Industrial Strategy

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Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy 3:40 pm, 18th April 2018

I beg to move,

That this House
has considered the Industrial Strategy.

It is a great pleasure to open this debate. We are at one of the most important, exciting and challenging times in the history of global enterprise. All around the world, new technologies are transforming the way in which we live our lives as citizens, how we work, and the products and services that we consume and supply. Whether it is in artificial intelligence, the digitisation of manufacturing, the clean energy revolution or breakthroughs in medicine, such is the scale of change that it has been described as the fourth industrial revolution. Britain is extraordinarily well placed to lead and benefit from this industrial revolution, just as we did in the first industrial revolution.

We are an open and enterprising economy, built on invention, innovation and competition. We are one of the world’s scientific powerhouses, producing more Nobel prize winners each year than any other country apart from America. We are synonymous with creativity, from literature to video games. People know that the UK is a hotbed of new ideas. In an uncertain world, we have a deserved reputation for being a dependable and confident place in which to do business, with high standards, respected institutions and the reliable rule of law. As this week’s Commonwealth Heads of Government meeting shows, we are—and always will be—proudly international. We are a crossing point for the world because of our geographic position, the importance of the English language, our global friendships and our vibrant culture.

Ten years on from the financial crisis, we have built a stronger economy than many people thought possible at the time. Unemployment is at its lowest rate for 43 years and there are more people in work than ever before. Our public finances have been transformed by rigorously reducing the yawning deficit that was inherited. We have world-beating industries—from financial services to the life sciences, and from the creative industries to advanced manufacturing.

As we look to the future, it is one in which Britain’s strengths are in increasing demand all around the world. The world is avid for our products, services, skills and know-how. To benefit from the opportunities before us, we need to prepare to seize them. We need to ensure that we join all the forces of our people and our economy to reinforce them and extend our strengths into the future, as well as capitalising on the new opportunities that have presented themselves. That is why I stood before this House at the end of November to launch our industrial strategy White Paper.

Deliberately, the exercise of producing the White Paper was a collaborative one. It was the biggest such consultation ever undertaken by my Department and its predecessors, drawing input from more than 2,000 organisations the length and breadth of the United Kingdom. I was particularly pleased that all the devolved Administrations contributed enthusiastically to the consultation. Employers, universities, research institutions, local government leaders and trade unions all contributed to the consultation that resulted in the White Paper, and there was a deliberate reason for this. It seems to me that if the nation is to have an industrial strategy, it has to be for the long term; we must orient our economy and society to the long term. The best way to ensure that policies and institutions endure is to take people with us, and to ensure that the advice and wisdom of all parts of the United Kingdom and all parts of the economy are taken and distilled into something of which all can feel a part.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

As the Secretary of State knows, Teesside is a powerhouse for industry, but in my constituency unemployment is still double the national average, and across the north-east of England it is considerably higher than the national average. Does he not agree that still more needs to be done to ensure that we balance industrial strategy in favour of those areas where there is high unemployment, and a lack of skills as well?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Gentleman knows Teesside very well. One of the things he would welcome is that in recent years the long-standing disparity, going back decades, between constituencies like his and others in the country has narrowed. There is a real sense of progress and achievement on Teesside that I experience every time I go up there; I was up there a couple of weeks ago. However, he is absolutely right that we need to continue that progress. We need to reflect on the fact that, as I said, many of the industries, skills and attributes that are in demand across the world now—marine engineering, for example—are abundant in areas like Teesside. We must capitalise on that, and we have a massive opportunity to do so. The industrial strategy, as he knows—our friends and colleagues on Teesside contributed very fully to it—has, for the first time in an industrial strategy, a real, very clear attachment to the importance of recognising the contributions of different places. This came out very strongly through the consultation, so he is absolutely right.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

We have just seen a hostile takeover of GKN. Some of my constituents work at a GKN plant in Luton. Does this not look like a return to the kind of cowboy capitalism we have seen in the past, where hostile takeovers lead to asset-stripping that will make short-term profit rather than being about the long-term interests of the economy and our manufacturing sector?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Gentleman knows that I have a quasi-judicial role to exercise in response to certain takeovers, so I cannot comment on that particular case. I would say, however, that in technologies such as automotive and aerospace, there is a high degree of interest and, indeed, optimism, about the future capabilities of companies right across those sectors and their supply chains. I mentioned marine engineering; aerospace and automotive are also examples of areas of British strength. The industrial strategy commits to build on that. My intention in implementing the industrial strategy is that our current strengths will be extended.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

Earlier, the Secretary of State used the term, “this nation”. Does he accept that he has responsibility for growth in the economies of all the nations of the UK?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I do indeed. In using that expression, as I think was evident from the context, I was praising the contribution that has been made from all parts of the United Kingdom. I am looking forward to being in Edinburgh tomorrow to give evidence on the industrial strategy to the Scottish Parliament. The work that we have done with the Government in Scotland has been very important. We had a very effective consultation session in Edinburgh. Many colleagues in Scotland contributed to it, and they see the results of it there.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

The Secretary of State talks about an industrial strategy, which, in general terms, we welcome, but running alongside that we need to have an investment strategy, particularly in new technological developments and in energy areas such as electric cars. Will he say something about an investment strategy as well, because the regulator plays a big part in this?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I am coming on to talk about that, but I will say now that one of the major breakthroughs in the industrial strategy is to recognise the utmost importance of investment in research and development, not only on the part of the private sector but on the public sector side as well. All around the world, advanced nations are investing in the future through R&D, and we have in the industrial strategy the biggest increase in research and development that we have ever seen in this country. It is a matter of pride that we were able to achieve that.

Photo of Pat McFadden Pat McFadden Labour, Wolverhampton South East

I very much welcome the fact that the Government are committed to the industrial strategy. When I was a Minister in the Secretary of State’s Department some years ago, we rebooted and renewed the belief in an industrial strategy in the wake of the financial crisis. I am glad that it has survived and that there has been a lot of continuity through the years of the coalition Government to his tenure. This is a welcome move away from the laissez-faire approach that we had in the 1980s, but it will only work if it is bought into by others beyond his Department. Given that many other countries are trying to do similar things, is he confident that he has the commitment right across Government and the scale of resources and buy-in necessary from the Treasury and others to make this a success?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The right hon. Gentleman makes an excellent point. First, in terms of what was achieved before, he is right to recognise that we are building on what have been successes. Successful arrangements that have been put in place in the process industries, for example, are recognised and built on in the strategy. It is very important that we have a long-term approach. He is absolutely right; this is not my Department’s industrial strategy, my industrial strategy or even the Government’s industrial strategy. The ambition for this strategy is to unite all the nations of the United Kingdom and the UK Government certainly, but also the leaders of our cities, towns, counties and universities. The approach we have taken in developing the strategy is precisely for that purpose.

I have a set of responsibilities which the right hon. Gentleman will know, from his tenure in my Department, are limited to those allocated to the Business Department. However, when it comes to skills or investment in transport infrastructure, for example, it is vital that all join together. One of the strategy’s purposes is that we can clearly brigade in a way that reinforces the different contributions.

Photo of Wayne David Wayne David Shadow Minister (Defence) (Armed Forces and Defence Procurement)

On that point, one crucial aspect of our industrial base is the defence sector, yet one of the surprising things about the Government’s industrial strategy is that the defence sector is hardly mentioned, if at all.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I would not read too much into that. The defence industrial strategy is a very important part of our overall strategy. There are many references to industries—I mentioned aerospace—in which the innovation that comes from defence work can have important spillovers for the wider economy. We recognise that across the world, that tends to be the case. The defence sector is very important to the strategy, and when some of the sector deals that I will come on to discuss are agreed, the hon. Gentleman will see that in abundance.

Drawing on input across the United Kingdom, we have an approach that is the distilled wisdom of many different contributors. It is a vision to help businesses raise their productivity performance, which is essential if we are to increase the country’s earning power. If we want to pay ourselves better as a nation and a society, we need to earn the way to do that by creating better-paid jobs and putting our country at the forefront of the industries of the future.

Let me introduce the four grand challenges that we have set out. I mentioned that we are uniquely well placed in this country, having leadership in some of the areas of the future, but we should not take that leadership for granted. We should have a deliberate plan and programme to reinforce that success. The four areas we have set out in the strategy, on advice, are: artificial intelligence and the data-driven economy; clean growth; the future of mobility; and meeting the needs of an ageing society. Those challenges have been identified on the advice of our leading scientists and technologists, and they will be supported by investment from the new industrial strategy challenge fund and matched by commercial investment.

Let us take each of those briefly. We know that, whether in the Alan Turing Institute or in our companies throughout the UK, we have some of the most innovative thinkers and practitioners in AI and the use of data. We already have that reputation, but we need to keep at the forefront of those developments. A big part of the strategy is to recognise that, historically, as all Members know, we have been better at the “R” of R&D than the “D”. We have had brilliant ideas, but sometimes we have let them slip through our fingers and seen them implemented in industrial processes and investments in manufacturing in other countries. A big part of the challenge is therefore not just discovery but applying those discoveries in UK industry.

Photo of James Heappey James Heappey Conservative, Wells

When travelling overseas on parliamentary business and visiting universities, I have noticed, particularly in America, that people are much more entrepreneurial in their research projects and mapping out a route to a market. What might the Department do to encourage that sort of entrepreneurial spirit in our universities?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

We are getting better at it. Most colleagues will have experience of their local universities and others, and most research universities have active programmes to spin out discoveries and reap the benefits. Again, through the industrial strategy challenge fund, funding is available on a match basis to universities to pursue that implementation of good ideas. My hon. Friend is absolutely right.

Let us take the future of mobility. Mr Cunningham and I have had many conversations about this country’s reputation not only for the efficient manufacture of vehicles—that is a proud record—but for innovation, whether in the west midlands or the world-beating cluster of Formula 1 businesses around Oxfordshire and Northamptonshire. The world comes to the UK for the next generation of technologies. Forty-year veterans of the automotive industry say that this is the most exciting time in their career, when not only the powertrain but the way in which vehicles navigate is undergoing a revolution. Around the world, there is increasing demand for that set of technologies and we have a strong capability in them. Again, setting a grand challenge is crucial.

We have set the Faraday challenge to be a world leader in the development and application of new battery technology. It is already attracting great interest around the world, and the hon. Member for Coventry South will know that the national battery manufacturing development facility will be located in Warwickshire at the heart of our cluster there.

On the ageing society, whether in Glasgow and Edinburgh or Cambridge, we have some of the best researchers in the world looking at medical breakthroughs that will be in increasing demand around the world. I make it clear that now and long into the future, we will invest in the facilities and the people to make us the place to come to research new innovations. As Members from Scotland will know, the Glasgow city deal had a big medical component to build on our success there.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

Clearly, medical innovation and continued investment are welcome, but when dealing with an ageing population and workforce, we need not just innovation but immigration. We need immigration in the healthcare sector to support an ageing population. Does the Secretary of State agree that the Government should review their immigration policy, especially tier 2 visas, which are putting a block on experienced healthcare workers coming to the UK?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

As the hon. Gentleman knows—the industrial strategy is clear about it—we benefit from the contribution of workers, scientists and engineers from all over the world. There is no successful future for an economy that does not engage with the world. That means that we should be open to talent from around the world. We need to make sure, as every responsible nation does, that we have an orderly system for managing immigration from around the world. That is what we are achieving and what we will continue to achieve. It is very clear, on every page of the strategy, that this is a vision for an international Britain, rather than one that is moving towards a kind of national self-sufficiency.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

I thank my right hon. Friend for giving way and for the commitment he is making to ensuring that world-class talent from across the world can continue to come to support science in Britain. When the president of the Royal Society came to speak to the Science and Technology Committee, he pointed out that world-class scientists need to be mobile, anthropologists need to work abroad and those working for the British Antarctic Survey need to go to Antarctica. Will he make sure that the visa system is able to provide that mobility?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

That is very important. One of the commitments in the industrial strategy is to increase the number of visas and studentships for international researchers coming to work in the UK. Nobel prizes were mentioned earlier. I had the privilege, when I was Science Minister, to go the Nobel prize ceremony. What is notable is not just that a lot of Brits receive these awards, but that most Nobel prizes in the sciences are given to teams of researchers and that those teams are usually international. That embodies the fact that the best ideas come from the connections that are made between researchers from different cultures and different countries.

Photo of Paul Sweeney Paul Sweeney Shadow Minister (Scotland)

The Secretary of State mentions the critical need to attract high-quality education graduates from across the world to British universities. Does he also recognise that that is a critical part of growing our population? In Scotland, we had a declining population. The Labour Administration under Jack McConnell introduced a post-study work visa scheme, which reversed Scotland’s historic population decline. That is why today we have a great legacy of an expanding population in Scotland that is adding value to our economy.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The overall population of the UK is growing, as the hon. Gentleman knows. It is important that our immigration system is set in a sensible way that recognises the needs of the economy and the needs of our society, and that is the approach being taken.

I talked about grand challenges. Let me turn to another important aspect of the industrial strategy, which is, candidly, to address areas of historic relative weakness in the UK economy. I talked about our strengths, but it is well known to every Member of this House that for many years now our productivity performance has not been as good as that of some of our competitors, and since the financial crisis it has been slower to recover. In recent quarters we have seen an acceleration of productivity growth, but I think everyone would recognise that it is the responsibility of this House and those of us in Government to act on the foundations of productivity so that we can maximise the productive capacity of the economy. A big part of the consultation was to consider what we can do to drive up our productivity performance.

There are five areas in which clear commitments and progress are required across the whole economy—indeed, across society, to go back to the comments made by Mr McFadden. This is not simply, if at all, in the gift of the Business Department. It requires a whole-country commitment to investing in the foundations of productivity. We have set out our plans and ideas on research and development, as I mentioned earlier. As new technologies are developed, the skills required by the workforce to make use of them clearly need to change as well. It is no good doing one if we do not do the other, so the skills element of the strategy is very important. It is important to recognise the different needs of different places, as I mentioned in response to an intervention from Alex Cunningham.

We want to make sure that our business environment is not only competitive and open, but recognises the need to ensure that when companies start up—we have a great record of start-ups—they can attract the funding that they require to grow into medium and larger businesses. We want to make sure that the infrastructure on which our whole economy depends is competitive with the best in the world. Through the industrial strategy, we set out action across all five of those contributors to productivity.

Photo of Ruth George Ruth George Labour, High Peak

The Secretary of State has not mentioned the principal foundation of productivity: the workers of Great Britain. Obviously, investment in those workers is absolutely key to making sure that they see that their own investment in their work and productivity will lead to substantive benefits for them and their families. The response to the joint inquiry by the Work and Pensions and Business, Energy and Industrial Strategy Committees into the Taylor review on modern employment practices kicks a lot of the action into the long grass and into consultation. Will the Minister please admit today that workers are the foundation of productivity and that they need the Government to commit to solid action?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

It is not a question of admitting to it—I want to boast of it. When I talk about our strengths and talents, those are the strengths of the people of the United Kingdom as workers, researchers and leaders of local economies. The prosperity of our economy is founded on our workforce. The hon. Lady is absolutely right to emphasise the importance of investment in people. I have mentioned investment in research and development, but it is important for her to reflect that much of that is about investment in people, making sure that we have research funding and opportunities for researchers so that we have brilliant individuals as well as physical infrastructure.

When it comes to investment in skills and the workforce generally, the hon. Lady is absolutely right. I have mentioned the importance of skills training. One thing that we and Members from across the UK know is that there are shortages in many parts of the country, particularly in engineering and technology skills. That is before we have the full benefit of the opportunities set out in the industrial strategy, which highlights and commits us to a long-term programme of upgrading not just investment—although that is important—but the prestige attached to technical qualifications in this country, and to emphasising the importance of that. There is, for example, nearly half a billion pounds of investment in teaching maths, digital and technical education.

