other way round. That is a very forward-looking decision, and I hope the hon. Gentleman will congratulate the company on that.

Mr. Hoyle: I do congratulate the company on that. It is a sensible business decision to stand by loyal employees who have helped make the company. I will, however, give the hon. Gentleman an example of where the company did fail the people. Rolls-Royce Energy, which produces engines to move gas around, had a plant in America and a plant in Liverpool. Guess which one it closed? The one in Liverpool. That is what I say about Rolls-Royce. Of course, R and D has been moved to Germany, as has the European end of the deep maintenance of engines. I think that all that should be done in the UK. The company might say that its approach gives a financial gain to shareholders, but there are times when shareholders ought to look a little bit further than the 12-month dividend and towards a long-term future in the UK.

Mr. Prisk: I understand the point the hon. Gentleman is making. However, I read that Rolls-Royce executives gave the following reason for the move to Germany:

Is not the hon. Gentleman disappointed with his own Government?

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Mr. Hoyle: I am sorry that the hon. Gentleman believes what he has just read. If we are truthful, the German question was about money. It was about how much of a carrot was being dangled in front of Rolls-Royce, and the carrot just happened to be bigger in Germany than it was in the UK, because otherwise the choice would have been the UK. I say to the company that short-term gain is long-term loss to the UK. Unfortunately, it went for the bigger carrot at that time.

That is the problem with global companies. They have no responsibility, or no morals about the people who made that company great. It was this Government and this party, along with others, that made sure that Rolls-Royce existed and it ought to remember that. When it went bankrupt, it was a British Government who bailed it out, yet now it goes for the bigger carrot. We can all pick different reasons. The company has also invested heavily in Singapore. In fact, Singapore and the UK are the only places that can build a complete new Trent engine. It cannot be built in Germany, but it can in Derby. Singapore and Derby are the only places where the company can build those big engines. What does that say about education, work skills and manufacturing? As I said, we can all cite different reasons but, unfortunately, the truth is that firms go with whoever dangles the biggest carrot, which is a retrograde step.

I hope that Rolls-Royce will remember that when it says it is British, it means it is British. Rolls-Royce is the second biggest jet engine company in the world and has a fantastic name. I am proud of British manufacturing. I hope that we ensure that this country continues to manufacture-but greater and bigger-and that it invests in the new ships that are required. We ought to be building a manufacturing future in this country.

3.29 pm

John Thurso (Caithness, Sutherland and Easter Ross) (LD): It is a great pleasure to appear under your chairmanship, Ms Walley.

I congratulate my hon. Friend the Member for Southport (Dr. Pugh) on securing the debate. I shall come back to his remarks in a moment, but first I must say that it is always a great pleasure to follow the hon. Member for Chorley (Mr. Hoyle). I vividly recall his debate in this Chamber on 9 June, when many of the same points were made. He mentioned at the beginning of his interesting speech his constituent's willingness to collaborate and to welcome others on to his site. He might be interested to read a recent CBI publication about the shape of business in 2020-a think-tank work aimed at showing how business will change. One of the most interesting points in it is that business will become collaborative: rather than having, as now, a big blob that deals at arm's length with all the little blobs, there will be a cross over, and some financing will come from the bigger commissioning companies through the suppliers. What the hon. Gentleman said is early evidence of that.

I also congratulate the hon. Member for Ellesmere Port and Neston (Andrew Miller) on his remarks. I am most grateful to him for the compliment that he paid me in suggesting that I may one day have the power to make a decision about a ministerial car-a decision I look forward to eagerly. More important, his remarks on small and medium-sized enterprises were apposite and good.

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Andrew Miller: The hon. Gentleman will always be welcome to join our party.

John Thurso: Ah, it is the festive season, when one knows there are invitations one must decline.

The hon. Member for West Bromwich, East (Mr. Watson) made some important points about the relationships in modern industry, including the fact that unions have radically changed in the past 20 years and approach most of their dealings in a highly constructive manner. He would probably agree with me that management has also changed-it is a jolly good thing that it has-and is far less confrontational, understanding the importance of people, and the need to work in partnership.

To return to the remarks of my hon. Friend the Member for Southport, I thank him for raising this important debate. Those of us who are keen on manufacturing and think that it is important to this country are right to keep turning up at debates-it is often the same people who turn up-to make that argument. My hon. Friend spoke about the need for Government to act on a more strategic level, and I agree completely. To a certain extent, to be fair to the First Secretary of State, it is true that he has a strategy, which has seven drivers-I am sure that the Minister will talk more about that-but it seems to me that we should consider the fundamental role of Government and how it touches on all business, including manufacturing.

The need for regulation is obvious: we must have sensible regulation and a level playing field. We must have fair taxation, and the direction of travel must be set out clearly. The aspect of Government's role that is not often picked up, although several hon. Members did mention it today, is what I call the common infrastructure-the infrastructure of roads, rail, sewers and utilities. That can in some instances be provided by the private sector, but it is really down to Government to ensure that provision. I hugely regret the fact that, as the hon. Member for Ellesmere Port and Neston said, we have not used the opportunity to increase rail freight; we have neglected that aspect of infrastructure. I hope that all future Governments will consider rail and what can be done to move goods by rail.

I think that my hon. Friend was just a touch pessimistic, because I think that manufacturing is at heart a good-news story-or should be. It is a very British characteristic to talk about doom and gloom and to say that it is all mucky people in overalls and nothing gets done. Nothing could be further from the truth. We are the leaders in many areas of manufacturing industry and technology. In my part of the world we have world-leading companies in the civil nuclear field and marine and tidal energy. We have fantastic facilities for subsea-Aberdeen is the subsea capital of the world and just outside Wick, Subsea 7 has an important base. Believe it or not, we also have the leading European manufacturer of nail varnish in Invergordon, which, interestingly, has seen a great improvement in its trading conditions this year. All the supplies that were coming from China and took six weeks to deliver by sea have lost out, because that company can deliver in three days from Invergordon. In managing stock and cash flow, it is more important to be able to order in three days and know that there will be a delivery than have a six-week lead time. That is important and makes one think about some of the received wisdoms, which are not necessarily true.

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This country has the sixth largest manufacturing industry in the world, accounting for just over £150 billion in 2008. Depending on whose figures we believe, manufacturing employs between 2.7 million and 3 million people. It is absolutely right to say that there has been growth in real terms, but in relative terms, there has been a decline, particularly in the number of people employed, down from more than 4 million a decade ago. Part of that is because industry has become more productive: there have been huge productivity gains throughout much of manufacturing industry. Part of it, I am sure, as the hon. Member for West Bromwich, East said, is because outsourcing and the definitions therefore becoming narrower. However, part of it is because there has been a decline-a decline that I would like to see reversed.

I would also like to see the world-leading industries that we have maximised. At the Society of Motor Manufacturers and Traders dinner last week, I sat next to a gentleman who started a company making electric trucks. I am sure that many other hon. Members will remember his name, but it escapes me at the moment. The interesting thing he told me was that he had developed the prototype in the UK but, having done all the work, he was going manufacture in the US, because that was where he had found a market and where he had been given the grants to go. That is where the Government should be looking-the reasons why that is happening and why great British innovation is not being captured here to become great British enterprise.

There are three drivers for the future: finance, innovation and skills. In the couple of minutes left to me, I shall touch briefly on each. First, the banking crisis has shown us clearly that we should not, and cannot, depend on financial services to be the bedrock of our industry. We need proper, mixed and sustainable industry, of which manufacturing will be a critical part. Secondly, we have learnt that capital is a scarce resource, and if it is being consumed in never-ending circle of speculation in the City, it is not available for investment. What we need is investment in commerce and industry. The third lesson that we have learnt is that the days of large debt for everything are over. We need more equity at every level. There is a whole debate on that subject, so I will leave it at that and move on.

On innovation, we have superb R and D in this country, whether it is on the work bench or in the universities, or the guy working down the bottom of the garden in his shed. What we do not do nearly so successfully is convert that innovation into small and medium-sized businesses. That is partly about finance, but partly about ensuring that the right skills are there. We need to support R and D and innovation, and we need to do more about moving companies from that early stage to the next one.

Yesterday, here in the House of Commons, I attended an event for the Engineering and Technology Board being renamed Engineering UK. The people there told me things that I think I already knew to a certain extent. They claimed that manufacturing is responsible for 55 per cent. of British exports-my hon. Friend the Member for Southport said it is 46 per cent., but whichever it is, it is still a very big number. What struck me, however, was their estimate that by 2017, we will need 587,000 more engineers-roughly 80,000 a year-whereas, on the other side of the equation, we are losing
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30 per cent. of our further education lecturers, who are retiring and are not being replaced, and we have a 17 per cent. drop in the number of students. There are tremendous opportunities-for example, the green economy is estimated to be worth something like £3 trillion in the world as a whole. The UK is well placed to have a slice of that, but I believe that, unless we take proactive decisions-on financial support, for example-to encourage people into engineering and technology, we will simply not have the well trained people who will be the bedrock and raw material of our future progress. That is the single biggest challenge that we face.

I am, and always like to be, optimistic. We have great people and skills in this country. We also have, as I have briefly outlined, some great challenges. We need a secure manufacturing base, and, in my view, we need it more than we need a financial services industry. The sooner we get that, the better.

3.40 pm

Mr. Mark Prisk (Hertford and Stortford) (Con): May I share in the congratulations to the hon. Member for Southport (Dr. Pugh), who secured this debate? He gave a very thoughtful analysis-he always does, but this one was particularly thoughtful. Although his father may not necessarily support his vocation, I am sure that he would have been very proud of the hon. Gentleman's helpful analysis of the manufacturing sector's needs and challenges.

As we have heard, British manufacturing has faced a turbulent time in the past year: investment has been cut, production is down and productivity has weakened in a number of sectors. Moreover, more than 280,000 people in manufacturing have lost their jobs in the past year alone. The problem, however, did not start just 12 months ago. Since 1997, 10 per cent. of manufacturing businesses have closed and more than 1.5 million manufacturing jobs have been lost. There has been some frustration among leading industrial businesses about the current Government's policies.

I believe, as most participants in this debate have said, that manufacturing has a future in the UK. It represents more than 12 per cent. of our gross domestic product and produces more than half of our exports, so it helps us pay our way in the world. This country also remains, as we have heard, the sixth largest manufacturing nation. I totally endorse the arguments about partnership between employers and employees. That is a good sign that we should all encourage.

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