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Mr. Sutcliffe: I am grateful to my hon. Friend for his experience. We will have those discussions. I understand that the Scottish Government are having difficulties introducing minimum pricing. We will wait to see what happens.

The British pub is important. Earlier, we discussed the definition of a community pub. From my perspective, that definition includes members' clubs, not-for-profit clubs and other clubs that affect our communities and offer sport, cultural and community activities. The smoking ban has been mentioned. Do hon. Members forget that the overwhelming majority of Members of this House voted for the smoking ban? I understand that there have been issues with its implementation, but we have considered best practice to ensure that the ban has been applied so as to meet policy objectives, as well as to find ways of supporting those who want to smoke. It was the Government who introduced the amendment for the smoking ban to include clubs, which some hon. Members voted against. I lay that on the table. Sometimes memories are selective.

Mr. Greg Knight: Some of us voted for it.

Mr. Sutcliffe: Indeed, but the overwhelming majority voted for the ban.

Sky TV is important, particularly to me in my role as sports Minister. Like the hon. Member for Bournemouth, East, I have met Sky and been told that it will change how it handles rateable value. We think that that will be a step in the right direction. We are aware of the issues relating to community pubs in particular-

Miss Anne Begg (in the Chair): Order. We must move on to the next debate.

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Manufacturing Industries

12.30 pm

Mr. Michael Moore (Berwickshire, Roxburgh and Selkirk) (LD): I am grateful to Mr. Speaker for the opportunity to raise these important issues this afternoon.

This is the third time in the past year that I have drawn attention to the critical issues affecting manufacturing and other businesses in my constituency. I believe patterns can be seen across the country. Most of the issues I raised in the previous debates remain valid. As the Minister would expect, I will emphasise particular issues this afternoon.

Manufacturing matters, as the Engineering Employers Federation campaign "We Love Manufacturing" makes clear. It has designated next week as manufacturing week, in anticipation of which it has asked why manufacturing matters. Its answer is that it accounts for 14 per cent. of the British economy, 2.5 million jobs and 50 per cent. of British exports. As it says:

It states that:

I agree with that, as I expect does the Minister.

Before coming to the House, I spent almost 10 years as a chartered accountant and had many manufacturing clients. Over the past 12 years as an MP, I have known many manufacturers in my constituency. That has re-emphasised my commitment to the manufacturing cause. My constituency is a rural one that covers a vast, beautiful area of 1,500 square miles, but appearances can be deceptive. Agriculture and fisheries are of course important sectors from the Berwickshire coast and arable areas through to the hills of Selkirkshire, but manufacturing is hugely significant and is more important in the borders than in other parts of Scotland and the UK. The latest statistics from the Office for National Statistics estimate that there are 5,800 jobs in manufacturing in the borders, which represents 13.3 per cent. of the work force. That compares with 8.7 per cent. in Scotland and 10.2 per cent. in the UK.

The borders are closely identified with textiles, which was the subject of a debate I was lucky enough to secure in the autumn. Many of the companies in that sector have been around for centuries. There is a long list including Peter Scott & Co., Hawick Cashmere, Lochcarron of Scotland, House of Cheviot, Barrie Knitwear and Shorts of Hawick. Those companies have been synonymous internationally with tartan, knitwear and hosiery for decades, if not centuries. In the same year as the founding fathers declared the independence of the United States of America, 10 mill owners came together to form what is now the Scottish Borders Manufacturers' Corporation, which to this day plays a key part in the local economy of south-east Scotland.

Our manufacturing base is much broader than the textiles sector. In electronics we have Plexus in Kelso and Tweedbank, which specialises in electronic manufacturing services; in tool making we have the world-leading LS Starrett Co. in Jedburgh; in food
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processing we have Farne Salmon and Trout in Duns and John Hogarth in Kelso; in software, Sykes still has a significant presence in Galashiels; in timber frame manufacturing for house building, Oregon in Selkirk is one of the country's leading manufacturers; and in the exciting future industry of fibre optic cable, one of the country's leading companies is Emtelle, which is based in Hawick in my constituency. I am bound to be in trouble for missing out many important and significant local businesses, but I hope the Minister gets the message about the diversity of the local manufacturing economy, how impressive the businesses are and the fact that they are surviving and remaining internationally competitive.

I wish to see those businesses continue to be internationally competitive and they have no choice but to be so. They are dependent on world markets for their sources of supply, whether it is Chinese cashmere fibre or north American timber. When they have turned those raw materials into manufactured goods, they are exposed to all that the globalised markets of the 21st century can throw at them, including competition for investment. People are entitled to ask why a group would make coat hangers in south-east Scotland when it has factories in Morocco and Bangladesh or why Ahlstrom recently invested £20 million in an 18th-century paper mill to develop glue-free teabags, the main market for which is Japan, when it has facilities in India, China and Thailand. All of those businesses compete with the best; internally to ensure that they secure investment for the future and externally to win market share.