I am pleased that the hon. Lady mentioned the Matthew Taylor review, because it is exactly the right kind of strategic approach that we should take. We know that new technology is changing the world of work and that it poses challenges to established ways of working. Rather than simply ignoring that and not addressing those changes, in commissioning Matthew Taylor to review the emerging economy we equipped ourselves with some very important reforms that Taylor himself advised we should consult carefully on. That consultation came from a review commissioned by the Government, who absolutely have the intention to deliver on its recommendations. The consultation is the way to proceed with legislation and regulation.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

The Secretary of State refers to the prestige of an industrial qualification as a device to attract the most capable people into industry and manufacturing. Does he agree that it is also important for manufacturing to show in a more open way exactly what the manufacturing environment is like now? Far too many people see manufacturing in the style of dirty old factories such as those that existed a generation ago. The manufacturing landscape has changed, but I do not think that we have managed to get that message across to our young people to encourage the brightest and the best to make it a career destination.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

My hon. Friend is absolutely right. It is sometimes not known and cannot be seen what modern manufacturing is about. I had the great privilege and pleasure of visiting the Big Bang Fair at the National Exhibition Centre in Birmingham a few weeks ago, which does precisely what he advises. The excitement among the young people there, seeing the possibilities available, was palpable. It does a great job.

I know that you are rightly interested in other Members being able to contribute, Madam Deputy Speaker, so I will make some progress and give colleagues the chance to speak. Along with the measures in the Taylor review, it is very important, when new technologies require different skills from the existing workforce, that we back industry in providing the training that is needed. In that regard, the national retraining scheme being developed in conjunction with employers and trade unions, focusing initially on construction and digital skills, is a very important commitment. It is also vital that we upgrade our infrastructure, be it physical infrastructure or the broadband and mobile connections on which many new businesses depend, and again commitments have been made in that regard important.

When it comes to places, the leadership being given to many of our great cities by elected Mayors, not least those elected last year, must be combined with the ability, powers and resources necessary for them to make a difference to their areas. One of our commitments was a fund to enable local leaders better to connect not just city centres but the networks and clusters of smaller towns around our cities. An early example was the decision by Andy Street, Mayor of the West Midlands, to use the investment available through the industrial strategy to fund a metro extension to Brierley Hill and Wednesbury, which connects two important parts of the west midlands to Birmingham and the wider area.

On the business environment, we know that there is a problem of composition. We have some highly productive, highly performing businesses as well as what the Bank of England has identified as a long tail of less productive businesses, and transmitting the lessons from the best to the others is an important part of the work that we need to do.

I will conclude by saying a word about the importance of particular sectors. We have talked about the north-east and Teesside, the west midlands and other parts of the country. We know that the clusters of excellence in those areas can be very important not only in driving productivity but in attracting new investment and becoming the location of new businesses.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

One of those clusters is, of course, the chemical industry. People in that industry are extremely anxious about the possibility that the EU regulation concerning the registration, evaluation, authorisation and restriction of chemicals might go when we leave the EU. Will the Secretary of State update the House on where we are with negotiations on those regulations to ensure a common working platform for chemicals after we leave the EU?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I would incur your displeasure, Madam Deputy Speaker, if I went into the European negotiations. Suffice it to say that if the hon. Gentleman reads the Prime Minister’s Mansion House speech, he will see a reference to chemicals. We take the advice of the Chemical Industries Association, which I meet regularly, into those negotiations so that we can continue to trade successfully in that very important sector.

I want to say a word about sector deals. As the right hon. Member for Wolverhampton South East mentioned, we know of the success of long-standing arrangements whereby major manufacturers, supply chains and the Government can work together—for example, in the automotive sector and the aerospace sector. These important institutions have taken a lead and boosted jobs and prosperity. In the industrial strategy consultation, therefore, we asked whether we should offer and engage in more sector deals with sectors that have not benefited from those arrangements. We asked business whether that proposal had merit, and the answer was an emphatic yes. These deals are about the Government working with sectors, but also about the sectors working with each other, in exactly the way that the right hon. Gentleman mentioned.

We have made significant progress. In December, I launched the life sciences sector deal with my right hon. Friend the Secretary of State for Health and Social Care. This deal for the long term is already attracting immediate investment, including from MSD, which is supporting nearly 1,000 jobs in the UK.

Photo of Mark Tami Mark Tami Opposition Pairing Whip (Commons)

The Secretary of State is talking about the long term, which is very important. For a company such as Airbus, the relationship with its suppliers, which is not a short-term relationship but a long-term one, is also very important. It is because such a relationship is so important that there are fears about how long Melrose will actually invest in GKN and keep hold of that company.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Gentleman is absolutely right about the importance of long-term relationships. I have said that I cannot make an appraisal of that particular bid, since I have a decision to make, but it is on the record that I requested and obtained commitments from the bidder to investment in research and development, and indeed to the continued ownership of that aerospace business. I hope he will therefore recognise that I regard commitments to the long term as important.

I have mentioned the life sciences sector deal. We launched the automotive sector deal in January, and I launched the creative industries sector deal with my right hon. Friend the Secretary of State for Digital, Culture, Media and Sport just last month. We have in the pipeline a number of other sectors where great progress has been made, and we expect to make more announcements soon.

I hope it is evident that in the industrial strategy—whether looking to the future, harnessing our resources to make sure that we capitalise on our existing strengths, or looking objectively and candidly at areas in which we need to do better and in which we need to invest for the foundations of future productivity—the approach we have taken is to set out a strategy for the long term to which all parts of the United Kingdom can contribute.

We are not the only country in the world to recognise that a technological revolution is taking place. Wherever I travel I find similar concerns, and similar appraisals of the future are being undertaken by other countries. Our industrial strategy has already, in the few months since it was published, attracted widespread attention and respect around the world. We have already translated it into several languages because of demand, so any colleagues travelling around the world who want copies of it can approach my office for a translation in most languages, and we will have other translations made according to demand.

Our industrial strategy is a calling card for the future of the United Kingdom economy, and I hope Members on both sides of the House recognise that in pulling together our strengths and opportunities through it, we have a chance to tell the world, as well as our fellow countrymen and women, that this country has a great future ahead of it, just as we have had a very successful past. I commend the motion to the House.

Several hon. Members:

rose—

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means)

Order. Before I call the spokesman for the Opposition, let me say that it will be obvious that a great many Members—I have indications from more than 20 people—wish to speak this afternoon, and there is limited time. I therefore give a warning now, so that colleagues who wish to speak can tailor their notes accordingly, that there will be a time limit of six minutes to start with, but that is likely to be reduced later. That provides plenty of warning, but the time limit does not of course apply to Rebecca Long Bailey.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee 4:19 pm, 18th April 2018

According to the Government’s own declaration, the industrial strategy sets out their plan to create an economy that will boost productivity and earning power throughout the United Kingdom. The Secretary of State has just presented a very rosy picture of his Department’s industrial strategy, but I am afraid those spectacles he is wearing may be a little bit rose-tinted.

The key questions that must be asked today are whether the strategy is working, and whether it addresses the huge problems that our economy is facing. The first of those problems is productivity. I agree with the Secretary of State’s comments about investing in the foundations of productivity, but we have just seen the productivity figures for 2017, and they are not good. Two negative quarters were followed by two positive quarters of growth. The two quarters of growth were caused by GDP growth slowing, but hours worked slowing even further. In other words, productivity has increased through the worst possible means. Even incorporating the 2017 figures, the productivity growth that has taken place over the 10 years since the crash has been the worst since 1820, just after the Napoleonic wars.

The second problem is GDP stagnation. For the 60 years preceding the financial crash, rising GDP meant broadly rising living standards. When GDP rose, unemployment came down and wages went up. However, over the course of 2017, UK GDP growth was weaker than GDP growth in any other G7 nation, standing at 1.4% compared to a G7 average of 2.4%. The figures were 2.9% in Germany and 2.5% in France. The situation is not forecast to improve: yesterday the International Monetary Fund forecast that we would be the slowest in the G7 bar Italy over the next two years, and the OECD predicts that we will grow more slowly than France, Germany and the United States in both 2018 and 2019. Worse still, among major advanced economies since the crash, Britain is the only one to have grown slightly while real wages have fallen.

The third problem is wage stagnation. In real terms, average weekly earnings are lower now than they were in 2007, 10 years ago. Working people, particularly those on low to middle incomes, have suffered the worst decade for a generation in terms of living standards. That is unprecedented since at least the end of the second world war. The quality of work is also an issue, as we have heard from some of my hon. Friends. The Secretary of State lauded employment figures in his opening remarks, but he must acknowledge that insecure employment is rife. According to the TUC, there are 3.2 million people in insecure work—about one in 10—and the number has risen sharply over the last half-decade, by 27%.

The Government tried to paper over those bleak realities with rhetoric in their recent response to the Taylor review, but I am not as optimistic or as excited as the Secretary of State was when he responded to comments earlier. Launching four consultations, merely “considering” proposals, failing really to act on the review’s recommendations, and tweaking the law here and there is simply not good enough.

The fourth problem is uncertainty. Britain is facing an uncertain future—we are about to leave the European Union, and businesses are craving a deal that will put the economy and jobs first, with as much access to Europe as possible—but Europe aside, parts of our economic framework do not encourage certainty. Our takeover regime leaves many companies deeply uncertain about their future, and prey to predatory and hostile takeovers. We have already heard about GKN today. Under our takeover laws, that fantastic manufacturing company was bought up by Melrose. It was clear that our takeover regime needed more teeth and more clarity, but I must add that even in that case the Government had grounds to intervene on matters of defence, and still failed to act. As the Financial Times suggested recently, the failure to equip our takeover regime adequately may be partly why a great company such as Unilever decided to make its legal home the Netherlands. How many other companies will follow?

The fifth and final problem is inequality. Sadly, the UK is one of the most unequal countries in Europe in terms of household income. As the Resolution Foundation recently revealed, inequality is projected to increase after 2016-17. On some measures, it is projected to rise to record highs by 2023. Furthermore, there are clear inequalities between our regions and nations. The Institute for Public Policy Research Commission on Economic Justice has found that Britain is the most regionally imbalanced country in Europe.

All these problems are not just abstract, general issues; they have recently manifested themselves in concrete examples—a barometer of the health and efficacy of the Government’s industrial strategy going forward. We started this year with the insolvency of Carillion, but that is not an isolated example. Our retail sector shows signs of strain: Toys R Us has collapsed, Maplin has gone into administration, New Look is fighting to avoid it, and Carpetright is planning a company voluntary arrangement. Workers have also felt the pain of a stalling economy: in the last week alone, literally thousands of workers have been threatened with job losses at Jaguar Land Rover and Shop Direct, yet we have received no statement whatsoever from the Government on what they are doing to protect those jobs, so perhaps the Minister will outline in his summing-up speech the action he is taking.

Photo of Ruth George Ruth George Labour, High Peak

I met many businesses in my constituency last week. Does my hon. Friend share my concern that several of them are already having to move trade to EU countries because they are worried about the cost of a visa system when they cannot guarantee that they will hang on to the staff they pay for, the ending of preferential tariffs at the EU rate—

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means)

Order. The hon. Lady is not making a speech; she is also taking away from the time for other Members.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

My hon. Friend made some pertinent points and I will talk about skills shortly, and the extreme worry that many of our business leaders across the country have voiced about both Brexit and the quality and adequacy of the supply we have currently in the UK.

Returning to the problems that are a barometer of the issues in our economy, will the Minister update us in his summing up on the Government’s rabbit-in-the-headlights approach to the risks currently faced by our steel industry as a result of recent discussions and the global crisis of overcapacity and dumping? This Government have been in power for eight years—the best part of a decade—and they must own these problems if they are to make any progress; they must own the fact that they have not solved the five problems I outlined earlier, and that instead they have festered.

The Secretary of State and I are in clear agreement on the need for an effective industrial strategy. I applauded the Government for adopting to some extent Labour’s mission-orientated policy approach and the Secretary of State outlined the challenges again today, but I am afraid that this is where the consensus ends. As I set out late last year, the detail and investment proposed in the industrial strategy White Paper simply did not match the surrounding rhetoric, and fell far short of what was needed truly to boost our economy. Indeed, a Government source was recently quoted as saying:

“It’s all perfectly worthy, who could oppose any of it? But there is no money, and even if there was, no one has a decent idea of what to do with it.”

So for the benefit of the House let us look briefly at a few key snippets again.

The Secretary of State touched on innovation. Raising total R&D investment to 2.4% of GDP by 2027 is certainly better than where we were, but the UK has been below the OECD average of 2.4% of GDP for years, and we are way behind world leaders who spend over 3% such as Japan, South Korea, Finland and Sweden. Why are we simply aiming for average? It must also be noted that the R&D investment of many of our regions and nations is also well below average. Over half of all research funding goes to the south-east, for example.

Photo of Eddie Hughes Eddie Hughes Conservative, Walsall North

I just cannot contain my anger: settle for average? We have some of the best universities on the planet in this country and investment by this Government in some of the most world-leading, cutting-edge technology. I visited Birmingham university and saw its work on quantum computing; it is absolutely world-leading. We are not average at all, and it is so dismissive of this country to say we would settle for average; we are excellent.

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means)

Order. The hon. Gentleman is not making a speech either, but I think Rebecca Long Bailey has got his point.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

The hon. Gentleman makes his point very passionately, but I do not think he has really listened to what I have been saying. We are certainly—[Interruption.] Please! If Government Members would listen rather than chunter, they might actually learn something.

We are far from average, as these comments from the Commission on Economic Justice illustrate quite articulately:

“We have vast ingenuity and creativity among our people, where enterprise and industry have deep roots going back to the Industrial Revolution. Many of the most important scientific discoveries in human history have taken place in Britain, advancing not only this country but also the entirety of humanity.”

We are far from average—I agree with the comments that the hon. Gentleman made in a, shall we say, quite haphazard and incoherent way—so why should we have to trail behind the world and settle for mediocrity from this Government in terms of investment in research and development?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I will make some progress, if I may, then the hon. Lady can make further interventions.

In relation to skills, we were promised about £500 million of investment. That is frankly pitiful and does not even begin to repair the damage done to the adult skills budget between 2010 and 2015, when over £1.15 billion was cut. With research by PWC finding that 77% of CEOs worry that skills shortages could impair their company’s growth, and with the CBI stating that 69% of businesses are not confident about filling their high-skilled jobs, the Government’s actions have done little to show that they are creating a workforce truly ready for our industrial renaissance.

On infrastructure investment, we were promised £31 billion of investment through the national productivity investment fund. Again, that is below the levels seen in other leading industrial nations. As TUC analysis shows, the sums promised will simply increase investment to just 2.9% of GDP, whereas the average spend on investment by the leading industrial nations in the OECD is 3.5%. It is also clear that the Government have made no attempt to halt the skewing of infrastructure spending towards London, which is due to get more transport spending over the next five years than the rest of England put together.

That brings me to local industrial policy. Labour has been clear on the need for a national industrial strategy, but we are also clear about the need to be regionally powerful and distinctive, with the resources to match, and to build on the already world-class universities and businesses in our regions and nations. Since last November, the Labour party has been convening round-tables in every region and nation of the UK to discuss what businesses in those regions need from an industrial strategy. Alarmingly, in one region I heard that the responsibility for formulating a local industrial strategy had simply landed on the desk of the local enterprise partnership’s chief executive, with no additional resources. Could the Minster confirm whether there is a team in his Department working on local industrial strategy or whether that is simply now the responsibility of LEPs? Last month, the Local Government Chronicle argued that the Government should put more resources into agreeing a local industrial strategy if they did not want to risk concentrating their efforts on improving the economy in just a handful of areas.

