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Manufacturing Companies

Acas – in the House of Commons at 11:30 am on 6th May 2004.

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Photo of Michael Clapham Michael Clapham Labour, Barnsley West and Penistone 11:30 am, 6th May 2004

What action she is taking to help small and medium-sized manufacturing companies.

Photo of Michael Foster Michael Foster Labour, Worcester

What action she is taking to help small and medium-sized UK manufacturing companies.

Photo of Jacqui Smith Jacqui Smith Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry

We are helping small and medium-sized manufacturing companies to compete effectively in the increasingly global market with the support of the highly successful manufacturing advisory service and the other measures of the Government's manufacturing strategy—the first for 30 years.

Photo of Michael Clapham Michael Clapham Labour, Barnsley West and Penistone

I am grateful to my right hon. Friend for that answer, which illustrates the comprehensive package that is available to small and medium-sized enterprises. She will be aware that there are 3.8 million SMEs in the UK, and that they account for 40 per cent. of our gross domestic product. However, one weakness is that only a relatively small number of SMEs export into the EU. Indeed, the Federation of Small Businesses estimates that number at just 22 per cent. What can my right hon. Friend do to make that better? Will she ask her officials to look into what assistance we might be able to give to make the route into the new, expanded European Union better for SMEs?

Photo of Jacqui Smith Jacqui Smith Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry

My hon. Friend makes an important point. The key to success in export is to be productive and innovative at home. The manufacturing advisory service is making a difference by adding an average of £104,000-worth of value-added to the manufacturers that have used its services. We need to couple that with the kind of support and advice that is provided by UK Trade and Investment and, as my hon. Friend rightly says, to link that to the new opportunities now opening up for our exporters, both small and large, through the enlargement of the EU. I shall certainly undertake to ensure that we redouble our efforts in that regard.

Photo of Michael Foster Michael Foster Labour, Worcester

What specific policies does my right hon. Friend's Department have to help small and medium-sized manufacturers deal with the relative strength of the pound against both the euro and the dollar?

Photo of Jacqui Smith Jacqui Smith Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry

My hon. Friend has identified just one of the many global pressures under which our small and medium-sized manufacturers have to operate. In that regard, I am reassured and encouraged—as I know my hon. Friend will be—by the fact that April's CBI survey showed that output expectations remain high for the second consecutive quarter, and that May's Chartered Institute of Purchasing and Supply survey found that the manufacturing sector had improved for the 10th consecutive month. Strengthening world conditions also offer opportunities for our manufacturers. We need, however, to couple the general support that I have mentioned with the specific assistance that UK Trade and Investment, for example, can offer, and with other activities in order to strengthen our manufacturers so that they are able to compete not only domestically but, increasingly, internationally.

Photo of Robert Smith Robert Smith Opposition Deputy Chief Whip (Commons)

One way to help all small and medium-sized manufacturers is to reduce the burden of bureaucracy on them, to allow them to concentrate on their core activity. To that end, the Government held out great hopes in their White Paper on company law reform, which we were told would bring all such law under one heading so that there would finally be simpler law, and ensure that there would be a minimum law for all companies, with only the larger companies having to comply with it. Since then, we have seen no legislation on those reforms coming through Parliament. Can the Minister give us any indication as to when that promise will be delivered to small businesses?

Photo of Jacqui Smith Jacqui Smith Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry

We are in the process of consulting stakeholders on the way in which we shall implement the recommendations of the company law review, including the important principle of "think small first". We have ways in which we can deliver all that, and we are currently considering how we shall draft the legislation. I would expect that to happen very soon—as soon as parliamentary time allows. Stakeholders have been encouraged by the progress that we have made in dealing with this complex issue, which, as the hon. Gentleman rightly points out, is very important to the whole basis of our company law as a source of our competitiveness, and particularly to small and medium-sized companies.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

Does the Minister recognise that, in relation to small and medium-sized manufacturers, the Government's so-called actions have resulted—as announced yesterday by the Office for National Statistics—in UK manufacturing output declining in the last reported quarter? It is now significantly lower than in 1997. Does she acknowledge that, in the fourth quarter of 2003, total manufacturing investment fell by 1.5 per cent. compared with the previous year; that UK productivity growth has halved during Labour's seven years in office; and that, according to the latest figures, jobs in UK manufacturing were down 95,000 in 2002–03? Is she aware that the World Economic Forum's competitiveness ranking shows that, although Labour inherited one of the foremost competitive economies in the world, we have now fallen to a woeful 15th place in those rankings under Labour's regulation state? Where precisely is the financial return to British businesses and taxpayers on the Department's £8.2 billion splurge of their money?

Photo of Jacqui Smith Jacqui Smith Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry

I will not take any lessons from Conservative Members on support for manufacturing, given the record of devastation of manufacturing during the boom and bust years under their party. Based on the manufacturing strategy—the first for 30 years—we are taking practical action to support our manufacturers, including investment in the manufacturing advisory service, which brings with it £38 million-worth of value-added for our manufacturers, and investment in science and innovation, as well as ensuring that manufacturers can benefit from that through the technology strategy. There is also investment through our regional development agencies in helping to develop support for manufacturers at regional level. All that is practical support that would be under threat from cuts by the Conservative party.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

As a manufacturer who worked in a business that prospered for all 18 years under the Conservatives, I think that is an extraordinarily poor response. British business will have heard that—surprise, surprise—there is no financial return on all that taxpayers' money, which has been thrown away by this profligate DTI. Instead, we have the Minister's habitual torrent of denial and complacency.

Under Labour's regulation state, one of the biggest burdens on small and medium-sized businesses, not least manufacturers, is employment regulations. Given the scrutiny that the political parties are under owing to the imminent European elections, will the Minister condemn and discipline her colleagues the Labour MEPs for defying her party's policy by twice voting to remove the UK's opt-out from the EU working time directive? If she will not—her colleague the Minister for Small Business and Enterprise pointedly failed to do so when questioned directly by me at February's Question Time, and did not even mention it in his answer—she knows that the only possible interpretation is that, on this crucial matter, she is confirming that Labour MEPs were accurately reflecting Labour policy to scrap Britain's opt-out from the working time directive. So, let us all listen very carefully—

Photo of Jacqui Smith Jacqui Smith Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry

I identified three practical areas where the Government are investing and achieving success in supporting manufacturers. We heard nothing from the hon. Gentleman about whether those would, as we believe, be cut under Tory plans. I can assure him that the Government will support decent basic working conditions for our work force and the maintenance of a flexible labour market, which of course has been one of the keys to ensuring that we have 2 million more people in work than when his party was in government.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

My right hon. Friend will be aware that regional selective assistance is important to manufacturing industry and that we have had a series of meetings with her on a medium-sized assembly operation in Ryton in Coventry, while awaiting the approval of the Commission in Brussels. Can she tell the House whether we have had that permission communicated to us, and if not, why not? Will she please hurry it up and let us know when we can expect it?

Photo of Jacqui Smith Jacqui Smith Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry

As my hon. Friend rightly says, we have been engaged in discussions with the company and with him and our hon. Friends in terms of what we need to do to provide support. I will write to him on the up-to-date situation, but I can assure him that we will continue to engage with hon. Members and the company to make the strongest possible case to the EU with respect to state aid regulations.