There are plenty of smaller businesses, such as Berwickshire Electronic Manufacturing Ltd in Duns, which is one of a range of niche players that specialise in tiny markets. Many businesses come together under the banner of the Scottish Borders Exporters Association, which covers everything from industrial heat exchangers and cleaning chemicals to giftware and food. We are proud in the borders to have some of the finest primary produce in the country and are beginning to add value to it through manufacturing. Groups such as the Scottish Agricultural Organisation Society and the Food and Drink Federation have many members in the borders and rightly highlight the importance and great potential of food manufacturing in the area.

Understandably, confidence in the future is currently a precious commodity that is in limited supply. The recession that lasted for six successive quarters has been followed by anaemic growth at best. I understand that the figures might be revised on Friday. Unemployment levels in the borders are at their highest since the Viasystems debacle and collapse a decade ago. There has been an increase of 31 per cent. in claimants for jobseeker's allowance over the past year.

The UK trade deficit in manufactured goods was nearly £13 billion in the last quarter, which is part of a sadly familiar pattern. I emphasise that we must not use that deficit to signal that we are giving up on manufacturing. If we address the key issues and provide the right kind of support, there is much to play for.

It is critical that we boost economic activity across the country. We have had the private sector recession, but we face the prospect of a public sector recession that will engulf the economy as we tackle the country's enormous budget deficit. While we are in such fragile circumstances, manufacturing, like other sectors of the economy, needs Government spending to be maintained.
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I do not want to see any rush to cut spending, although like everybody else I recognise that a serious programme will have to be introduced at the appropriate moment.

Liquidity and bank finance remain a serious issue. A recent report by the Public Accounts Committee indicated that the part-nationalised banks will fall short of the legal requirement to lend £39 billion by the end of this month. As the Committee Chairman, the hon. Member for Gainsborough (Mr. Leigh), said:

As the Minister will recall from responding to the debate I secured on textiles in the autumn, that is a theme I have covered before.

One of my constituents got in touch with me in anticipation of this debate. He has a successful manufacturing business and has had a year of growth and improved profitability. Despite that, when he sought to renew his overdraft facility at the same level as before, he was told by his bank that he could do so, but that the new rate would be 7.5 points over the base rate. I do not know what the Minister thinks of that, but it is a scandal. My constituent is right when he says in his e-mail to me:

As the Minister will recall, I raised that issue last year, particularly in the context of the enterprise finance guarantee. I have subsequently asked a number of people what they make of the guarantee and many simply dismiss it as a political stroke that seems to have underpinned the banks without increasing their appetite for risk.

On skills, I hope that we might soon get some clarity about how the new sector skills council will take on the textile industry-I understand that it will be done through Skillset rather than Skillfast, which is another vast meaningless name that does not tell us much about the organisation itself. A fortnight ago in Hawick in my constituency, I was at a meeting convened by my colleague, Jim Hume, in the Scottish Parliament. The Scottish Skills Minister, Keith Brown, attended and, because of the mess over the demise of Skillfast, he was able to blame Westminster for the fact that the Scottish Government are not doing anything about training in textiles. Disappointed as I am about the demise of Skillfast, I hope that the Minister will now remove that excuse and give us some assurance that Skillset will do what it needs to.

Many of the issues relating to infrastructure have been devolved, so I will not mention roads and trains, although the east coast main line is of major importance to my constituents. I hope that I will be able to have a meeting-one has been postponed-with Transport Ministers to discuss that. On digital, we were promised a rosy future and, frankly, the difference between success or failure may lie in the quality of the digital infrastructure. I repeat a plea I made to the Secretary of State for Culture, Media and Sport: let us get to that future-although it is still doubtful how we do so-but let us not forget about the here and now. Mobile phone coverage in the south of Scotland is still patchy, the 3G data network is a joke and broadband remains inadequate. It
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is ironic that Emtelle is creating some of the finest high-tech cabling products in the world, yet none of it can be used in my constituency.

Finally, I want to raise the serious issue of competition. I hope that the Minister is on top of the issue that has been brought to the attention of the US trade representative, Ron Kirk, by the American National Textile Association about how the Chinese appear to be playing around with their export value added tax arrangements to subsidise the cashmere industry in China. In my constituency, people have long memories and remember the problems of international trade battles in relation to the banana war. That issue is very direct and important to them, and they are concerned that the actions of the Chinese might seriously unbalance the competitive playing field and threaten their future.

We currently make a lot about sustainability, and rightly so. At a time when we are increasingly concerned about our carbon footprints, people are looking to see what we are doing about our manufactured products and asking if it is sustainable for so many of them to be sourced in China and the far parts of Asia. In development and human rights terms, people are becoming more interested in the quality of life of the people who make the products we buy so cheaply in the UK. It is important to ensure we have a manufacturing sector here, so that when the tide has turned, we can respond to people's concerns about sustainability.

Outside bodies recognise the need for a clear focus on manufacturing and to deal with regulation, red tape and many of the traditional concerns. In the south of Scotland, through the local councils and economic development agencies, we are implementing the competitiveness strategy, which focuses on many of the key issues I have raised in the debate. Those officials and the thousands in my constituency who work in manufacturing want to see their efforts backed up robustly by the UK Government. The EEF puts it neatly:

Manufacturing needs to be supported in a way that indicates the Government agree with that sentiment.