Photo of Rachel Maclean Rachel Maclean Conservative, Redditch

Further to the point made by my hon. Friend Eddie Hughes, I wonder whether the hon. Lady would like to visit the west midlands and meet the Conservative Mayor of that devolved authority, who has most certainly come together with a local industrial strategy. There are resources there, backed by this Government and their friends on these Benches, and that is making a real difference in our region. I would be happy to host the hon. Lady and enable her to speak to those successful businesses that are backing our Conservative Mayor.

Photo of Lindsay Hoyle Lindsay Hoyle Deputy Speaker and Chairman of Ways and Means, Chair, Panel of Chairs, Chair, Standing Orders Committee

Order. I just remind people that we have a lot of speakers in this debate. Short interventions, please.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I thank the hon. Lady for her comments, which are rather illuminating. I wonder whether she could share with the House how her region managed to secure those additional resources, so that we could let our colleagues know about it. That simply does not seem to be the case right across Britain.

Now, there was also a clear failure in business support. The Government’s proposals recognised that we need both public and private investment. Similarly, the Labour party has pledged to mobilise £250 billion of lending through a national investment bank and a network of regional development banks. However, the Government’s proposals fall far short of that. I said in the House last year that sector deals, a £2.5 billion investment fund incubated in the British Business Bank and yet another review into encouraging SME growth were simply not good enough. There was a clear failure to recognise the impediments that many businesses face when attempting to access finance and, indeed, there was a failure to protect businesses more generally.

Photo of Alex Sobel Alex Sobel Labour/Co-operative, Leeds North West

Does my hon. Friend agree that we lost a lot of support after 2010 when Business Link was shut and the regional development agencies were closed down? Business support has gone backwards. We need to take it forwards, but we have lost eight years.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I completely agree. Unfortunately, what I see as I travel around Britain is a bit of a postcode lottery in business support, and the Government need to address that urgently.

As I said, the Government failed to recognise the impediments facing many businesses and to outline any more general protections. That could not have been displayed more clearly than in the Government’s handling of the Carillion scandal, where key requests by business organisations to mandate 30-day payment to suppliers and instigate the use of project bank accounts were effectively ignored. The Government simply looked on as Carillion and other big players like it abused the businesses that they contracted with and passed on financial liability and risk down the supply chain. Labour pledged to mandate 30-day prompt payment and the use of project bank accounts for all Government projects, and I will be grateful if the Minster will do the same today when summing up.

Photo of Peter Kyle Peter Kyle Labour, Hove

My hon. Friend rightly points to the failures around the collapse of Carillion, which was a disaster for the many thousands of people who worked for it. The other organisations that failed were the regulators, so does she agree that we need a root-and-branch think about how we regulate the private sector, particularly when organisations are delivering public services at vast cost to the public purse?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I completely agree again.

Another issue that has been brought to my attention relates to sector deals. I understand that sectors are ready with proposals for such deals, but there is no clear structure or process in place for them to follow. For example, the rail industry has had a proposal for a sector deal ready since October, and the plan would deliver transformation across rail over the next 20 years, including new approaches that will cut the cost of digital signalling, addressing capacity issues and reliability. Perhaps the Minister will explain to the House what the delay is. How many proposals for sector deals has he received and how many have been agreed? Perhaps he will also commit to setting out in clear guidance, accessible to all businesses, how to go about pitching for a sector deal? Finally, will he update us on the implementation of the “Made Smarter” review? It was effectively ready to go, but I am sad to say that it received only a few cursory lines in the Government’s industrial strategy White Paper.

In short, Mr Deputy Speaker, as I am sure you have gleaned from my comments, the Government's industrial strategy, as drafted, is inadequate. While they now recognise the importance of an industrial strategy—well done—they are not prepared to use the full policy levers at their disposal to achieve it.

Photo of James Heappey James Heappey Conservative, Wells

Following the shadow Secretary of State’s consultations with businesses around the country, will she name just one that agrees with Labour’s plans for nationalisation?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I would not want to put on the record in public the names of any specific companies without their consent, but there has been resounding support for Labour’s approach to the industrial strategy, because we are prepared to invest in our country’s future and to provide the support that businesses deserve. I am afraid that I hear time and again from businesses that the Conservative party simply does not listen anymore.

Several hon. Members:

rose—

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I will make some progress as I am coming to the end of my comments.

One of the key responsibilities of any Government is to deliver the best quality of life to every single person in Britain, and this Government have failed to do that. Labour knows that key to that responsibility is the delivery of a truly prosperous, ambitious and locally focused industrial strategy. We see a fourth industrial revolution that, with bold and focused Government investment and support, presents an opportunity for Britain to harness the power of technological and scientific innovation to achieve higher productivity and high-paid, high-skilled jobs in an employment landscape that values and protects workers.

We also see the need for an economic model that deals with the big issues of our time, and the need to build an economy around missions so that we not only lead the world economically in these areas but deliver real social and economic benefits to our people. We recognise that industrial strategy must be a true collaboration between business, the Government and society, not a wild west that picks winners and losers, that pits region against region and that leaves businesses and workers to fend for themselves in a dog-eat-dog economy in which only the largest and most powerful survive.

That is the economy that Labour Members are intent on building but, sadly, it is not the economy that the Government are building. Although I am fiercely adamant that industrial strategy should not be political, from what I have seen so far from this Government, until we get a Labour Government we will not see an industrial strategy.

Photo of Kwasi Kwarteng Kwasi Kwarteng Conservative, Spelthorne 4:40 pm, 18th April 2018

I am grateful to be called in this important debate. I thought that I was coming here to speak about industrial strategy but, having listening to Rebecca Long Bailey, I realise we are having just another general debate on the economy in which we hear the same old Labour rants, gloom-filled prophecies and denunciations of Government policy.

Industrial strategy is one of the most interesting areas of policy and government, so it is frankly disappointing to see the Labour party using it purely as a political football, with its spokesman giving a ranting speech that, in my many years in this House, I have heard far too often—it was very dispiriting. I am sorry to have to introduce my short speech in this way, but her speech was a real missed opportunity.

It is exciting that, for the first time in a long while, we actually have an industrial strategy. The House will remember that there was no such thing under the previous Labour Administration. There was no coherent, focused strategy between 1997 and 2010, and it was exciting when the Government made their announcement last year.

On the reach of the industrial strategy, it is right to start with research and development, which is central to our forward progress. It was remarkable that the Lady opposite did not once use the phrase “research and development”, as far as I remember, although I will check Hansard tomorrow. It is was surprising in such a debate that we did not hear anything about research and development from the Opposition.

Research and development is clearly a big part of the Government’s strategy, and there is a £4.7 billion fund for such investment. We are also trying to create a more favourable environment. From where I stand, corporation tax cuts, about which we have been very consistent over the past eight years, have been an important lever—the Lady opposite talked about levers.

Photo of Kwasi Kwarteng Kwasi Kwarteng Conservative, Spelthorne

Forgive me. I am pleased that the hon. Gentleman has picked me up on that.

It is right that we look at these measures in the round. Reductions in corporation tax from 28% towards 18% have been of huge benefit in trying to create a culture of entrepreneurship and in trying to create growth.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

The hon. Gentleman will be aware that the Government’s Red Book at the 2017 spring Budget predicted that cuts to corporation tax would cost the UK Treasury £24 billion. How does that equate to growth?

Photo of Kwasi Kwarteng Kwasi Kwarteng Conservative, Spelthorne

The hon. Gentleman talks about predictions, but let us look at the past. We have cut corporation tax in every single year since 2010 but revenues from that tax have gone up. That shows exactly that the Government’s strategy is right.

Let us consider ideas about investment in our people and their education. When I go around schools in my constituency, I am struck by the fact that everyone is talking about STEM subjects—science, technology, engineering and maths. These subjects are being fostered and encouraged by the Government. The message is very much going out, right through the educational establishment and across schools, and it is very encouraging that that is happening. In my constituency, a number of schools are looking in particular to increase STEM participation among female students, which is very exciting. All these things are part of an industrial strategy. All these things will make the country more prosperous and more productive—they will drive future productivity growth. The Government are to be commended for taking an unusually medium to long-term view of the UK economy. Far too often in this House, we sling insults, with lots of abuse and all that, and we are very focused on the short term. It is exciting that in this industrial strategy we can think in terms of the medium and longer term.

On that note, infrastructure spending is very dear to my heart, as the Member for Spelthorne. Heathrow—the “H” word—is something that this Parliament will have to decide on, hopefully in the next few months, but certainly in the next couple of years. I have always been clear about my support for the third runway—or rather, I should say, the expansion of Heathrow. That is vital to drive forward the economy, productivity growth and prosperity, so we will have to tackle that.

On the broad range of infrastructure issues, investment in human capital with regard to STEM subjects, and research and development—

Photo of Norman Lamb Norman Lamb Chair, Science and Technology Committee (Commons)

I absolutely welcome the increased investment in research and development to which the hon. Gentleman refers, but does he agree that aiming to get to the OECD average in 10 years is not exactly ambitious for this country?

Photo of Kwasi Kwarteng Kwasi Kwarteng Conservative, Spelthorne

There are a huge number of ambitious initiatives in the industrial strategy. We are very good in this House—Opposition Members certainly are—at running the country down and pointing out shortfalls. However, as my hon. Friend Eddie Hughes pointed out, we have some of the best universities in the world, and we have the best talent, as the Secretary of State mentioned. The trick, and the ambition, is to try to marry some of that talent with commercial productivity, and that is what the Government are trying to do. That is an exciting development. When we look at world-beating innovation and scientific research, we see that this country is right at the top of any list. We should celebrate that and try to improve on it, and I fully accept the remarks that have been made about that.

I am delighted that we are debating this issue because, as far as I can recall, it has been a very long time since we have talked about industrial strategy, certainly in this House. We are putting to bed a lot of the ghosts of the 1970s. I know that the Labour party does not necessarily want me to talk about the 1970s, but they were a disastrous era, when the so-called “industrial strategy” collapsed into a slightly absurd game of trying to pick winners and of backing industries that were totally failing. It is a real relief to hear a plan from the Secretary of State that moves away from some of those old ideas. Anyone who thinks we will drive innovation, R&D and talent by nationalising vast swathes of the British economy—anyone who thinks that is a viable option—deserves some sort of break or respite, because they are clearly not thinking particularly straight. I do not think it is right to confront this country with threats of nationalisation and confiscatory taxation. I do not think that helps the investment climate, and it is not a good form of industrial strategy. I am delighted that we are discussing this, and I look forward to contributions from Opposition Members that will be made in a more constructive spirit than the speech we heard just a few minutes ago.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy) 4:49 pm, 18th April 2018

I always enjoy listening to the Secretary of State; I find him a courteous and well-mannered person who tries to put forward a positive view at all times. I find the same to be the case when I work with his team.

This long-awaited industrial strategy is welcome—it is good to see something—but it lacks the substance that we should see in a document that would make a meaningful difference for people, and it misses the mark on fairness and ambition. I hope to delight Kwasi Kwarteng, because along with my criticisms, of which I have many, I am going to try to be constructive and suggest some points that the Secretary of State might want to consider.

On inclusive growth, the Scottish National party has long argued that ideologically-driven measures not only are harmful to society, but actively hinder business development, growth and investment. Inclusive growth must be at the heart of any economic strategy, yet the Government continue their obsession with a failing austerity dogma, and nothing in the industrial strategy signals a change of direction. The Institute for Fiscal Studies has forecast that austerity could last until the mid-2020s, meaning that Scottish businesses, households and public services could ultimately face 15 years of austerity measures—and that amid the harsh realities of a hard Tory Brexit. The UK is facing the biggest increase in inequality since the 1980s, the worst wage stagnation in 70 years, which the IFS described as “dreadful”, and a huge increase in child poverty as a direct effect of tax and benefit reforms.

In the context of Brexit, the Global Future study was released just today. After looking into all four options available to the Prime Minister, it established that, in the long term, the amount available for spending on public services will fall. Under the so-called Norway option, there would be £262 million less a week. Under the Canada model, there would be £877 million less per week, while under a no-deal scenario, there would be £1.25 billion less per week. For the NHS, there would be 22% less funding available if there was a bespoke deal, and 9%, 31% and 44% less under each of the other options. Of course, it is not just about the public sector. As we have found from speaking to industry after industry and sector after sector, there are many concerns across the piece about the direction of the Brexit negotiations.

Unfortunately, Mr Sweeney is no longer in the Chamber, but I wish to reflect on what he said about Jack McConnell and the post-study work visa. I have a great deal of respect for Jack McConnell, who was and remains a far-sighted politician. He recognised that Scotland requires different measures when it comes to our immigration needs. For many decades, our problem has been one of emigration. We need people to come to Scotland. If we are to retain competitiveness and increase productivity, it is essential that Scotland’s immigration system is outward-looking and that it allows businesses to attract the necessary skills to boost growth and create jobs.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

I will give way briefly in a second, but I am mindful of what Madam Deputy Speaker and Mr Deputy Speaker have said about the time available for the debate. I shall make a little progress first.

The ability to attract workers to Scotland is a vital component of how we strengthen our economic advancement and tackle demographic challenges. Over the next 10 years, some 90% of our population growth is projected to come from migration, and that will be directly affected by Brexit dogma.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling

The hon. Gentleman is absolutely right that we need to attract people, new talent and high-end jobs to Scotland. I just do not know how the SNP Government wish to achieve that by having Scotland as the highest-taxed part of the United Kingdom.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

Of course, in a discussion about the future of EU nationals, many of whom are very worried about their future, the hon. Gentleman tries to make a rather petty political point. What he should acknowledge is that Scotland is far from being a less attractive place. Thanks to the huge council tax hikes in England, which are the largest in 14 years—bills are up by some 5.1%—people are actually paying more tax in England than they are in Scotland.

There are roughly 181,000 EU nationals in Scotland. Half the welcome net increase in the Scottish population between 2000 and 2015 has come from people born in EU countries, yet the strategy overlooks the likely impact of immigration restrictions on UK industry. If there were a time to pause and think about the effects of immigration on people and industry, it should surely be this week, when we have seen the manifest failings of the UK Government’s current immigration strategy.

Some sectors in Scotland, such as the thriving food and drink sector, are particularly reliant on the employment of EU nationals. Many businesses across Scotland and the UK employ and rely on EU workers, but the UK Government’s regressive approach to immigration has failed to take proper account of that fact. It is simply not possible to replace straightforward access to the EU labour market with domestic recruitment, and replicating existing immigration rules for non-EU nationals would place significant and unnecessary costs and bureaucracy on business. As has been noted, we have had two very clear cases of people in my constituency of Inverness, Nairn, Badenoch and Strathspey who have been contributing to our local economy being booted out by the immigration policy of this Tory Government.

Let us now turn to the ambition of the industrial strategy. If we really want to deliver affordable energy and clean growth, it is astounding that the UK Government have failed properly to recognise renewable energy in the industrial strategy. The devastating predicted drop in renewable investment of 95% between 2017 and 2020 should be a wake-up call that urgent action should be taken to secure a thriving future for this dynamic sector. Of course, during that period, we have also seen the near decimation of the solar industry.

Scotland is proudly in the vanguard for the development of renewable energy projects and investment. The SNP Scottish Government have set out ambitious targets for a transition to a low-carbon economy. In contrast, the UK Government’s erratic energy approach and the UK’s decision to leave the European Union have created uncertainty in the sector. The UK Government have responsibility for the damaging effects that we have seen.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

No, I will not give way. I did say earlier that I would limit the number of interventions. I have a lot to say on this subject, and I am wary about people taking too much time early in the debate.

Carbon capture and storage technology should play a leading role in tackling climate change, yet the UK Government have been complicit in stifling investment to develop this technology, as well as showing a lack of interest in developing and protecting jobs in Scotland. We wholly condemn the decision to cancel the CCS competition, which left Peterhead betrayed, resulting in a damaged relationship between Government and industry as well as a negative legacy on investment and consumer confidence.

We have heard warm words about new investment in CCS, and I welcome that, but what I say constructively to the Secretary of State is that one tenth of the previous required investment will not cut it in terms of making the difference that needs to be made. Sustainable energy has been a success story for Scotland in recent years, and the Scottish Government have set out an ambitious strategy for renewable investment with the powers at their disposal. We firmly believe that supporting long-term energy security and environmental protection should be a key priority for any responsible Government. A robust and sustainable strategy for energy security would not only assist the creation of a low-carbon future, but boost productivity, which has largely flatlined in the UK for far too long.

Scotland’s oil and gas industry still has a prosperous future ahead of it, but support is needed to maximise the longevity and success of this dynamic industry. The industrial strategy has failed to mention any new developments in the oil and gas sector. Although I understand that work is ongoing to develop a sector deal, we remain in the dark about what this might look like. Furthermore, Brexit again poses a risk to the development of this vital sector. The Oil and Gas Institute at Robert Gordon University in Aberdeen has said that the departure from the EU bloc is likely to cost the North sea oil and gas supply chain another £200 million a year in tariffs and export taxes. It is time for the Secretary of State to show the same level of support for the oil and gas sector that has been mooted for the automotive and aviation sectors.

The UK Government have ploughed ahead with costly and ineffective investments in nuclear energy projects such as Hinkley Point C at the expense of the rest of the industry. The UK Government must halt the agenda of unexpected, cherry-picked and damaging announcements and policies in favour of making this a thorough industrial strategy for the supply and demand of energy.

I know that I will please the hon. Member for Spelthorne by saying that the UK Government must now invest more in science, and in research and development. More than 50,000 international students study in Scotland, which is home to 19 educational institutions. The Scottish National party is incredibly proud of Scotland’s world-class university and higher education sector, and will support the necessary steps to ensure that it remains open, outward-looking and inclusive, yet the industrial strategy offers no assurances that this relationship will be protected. I again ask the Secretary of State to make his Government take the opportunity to do this.

Science, and research and development, have the potential to thrive further in Scotland. For example, the life sciences sector in Scotland could be worth £8 billion a year by 2025, according to industry groups. Although we welcome the sector deal for the life sciences, it is particularly worrying that it was agreed without any consultation with the SNP Government. That must not be replicated in any other sector deals.

On trade and inward investment, being a member of the EU means that Scotland’s businesses are operating within the world’s largest trading area of 500 million potential customers. The EU single market is eight times bigger than the UK’s alone. Moreover, trade with EU countries is becoming more important for Scotland. Since 2007, Scottish exports to the EU have grown by more than 25% to more than £12 billion in 2015. Although some steps are welcome, including the creation of an inward investment strategy, the mechanisms offered to overcome the challenges do not go far enough to alleviate the threat posed by the loss of EU single market membership and the trading partners that come with it. The Government must stop their reliance on rhetoric about trade and investment needs, take action to acknowledge the industry’s concerns and work constructively with the Scottish Government to maximise inward investment as part of a genuinely co-operative approach.

Members of the SNP have a shared goal: to make Scotland the best place to live, work and do business. Although the UK Government have overall responsibility for the economy, we will use all the powers that we can in Scotland to try to achieve this. The SNP has had a plan with trade and investment, manufacturing, innovation and employment at its heart for a number of years, and the recent enterprise and skills review aligns its agencies and resources behind those plans.

Since 2007, the Scottish Government’s central purpose has been to create a more successful country through increasing sustainable economic growth. That remains our ambition and is at the core of our single economic strategy, which was published in 2015. The strategy sets out the overarching economic approach of the Scottish Government and is backed by a series of policies to boost economic performance. We are supporting business and growing Scotland’s economy by focusing on investment, internationalisation, innovation and inclusive growth; building on the successes of our enterprise and skills agencies; and developing a system of support for Scottish businesses and the economy.

An overarching strategic board is now in place that will maximise the impact of the collective investment that we make in enterprise and skills development, and will create the conditions for delivering inclusive growth. We have also created a new enterprise agency in the south of Scotland with an interim economic partnership in place, backed with £10 million of investment. We have appointed Benny Higgins to lead the work to establish a Scottish national investment bank to support investment growth, among many other measures.

I have a lot more to say, but I am going to cut my speech short in order to aid progress. On fairness, we have put in place progressive social policies in Scotland. With the cost of living rising, our commitment to our social contract with the people of Scotland is more important than ever, and vital for economic prosperity for all. Conservative Members have referred to the changes to income tax. Indeed, this will make Scotland the fairest-taxed part of the UK, with the majority of taxpayers paying less than elsewhere in the UK. Compared with last year, everyone earning less than £33,000 will pay less tax in Scotland. By choosing a fairer path on taxation, we will protect Scotland’s cherished public services.

Given that the cost of living is rising, we will deliver a minimum 3% pay rise for public servants earning less than £36,500—75% of public sector workers—while those earning more than £36,500 will receive a 2% rise, and a cash cap will be put on increases for those earning more than £80,000. There is new investment to ensure that Scotland is the best place to do business and invest. We are investing an extra £100 million to deliver the best business rates package in the UK, increasing investment in business research and development by 70%, and making a £4 billion investment in vital infrastructure—and doing much more to build a fairer Scotland.

Finally, I have some asks for the Secretary of State. Will he take on board Scotland’s concerns about Brexit and its industrial strategy? The risks are real, as he knows, and they threaten the economy and people’s incomes. With his overarching responsibility for the success or failure of the UK nations’ economies, will he acknowledge that Scotland’s economy, like those of the other nations of the UK, is unique, and will he engage in a meaningful way with the Scottish Government on the industrial strategy so that we can maximise the benefits for all and support some of the key sectors that I have outlined? Does he recognise that we need inclusive growth to prosper and will he ask the Government to put an end to austerity policies that are damaging the lives of thousands of families across all the nations of the UK?

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland 5:07 pm, 18th April 2018

I am grateful, Mr Deputy Speaker, for the opportunity to speak in this debate, which is important for our country, for my constituency, and, indeed, for Cumbria. I thank the Secretary of State for his very positive comments, his clear pride in our country, and his pioneering ambitions, which I share.

The fourth industrial revolution will indeed bring much transformation, particularly in the green energy sector. I was pleased to hear reference to development and routes to market. The industrial strategy, the nuclear sector deal proposal and the northern powerhouse strategy all support the case that in future this country will require much more electricity for power, heating, lighting, and, increasingly, electric vehicles. The Government’s Gen III nuclear new-build programme at Hinkley Point C, Wylfa, Moorside, Sizewell C and Bradwell will only just meet the anticipated electric vehicle requirements of 18 GW of generation. By 2030, the total capacity required of the UK network could rise to over 150 GW, and with over 20% of our electricity currently provided by ageing, soon-to-be-decommissioned reactors, new-build on a grand scale is essential.

I absolutely agree that we need an energy mix. Last year, records were broken, with 15% of UK electricity provided by wind turbines. Nearly a quarter of all investment in European wind turbines took place in the UK. However, renewable energy, by its very nature, is intermittent. Renewable energy has lower energy density, requiring more sites to meet a given level of demand, and the plant sites are highly dependent on location. I therefore welcome the Government’s recent investment to boost nuclear fusion research at Culham in Oxfordshire with a further £86 million to set up the technology platform at the United Kingdom Atomic Energy Authority’s science centre. I also welcome the £56 million investment in research and development funding for new advanced modular reactor technologies, along with the launch of the next phase of the nuclear innovation programme, which is to include ambitious plans for reactor design and safety engineering, security and advanced fuels, helping to bring down the cost of new nuclear.

The UK nuclear new-build economy is worth around £75 billion. Globally, the nuclear new-build economy is worth around £1.2 trillion to 2035. To give that some context, it’s a heck of a lot of money. I do not want to give Members a maths lesson, but if we were to spend £1 million every day, it would take 3,285 years—indeed, to the year 5303—to spend that amount of money. To capitalise on that huge global economy, our industry and Government must collaborate. I commend the nuclear sector deal proposal, which refers to the need for financial and policy support to bring down the cost of new nuclear, to create the pipeline of projects, including large-scale generation plants and small and advanced modular reactors, and to reuse existing nuclear licensed sites.

The nuclear industry in Copeland has provided highly skilled jobs, electricity and worldwide recognition of excellence for more than 70 years. Being the first in the world to generate electricity comes with the early skills and knowledge in how to decommission—a key market for the UK, with vast potential across Europe and beyond. I see great potential for improved collaboration between civil nuclear and nuclear defence, and there can be no better area than the western coast of Cumbria for that collaboration to happen.

The legacy challenges being met at Sellafield, the low-level waste repository and the ground-breaking research and development taking place every day in the National Nuclear Laboratory, the Dalton Nuclear Institute and the 70-something nuclear supply chain companies in my Copeland constituency alone are world-leading. I have had the great privilege of visiting all those companies, which employ the 27,000 nuclear workers in Cumbria—around 40% of the country’s entire nuclear workforce.

Those skills and the products are being developed to deal with the incredible challenges in difficult working environments, but they are not realising their true value to this country and to UK plc. We are not yet delivering our industrial strategy potential. Virtual reality technology, robotic vehicles and amphibious robotic vehicles are being developed in my constituency and used across our armed forces and in many highly regulated environments. I want the pioneering spirit and ability to reverse-engineer complex systems to be further developed, with better support for companies to retain their intellectual property and explore export opportunities. We are anticipating Moorside and confirmation of the successor submarine programme, Dreadnought, to be built by BAE in my neighbouring constituency to the south, in Barrow.

Photo of John Woodcock John Woodcock Labour/Co-operative, Barrow and Furness

It is even better to be able to work with the hon. Lady in three dimensions than it was to work with her two-dimensional cut-out last month. Does she agree that, if the industrial strategy for Cumbria is to work properly, we have to see the south and the west as one centre of global nuclear excellence, and that the previous years of civil nuclear and military nuclear submarine programmes operating separately must be put behind us?

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

I thank the hon. Gentleman, and I could not agree more. He is absolutely right that there is so much more we can do to ensure that our civil nuclear and nuclear defence collaborate, which will benefit our skills agenda and meet recruitment challenges, particularly in the defence sector. I thank him for his comments.

We also have the National College for Nuclear to the north, in the neighbouring constituency of Sue Hayman. There is enormous potential for financial and policy support to develop the existing centre of nuclear excellence. I know that in Copeland, we can power the northern powerhouse and deliver the industrial strategy with Government support and collaboration. Thank you once again, Mr Deputy Speaker, for the opportunity to speak in this debate.

Photo of Adrian Bailey Adrian Bailey Labour/Co-operative, West Bromwich West 5:14 pm, 18th April 2018

I welcome this industrial strategy for two reasons in particular. First, it recognises that business productivity is vital for growth, competitiveness, our standard of living and the funding of our public services. Secondly, it acknowledges that the hidden hand of free-market competition is inadequate to ensure that market forces will deliver resources in a way that will both maximise our economic potential and meet our social needs.

I am less convinced that the strategy fully grasps and incorporates the challenges that come from recognising that our taxation policies, public spending priorities and regulation are all vital to our productivity. An industrial strategy is vital to ensure that they underpin and help, not hinder, our objective.

I acknowledge that balancing conflicting public priorities with the need to promote our productivity is not always easy. Different Departments have different priorities, but the success or failure of the strategy will ultimately depend on the ability of the Department for Business, Energy and Industrial Strategy to get other Departments to sign up to and promote the strategy’s objectives in their departmental priorities. My right hon. Friend Mr McFadden raised that issue, and the Secretary of State made reassuring noises, which was good, but I must mention one or two obstacles that have emerged since the strategy’s publication and cause me grave concern.

I represent a constituency that is heavily dependent on the success of the motor industry. Indeed, it has been a great success, with 70% of the cars that are manufactured in Britain—we are almost at record levels—exported abroad, including 56% to Europe. Productivity in that industry is vital to our national productivity and our balance of payments. Leaving aside the industry’s issues around Brexit, the ill-considered and hasty announcement by the Department for Environment, Food and Rural Affairs on the target abolition of diesel engines, however worthy, has caused havoc in the industry. The Society of Motor Manufacturers and Traders has aptly called it the demonisation of diesel. Arising from that, Jaguar at Solihull is laying off 1,000 workers and Vauxhall is closing 326 dealerships. That is hardly a ringing endorsement by other Departments of the strategy’s importance.

I fully understand the support for research and development and the extra funding for life sciences, but the strategy fails to recognise that success will depend on recruiting from schools students who take STEM subjects. There is an acute shortage of those, and although the problem is partly cultural, it is also due to the inadequacy of school funding for delivering the necessary courses and equipment.

We have some of the best universities in the world—I am not talking down Britain; they are terrific. However, to maximise their potential, they need to be able to recruit the best brains from all over the world. Unfortunately, as a result of the Home Office visa regime, there is currently a perception that Britain is no longer the best place to come for would-be students from other countries. We are taking a declining proportion of an expanding market. The Windrush scandal has exposed the culture of the Home Office, which does not seem to be signed up to the crucial objective that the strategy and our economy need.

I could mention many other aspects, but in the time available, I will finish by considering another element that I welcome: the independent strategic council—effectively, an Office for Budget Responsibility for the strategy. It is designed to develop and measure success and evaluate strategic performance. It could be crucial, but I emphasise to the Minister that it must not just be a monitoring body. It must be tasked with identifying blockages to performance not just in BEIS but in other Departments as well. How it develops will be a test of the Government’s commitment to the strategy. I suspect it will become more unpopular the more successful it is. It is a challenge, and I wish it well.

Photo of Mark Menzies Mark Menzies Conservative, Fylde 5:20 pm, 18th April 2018

I welcome this debate and the Government’s commitment to a new industrial strategy. This is a significant opportunity for us to chart a course for UK business, so that it does not merely adapt to global trends but is at the forefront, building new industries and leading global change. This is a broad debate, but the central theme is how the Government can work together with industry to shape a strategy that will develop the entire UK economy. Past Governments’ interaction with industry has not always been successful in that endeavour, and we are right to be sceptical when the state wants to get too closely involved with business, but this afternoon I would like to confine my remarks to two industries in which close Government involvement and support is not only welcome but vital for their continued success in this country.

In my constituency, just under 8,000 people are employed directly in the defence and nuclear sectors, and several thousand more rely indirectly on BAE Systems’ Warton military aircraft and Springfields nuclear fuels manufacturing sites for their employment. Both facilities can continue to function only due to the sensitive, strategically important nature of those industries, and if the Government are willing and able to provide support.

The UK’s military aircraft sector is worth £10 billion to our economy and provides directly tangible benefits through exports, employment, technological advancement and the development of skills. Furthermore, BAE Systems is capable of delivering a sovereign capability; in other words, the independent design and manufacture of military aircraft. We should and we must build our own military aircraft. I welcome the Government’s intention to launch the combat air strategy. It will look towards a sixth generation of military aircraft, which the Secretary of State for Defence recently announced. That is another demonstration of the Government’s significant commitment to delivery on behalf of those who work in our defence industry.

The Aerospace Growth Partnership, which has brought industry and Government together to tackle barriers to growth, boost exports and grow high-value jobs in the UK, published its aerospace industrial strategy in 2013. It has encouraged UK companies to co-operate more closely in addressing challenges that affect the sector as a whole, such as supply chain competitiveness, R&D and skills development. It contributed to a 30% growth in productivity during the period of the coalition Government, compared with just 3.3% across the rest of the economy. That demonstrates the huge benefits that a successful strategy can have for an industry.

We cannot stop here, however. In my constituency, a future fighter programme is required for BAE Systems to sustain its military aircraft design and development engineering capabilities. Currently, the Typhoon and F-35 programmes do not provide enough work to sustain the business that is crucial for the Fylde’s economy. We simply cannot rely on getting on with what currently exists. We have to develop and devise a strategy to deliver the sixth generation of future fighters. I urge the Government not to put off the key decisions on who should partner the UK in building those aircraft, and I go further in asking that they support a European deal, which has proved highly successful for both Typhoon and its predecessor Tornado, as a partner in designing and building the next generation of military aircraft. It is clear that only a European deal can guarantee that the UK plays a full part in all the design, build and maintenance phases of manufacture. A comparison between the Typhoon and F-35 projects demonstrates that clearly. Only then can we guarantee jobs throughout the full cycle of an aircraft’s lifespan, retain UK intellectual property and export overseas aircraft designed and built in the UK, sustaining high skilled manufacturing jobs for decades to come.

My hon. Friend Trudy Harrison covered the nuclear industry in great depth, but I would like to make an appeal to the Minister and to the Secretary of State, whom I have met on a number of occasions on this matter. It is vital that, as we roll out a new generation of nuclear generation capability in the United Kingdom, we retain the sovereign ability to manufacture nuclear fuel in this country. If we rely on importing nuclear fuel, not only does that put an enormous strain on the balance of payments, but at a time when we have the ability to manufacture nuclear fuel for any of the reactors that are currently being proposed for the UK’s new fleet, it would be absurd in the extreme if we were to turn our backs on that capability and instead outsource it overseas. We live in an uncertain world, and I would like to retain that sovereign capability here.

In conclusion—he says, turning to the back page of his speech—although there is much for the Government to consider in this field, the economic value and strategic importance of the skills provided by the defence and nuclear industries mean that they deserves their primary consideration. I commend the significant steps that have been taken towards setting out the plans that the Government have for both, but we need a concrete proposal for delivering a sixth-generation fighter aircraft that guarantees long-term sustainable employment in Fylde, and indeed across Lancashire and the north-west. We need deals to guarantee that nuclear fuel is manufactured in the UK, and we need to deliver them now if we are to safeguard and grow these sectors, and to sustain and then create jobs for the generations to come.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North 5:25 pm, 18th April 2018

I am very pleased to speak in this important debate, Mr Deputy Speaker, and to see that an industrial strategy for the country is at last back on the political agenda, although I have to say, without being unkind to the Tories, that we need a Labour Government prepared to make the right kind of interventions to make sure that it works.

The truth is that Britain has suffered from a long and disastrous period of deindustrialisation, which accelerated from the late 1970s and has left the country in a perilous economic state. We import too much, make too little and have suffered from a growing and now gigantic trade deficit primarily with the rest of the EU, and with Germany in particular. The industry that we have left is good—much of it is, anyway—and it has to be good to survive, but even then, our productivity levels are often too low and investment has been too little.

I am delighted that Peugeot has just announced plans to manufacture a new van at the Vauxhall plant in Luton, and we have to hope that this is a first swallow in a new industrial spring. I have put the case to motor manufacturing representatives that the recent depreciation of sterling relative to the euro should provide a sound basis for expanding supply chains in the UK manufacturing sector. That is true for other sectors, too. I was pleased that the head of Peugeot suggested just such an intervention at the time of the takeover of General Motors Europe, which included Vauxhall.

However, let me get back to the general case that Britain’s manufacturing base has been seriously eroded in the last decades and that we need desperately to rebuild the sector on all fronts. We have lost out massively in trade, and in manufacturing trade in particular. The figures are stark, and I shall quote just a few to make my point. The UK current account deficit in 2016 was £111.3 billion, or 5.8% of GDP. We in the UK are paying out to other nations the net figure of nearly £2,000 per person every year. The goods trade deficit in 2017 was even larger, at £138 billion. The UK’s overall trade deficit was £33.7 billion, but was a staggering £80 billion just with the EU. That was balanced only partially by our trade surplus of £39 billion with non-EU countries. At the core of this problem is the loss of much of our manufacturing capacity.

In 2017, the UK’s manufacturing trade deficit totalled £98 billion, £79 billion of which was with the EU and some £19 billion or so with the rest of the world. That disastrous yawning chasm in trade contrasts markedly with the performance of another major European economy—namely, Germany. In 2014, Germany had a current account surplus of $280 billion, contrasting with Britain’s current account deficit of $152 billion. We import four times more motor vehicle products from Germany than we export to it, which is just a simple illustration of the grotesque imbalance between our two countries.

Britain’s balance of payments deficit has been getting dramatically worse in recent years. In the crisis year of 2008, the deficit was £55 billion, but it rose to £113.6 billion in 2017. That is simply not sustainable and has to be addressed by Government action. A re-creation of our historical industrial strength has to be the key factor in rebuilding our economy for long-term sustainable prosperity. Central to that strategy must be a benign macroeconomic environment, and an essential component of that must be appropriate parity for sterling—an exchange rate that helps our domestic manufacturers and restrains manufactured imports. We must not price our goods out of foreign markets, above all the EU.

Britain’s economy has been dogged by sterling overvaluation for many decades, and it has chronically damaged our competitiveness. Devaluations and depreciations have relieved the economic straitjacket from time to time—in 1931, 1949, 1965 and, most significantly, after the disastrous collapse of the exchange rate mechanism in 1992. A big depreciation after the 2008 crisis saved the UK from complete catastrophe, but the pound-euro exchange rate crept up again in 2016, causing more economic damage. The post-referendum depreciation has helped our manufacturers, but the balance of trade is still in dire straits.

Britain’s primary exchange rate problem is with the euro—not just sterling’s overvaluation but the serious undervaluation of the euro. In my view the euro is, in reality, the Deutschmark in disguise—a Deutschmark with weaker economies bolted on to it, holding down its value and giving Germany an unjustified competitive advantage both against other eurozone economies and against Britain. Britain’s uncompetitive exchange rate has been our economic Achilles’ heel for a very long time. An appropriate exchange rate, sustained for the long term, is vital for a new industrial strategy to be successful and for a revival of Britain’s greatly diminished manufacturing sector. It is an essential component of many modern industrial strategies, but not a sufficient condition for success.

Finally, I suggest to Ministers and the Secretary of State, who is not in his place, that we need to re-establish Neddy—the National Economic Development Council—in which I was personally involved when I worked at the TUC in the 1970s. The disastrous collapse of industry took place after Labour’s Government. It was in 1979 to 1983 that we saw a fifth of manufacturing disappear—a crime for which the Tories must always bear their guilt. Neddy brought together Government representatives, business representatives, employers and trade unions in a forum for manufacturing, ensuring that its vital interests were advanced to the benefit of the country and the future prosperity of all its people. Neddy should be reinvented and recreated, but it should be made much stronger.

Several hon. Members:

rose—

Photo of James Heappey James Heappey Conservative, Wells 5:32 pm, 18th April 2018

It is good that we have an industrial strategy. It is not the command economy of past industrial strategies but an opportunity to put together a coherent plan to develop and support the industries that will underpin this country’s economy in the future, boost productivity and raise the skills needed.

In that sense, we should be very excited about what the Government have done. The four grand challenges within the strategy—artificial intelligence, clean growth, dealing with an ageing society and the concept of future mobility—are essential ingredients of that future economy, but of course each does not stand alone; all entwine with one another to deliver something that is quite exciting, not just from an industrial and economic perspective, but from a social perspective and in terms of how our communities and the future economy will operate.

Within that are the sector deals. It is right that the Government are seeking to reinforce the success of current industries that have done well for the UK, such as defence and aerospace and nuclear, and looking to use these sector deals to incubate our future economy too. To be clear, in putting together this industrial strategy, focusing on the areas as it does and in looking over the horizon—while not, I suspect, trying to pick winners but trying to understand what is likely to be the bedrock of a future economy—the Government must use the industrial strategy and everything around it to facilitate disruption as much as they can. I say that because, again and again, we see that the new businesses that really change the way we live, drive down costs for consumers and drive up customer service are the ones that have come in and disrupted old and lazy industries. These industries, often underpinned by exciting advances in automation, artificial intelligence and tech, are exactly the things we have the opportunity, through good policy making in the next few years, to unleash to the benefit of UK consumers.

If I may make a political point, such an approach is in stark contrast to the rather retrograde measures proposed by the Opposition, such as a return to nationalisation, as well as their outright fear of automation, suspicion of artificial intelligence and desire to regulate almost to the point of obsolescence the gig economy that underpins so many of the businesses particularly popular with the millennial age group. It is right that Conservative Members should champion this approach.

The way in which we will really unlock all those things is by recognising that the internet of things is a very exciting proposition for our nation’s economy. It will create smart homes, smart businesses and smart communities as the vehicles through which all disruptive businesses will undoubtedly succeed. There is a catch, because we need to lead on regulating for the data challenges that come with an internet-of-things economy, with data points all over the place bringing huge amounts of very personal data into the possession of private companies. From there, self-learning AI algorithms will be able to discern things about the way in which we live our lives that are really very intimate, and we need to protect consumers from that. However, that should not stop us being hugely excited about the opportunity for this future economy, and we should use the industrial strategy to let it off its leash.

Our colleagues in the Department for Business, Energy and Industrial Strategy should really look at the fact that the very many different funds they have brilliantly brought forward to address so many of the challenges for our future economy are all stand-alone ones. My final point is that I would very much like us to start to designate test towns in which we could trial such things at scale. When we are looking at the future of mobility, we will learn most only when we have, at scale, automated on-demand transport. When we are looking at how to support an ageing society, we will be able to do so only if we can see, at scale, how CivTech will actually support people in old age to live in their own homes for longer, with the savings that that will deliver to local health services. On clean growth, it is only when we can see, at scale, the advantages of a digitised, decentralised energy system—with storage, interconnected electric vehicles and demand-side response—that we will really understand such opportunities. I therefore hope that the Minister will look at the opportunity for test towns.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North 5:37 pm, 18th April 2018

I want to concentrate on one particular aspect of the Government’s industrial strategy, which is what seems to be their limited work to deliver carbon capture and storage projects, with the thousands of new jobs CCS could create and the hundreds of thousands it could protect.

Yesterday, I took part in a roundtable hosted by the Institute for Public Policy Research on northern energy industry, where I spoke about the northern energy taskforce and its recommendations on expanding low-carbon energy. The recommendations are ambitious, realistic, comprehensive and achievable, but they are also essential. The north has a huge advantage when it comes to expanding low-carbon generation: hydrogen production, in which Teesside is the bigger producer in the country; the development of energy storage; the opportunity to develop smart grids to support our industry and communities better; and, of course, carbon capture and storage.

I chair the all-party group on carbon capture and storage, and I know that both parliamentarians and people from industry have been very disappointed and frustrated at the lack of comprehensive action on this issue. Two years ago, the Government cancelled the CCS competition to establish one or two projects at the Humber and in Scotland. Since then, we have been trying to play catch-up, and while there have been encouraging words from the Government about possible investment, every moment of delay is a continued failure. Delays are also giving countries the opportunity to steam ahead of us so far that we will never reap the benefits that CCS can bring to the UK.

Carbon capture is vital not only to create and support industry, and to increase productivity and profitability, but in delivering the clean growth grand challenge, in that it would deliver a long-term sustainable future for key industries such as chemicals, steel, cement and oil refining, and it would enable low-carbon fossil fuels to continue to provide a clean, flexible source of electricity.

I was a little encouraged when the Government published their clean growth strategy in October last year, which includes the intention to develop a new approach to carbon capture and storage, but I am concerned about its ambition of deploying CCS at scale during the 2030s, subject to cost reduction. I am afraid we need much more than ambition when it comes to this issue; we need robust plans that deliver our capability and need. I am afraid that the 2030s will be far too late—long after other countries have steamed ahead of us and taken the opportunity.

I am proud to represent a Teesside constituency, and it is deeply frustrating for me to see the potential that we have to be a key CCS site while the Government talk a good talk but appear slow to real action. The Teesside Collective is based in my area, and one of its main projects is decarbonisation. The collective is industry-led. Those industries know what they are talking about, and they know what they can achieve given the right environment. Teesside’s concentration of industrial emitters and proximity to potential storage sites under the North sea means that the area is industrially and geographically suited to be the starting place for large-scale industrial decarbonisation in the United Kingdom. We also have the potential for a large-scale CCS-ready power station, which would add huge value to any project in the area.

While I trust that I will always be Teesside-focused, it is important for us also to focus on developing CCS in other countries and regions, such as Scotland, Yorkshire and Humber, the north-west and Wales. A number of potential projects are already being considered, and the Government need to create a framework in which they can be successfully delivered.

CCS is also an essential part of the lowest-cost route to achieving the UK’s climate change targets. The Committee on Climate Change has said that the Government should not even be considering any scenario to meet the 2050 target that does not include CCS. If we are not to be left behind, we need the first CCS projects to begin operating in the 2020s. While the £100 million to support that work is welcome, the Government will need to do much more to ensure its success. The development of low-carbon industrial clusters would constitute a major upgrade to UK infrastructure for a decarbonised economy, supporting regional growth at a time when the outlook appears shaky at best.

Sadly, by the time we see the report from the Cost Challenge Taskforce we shall be three years behind where we should have been. The time is now. I believe that the Minister for Energy and Clean Growth, Claire Perry—who visited Teesside recently—does “get” CCS, but we need her to bang on the doors of the Treasury and come up with the money that is needed to push these matters further forward.

It is vital for the deployment pathway to set out a strong and clear approach to CCS that will enable the first projects to begin operating in the 2020s—and that is 10 years earlier than the Government appear to be planning. Our industries need to know that the Government are on their side, and are prepared to work in partnership and share the financial risk as CCS is developed.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby 5:42 pm, 18th April 2018

It was a pleasure to hear the Secretary of State, in his opening remarks, speak of the importance of a strategy to help businesses to create quality, well-paid, sustainable jobs. In any walk of life, we need a roadmap to tell us how to get somewhere. That can be achieved through a strategy that involves both playing to our strengths and attending to our weaknesses. The Secretary of State was very frank about the weaknesses that we face, one of which is the issue of productivity. I want to focus on the five foundations for improving productivity: ideas and innovation, people, infrastructure, the right business environment, and the right places.

Companies and organisations are developing those themes at Ansty Park, in the east of my constituency. The site has been visited by the Secretary of State himself, and the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend Richard Harrington, will recall doing so as well. It came into its own with the development of the Manufacturing Technology Centre, one of the first Catapult centres. I am disappointed not to have heard any acknowledgement from Opposition Members of the role of those centres. The centre will develop ideas, and will enable us to turn discoveries—and we have been great at discoveries—into commercial products. It is changing the landscape of manufacturing. When I first visited it just after my election in 2010, it was a building site; now it has 65 industrial members working in new technologies.

We will also exploit innovation and ideas at the High Temperature Research Centre at Ansty Park, which is the result of a collaboration between Rolls-Royce and the University of Birmingham and a £60 million investment. It measures 62,000 square feet, and provides a unique casting, design, simulation and advanced manufacturing research facility focusing on aerospace.

A newcomer to the site is the London Electric Vehicle Company’s factory, where an investment of £250 million has been dedicated to the construction of the electric taxis that are now on the streets of London. It will provide the clean growth that the industrial strategy is intended to achieve, and will be supported by the £400 million investment in charging infrastructure. The London EV Company’s new factory at Ansty has been a real success story.

Over the road from the London Electric Vehicle Company is Fanuc, manufacturer of the widest range of robots in the world, and if we want to increase our productivity through investment we will do so through this new industrial landscape. Robots have applications from micro-electronics assembly to the forging of precision aerofoils for jet engines.

We will also create our industrial growth and development through working on our people. The MTC has a state-of-the-art Lloyds bank training centre, opened in 2015 by the former Business Secretary my right hon. Friend Sajid Javid, and was set up to address the skills gap in UK engineering. Between 2015 and 2020, 1,000 apprentices will be trained in the latest technology.

Importantly, the MTC also engages with the community to support young people into engineering and STEM subjects. A year or two ago, I was with 30 local schoolgirls from Bilton School in my constituency who received the chance to have a hands-on training challenge at the centre.

The site continues to develop. AVL is due to open a new test and engineering centre this spring. It will be operating state-of-the-art “testbeds” for advanced powertrains, including hybrid and battery electric vehicles. If that is not cutting-edge, advanced technology, I do not know what is.

The site will be added to again very shortly by Meggitt, which has recently been given planning consent by Rugby Borough Council. It is important to recognise the role local authorities can play in achieving objectives: a proactive local authority responsive to new development can achieve these things. Meggitt is developing a £130-million international aerospace and defence engineering centre to serve as a hub for the next generation of world-class innovation in aerospace thermal management technology. That will consolidate Meggitt’s presence in the business and provide a further 1,000 jobs in the area.

I am proud of what is happening in my constituency. It exemplifies what we mean by an industrial strategy, providing an environment for both new and well-established companies to help make the UK a more attractive place to start and grow a business, with a stimulus provided by our link to the first-class research and development opportunities at the Manufacturing Technology Centre.

Photo of Jack Dromey Jack Dromey Shadow Minister (Work and Pensions) (Pensions) 5:47 pm, 18th April 2018

Erdington is rich in talent, but is one of the poorest constituencies in the country. It is, however, blessed by the industrial belt that stretches along the M6, at the heart of which is the giant Jaguar plant. Back in 2010, I was involved with the new management brought in by Tata to turn around the plant from closure. It has gone from strength to strength since and has doubled in size. Just up the Chester Road from the Jaguar plant is GKNGuest, Keen and Nettlefolds—a 259-year-old company which, on the back of the success of Jaguar, has gone from 500 to 800 employees. It is at the heart of a motor manufacturing cluster in the midlands—a world-class success story that is in part built on foundations that we laid in government with the establishment of the Automotive Council.

However welcome some of the things said today about industrial strategy are, developments in relation to both Jaguar Land Rover and GKN potentially make a mockery of that talk. The Secretary of State is a good man with whom I have worked over the years, such as on the Heseltine initiative in 2012 and on securing investment for the new low-emission engine plant in Wolverhampton in 2012-13, but the simple reality is that Jaguar Land Rover is facing mounting problems with the combination of uncertainty over Brexit on the one hand, and the grotesque mishandling of the transition from diesel on the other.

We have gone down from 3,000 workers in the Jag to 2,200, with no production for six weeks, and now 1,000 are being laid off at Solihull, with 360 workers being transferred from the Jag over to Solihull. Little wonder that when the workers were briefed on Monday, they were described to me as being “numb.” So, too, were the GKN workers when I was with them in the Driveline plant on that bleak day of 29 March with the takeover by Melrose. It was a rerun of what happened over Cadbury. I led the battle against the Kraft takeover of Cadbury, when a debt-laden American multinational took over a successful and profitable British icon because 31% of the shares were bought by hedge funds.

Exactly the same thing happened over GKN. We had hoped, after Cadbury, that progress would be made on a new corporate takeover regime. We had discussions with the Government at the time about freezing the share register at the time of a bid, for example, and about a proposal for shareholders needing to have held shares for six months before they could vote. We discussed a whole range of potential mechanisms, including a public interest test, but little progress was made and GKN was ultimately left open to a predator, Melrose, as vultures such as Elliott—described as the world’s most ruthless hedge fund—circled. They were utterly cynical in their approach. They were there for a matter of weeks in a company with a 259-year-old history, and their aim was simply to make a quick buck on the back of that corporate takeover. Theirs was a fleeting interest, and it was fundamentally wrong.

I welcome some of the contents of the industrial strategy, but I hope that the Government will listen to the wise words of the shadow Secretary of State about going yet further, crucially on Jaguar Land Rover and on the lessons of GKN. On Jaguar Land Rover, the transition to electric has been called a just transition, and all parties should be involved in the next stage: the road to zero. Crucially, that will need support from the Government—for research and development, for example—but that has been nowhere near good enough so far. Investment in infrastructure will also be needed. In parallel to that, I have to say that there must be no more playing to the gallery, exciting fears in the meantime, by the Secretary of State for Environment, Food and Rural Affairs. His statements on the transition from diesel have been at the heart of the collapse in diesel car sales by 37%, despite the fact that the new diesel technology is infinitely better for the environment than the old.

On GKN, I still hope that the Government will use their power under section 58 of the Enterprise Act 2002. If they do not, the guarantees given thus far will simply not go far enough. The most immediate task for the Government is to ensure that they play their part in extracting cast-iron guarantees for the future. They must then look towards introducing a Cadbury-GKN law. There must be no more leaving it to the market, red in tooth and claw—what the Daily Mail called “an abuse of capitalism”. Crucially, at the centre of our industrial strategy, in order to achieve a long-termism of approach, we need a new corporate takeover regime that is in the best interests of British industry, British investors and British workers. That is what our country needs, and it is what we look to the Government to deliver.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes 5:52 pm, 18th April 2018

It is a pleasure to take part in this important debate. The industrial strategy is an important document that contains crucial objectives relating to skills and young people. The importance of the skills agenda is particularly demonstrated in my own area, where the offshore renewables sector is playing a major role in the area’s economic expansion. Indeed, the Government have referred to the Humber estuary as the “energy estuary”. We have a number of important training facilities, such as the CATCH facility in Stallingborough, which was set up as a joint operation funded by the Government, local authorities and industry. The Secretary of State himself has visited the Grimsby Institute, where he launched a previous skills initiative. Leaving the European Union provides us with many opportunities, but we need to invest in research and development, and we also desperately need to invest in our infrastructure. I am pleased to say that the Government have taken that matter particularly seriously.

A crucial element in the document is regional growth, and I know that the Secretary of State is particularly committed to that. He has visited the Grimsby-Cleethorpes area on a number of occasions, and I know that he is familiar with the problems and the opportunities that exist there. He will, I am sure, have taken note of the importance of the seafood processing industry in the area, as well as the offshore renewables sector and the chemicals, ports and logistics industries. We also have two of the country’s six oil refineries. Cleethorpes, being the jewel in the crown of the east coast, is very important for tourism. I can see that you are eager to visit it yourself, Mr Deputy Speaker. You would be most welcome, and you would enjoy the best fish and chips in the country.

I am sure that Ministers would be disappointed if I did not mention page 226 of the document, which refers to the Greater Grimsby town deal. In fairness to Governments of both colours, there has been much investment in our cities and city regions over the past 20 years, but that has emphasised the relative decline of some of our smaller towns in the provinces, particularly our coastal communities. To combat that, the local authority, the local enterprise partnership and, crucially, local industry have come together to create the Greater Grimsby project board, which has put forward several important proposals encompassing a town deal that would boost the area tremendously, reducing the differential between our cities and towns. The Prime Minister herself has referred to “left behind” towns, and our coastal communities sadly fall into that category.

As I mentioned, the project board is led by the private sector, but it includes the local enterprise partnership and local authorities. We have put detailed proposals to the Government, and they are grinding their way through the various Departments, but the Department for Business, Energy and Industrial Strategy is primarily responsible for town deals. Our most recent meeting was with Lord Henley, who has now taken over day-to-day responsibility for the strategy, and I urge the Minister to give us some indication of when we can expect a decision on the deal. At that meeting, it was suggested that we might get a decision by June or July. I suspect that the Minister will not want to give a definite date today, but I urge him to push things forward as quickly as possible.

The industrial strategy clearly presents huge opportunities for areas such as northern Lincolnshire. The shadow Secretary of State, in fairness to her, did acknowledge that even a future Labour Government would not go about picking winners, but it was rather depressing to hear Kelvin Hopkins turning the clock back to the days of the Neddy—I think there were even “Little Neddies”—with prices and income falls and the winters of discontent. All that could come again if, sadly, the Labour party comes to power.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I remember the 1970s very well, but it was between 1979 and 1983 that we saw a collapse. We had a Tory Government who were determined to introduce the new free market world, which saw British industry almost disappear.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

The hon. Gentleman may or may not be correct in his analysis, but the reason why we had a Conservative Government in 1979 was due to the collapse of the economy during the late 1970s. There had to be a big shakeout and an acknowledgement of the failed policies of the ’60s and ’70s, so he should reflect on the fact that this industrial strategy is about the future and how we can become a global trading nation in the post-Brexit economy.

In conclusion, I hope the Minister will acknowledge my point about the town deal, which is the main point of my contribution.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon 5:58 pm, 18th April 2018

The British economy can best be described by the saying “all that glitters is not gold.” At first glance, things appear relatively rosy with modest growth, unemployment down and moderately stable consumer confidence. However, if we scratch just below the surface, a deeply troubling picture emerges, and it is a story of a productivity crisis, precipitous personal debt, a dangerous overreliance on financial services, and a gaping chasm between London and the rest of the country.

I was therefore pleasantly surprised when the Prime Minister announced, in that fateful speech on the steps of 10 Downing Street, her intention to develop an industrial strategy. Wherever we look in the world, the successful countries are the ones with a Government who been an active partner of business, using their scale, and convening capability and financial firepower, to create long-term platforms for national success. If we are to succeed as a country, we need a Labour vision of government. We need a Government who enable people and businesses to make the most of their talents, who are a true and proactive partner of business and industry, who are prepared to address the structural weaknesses of the UK economy, and who are ready to tackle the causes of the malaise, rather than simply tinker with the symptoms.

There can be no doubt that the most important single cause of the huge imbalances that afflict our economy is the shrinking of our manufacturing base. In the 1970s, manufacturing accounted for around 30% of our GDP; today it stands at barely 10%. The knock-on effects of that decline have been profound. Thanks to the erosion of our manufacturing base, we have seen wealth and resources sucked into the services sector, which has been great for London and the south-east and devastating for the rest of the country.

We have seen a wholesale shift from production into consumption. We have seen a catastrophic collapse of our productivity. We have seen a massive increase in our trade deficit. And, perhaps most damaging of all for the future of our country and our politics, we have seen a fundamental sense of the communities in our industrial heartlands being left behind.

A proper industrial strategy should focus relentlessly on redressing those dangerous and deeply damaging imbalances. A comprehensive, broad-based strategy would spark a modern manufacturing renaissance across the length and breadth of our country, but what we have seen from this Government is an approach to industrial strategy that is set to entrench rather than address the imbalances. Rather than committing to a broad-based industrial strategy that supports our foundation industries and puts the foundational building blocks in place for the manufacturing base, our Government are instead intent on focusing on going into the stratosphere of space research and life sciences.

Research from Sheffield Hallam’s centre for regional economic and social research shows that the focus of the Government’s industrial strategy challenge fund is on sectors that disproportionately benefit London and the south-east. By focusing R&D on an exceptionally narrow range of sectors—healthcare and medicine, robotics and artificial intelligence, batteries, self-driving vehicles and space tech—we will end up only really benefiting the so-called golden triangle of London, Oxford and Cambridge. That is a blatant and outrageous abdication of the Government’s responsibility for the entire economy, not just for those sectors that may have certain pockets of political support.

Exhibit A in the Government’s failing strategy is its approach to the steel industry. The town I represent is the hub of our steel industry, and the Port Talbot steelworks is the beating heart of my community in Aberavon. Last September—almost eight months ago—the Government received the steel sector deal, a comprehensive plan for how we can turn the British steel industry from one that is surviving into one that is thriving. The plan would involve an additional £1.5 billion of investment over the next five years, increasing production by 40%, creating 2,000 more jobs, training 200 more apprentices a year and increasing investment in R&D. The plan has the support of companies and unions, but it has sat on a shelf, gathering dust, for eight months.

I implore the Secretary of State to confirm today when the steel sector deal will be approved, and I urge him to stop treating us like children or idiots. If the Government are giving up on the sector deal, and on the steel industry, Ministers should come clean today and say that from the Dispatch Box.

A successful industrial strategy cannot do everything for everyone, but it must do something for everyone. As things stand, this industrial strategy fails that test. If the Government really want a broad-based industrial strategy, they have to start with a broad-based manufacturing renaissance, and that starts with delivering a sector deal for the steel industry.

Photo of John Lamont John Lamont Conservative, Berwickshire, Roxburgh and Selkirk 6:03 pm, 18th April 2018

I welcome today’s debate because the UK Government’s industrial strategy is hugely significant and could be transformational for all parts of the United Kingdom. It is fair to say that the industrial strategy has been welcomed by a huge variety of organisations, including organisations that are not common bedfellows. The CBI is positive about the strategy and the TUC calls it “an important step forward.”

There is cross-sector acknowledgement that the industrial strategy is a serious piece of work that is genuinely trying to identify and address the challenges that our economy will face in the next few years. It is the role of Government to support and develop industry and to pursue economic growth, and I am broadly in favour of the non-interventionist but highly engaged approach. With this industrial strategy, we have gone right back to basic principles, and the UK Government have identified five foundations that are essential for a successful economy. These five foundations show how in Scotland the industrial strategy will need to be implemented by both the UK and Scottish Governments. Devolved government has control over significant parts of the five foundations, including skills, transport and housing. I am pleased that the UK Government understand that point and have repeatedly acknowledged that it is vital to work with the devolved Administrations in order to implement the industrial strategy. I hope that the Scottish Government—I note that Scottish National party Members are currently absent from the Chamber—are able to accept this commitment at face value and work constructively with their counterparts here at Westminster.

I would like to focus my remarks on what has been identified as the fifth foundation: places. I think we all accept that in order to have a productive economy, we need prosperous communities, but what does that mean in practice for the United Kingdom? The industrial strategy identifies four challenges that need to be addressed in order to put the UK at the forefront of industries of the future. These are understandably forward-looking, but I do think it omits a current challenge: the dominance of London in the UK’s economic output. I would like to make it clear that the success of our nation’s capital is something of which we should all be proud. London is a truly global city, an economic powerhouse and a cultural masterpiece. Its contribution to the UK goes well beyond the fact that it accounts for 22% of our GDP. We will not drive our economy forward by holding London back, but it remains the case that London dominates our economy in a way that is almost unique.

That matters because it has resulted in an imbalance in our nation’s economy. The domination of London has created a self-perpetuating cycle where new investment flocks to the city because that is where everyone else is. This has created wealth and economic growth, but it has also been centred on the one city.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

Northern Ireland has benefited from IT and digital tech industries to such an extent that our region is equal in this to London in the delivery of jobs and opportunities.

Photo of John Lamont John Lamont Conservative, Berwickshire, Roxburgh and Selkirk

The hon. Gentleman makes the point well.

As a Scottish MP, I think London’s domination has to change, not because I think Scots look enviously at London, but because rebalancing our economy and spreading power across all parts of the United Kingdom strengthens our bond in that Union. The Conservative manifesto last year pointed out:

“For our civil service and major cultural bodies to claim to be UK institutions, they need to represent and be present across our whole United Kingdom.”

Let us push ahead with the proposal to use Brexit as a catalyst to create more civil servant jobs outside London. As we are talking about the industrial strategy, why not, for example, base the Industrial Strategy Council outside London? Let us focus on bringing the economy outside London up to speed. The city deals for Scotland, including the proposed Borderlands growth deal in my area, are part of this, but we need to do more. The industrial strategy represents an opportunity to drive forward the economy of the UK as a whole, and I hope that Scotland’s two Governments can work together with this common aim.

Several hon. Members:

rose—

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

A four-minute limit now applies. Of course Members are free to interrupt each other if they wish, but it will, to put it bluntly, screw up somebody’s chances, and that would be a pity.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy) 6:08 pm, 18th April 2018

The Secretary of State, in his opening remarks, made several mentions of UK success in terms of Nobel prize winners, so I just want to remind the House that Kilmarnock Academy, in my constituency, is one of the few schools in the UK that has educated two Nobel prize winners.

I welcome the publication of the industrial strategy and the fact that the original consultation document recognised some of the failings in UK industry, particularly on productivity. However, the strategy has a glaring omission regarding the challenges—Brexit. The industrial strategy seems to pretend that Brexit is not happening, even though the UK Government’s own analysis shows it will have an impact on the UK economy. We need to know what is going to happen to R&D collaboration and to R&D funding, and we need to take action to mitigate any impact.

We also need to know what is going to happen to other funding streams, such as European regional development fund moneys. In my constituency, industrial engineering units are constructed with the aid of the ERDF moneys. What is going to plug that gap in future? What are the UK Government going to do to provide that assistance to the areas that need that development money? I welcome the industrial strategy’s principles, including the sector deals but, as my hon. Friend Drew Hendry said, the Scottish Government need to be involved and properly consulted on them. They were not consulted on the advanced life sciences sector deal. If they were properly consulted, I am sure we would already have an oil and gas sector deal.

Let us look at what the UK Government have done in recent years to support the oil and gas industry. In the spring 2016 Budget, they reduced the supplementary charge to 10%. That was welcome, but the £1 billion that that cost the Treasury was only a third of the inheritance tax giveaway to millionaires. That shows the Government’s real priorities. In the spring 2017 Budget, there was a paragraph promising another discussion paper. We are still awaiting the appointment of an oil and gas ambassador. In the November 2017 Budget, the transferable tax history mechanism was a welcome measure for the oil and gas industry, but it is predicted to bring an extra £70 million into the Treasury, so it is hardly a concession; it is actually a positive move. Actions are always stronger than words, and so far the UK Government have failed to provide the broad shoulders that we were told about. In the same period, they pulled £1.5 billion from the carbon capture and storage scheme in Peterhead.

Another innovative and possibly world-leading energy project is the proposed renewable energy plant at Grangemouth to replace the existing end-of-life gas turbine station. The new proposals include biomass, which means the project needs access to renewable heat incentive funding and contract for difference funding. Right now, however, the UK Government are seeking to cap the RHI funding available to any scheme at 250 GWh, which would make the project completely unviable. I urge the Secretary of State to do everything he can to make sure that the project goes ahead.

The industrial strategy rightly highlights offshore wind development via the catapult, which is welcome. With onshore wind currently at £57.50 per MWh, we clearly need to continue in this direction, because that provides much better value for money than Hinkley, at £92.50 per MWh. I repeat the plea for onshore wind projects to be allowed to bid in future CfD auctions. That would reinvigorate the industry and provide a boost to engineering and fabrication companies throughout the UK.

Another sector deal that I welcome is the one for the construction industry, which will provide high-paid jobs, but, as I highlighted earlier, the £24 billion giveaway in corporation tax would be better used in the construction industry and would double the money available for the national productivity investment fund over this Parliament. I have one more plea: we really need to see the Ayrshire growth deal happen.

Photo of Jack Brereton Jack Brereton Conservative, Stoke-on-Trent South 6:12 pm, 18th April 2018

I am grateful for the opportunity to contribute to this debate. This is an exciting time for British business, particularly the UK ceramics, advanced manufacturing, digital and logistics industries that do so much to create jobs and prosperity in Stoke-on-Trent.

I am delighted to have visited several businesses in the city over the Easter recess: Don-Bur, which makes some of the most technologically advanced trailers for lorries; Michelin, which is leading the way with retreads for tyres; and Midway Manufacturing, which specialises in bespoke electronics and, I am pleased to say, has expanded and just relocated to Longton in my constituency. Stoke-on-Trent is on the up, and it is businesses like those that are driving the resurgence of our great city—as, indeed, they are driving economic growth throughout the country, underpinned by the internationally competitive tax and regulation framework delivered by this Government.

Stoke-on-Trent is increasingly seen as an attractive place for businesses to locate and invest. From my recent Adjournment debate, the Minister will know about my personal ambition to see Stoke-on-Trent’s ceramics economy grow to an annual £1 billion in gross value added. Now is the time for the Government to help to underpin and realise that growth by building a sector deal for the ceramics industry into our modern industrial strategy. I am committed to the creation of a national research centre—indeed, a dedicated international institute for ceramics—in the authentic world capital of ceramics, Stoke-on-Trent.

Increasingly, advanced and technical ceramics are being used throughout the global economy. We all know about tiles, crockery and household ornaments, but ceramics are also used in thermal barrier ceramic coatings for jet engines, in ceramic armour, and even on the space shuttle. They are used in semiconductors for electronics, and in healthcare and many other industries. Our industrial strategy must ensure that it is global Britain that harnesses the power of the 21st century advanced ceramics manufacturing industry. A British, authentically place-based research centre for ceramics, focused on Stoke-on-Trent, will be a magnet for exceptional research, design and talent.

A sector deal for ceramics can realise the potential for enhanced skills, education, apprenticeships and training. This will keep UK ceramics internationally competitive as a world leader in products and technology, and a driver of British exports. Although the world of ceramics defines Stoke-on-Trent—we are the Potteries after all—we have a wide range of vibrant industries to encourage and support. Our local economy is more diverse than ever before. As I said at the beginning of my speech, logistics and bespoke electronics are part of our economy, as are industries ranging from retail to advanced technical engineering through to bespoke digital security. I totally agree with what my hon. Friend Trudy Harrison said about the potential of modular nuclear reactors. I hope that they can be at least partly manufactured at Goodwin International in Stoke South.

The industrial strategy needs to have an eye on the skills needed for these industries to emerge, grow and flourish—not just academic or technical qualifications, but personal skills such as innovation, enterprise, flexibility, and resilience. This is all about making our communities, our city and our country more productive and more prosperous, and ensuring that everybody is able to access these opportunities to live up to their full potential.

Photo of Paul Sweeney Paul Sweeney Shadow Minister (Scotland) 6:15 pm, 18th April 2018

Although it is easy to adopt a declinist outlook about Scotland’s long-term industrial trajectory over the past century, it is important that we do not view the loss of the once iconic staple industries of shipbuilding, steel and coal, which had their genesis in the first industrial revolution, as part of a terminal decline of our manufacturing capability. Indeed it is a sector that we urgently need to reposition at the heart of our economic future in order to maximise our country’s productive potential.

Currently, Scotland’s productivity ranks in the third quartile of OECD countries, and although productivity growth has been better than the UK average since 2009, the rate of productivity growth in Scotland lags behind many of our competitors. To catch up, Scotland must expedite a significant increase in that rate. Achieving the required growth would be truly transformational. Increasing Scotland’s productivity to the level of the top quartile of OECD countries would grow GDP by almost £45 billion—an increase of 30%—and annual average wages could be more than £6,500 higher. That would be an increase of 25%, which is a huge prize.

It is in Scottish manufacturing that we can find the prime mover towards any significant realisation of that opportunity for enhanced productivity. The firms in that sector continue disproportionately to drive innovation, investment and international exports.

On some measures, Scotland’s innovation performance is improving. However, performance still significantly lags behind many other countries on key innovation measures. Despite some signs of improvement, Scotland’s research and development performance continues to be below that of the UK and most OECD countries. Although business enterprise R&D increased by 45% to £905 million per annum between 2010 and 2014, which was faster than the OECD and UK average, Scotland’s performance is near the bottom of the third quartile of OECD countries. To reach the top quartile, Scottish R&D investment would need to be 200% higher—an increase of £1.8 billion. The need to close that gap is critical. Although 2,790 businesses in Scotland invested in R&D in 2014—an increase of 23% since 2012—R&D remains heavily concentrated, with just 10 businesses accounting for 45% of the total investment in R&D in Scotland. Almost 70% of R&D investment is by non-Scottish-owned businesses.

Labour plans to support the growth of Scottish engineering and manufacturing in a number of ways. It would create a national investment bank that would see £20 billion of capital structured in Scotland for industrial strategy and investment. The SNP has recently announced the creation of a Scottish investment bank, but it will be capitalised to the tune of a mere £322 million. If the SNP is so inspired by our policies, it might as well do it properly and ensure that the Scottish investment bank is appropriately and properly scaled so that funding is made available in this vital area.

It is also Labour policy to set up a national transformation fund, which would see £40 billion of capital investment in Scotland, in areas such as infrastructure and house building, creating jobs and boosting the economy. In total, Labour policy in Scotland would see £70 billion of investment in industry in Scotland. That is the scale that is needed—it needs to be to the tune of billions of pounds of investment, not just millions of pounds.

The country stands on the cusp of a great disruptive opportunity with a new industrial revolution emerging. It is therefore imperative that the nation’s industrial base is encouraged to adopt the characteristics required to advance growth by being more innovative and international, while investing adequately in the most advanced plant and processes. These are not alien ideas; they are some of the very same ones that originally drove Scotland’s capacity to lead the world in industrial development through the 19th century.

We must seize the opportunity to issue a clarion call to reindustrialise Scotland. The country does have one distinct advantage over most others, in that it has done most of this already, albeit quite some time ago, although it may have failed to learn the most challenging lessons about its weaknesses as well as its many strengths. The trick now is to learn from both and do it all over again.

Photo of Matt Warman Matt Warman Conservative, Boston and Skegness 6:19 pm, 18th April 2018

This debate is about the future, so I want to talk about the 19th century. To set the scene, new technologies are sweeping away centuries-old techniques, placing whole professions at the risk of extinction. The year is 1841, and a royal commission is publishing its report on the condition of handloom weavers.

Back then, 100,000 handloom weavers had lost their jobs in just 10 years thanks, in part, to the new power loom. The remaining 300,000 were living in increasingly appalling conditions. Today, Parliament has the same duty to cab drivers, lorry drivers and, increasingly, to white collar professionals such as accountants and lawyers. We would do well to look at what our predecessors found.

The commissioners proposed a number of immediate solutions, not least some reform of the corn laws. But they were more interesting when they considered the Luddite case to tax power looms so that the less well paid hand weavers could be protected. The commissioners concluded that

“if we were insane enough to legislate against power-looms…the consequence would be not to raise the wages of the hand-loom weaver, but to depress those of the power-loom weaver to his level.”

Likewise, they concluded that taxing foreign cloth would not help much either. They backed the new technology, realising that investing in it would put the UK at a greater advantage.

The commissioners found again and again that the solutions were measures that would improve the general quality of life and embrace technology, not protect vested interests. If only the RMT would read their report, we might already have driverless trains. Time and again the evidence showed that the workers who resisted change and clung on to a diminishing industry were those who then suffered most. The work done by Matthew Taylor in this regard is in the same vein. Crucially, the commissioners wrote bluntly that

“aversion to change…prevails in proportion as education is deficient.”

In short, constituents then and now resisted a brighter future because they thought, quite wrongly, that it was worse than a diminishing standard of living by clinging to old ways. This Parliament, as the Victorians did, has a duty to excite our constituents about the prospects of technological advancement just as much as it has to guard against the perils that modern technology brings—for instance, in the misuse of our data.

The approach that the commissioners suggested was in part to make reforms, such as to the corn laws, but they also realised that the revolution was coming for all industries, just as the internet will affect all industries now. Our Victorian predecessors were brave enough to embrace that reality, and we should be too. The 1841 report, for instance, refers to a school of design that had recently been set up, because it was human capital that was most valuable. Machines were rubbish at creativity, but humans were brilliant at it. Similarly, the commissioners sought to protect copyright and improve workers’ rights, just as we do in this industrial strategy.

There is much more to say about the 1841 report and, frankly, I had written a much longer speech. There was by necessity a local approach to our industrial strategy in the 19th century. If I may end with one plea, it is that today we consider devolving responsibilities for skills to local areas so that we too can cater to our local areas and industries. It is by being local that we may be truly international in our ambitions and successes. It is by not repeating the mistakes of the past—be it protectionism or clinging on to old technologies—that Britain can truly make the most of its potential.

Photo of Michelle Donelan Michelle Donelan Conservative, Chippenham 6:23 pm, 18th April 2018

I am delighted to speak briefly in this debate on a topic that is so important to our country and economy. I welcome the industrial strategy, which highlights the fact that the Government appreciate the need to be an engine for change. That is more important now than ever before, with Brexit, the technological revolution and the changing nature of the labour market.

The industrial strategy sets out five foundations of economic policy, but perhaps the most important foundation is people. People are the backbone of the economy and business, and the inventors and engineers of technology. We need a flexible workforce in today’s economy and tomorrow’s, so we need to ensure that the labour market has the correct skills to be flexible and progress our economy.

Currently, though, we have a skills gap, as Members in all parts of the House have recognised. I am passionate about tackling the skills gap in Wiltshire and the UK, having called it “the ticking time bomb” previously in this place. In fact, research from the Open University has found that the skills shortage means that there is a cost to UK business of more than £2 billion a year in higher salaries, recruitment costs and temporary staffing. The skills gap is particularly stark in the STEM and engineering sector. According to EngineeringUK, about 1.3 million workers are required each year to replace the ageing workforce and those leaving the sector. That is particularly pertinent in Wiltshire, which is a hub of engineering, design and technology. Every year I hold my own festival of engineering. Last year more than 3,000 students attended, and I hope to do it again this year in the Year of Engineering.

I welcome the investment of an additional £406 million in maths, digital and technical education, which will help to address the shortages in the STEM sector, but I believe that T-levels will prove the key to tackling the skills gap. The UK currently ranks 16th out of 20 OECD countries for the proportion of people with technical qualifications across STEM areas, whereas T-levels will provide a qualification that is academically regarded as well as being backed by industry. It will be relevant, applicable, and without stigma. For too long, the technical pathway has been littered with confusion and with various different routes.

I also welcome the ability for us to foster a flexible workforce through the creation of a national retraining scheme by the end of the Parliament, including a £64 million investment in digital and construction retraining. In essence, the beneficiaries of all this will be people. It will help to create highly skilled and better-paid jobs for the next generation, improving living standards across the country.

A core mission of the industrial strategy is to tackle our productivity lag. That is a real problem, and the industrial strategy provides us with real solutions. It is a huge opportunity. The national productivity investment fund will provide an additional £31 billion of investment over six years, which will enable us to seize this opportunity rather than talking down our country and our economy, as Opposition Members have done today.

This is a long-term strategy. It is not a theory but an action plan, involving more than £460 billion of projects currently sitting in the infrastructure and construction pipeline. Most importantly, it will tackle the skills gap and the productivity lag that for too long have impeded our economic growth.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford 6:27 pm, 18th April 2018

We are in the middle of the fourth industrial revolution—a time of huge technological, demographic and environmental change—and the decisions we make now are crucial to our future. I welcome the focus brought by this industrial strategy, and particularly its focus on innovation. I am proud to serve on the Science and Technology Committee. It is science and research that delivers the innovation that drives a modern economy, and we are a world leader in science and research. Four of our universities are in the world’s top 10, one in six of the world’s top research papers are written here, and we have more Nobel prize winners than any country other than the US.

But we cannot rest on our laurels. Countries such as India and China are accelerating their investment and they want to woo our best scientists. That is why it is absolutely right that this Government are investing more in science and technology than any other Government in the past 40 years. Scientific innovation is not just about money—it is about people too. World-class science needs world-class people. I am pleased that this industrial strategy establishes the Rutherford fund to help recruit researchers, doubles the number of tier 1 visas, and gives a commitment to make it easier for world-class researchers to settle here. However, the devil is in the detail. We need a visa system that makes mobility easy for scientists. I thank the Secretary of State for the answer he gave on that earlier.

Research is changing. It is not just done by one scientist in one lab working alone—it is delivered through networks of collaboration. This industrial strategy points out that our closest relationships and collaborations are with EU member states. Britain has led the EU framework programmes, and I worked with Government Ministers to lead the latest one. More British scientists participate in them, and more hold European Research Council grants, than those from any other country. It is in our national interest to continue to participate. Ministers have confirmed that if the next framework is materially the same as the last one, Britain would like to continue. I ask them to make that point more positive by saying that we will continue to participate unless it is materially different.

We need to ensure that the best ideas are not just generated here but also developed and manufactured here. That is why I welcome the sector by sector focus in the strategy, and I would like to concentrate on some of those sectors.

Our space sector has trebled in size, and the jobs in it are highly skilled and highly productive. The Space Industry Act 2018 means that next-generation smaller, smarter satellites will not only be developed here but launched here. Space assets are key to our communications and our security. We are the only G7 country that does not have its own earth imagery assets. We have paid for the Galileo satellites, and Britain needs to benefit from that.

We are a world leader in life sciences. We are home to the Wellcome Genome Campus. It was a British Prime Minister who led the visionary 100,000 Genomes Project, and it is absolutely right that life sciences are at the heart of the industrial sector. We need to ensure that drugs are not just delivered and developed here but used here, and our Select Committee has done some very good work on how we can ensure that those revolutionary genomic drugs get delivered into the NHS.

Data is the lifeblood of the digital revolution, and we cannot separate digital from other sectors of the economy. The scandal of Facebook and Cambridge Analytica reminds us of the need for clear rules. It is great that the general data protection regulation is becoming the global standard and that this Government are delivering it into British law through the Data Protection Bill. The strategy also points to the need for legislation to be flexible, which I welcome.

Photo of Rachel Maclean Rachel Maclean Conservative, Redditch 6:31 pm, 18th April 2018

I warmly welcome this debate and the Government’s industrial strategy. It has been proved time and again that the best way to secure prosperity for millions of people around the world is through free enterprise and free markets, and that sits comfortably alongside the modern industrial strategy laid out by the Government. The challenges of globalisation affect us all, and taking a long-term view will tackle the underlying issues and enhance our economy more broadly.

I wish to focus my comments on my local area and a local approach. My constituency is on the outskirts of the country’s second city, Birmingham. Birmingham is a large city that has suffered from a productivity gap with the rest of the country. It has overcome decades of bad press and has a legacy image problem. I bet that if I asked anyone in the Chamber—except Jack Dromey—whether they have been to Birmingham, they would say that they have been for a meeting, been through it on the train or driven through Spaghetti Junction but they do not know much about Birmingham. It is a fabulous city, and I am proud of it. It is much better than Manchester, but this is not the time to go into that, because I want to talk about Redditch, which has its own challenges and has to carve out its own identity.

Redditch is on the outskirts of Birmingham. It is a new town, built to accommodate the overflow from Birmingham’s factories. We have a proud history of manufacturing needles, fishing hooks and parts for military aircraft, which were important in our country’s history. But what will the future hold for the people of Redditch? They wish to be proud of Redditch for what it can do in the future, not just what it has done in the past. That is why it is great to have a framework to tackle structural issues. It is not a world-class region like Oxford, Cambridge or London, so it needs some help to secure its future.

I would like to make some suggestions to the Secretary of State. If Grimsby can have a town deal, why can Redditch not? I have lobbied Treasury Ministers for that, and I would like to see that idea taken forward. We look close to home, to the Worcestershire town of Kidderminster and its ambitious and successful ReWyre project led by Conservative councillors, and see no reason why we could not adopt a similar model to unlock the potential of Redditch.

I would like to see the devolution deal in the West Midlands Combined Authority unlock further potential in our region. It is successfully steered by a Conservative Mayor, and I believe that Redditch can harness that growth. I would also like to see a free enterprise zone or a free port, similar to what we see in Teesport. I understand that there is no reason why a landlocked area could not be a free port.

I will finish my remarks by focusing on skills, which are the single most important factor. We need to see reform of skills funding. The apprenticeship levy needs further reform, and we need further devolution and more freedom for those outside the traditional employment relationship to take charge of their own learning, to ensure lifelong learning for every person working in our country. Skills lie at the heart of the economic transformation needed in our area. They are a crucial aspect of rebalancing the economy and creating growth all around the country. To that end, I welcome the Government’s focus in the industrial strategy on sector-specific deals and their commitment to listen to the full range of voices when developing local and sector-based deals so that firms of all sizes and sectors can buy into the strategy for years to come.

If people can live and work in Redditch, which has a great quality of life, environment and cultural offer, why would they move to the overcrowded and expensive south-east? Redditch is affordable and a clean, green town. We accept that people migrate around the country, but let us work towards the goal of enhancing all areas to make the best use of our country’s natural talent and resources. I believe that the industrial strategy will achieve just that.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling 6:35 pm, 18th April 2018

I begin by referencing page 236 of the industrial strategy White Paper, which specifically mentions the Stirling and Clackmannanshire city region deal. I look forward to hearing—shortly, I hope—about the heads of agreement that have been reached with the Scottish Government and local authorities so that the deal can be brought to life.

The subject is fascinating and I am sorry that there is so little time to talk about the industrial strategy. I want to concentrate on one aspect that I think is critical to its execution. We cannot overestimate the role of the UK universities sector in the successful execution of any industrial strategy worthy of the name. It remains a jewel in the UK’s reputational crown. British universities are among the very best and people across the world aspire to attend them, such is the reputation of the quality of the education on offer.

Building close links between the universities and business is vital. Those links are the springboard for invention, innovation and new business creation. As a member of the Select Committee on Business, Energy and Industrial Strategy, I visited the University of Sheffield Advanced Manufacturing Research Centre, where the partnership between the university and Boeing has attracted the engagement of dozens of other business across the sector, solving problems and driving increases in productivity. That is a model for high-level collaboration between universities, academics and industry to enable the delivery of the industrial strategy. Sheffield has become a centre of excellence in design, machining, casting, welding, composites and so much more. It was inspiring to see how all that is being achieved. It gave a vision of what can be done when we put our minds to it.

We need to leverage the international excellence of UK universities to make the UK a global hub for ideation, invention, discovery, innovation and commercialisation.

Stirling University is the second largest employer in my constituency and we have welcomed some 2,600 overseas students who pay between £15,000 and £17,000 a year. Stirling University is therefore, to my mind, one of our great exporters. The Higher Education Policy Institute estimates that there is a £52 million net positive impact on Stirling from those students.

I recently visited the INTO international student facility at Stirling University where I met several of the international students. It came as no surprise to me that they had chosen to make Stirling their home because, 36 years ago, I did the same. However, I only came from Forfar, which, as my hon. Friend Kirstene Hair, who is not here, would doubtless attest, is still part of the United Kingdom.

We seem to make it too difficult for students to come here. We make people jump through hoops and undertake expensive and extensive screening and other requirements that very few other countries do. We are losing our market share in an expanding global market. The UK’s reputation as a university destination choice is not what it should be. Chinese students are going to Canada, the United States and Australia rather than here. Those countries have targets to attract international students, and we can learn from that.

Time is against me. My appeal to the Government is: make it easier for students. It is time for students to be taken out of the Government’s net immigration target. Student visas should be easier, not harder to obtain. We should build on the great strength of the UK universities sector as a path to executing the Government’s industrial strategy.

Photo of Lee Rowley Lee Rowley Conservative, North East Derbyshire 6:39 pm, 18th April 2018

I am glad of the opportunity to speak in this important debate. It is a pleasure to follow my hon. Friend Stephen Kerr, who speaks for his area with characteristic vigour. It is also a pleasure to follow my hon. Friend Rachel Maclean, who made the sterling point that the way in which to make sure our country develops economically is through private enterprise and free markets, and ensuring innovation in the private sector, which can create economic growth and jobs. We all want that and have seen it in the past eight years. We hope that that will continue to happen.

I also agree wholeheartedly with my hon. Friend Matt Warman that we should embrace change. We have an opportunity, over the next 10 to 20 years, to make our country into an even better place; to grow the jobs we know we can have, and to develop the new skills and new industries we know are coming. We should embrace them rather than be scared of them. What a contrast those fine speeches were compared to the dystopian and very unbalanced vision from Rebecca Long Bailey about how this country will fall away. I can see how that could happen only under a Labour Government.

I welcome the Government defining some of our key challenges over the next 10 to 20 years: growth, artificial intelligence, meeting the needs of an ageing population, and mobility. I want to focus on mobility. We have heard today about a potential sector deal for the rail industry, which I would welcome wholeheartedly. My area has an historic link to railways and rail manufacturing. My county is the home of Bombardier, although it is not in my particular constituency, which builds a significant number of trains around the country. What a difference the last few years have made, from a company in an industry that may have been struggling to having a really good order book that shows the renaissance of our railways. When I walk out from the station in my town tomorrow, I will see the statue of George Stephenson. He lived just a few miles away from my part of the world and it was his son who developed the Rocket. My part of the world is steeped in history.

When the Secretary of State considers a sector deal for the rail industry, which I endorse wholeheartedly and hope will come forward, I hope there is an opportunity for a cluster in the east midlands, just like the other clusters and sector deals we have talked about and the wonderful work going on in the automotive sector. There is an opportunity for the east midlands to build on Bombardier in Derby, build on the academy that has been put forward in Northampton, build on the news about additional train manufacturing in Lincolnshire and build on all the other opportunities we will have in the future. As part of the industrial strategy and the Government’s mission to build on and improve economic growth and economic development, and the opportunities we have as a country, I hope we can have a sector deal for rail and a cluster that is supported in the fastest growing region outside London and the south-east, which is the east midlands.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Department for Business, Energy and Industrial Strategy) (Industrial Strategy) 6:42 pm, 18th April 2018

This has been a timely, well-attended and generally well-informed debate. Members on both sides of the House have come together to call for an industrial strategy that brings good jobs to every region in our post-Brexit world. I listened with considerable respect to the contributions made by the hon. Members for Spelthorne (Kwasi Kwarteng), for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) and for Copeland (Trudy Harrison), my hon. Friend Mr Bailey, Mark Menzies, my hon. Friend Kelvin Hopkins, James Heappey, my hon. Friend Alex Cunningham, Mark Pawsey, my hon. Friend Jack Dromey, Martin Vickers, my hon. Friend Stephen Kinnock, the hon. Members for Berwickshire, Roxburgh and Selkirk (John Lamont), for Kilmarnock and Loudoun (Alan Brown) and for Stoke-on-Trent South (Jack Brereton), my hon. Friend Mr Sweeney, and the hon. Members for Boston and Skegness (Matt Warman), for Chippenham (Michelle Donelan), for Chelmsford (Vicky Ford), for Redditch (Rachel Maclean), for Stirling (Stephen Kerr) and for North East Derbyshire (Lee Rowley).

Given the Secretary of State’s predecessor’s refusal to utter the words “industrial” and “strategy” in sequence, the current Secretary of State’s rhetoric is to be welcomed. But it is just that: rhetoric from a Government forced to accept the reality facing working people. The White Paper, while lengthy—it was generously padded out to 256 pages with glossy pictures and large type—did little to turn that rhetoric into reality. To take just one example, my hon. Friend the shadow Secretary of State pointed out that the Government’s target of spending 2.4% of GDP on research and development by 2027 is inadequate. In contrast, Labour would raise investment in R&D to 3% by 2030, ensuring that the UK has the greatest proportion of high-skilled jobs in the OECD as a consequence. My hon. Friends the Members for Aberavon and for Glasgow North East called for just such an economy.

It is not only that the Government’s strategy is under-resourced. It is sectoral, favouring sectors and areas that are already well organised and can push to the front of the queue. As Sheffield Hallam University researchers found last year, the Government’s pledges would have an impact on only 10% of our manufacturing base and only 1% of the whole economy. Many Members, including my hon. Friends the Members for West Bromwich West and for Luton North, considered the implications of this disparity for their constituencies. As my hon. Friend the Member for Stockton North implied, this is not so much about picking winners as rewarding those who have already won.

Let me take one example: Cambridge, a city that has contributed so much to the country’s innovation economy. With a population of 285,000, it has as many private R&D jobs as the whole of the north, which has 50 times more people. This must not be an either/or. We need an industrial strategy that maintains our current centres of excellence while ensuring that other areas can grow successful innovation-intensive economies as we move outside the European Union. Unlike the Government, we are not just focusing on headline-grabbing tech trends. We are committed to putting innovation at the heart of the lowest-paid and least productive sectors, for example by creating a retail catapult to support the 2.8 million people in our retail sector.

The Government’s industrial strategy has no strategy to it and it has nothing to say about the fundamental workings of our economy. As the world-leading economist Mariana Mazzucato argues in her new book, “The Value of Everything”, at the heart of capitalism’s fundamental failure is the two faces of financialisation. The first is the way in which the financial sector has stopped resourcing the real economy. Instead of investing in companies that produce stuff, finance is financing finance. Why would someone lend money for a manufacturing plant that can take years to yield a return and cannot easily be sold on when they could bet on some options hedged with other options and virtually guarantee a return in a few weeks? With so much financial engineering demanding investment, real engineering does not stand a chance.

The second is the financialisation of the real economy. With industry driven by short-term returns, this results in less reinvestment of profits and rising burdens of debt, which in a vicious cycle makes industry even more driven by short-term considerations. As my hon. Friend the Member for Birmingham, Erdington emphasised, the sale of GKN to Melrose demonstrated that this Government are not prepared to step in and defend our long-term economic industrial assets when they are under threat. Every time, short-term interest takes precedence.

We need a real industrial strategy that lays out a vision for the high-wage, high-skill, high-productivity economy that we want to build. As well as the two existing missions that my hon. Friend the shadow Secretary of State laid out earlier, our industrial strategy is based on a platform of strong horizontal policies—from our national education service making lifelong learning free at the point of use, to our £250 billion national transformation fund to deliver much-needed infrastructure improvements across our country and our diversity charter challenges to ensure that businesses draw on a wide range of talents.

Our approach is positive and practical. It speaks to the student who is anxious about their future, the single mum working two minimum wage jobs, and the Redcar steelworker wanting a job to be proud of. It addresses the crisis in productivity, skills and wages that keeps us poorer, even with unemployment relatively low. The Secretary of State has already borrowed from our approach to an industrial strategy on more than one occasion—imitation is the sincerest form of flattery—and I urge him to do so again for the good of our economic future.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 6:50 pm, 18th April 2018

We have had a really excellent debate today, as I think all right hon. and hon. Member would agree. One of the most important challenges facing this or any Government is seeing that the industrial sector—basically our economy—can develop in partnership with the Government.

In my brief career as an A-level economics student in the late ’70s, I visited a regional Neddy in Newcastle. We also went to London—it was the first time I had been to London, although not the last—to see how they worked. It seemed to me, at that time, to be civil servants and Ministers deciding which companies to pick. That is not what we are doing. This is a groundbreaking partnership involving the Government and industry working together. In my time at the Department, I have seen it involve hundreds of companies in a real way.

Photo of Norman Lamb Norman Lamb Chair, Science and Technology Committee (Commons)

The Minister will be aware of the small business research initiative and the report, commissioned by the Government and prepared by David Connell, that was published last November. It is a really good report, but there has been no Government response. Will he or the Secretary of State be willing to meet me, in my role as Chair of the Science and Technology Committee, to discuss the report?

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Both my right hon. Friend the Secretary of State and I would be delighted to meet the right hon. Gentleman to discuss that important matter.

As I was saying, I have seen many companies involved in this industrial strategy. It is much more than the same few companies that are used to lobbying the Government from the centre. That is one of the great achievements. The shadow Secretary of State and shadow Minister made partisan speeches—the former rather more than the latter, I might say—and I could spend a long time rebutting them, but time does not allow. I must, however, respond to a few of their points. The shadow Secretary of State said there was no guidance for sector deals. It is all in the White Paper—there are six of them—and I am very happy to send her a copy. In fact, she can choose from one of the many languages that it is printed in. I will send her one of each.

The shadow Secretary of State said there was not enough research and development and that this was all hot air, but actually it lays a pathway for the biggest increase for 40 years. There is an extra £7 billion of research and development funding to 2022. After the 2.4% target, we are aiming for 3% and to be world class. She also mentioned, as did several of her colleagues, the issue of steel. We have had regular meetings with the managements of all the steel companies. I have visited two steel companies in the last week. Moreover, everyone in the Government, from the Prime Minister down, has been involved with the situation regarding President Trump and the United States. As for the sector deals, we are regularly talking about them with unions and companies alike. So this is not, as the hon. