I was also asked recently to attend a meeting with another local manufacturer and its bank manager. The company borrowed £100,000 several years ago to buy a building and a further £50,000 more recently to expand the business. Business is up by 20% this year. After sitting through the meeting for two hours listening to the bank manager sing the company’s praises and even saying he wished all his customers were like it, I left for another meeting only to learn later on in the day that the bank manager had said after I had left that the bank
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would like to take a debenture over its fixed and floating assets and have a joint and several guarantees from the directors. It was explained to them that that was all to the benefit of the directors as it would move them down the queue when the bank came asking for its money back. That is the type of thing that I hear week in and week out from my manufacturers.
Calder Valley manufacturers are among the world’s best. Indeed, in many cases, they are the very best at what they do. They do not want a hand up or handouts—just a plain, old-fashioned level playing field. They tell me week in and week out that they will do their best to get on and play their part. We need the Government to put pressure on our banks to look at their practices and to get to know intimately what their local customers do. For far too long, business account managers in banks liaise with customers but then decisions about financial transactions are made by faceless people who are often miles away and have no idea or clue about what the businesses that are asking for the loans do. That needs to change. If it does not, the manufacturers that are still in business will turn more and more to banks such as the Silicon Valley bank, which, in the words of a Calder Valley managing director,
“totally understood our business and our business needs.”
The current situation cannot be good for manufacturers, business or the country as a whole.
We accept the need to charge full business rates on empty buildings. That was mentioned earlier and would have been my third example had I more time. Some businesses might need to benefit from an extension or a deferment plan; otherwise some of the businesses that are really struggling are going to fold. It is clear that our manufacturers in Calder Valley are a beacon for our economy. Let us make sure that we can facilitate greater growth by listening to our manufacturers, by putting pressure on the banks and by helping manufacturers when they need support.
5.27 pm
Mike Weatherley (Hove) (Con): I shall be brief and hope not to take up the full eight minutes I have been allotted. I want to concentrate on smaller manufacturers. My hon. Friend the Member for Warwick and Leamington (Chris White) might be interested to know that I come to the debate with a certain amount of expertise. First, I am a chartered management accountant and that profession is geared towards manufacturing. In addition, I was previously the owner and finance director of a manufacturing company in East Sussex. While I was there, we won a Queen’s Award for Export, a Queen’s Award for Enterprise, and Sussex company of the year. The company exported to 48 countries worldwide and had five satellite offices overseas. I pay tribute to my previous business partners Hugh Burnett and David Westcott and to all the staff at Cash Bases.
The two areas I would like to highlight today are staffing and finance. When I owned that company in the late ’90s we had enormous trouble recruiting staff at all levels. We even laid on buses from outlying areas. That was in the boom years after the Conservatives had put the economy on a good financial basis but the shortage of both skilled and unskilled workers was exceptionally
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high. The fact that our education system was, and almost certainly still is, geared towards service sector jobs rather than traditional engineering and machine operation is to our detriment. I recognise many of the points that the hon. Member for Huddersfield (Mr Sheerman) made about education, so I shall not revisit them. I appreciate the apprenticeships that the Minister mentioned earlier, but we need more of those to cover the skills gaps.
A far more worrying issue, which is a huge hindrance to growth generally but manufacturing in particular, is the availability of funds, which my hon. Friend the Member for Calder Valley (Craig Whittaker) mentioned. The banks can give very small loans but when the requirement creeps over the £10,000 mark, it gets very difficult. The enterprise finance guarantee scheme is supposed to fill the gap between equity investment and the lower levels at which banks are lending, but it fails on two counts. First, the banks do not like it and will not lend with the 25% risk factor. Secondly, the amounts being loaned are just too small.
There are 4.8 million SMEs in this country, but the Government are currently targeting loans at only 6,000 for this year. In comparison with previous years, the amount of funding has decreased. There was £1.3 billion in 2009-10 and £700 million in 2010-11, and the figure has gone down to £600 million for 2011-12. They are not just grants; they are loans that the Government get back.
I recognise what the right hon. Member for Wolverhampton South East (Mr McFadden) was saying about the creative industries. To my knowledge, not a single small firms loan guarantee has been given to the music industry, and that is a great shame. In the first half of 2011, just 1,779 firms were successful in obtaining such loan guarantees, and the average amount is just under £100,000 per loan.
My second point is the funding gap. Anything under £5 million is difficult to finance. When I purchased the company in Newhaven, East Sussex in 1997, we bought it for £4.2 million. The venture capital company that backed us then has said that it would not back a similarly low investment again. Anything under £5 million is considered totally uneconomic. That and the funding for small businesses trying to grow our industries need to be addressed.
Exports are another financing-related issue. I was pleased to hear what the Minister said about the Government’s growth targets. I will certainly hold the Government to account to try to reach the levels that we would like to achieve. However, funding for exports is not balanced sufficiently when compared with inward investment. Of course, inward investment is good for a short-term fix for jobs, but we must substantially address the fact that exporting is an important part of any recovery in the long term.
In summary, the enterprise loan guarantee scheme must be improved. The 25% collateral that the banks require puts them off making proposals. Indeed, the amount available under such schemes must be increased to get closer to where equity investment becomes sufficiently realistic. Lastly, let us not forget the staffing implications. We must gear towards manufacturing, not just the service sectors.