12.45 pm

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Ian Lucas): It is a pleasure to serve under your chairmanship, Miss Begg, and to hear from the hon. Member for Berwickshire, Roxburgh and Selkirk (Mr. Moore) about manufacturing. I can assure him that the Government have not given up on manufacturing and, as someone who represents a strong manufacturing constituency, it has been my commitment since being elected to Parliament in 2001 to ensure that manufacturing is central to Government policy.

I am delighted to serve in a Government who have put manufacturing at the core of the activity of the Department for Business, Innovation and Skills. We fully recognise, as the Engineering Employers Federation has said, that manufacturing is a vital sector that needs intensive support and co-operation from Government, employers, trade unions, regional development agencies and, in the devolved authorities, from bodies such as Scottish Enterprise. That element of co-operation is vital to the future of manufacturing.

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I was interested to hear about the range of companies in the hon. Gentleman's constituency. Although he is right that the traditional view of the borders is that it is a beautiful area-I am familiar with it, as I have relations there-I am not surprised that there is a range of manufacturing activity there, because Scotland has a proud manufacturing tradition and history. It also has a profound history of innovation from the days of the industrial revolution onwards. That is a characteristic of the textile industry, which I know is important in his constituency.

Innovation is central to my Department's work at the present time, and the assistance that the Government are able to offer in the realm of innovation to businesses of all kinds in the UK is very important indeed. Innovation does not just come from large companies; in fact, some of the most impressive companies I have met and dealt with since I have been in post are smaller companies with keen ideas that add greatly to the UK's manufacturing capability and to the steps taken to maintain our manufacturing industry. It is extremely important that we work to support those companies. Support for employment in manufacturing is very important indeed.

It has clearly been a very difficult two years, and the pressures of the international situation have impacted heavily on business across the UK in all our constituencies. My Department has offered specific support for individual businesses through the help for business scheme, which I used before I became a Minister and have used since to assist particular companies with difficulties they have had in dealing with, for example, access to finance.

In my experience, there has been some success in pursuing, for example, discussions with banks through that scheme. If the hon. Gentleman has specific cases he wishes to raise, I invite him to bring them forward. My Department stands ready to assist if it can with all those cases by engaging with banks and providing assistance in securing access to finance if at all possible. I have done that in the past and it has been successful in certain cases I have encountered. I am pleased to offer that facility to the hon. Gentleman if he or his constituents wish to take it up.

The hon. Gentleman referred to the enterprise finance guarantee in a rather disparaging way, I am sorry to say, and I would take him to task slightly on that point. The enterprise finance guarantee has offered real help to businesses in Scotland, as 81 loans have been drawn for Scottish companies worth £16 million, so assistance has been provided in those cases.

Mr. Moore: To be clear, I am not disputing that money has been lent through the EFG, but I would like to understand whether that is money that the banks should have been lending anyway, which the EFG now presents with a nice little risk cover, or whether it is available for genuinely new ventures that the banks would not have touched with a barge pole. Where is the independent analysis of the quality of that lending?

Ian Lucas: We consider and assess individual applications, and provide assistance where we believe taxpayer support is needed. The Government came under a great deal of pressure as a result of the recession, and mechanisms were put in place to assist business and provide support at a difficult time. That is the purpose of the EFG,
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which has provided assistance. We believe that the assessments that have been made have supported that assistance.

The Government also stepped in to provide financial support for the economy as a whole. We brought forward £30 billion of spending from the public sector to support business, enterprise and industry in the UK. I believe that that has been absolutely crucial to securing what is still, I fully accept, a slow and difficult recovery, but it was vital that the Government took that step. This morning I visited a construction company, Laing O'Rourke, and I know that the public sector has been very important in the construction sector.

With regard to the hon. Gentleman's point on infrastructure, I come from the north-east of England, so I know that the connections through that region to Scotland were in the past not the best, but the infrastructure projects and the links to Scotland along the east coast, not only by rail, but by road, too, have improved immeasurably since the Government came to power, and I have personal experience of that. I am pleased to say that when I visited the north-east last week, there was still substantial infrastructure work going on, providing jobs and employment in the construction sector that would not be there if the Government had not committed themselves to carrying out that work by bringing forward the public funding.

The hon. Gentleman made a good point on broadband infrastructure. It is important that we have the infrastructure to create a digital Britain and improve our existing connections in both the mobile phone and internet sectors. We have put forward clear proposals through "Digital Britain" to roll out broadband across rural areas. They are opposed in some areas by some political parties, but we believe that it is extremely important to provide a strong infrastructure to compete in the innovative sphere of the digital economy, and that is why we are introducing legislation in that regard.

We are also strongly committed to upskilling in our economy, providing training and strong support for work force development. In an innovative sphere, it is important that individuals upskill throughout life, both when they leave school and move into the work force and throughout their employment. It is only by doing so that we can contend at the highest level with competition across the world. We recognise the importance of skills and training. Skills are a devolved issue in Scotland, so the primary responsibility for support rests with the Scottish Government. Although I am not surprised that they perhaps attribute any difficulties in delivering skills in the Scottish context to the UK Government, I do not think that that is particularly fair.

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