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5.31 pm
Mr David Ward (Bradford East) (LD): We have heard advice to not go back in time, but I should like to go back 170 years to 1840, when two thirds of the country’s wool products were made in Bradford. In fact, by 1850 it was the world capital for wool. In 1876, when Sir Titus Salt died, 100,000 people lined the streets during his funeral to commemorate his work. Now, of course, Saltaire village is a world heritage site, but the huge mill closed down in 1986.
Some hon. Members might be aware of the Jowett motor car, which was produced in Idle in Bradford. Idle is where I live. I was in fact, yes, the Idle councillor for 26 years. Jowett closed and was taken over by International Harvester, which closed in 1983. I get quite cross when I hear people who are old enough to remember the ’80s recession compare this one to that one. There is no comparison. When International Harvester shut, the council estate in the ward that I represented had 70% male unemployment and men who did not work again and had children who did not work. That was the scale of things in those days.
I shall explain the relevance of those two examples. Salt’s mill was brought back to life by the brilliant work of the remarkable Jonathan Silver. It is now the home of the Saltaire art gallery, where David Hockney has an exhibition. More pertinent to the debate is the fact that it is the home of Pace plc, which is the largest Yorkshire technology company and has more than 500 staff there. The International Harvester site became a large Morrisons complex, with a shop for itself and a large retail outlet. Particularly important to this debate is the fact—not many people understand this—that Morrisons is a large food manufacturer. In fact, it provides 5,000 food manufacturing jobs. Those are examples of two important sites that were part of Bradford’s previous manufacturing glory and have had a second life.
I ought to compliment both Morrisons and Pace on the fact that, like Titus Salt, they are reinvesting in the community. Top graduates from Pace visit schools in our deprived communities as part of the Teach First programme to put something back into the community. Morrisons offers a university degree in food manufacturing, and is providing work for 1,000 homeless people across the country. The textile industry still exists in Bradford. We have Haworth Scouring, which is the largest wool-processing business of its kind in the world, and some 70% of its produce goes to China for carpets.
I praise Labour as much as I possibly can whenever it is warranted, to try to ensure that I have some credibility when I point out the things that it did wrong. In Bradford, between 1998 and 2008, we lost 15,000 manufacturing jobs—or 40%. That was at a time when there were 40 successive quarters of growth in the economy. I say that not just to have a go at Labour, but to point out why this debate is crucial. I do not for a second believe that that was the deliberate intention of the Labour Government; it happened in error as a result of neglect. We need to understand why this debate is so important; it is so that we have a focus on the future, as was said earlier, and the future must include manufacturing.
Bradford is not just about manufacturing. It has a financial services sector, and that, thank goodness, kept us going through some of the dark days. There is
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Yorkshire building society and Provident, which was formed in 1880 in Bradford. Provident’s representatives were here yesterday, along with representatives from Westfield and Morrisons, to sell Bradford to the City.
We are UNESCO’s first city of film; we have a tourism offer; and we have wonderful theatres, universities and colleges. We are not just about manufacturing, but the future of Bradford must lie in a successful, thriving manufacturing sector. We have the largest single-site chemical plant in the UK, but most of the manufacturing businesses—71%, or 1,300 of them—have fewer than 10 employees. The newly created Bradford and Airedale Manufacturing Alliance is contributing to the regeneration of the manufacturing industry through networking, providing new business opportunities, looking at co-operative working, and the spreading of best practice, advice and guidance. There is very much a renaissance taking place.
To conclude, as a Bradford MP I have a duty to speak out and remind Members of the history of places such as Bradford. Without manufacturing, there would have been no Bradford as we know it, and manufacturing must be an integral part of the future. The message to the Minister is please not to let places such as Bradford down. Bradford is ready to rise to the challenge, and to make its contribution to rebalancing the economy. It is a new dawn in Bradford, but in that new dawn manufacturing must be centre stage. I understand that manufacturing is 3% of the economy in London; it is 13% in Bradford. A total commitment to manufacturing is therefore not only part of the very welcome rebalancing from the service sector to manufacturing, but a crucial part of rebalancing from the south and the south-east to the regions. That is long overdue, and those of us with an interest in manufacturing, and all of us with an interest in the north, are impatient for that.
5.39 pm
David Morris (Morecambe and Lunesdale) (Con): I am delighted to be called to speak in the debate, not only to highlight the needs of my constituents and the manufacturing industry, but to support my room-mate and hon. Friend—he is not right hon. yet, but headed that way—the Member for Hexham (Guy Opperman). I like to think that I have taught him everything he knows.
My constituency is heavily reliant on energy production and manufacturing. Like many north Lancashire constituencies, we make high-spec components for clients in the energy, defence and constructions industries. When we watch programmes on television about the amazing engineering feats involved in BAE Systems, in nuclear submarines at Barrow-in-Furness and in the nuclear power station at Heysham, in all likelihood the vital components we see will have been made or designed in my constituency. North Lancashire has a skills base that allows it to compete favourably with areas that have low labour costs. Manufacturers in China and India, for example, are unable to offer their products with a 10-year guarantee because they are often not of the same quality. The situation is similar to that of BMW in Germany: it has never produced the cheapest cars but is popular because of its build quality and reliability. Our manufacturing sector is struggling not as a result of a lack of orders, but because of the perennial problem of recent years: lack of money.
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Any manufacturer of high-quality components needs to invest large sums in three keys areas: machinery, IT packages and training. It is worth going through each in turn. On machinery, I was talking recently to a manufacturer in my constituency who used to import 5,000 plumbing hoses a year. The products were no cheaper to order from China than they were in UK, but placing an order gave 30 days’ credit and the outlay is lower than buying a machine. It took the company several years to save enough money to buy the machine needed to make the hoses, but once it did it began making 7,000 a year. Obviously, British workers were employed to operate the machine, cutting unemployment in the constituency. Whatever we do in this difficult economic period, we must find a way of ensuring that businesses are able to access money and buy vital machinery.
On IT packages, the modern computer developed from an idea that came out of Bletchley Park during the second world war. We have always been world leaders in IT, but as computer packages have become more sophisticated the costs have risen. Although the packages save staff time and improve productivity, they also require capital outlay. I have heard plenty of examples of manufacturers being unable to turn ideas into viable products because the IT package required is just too expensive. I am not complaining about IT costs per se, as the people who design the products deserve to be properly paid. My complaint is once again that banks and the old regional development agencies were so poor at supporting businesses with the capital they needed to buy the products in the first place.
On training, I suppose a purist accountant would not view training as capital expenditure, but manufacturers are often required to pay for expensive training before a product is ever made. In practical terms, that means that lack of credit and poorly administered grants have an impact. Training for some IT packages can cost £1,500 per member of staff. When a company needs large numbers of staff to be trained, it is easy to see how costs soon mount up.
I have laid out three problems, but what are the solutions? First, we must accept that for small and medium-sized enterprises the regional development agencies simply did not work. They were too unresponsive and too focused on larger businesses. Many companies that I have spoken with got the impression, rightly or wrongly, that RDAs would step in only if a product would fail without them. That makes sense on paper, but in reality it is not about a product falling; it is about how quickly it can be brought to market and where it is made. Grants were not always available for speculative investments such as the machinery, IT packages and training I have mentioned. Things need to change and enterprise zones are a step in the right direction.
I know everyone will agree that we also need to get credit moving. I have now accepted that the big six banks cannot or will not help. We need greater diversity in our banking sector, so that the big banks are forced to serve business better. We need a regulatory environment that encourages more banks to enter the UK market and encourages more British companies to establish banks.
“Made in Britain” is still a mark of quality throughout the world, and our products still command a premium that makes our manufacturing viable. From the new
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plumbing system at Sidra hospital in Qatar to the A380 super-jumbo jet, British manufacturing is a vibrant part of our economy. Contrary to popular myth, we are still the world’s seventh largest manufacturer, but without solutions to the capital outlay problem we will never reach our full potential. We must give our companies the money that they need, because it is vital to invest in the future and in manufacturing. They maintain our skills base and are vital to the diversity of the British economy.
We should take this debate forward and act upon it. I again thank everyone for taking part in it, and my hon. Friend the Member for Hexham for bringing it forward in the first place.
5.45 pm
Richard Harrington (Watford) (Con): I, too, congratulate my hon. Friend the Member for Hexham (Guy Opperman) on bringing about this debate. I also congratulate the Minister on his comments so far and, in particular, the shadow Minister, the hon. Member for Hartlepool (Mr Wright), not only on his contribution, but on the resilience of his bladder, which has enabled him to stay in his place for such a long time. It is always a pleasure to see him. On these occasions, it is difficult to think of something to say that is different from the contributions that other Members have been making for what seems like 25 hours. But I shall do my best.
I was born into a family with a modest factory, and I saw the decline of British manufacturing through my own experiences and my own eyes, because my father was similar to most small manufacturers of clothing in Leeds, near to the constituency of the hon. Member for Bradford East (Mr Ward), and he had a similar business to those in Bradford. He was put out of business by imports, but we have to look beyond that and ask, “Why has manufacturing failed?” [ Interruption. ] The shadow Minister shakes his head, but it has failed, and I will explain why.
Manufacturing has failed as a type of business for entrepreneurs to go into as a start-up. We all know that in Britain most large businesses started off not with big foreign investment, which has been very successful, but with people deciding to start businesses in a small way and to build them up to medium-sized businesses and then into some of the great businesses, such as those that the hon. Gentleman mentioned in Hartlepool.
Manufacturing has failed for three reasons. First, there has been a failure of capitalism in this particular field. Members might think it strange to hear a Conservative Member using Marxist terminology—[ Laughter ] —particularly for the amusement of the hon. Member for Huddersfield (Mr Sheerman)—but I mean that although a lot of capital has been employed in businesses in this country, comparatively little has been used by manufacturing. That is because capital is invested to obtain a return, and in my generation manufacturing enterprise has not generally led to significant returns.
Capital that belonged to families has grown in other ways. My father is a classic example of a person who, having found that his business was worthless, sold a small site to property developers and probably made more money than he could have in years of business. That is the story of many family manufacturing businesses in this country.
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Secondly, there has been a failure of management. The hon. Member for Huddersfield, in an excellent contribution, mentioned being shown around Magdalen college, Oxford, where he was told that the bright undergraduates were going into the City. When he made that point, he was looking at my right hon. Friend the Minister, who I remember from my time was in fact at Christ Church rather than Magdalen, but I am sure he accepts that in our generation exactly the same thing happened.
Why did people go into the City? First, those people who were business-minded went, perfectly reasonably, into businesses where they felt they could make a lot of money. Secondly, and to draw another a Marxist analogy, for more than 100 years the class system in Britain looked down on manufacturing industry, so all that people such as my father, who was in manufacturing, wanted was for their sons not to have to put up with what they had put up with. These days people would say that manufacturing is not “cool” or “culturally acceptable”, but for many years has fallen, let us say, out of fashion.
Craig Whittaker: I have a lot of empathy for what my hon. Friend is saying. I mentioned in my speech the companies Boxford, Heights, BCA Leisure and Decorative Panels, all from the Calder Valley. They started from very small premises indeed and have built up. Does he agree that the biggest problem at the moment is that the banks just are not investing in research and development?
Richard Harrington: I very much agree with my hon. Friend’s intervention, but that issue has been covered in other hon. Members’ speeches, and in the remaining time I am trying not to mention it for that reason—valid though it is.
The reality is that for bright young people, manufacturing is not, by and large, something for them to go into. For some reason it is different in the United States. Very bright graduates—the brightest that Harvard and other places have—could always join firms such as Ford, General Motors and IBM. At those companies, they could expect to make as much money—if it is, indeed, money they are interested in—as the people who joined Goldman Sachs or such firms in Wall street or the City. We have not had that here so, in my experience—and that of the hon. Member for Huddersfield at Magdalen college and of the Minister at Christ Church college—people who were interested in making a lot of money from our generation did not go into manufacturing.
I have mentioned capital and management. The third issue is labour. I am not falling into the ridiculous trap of saying, “It’s the fault of the unions and the workers that we don’t have manufacturing.” Nevertheless, the issue of labour is a contributory factor. In Watford, where we have a few very good manufacturing companies, notwithstanding that there are 3,000 people on jobseeker’s allowance in the constituency, manufacturers have a problem getting unskilled labour because they cannot get people who will do night shifts and consistently do the kind of work that is expected. It is not dangerous work, but it is fairly mundane. Consequently, they have to import labour from Poland.
It is not right in the remaining nanosecond I have left to go into detail about the benefit culture, but we have to accept that if manufacturing is going to return, we
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must have people who believe it is a perfectly respectable and proper occupation to work in a factory. We want them to, and they should be properly rewarded for doing so. However, we cannot have a situation in which people feel it is not the right thing to do.
Manufacturing has been the victim of imperfections in capital and in management, its status in society and the attitude of labour towards it. Such a situation needs to be corrected, but that should be done on the true basis of entrepreneurship, which relates to people who may be called greedy by some. They want to make money, but they will pay their taxes and employ people as a by-product. It is a great thing to employ people but, for somebody going into business, it is a by-product rather than the reason they are doing it. When manufacturing becomes easier than property development, easier than the City, easier than management consultancy, easier than the law or, indeed, politics, it will come back—but only then.
5.53 pm
Guy Opperman: I thank colleagues who have contributed to the debate, in which there has been a cross-party optimism about the fundamentals of manufacturing. It is a noble profession and a wonderful sector to work in. There is optimism for the future of manufacturing, and that is what this debate is about, rather than the past.
There has been an understanding of the past difficulties from which successive Governments and businesses down the years have suffered and of the present problems of globalisation, the Chinese influence, energy prices and the extent to which the state is struggling with the debt and difficulties faced by each country in the eurozone, particularly this one. There has been recognition that we must subsidise and support individual businesses and manufacturing organisations, whether with a form of capital allowances, R and D, tax credits or the like.
Although there is a tradition for men to be involved in manufacturing, I was particularly heartened to hear my hon. Friend the Member for Erewash (Jessica Lee) contribute so robustly to the debate. As a female Member of Parliament, she spoke very eloquently of the role of women entrepreneurs. I strongly support the view that this is a profession not only for men but for women. I apologise to all women for saying, when I described the need for a Minister for manufacturing, that we needed a go-to guy; of course, it could just as well be a go-to woman.
The Minister of State, Department of Health (Mr Simon Burns): Or gal.
Guy Opperman: Or gal, as my right hon. Friend on the Front Bench so eloquently puts it. The learned Minister has intervened on many previous occasions, and we have another bon mot at last.
I listened to the 19 speakers who contributed to the debate. We finished, last but by no means least, in Watford, having journeyed north to Morecambe and the bay, taken in Bradford East and Hove, and travelled back up to Yorkshire and Calder Valley and then on to Carlisle and Hartlepool. At this stage, the Minister appeared. I must apologise to him, because I think I said that he was from Bognor. Of course, I have nothing against Bognor—everyone loves Bognor—but he is the
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representative of Havant, as we all know, except the hon. Member for Hexham. We then journeyed to Erewash, Derby North, Pendle, Blaenau Gwent, Warwick, West Bromwich West, Burnley, Wolverhampton South East, Weaver Vale, and then to Huddersfield and up to the finest constituency of them all—which is, of course, Hexham.
The future of manufacturing is worth our taking up the debating time of the Backbench Business Committee. The three co-sponsors of the debate—my hon. Friends the Members for Warwick and Leamington (Chris White) and for Burnley (Gordon Birtwistle) and the hon. Member for Huddersfield (Mr Sheerman)—have done so much to try to put manufacturing back in the frame in the House of Commons, and that is the right thing to do. It is noticeable that we are already receiving press coverage on the need for a Minister for manufacturing.
There seems to be widespread agreement that the banking system needs reform and improvement so that these businesses, which we all so cherish and want to receive support, receive that support, whether it is from a local bank or an industry bank such as that championed so well by the Germans with the KfW model. Such possibilities give businesses an endless ability to thrive in future. We all agree that that is the model for the way ahead. I look forward to the forthcoming meeting with the Financial Services Authority to discuss the local bank project. The Government should clearly be picking winners; manufacturing is a winner, and it has a very good future.
That this House has considered the matter of the future of manufacturing.
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Petition
Proposed Development on Coastal Road, Bolton-le-Sands (Lancashire)
5.57 pm
David Morris (Morecambe and Lunesdale) (Con): This petition is about the granting of planning permission to an unwanted development in Bolton-le-Sands. It is signed by 1,036 people.
The Petition of residents of Bolton-le-Sands and others,
Declares that the Petitioners are opposed to planning application 10/00830/0UT, relating to a proposed development on Coastal Road, Bolton-le-Sands, as the Petitioners believe that there is no demand for any further development in the area as many properties are not fully occupied and many are already on the market; that there are insufficient employment opportunities in the area for any incoming inhabitants; that there is insufficient space in local schools for incoming children; that there will be increased pressure on what the Petitioners believe are already overstretched local NHS services; that the development will change the character of the area, with a detrimental impact on the landscape and residential amenities, including causing the loss of open spaces that enhance the quality of life of everyone in the area; that the development will cause a loss of grazing land and essential hedgerow habitats; that the development presents a risk to the canal and species in the canal ecosystem; that the development will result in the joining up of the villages of Bolton-le-Sands and Hest Bank and that there will be an increase in vehicular traffic on already busy roads, particularly on Coastal Road which has seen numerous accidents in recent years.
The Petitioners therefore request that the House of Commons urges the Government to use any means possible to overturn the decision of Lancaster City Council to approve the development on Coastal Road, Bolton-le-Sands.
And the Petitioners remain, etc.
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Local Pharmacies
Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)
6 pm
Huw Irranca-Davies (Ogmore) (Lab): May I thank you, Madam Deputy Speaker, and your good offices for granting this Adjournment debate on a subject that affects hundreds if not thousands of people right across the country in England, Wales, Scotland and Northern Ireland? I hope to encourage, support, prompt, cajole and beat the Minister—in a very nice way—to put some urgency into this matter, which I know he is aware of and is working on. I think that we need to do more. I can understand why this issue has not grabbed the headlines that other health-related issues have.
A very wise MP once said to me, “Don’t go looking for issues. They will walk though your door.” That is exactly what happened. A female constituent came through my door about a year ago and said, unbelievably—it was unbelievable and I had some scepticism about it—that she could not get Femara, a cancer treatment drug. I said that that simply could not be the case because it is a readily available drug. It is not a drug that is not prescribed or that there is any shortage of. She left feeling a little disgruntled, but I agreed to take up the issue.
I contacted the chemist, who said that my constituent was absolutely right. They said, “I cannot get hold of it in my own stocks, I cannot get hold of it locally by ringing other chemists and I cannot get hold of it from my regular distributors. I actually have to ring the manufacturer.” Even having done that, there was a delay before it was delivered, leaving somebody without their cancer treatment drugs. The implications of that are not only physical and medical, but emotional.
Having looked into the matter further, it appears that this is a widespread concern. Like most people, I assumed that if a drug was a prescribed medication, it would be widely and freely available. I did not know about the systemic problem that we face in the UK in ensuring the supply of life-saving medicines. If one looks behind the façade of normality, one can see clearly the pressure on the pharmaceutical drug supply chain from manufacturers, through wholesalers and distributors, to pharmacists and right down to individual patients.
The Minister will be aware that today there are problems with about 50 products. Those medicines treat a wide range of conditions including cancer, Parkinson’s disease, schizophrenia, depression, asthma, diabetes and high blood pressure. All of those products seem to be in short supply due to the problem in the supply chain. In the midst of coming to terms with a serious medical condition, the last thing that I, the Minister, you, Madam Deputy Speaker, or anybody would want to face is the fear of not being able to receive their treatment or of having it interrupted because of a problem in obtaining the medicine. Yet that is the precise situation for too many people on a daily basis.
It is our community pharmacists on the front line who see the overwhelming reality of this problem. I know that the Minister will recognise that when pharmacists cannot get hold of a drug for their patients, they work hard behind the scenes, under the calm waters, often in a Herculean effort, to ensure that nobody is left without their vital medicine. I have seen in my constituency the
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hoops that pharmacists are obliged to jump through to obtain medicines on such occasions. All too often, they have to ring round other pharmacists in the hope that they have the medicines available, spend time on the phone to the wholesaler or the manufacturer, or send faxes with copies of prescriptions to manufacturers in the desperate effort to find supplies on the day for their patients. On too many occasions, they are told that there is no stock available from the wholesaler or the manufacturer. Despite the time spent on that wild goose chase, pharmacists still try to provide the multitude of other services that the NHS and we ask of them.
Margot James (Stourbridge) (Con): I congratulate the hon. Gentleman on securing this debate on such an important topic. Is he aware of the survey conducted as recently as this month by Lloyds Pharmacy of its pharmacists, which confirmed the point that he is making? It found that 50% of the pharmacists surveyed were spending between one and three hours a week trying to source medicines, and that 16% were spending between four and six hours a week doing so—almost a day of their working time.
Huw Irranca-Davies: Absolutely. The hon. Lady makes a very good point. I am aware of that survey, and I will touch on it. This is not a party political issue at all, it is very much cross-party, and I know she has a real interest in and specialist knowledge of the matter. We can help the Minister by suggesting to him some ways forward.
The Lloyds survey to which the hon. Lady refers was of 400 pharmacists, and it showed that 80% of pharmacists were unable to dispense items, or had had to call their local GP surgery, for four or more prescriptions a week. For 26%, that number rose to more than 10 prescriptions a week. On average, half of pharmacists surveyed were spending at least one to three hours a week trying to resolve stock availability problems for patients. That includes ringing around other stores, contacting suppliers and liaising with prescribers. Critically, as she said, 16% spend at least four to six hours a week doing so, and 8% spend more than six hours a week chasing down stock.
Another survey that has been undertaken, of which the House may not be aware, is a 2011 preliminary survey on medicine supply shortages by Chemist and Druggist online. It found, echoing those earlier findings, that 93% of respondents were spending more than one hour a week sourcing key medicines. It found that 54% were spending more than two hours a week doing so, and that 10% were spending five hours or more. If they are doing that, they are not providing the front-of-counter services that we want them to, such as helping people with minor ailments and providing other assistance. That survey also found that 90% had had to ask GPs to change a prescription in the face of shortages, and that 70% had found getting hold of branded medicines even harder in the past year than in previous years. Those figures mirror those in the previous survey the year before. The problem is at least as bad as it was a year ago, and possibly getting worse.
Let me personalise the matter. I spoke to a community pharmacist from Rasharkin in Northern Ireland this week, who told me:
“Supply chain issues are becoming an increasing problem as I continually have to telephone the manufacturer directly for stock. For example today”—
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“we had four prescriptions outstanding for a drug for depression; we had ordered these electronically through the manufacturer’s chosen supplier five days ago but the stock has still not arrived. We had to telephone the manufacturer for stock today and they insisted we supply copies of the prescriptions. I refused as I believe there are issues here with patient confidentiality. They agreed to send only a partial order. Two of the above patients will be without their medication until the supply arrives, the other two have enough to keep them going for a few days.”
Patients in that situation are all too often left with only a small supply, and sometimes with none of the medicines that they need. Research by the Patients Association found that half of those surveyed had had to wait two or more days to get their medication when there were stock availability problems, and that two thirds felt from their personal experiences that medicine shortages were definitely having an impact on people’s health. That situation will see real harm caused.
The Chemist and Druggist 2011 survey has already found tangible incidents of harm caused to patients by a lack of available medicines. To cite some examples, it found incidents of a pharmacist having to refer a patient back to hospital because of a shortage of drug supply; patients describing themselves as “stressed and upset”, and suffering severe emotional trauma; a patient experiencing difficulties with anxiety that had previously been controlled by their medication; and a diabetic patient suffering a hyperglycaemic episode while waiting for their medication.
The evidence showing the problems in the supply of medicines to local pharmacists is clearly overwhelming. The reality for patients, including the one who came through my door a year ago, is frightening. Despite the hard work of pharmacists everywhere, the results could be fatal. We must avoid that. The situation was noted by the all-party group on pharmacy this week when it announced that it will hold a full-scale inquiry into the continuing problem of shortages in NHS medicines.
The reasons for the shortage in the supply of such crucial medicines, as in any situation, are varied. First, as the Minister will know, European competition policy promotes a free market in medicines. The trade is legal and encouraged by the EU. With the weak pound, there is money to be made—by pharmacists, wholesalers and others—by selling drugs to those in Europe.
The Association of the British Pharmaceutical Industry states that the recent Medicines and Healthcare products Regulatory Agency announcement that it will repeal section (10)(7) of the Medicines Act 1968 to prevent pharmacists from trading without a wholesale licence is an important step in the right direction, but it will not solve the problem. Experience has shown that supply in the market well beyond what is needed for UK patients does not solve the problem of shortages at pharmacy level —it simply results in more stock being diverted overseas.
The second reason is the number of wholesalers. There are now 1,800 wholesale dealer licences in the UK. Additionally, according to the British Association of Pharmaceutical Wholesalers, six years ago, a pharmacist could order from their chosen wholesaler almost any medicine manufactured, but nowadays, they need to order from at least two or three wholesalers, which means two or three deliveries at different times of the day, with two or three times the paperwork.
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Thirdly, quotas put in place by manufacturers to control demand are crude and lack the flexibility to meet ordinary fluctuations in demand. In one case, a pharmacy was restricted by a quota to 28 days of supply for a medicine, meaning that it was unable to fulfil 56-day prescriptions. To overcome such situations, pharmacists must place so-called emergency orders directly with the manufacturers for stock to be delivered individually in unscheduled deliveries, which often arrive via courier companies one or two days after the identified patient need.
Increasingly, patients are forced to wait while the pharmacists make daily emergency orders with various manufacturers. They often have to go through quite intrusive audit questions to prove they have a genuine patient need. On top of that, the patient has to await delivery. Another pharmacist—from Gwynedd—said of this unacceptable situation:
“In many instances after phoning our wholesalers and the manufacturers and even…specialist wholesalers, we are eventually able to source the drug, but it doesn’t arrive for 2 to 3 days.”
In March 2010, the then Secretary of State, my right hon. Friend the Member for Leigh (Andy Burnham), held a summit meeting of all industry stakeholders and formulated an action plan. In February 2011, the Department of Health published guidance, but as we approach 2012, a solution is still not in sight, unless the Minister brings some clarity today. The guidance is a step in the right direction, as recognised by Pharmacy Voice, but it is not the silver bullet—there is no silver bullet. Problems remain and it is time for further affective action to be taken.
What should that action be? We should update the regulations on patient access to medicines to make them fit for purpose. Currently, there is a duty to supply, but no time scale in which to do so within the UK. Other EU nations, including Belgium, France, Finland, Germany, Greece, Hungary, Italy, Norway, Portugal and Spain, have implemented a patient or public service obligation—I prefer the phrase “patient service obligation—on the manufacturers and wholesalers to ensure that community pharmacists can get medicines to their patients when and where they are needed. It is time for the UK to implement its own, albeit adapted, version of a patient service obligation. The Minister might be hesitant to do that, but we place obligations on distribution network operators to connect people to the national grid to ensure that they receive an uninterrupted supply of electricity, and yet we have no obligations on an uninterrupted supply of medicines.
There are different ideas on what would constitute a patient service obligation, but let me suggest some principles that might underpin one. First, all those who supply medicines, whether manufacturers, distributors or dispensers, should have a duty to ensure that the medicine supply chain is economically efficient in line with the clinical needs of patients, so it delivers to them on time. Secondly, all those who supply medicines should have a duty to ensure that patients can easily and quickly obtain the medicines they need and to prioritise the supply of medicines to UK patients. Thirdly, medicine supply arrangements must be sufficiently robust and stable to guarantee a continuous supply to patients, including the rigour needed to absorb any short-term disruption—for example, through extreme weather conditions, as we saw last year.
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Such a patient service obligation would receive support across the supply chain from manufacturers, wholesalers, pharmacists and patients. The National Pharmacy Association and the British Association of Pharmaceutical Wholesalers are already on board, and the Association of the British Pharmaceutical Industry is keen to learn more. Indeed, the Government have not ruled out a patient service obligation. I see no reason why active discussions between all interested parties—the manufacturers, wholesalers, pharmacies and patients associations —cannot begin immediately, brokered by the Minister and the Department of Health. Perhaps the Minister would like to know that a recent Pharmacy Voice survey has shown that such a move would find considerable favour with the public.
It is time for the Department of Health to lead on this vital issue. The evidence is overwhelming and the urgency palpable. Everyone is ready to find a solution and ensure that the aims of a patient service obligation—ensuring that no one goes without their vital medicines—are more than just an ambition, and become a reality. I hope the Minister in his response—I know that he is aware of the critical nature of this issue—can assure the House of his intention to act on this issue with real urgency.
6.16 pm
The Minister of State, Department of Health (Mr Simon Burns): May I begin by congratulating the hon. Member for Ogmore (Huw Irranca-Davies) on securing this debate? I know that he has been assiduous in highlighting this important issue in his constituency and beyond, and anyone who doubts that need only have listened to his speech—or read it in Hansard tomorrow—to know about his commitment to, knowledge of and passion for this issue of genuine concern in many areas. It is also a pleasure to see my hon. Friend the Member for Stourbridge (Margot James) in her place, as I know that she has a long-standing interest in the subject, having secured a debate on the pharmaceutical situation earlier in this Session.
I assure all hon. Members that I am sadly all too aware of the difficulties that pharmacists and members of the public have had in obtaining some prescription medicines. It was particularly moving when the hon. Gentleman spoke of the experience of someone he knows who regrettably had trouble getting hold of one of her medicines, Femara, which is used to treat breast cancer. We freely discuss policy at meetings and in the Chamber, but those discussions suddenly seem very distant when we are confronted with the reality of what it means to be unable to access a drug. I am aware that some pharmacists have had difficulties getting Femara, but those difficulties have recently been greatly reduced following the expiry of the patent earlier this year. The generic version of Femara is now widely available under the name letrozole. I know that it is of little consolation to the hon. Gentleman’s friend, but what it does mean is that other people will not have to go through the same heartache as that lady.
I am also aware of how frustrating it is when such problems occur with other drugs—not simply cancer drugs—because for people who need them at the time, they are equally important. The coalition Government have already taken action and we will take further action if necessary.
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Supplying medicines to patients requires a complex, international infrastructure. There are around 16,000 licensed medicines covering tablets, capsules and injections, and different dosages, and nearly 900 million NHS prescription items are dispensed every single year. As hon. Members will appreciate, it is a vast undertaking. Given that complexity and scale, there are difficulties from time to time, and not only the UK is affected: recently the US has had problems of its own. There are many different reasons why patients might have problems getting hold of their medicines, and they range from difficulties in obtaining raw materials to manufacturing problems and the overseas sale of medicines intended for this country. I would like to speak about all of these.
Supply issues can arise as a result of parallel trade, as the hon. Gentleman mentioned. That is when medicines are bought at low prices in one European country and then resold at higher prices in another. When the euro got stronger relative to the pound, exporting UK medicines to other European countries become more profitable. At the moment, parallel trade exports are therefore reducing the supply of medicine available to UK patients. I stress that this parallel exporting is legal and can be carried out by anyone who holds the necessary licences under the medicines legislation. Indeed, in the past, UK patients have benefited from medicines being imported to this country by the same process.
I cannot stress firmly enough that there are existing legal duties on manufacturers and distributors, within the limits of their responsibilities, to maintain a suitable supply of medicines to pharmacies so that the needs of patients are met, but regrettably a minority of operators in the supply chain are thought to be putting profit before patients. I know that this is not condoned by the majority of those in the supply chain. Indeed, manufacturers and pharmacies have to fill the gap that these practices create.
Manufacturers have introduced quotas to try to target supply but this reduces pharmacies’ flexibility to meet unexpected patient need. Pharmacies use contingency arrangements to get medicines directly from the manufacturer rather than from their usual wholesaler. We have recognised this in NHS funding for community pharmacies but it still annoys the majority that are putting patients first. I understand that that is frustrating for many parts of the supply chain and can lead to delays in some patients getting their medicines. However, the Department of Health, the Medicines and Healthcare products Regulatory Agency and the supply chain stakeholders—manufacturers, wholesalers and pharmacies —are working together to reduce the impact on patients.
In order to address the issues with supply, the previous Government set up a ministerial summit in March 2010. A wide range of organisations and individuals participated, including those representing pharmacists, wholesalers and doctors. The summit agreed a package of tough actions to be taken forward in collaboration with the industry and other partners. This Government have taken forward many of the actions proposed by the previous Government. We continue to work with all parts of the supply chain to make sure it functions as well as possible through collaboration and collective agreement rather than by increasing the regulatory burden.
Actions taken forward following the summit include: publishing updated guidance on the legal and ethical obligations placed on manufacturers, wholesalers, registered
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pharmacies and others involved in the supply and trading of medicines in December 2010; publishing best practice guidance agreed by stakeholders of the supply chain clearly stating that under normal circumstances pharmacies should receive requested medicines within 24 hours—if all members of the supply chain followed this, patients might get medicines more quickly—and developing and maintaining a list of products in short supply published on the Pharmaceutical Services Negotiating Committee’s website so that no one trading in these products can say that they are not aware of supply difficulties.
On top of that, MHRA site inspections and follow-up inspections have been conducted and progress has been made, including through written undertakings to comply with the agency’s recommendations. To date, no breaches of the regulation have been established.
Huw Irranca-Davies: This is not a new phenomenon. As the Minister said, the previous Government recognised it, set up the taskforce and introduced proposals on which this Government are acting. The difficulty is that the system is not working properly, despite the best will in the world. I understand the one-in, one-out rule and the necessity to avoid an undue regulatory burden, but a light-touch approach would be welcomed by most of the industry. A manufacturer told me the other day that he was producing 140% of the needs of the UK but there was still a shortage of the drug that he was supplying. Surely a patient service obligation would fit the bill by ensuring that certain things have to happen. It has been done in most other European countries.
Mr Burns: I am grateful to the hon. Gentleman, and I will come to that point a little later in my remarks.
As I was saying, exporting medicines is only one source of supply difficulties. Problems such as obtaining raw materials or problems with manufacturing processes can also cause supply problems. The increasing concentration of pharmaceutical manufacturing has made the situation worse. A medicine may be made only in one or two sites globally, which means that there is not much flexibility if problems are experienced at a particular factory or manufacturing site. Production schedules have to be planned months in advance and if one company has a shortfall, suppliers of alternatives may be unable to make up the shortfall at short notice.
The current trend in the supply chain of pharmaceuticals over the past few years is to move towards a “just in time” set-up, which results in lower stocks of medicines throughout all parts of the supply chain. This trend has resulted in significant savings, but requires more active and reactive stock management. Again, the Government work closely with pharmaceutical companies, wholesalers, pharmacists and the NHS and have well-established procedures to manage these risks.
The Department of Health published joint best practice guidelines with the Association of the British Pharmaceutical Industry and the British Generic Manufacturers Association in January 2007. The guidance gives companies advice on what to do in the event of a shortage and recommends early communication with the Department about possible shortages that might
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affect patient care. This allows us to work together to explore whether any action can be taken to reduce the impact on patients.
The Department has also created a small buffer stock of some medicines to help manage shortages during pandemics and other emergencies. We are also taking action through the European Commission’s falsified medicines directive to strengthen the supply chain against the risk of counterfeit medicines. This aims to improve the reliability of the medicines supply chain and to respond to the increasing threat of falsified medicines entering it.
As a direct result of the arrangements I have described, combined with the diligence and professionalism of most of the supply chain, patients overwhelmingly have access to the right medicines in a timely and efficient manner. We are continuing to monitor the situation very closely. Of course, we are not prepared to be complacent. That is why we are working so closely and collaboratively with the supply chain, monitoring and intervening as appropriate.
The hon. Gentleman’s intervention was about the public service obligation. I am aware that some—like him, and quite honourably—would prefer to see a public service obligation placed on the medicines supply chain to maintain supplies of medicines. As I have said, it is already the case that manufacturers and distributors must ensure continuous supplies of medicines to meet patients’ needs. Failure to do so could put them at risk of regulatory action or criminal prosecution.
Some other EU member states have a very precise definition of how soon medicines should be received, but we are cautious about going down that road. It would vastly increase regulation on the industry and drive up costs across the board. This is why, as I have said, we have chosen to go down the route of best practice guidance instead. Best practice arrangements exist; they have been agreed with all parts of the supply chain and they have been very successful in minimising the impact of shortages. It is a much more flexible approach than statutory regulation.
In conclusion, I am grateful to the hon. Gentleman for raising this issue—one that will be relevant to all Members across all party divides, as well as to every single community and individual person. It is an issue of true universal interest and concern. I assure the hon. Gentleman that the coalition Government are absolutely committed to patients getting their medicines as quickly as possible. We are also certain that in the supply of medicines, everyone in the supply chain has their part to play, including manufacturers, wholesalers, pharmacists, prescribers and patients. The Government will continue to work closely with all those involved in the supply chain, making sure patients receive their medicines in a timely manner and without any unnecessary complications. This is not an issue that will be discussed just once and then forgotten. We are determined to keep a watchful eye on the situation to see if there are ways to improve it and minimise disruptions or problems for patients, ensuring that they get the best service, to which they are entitled.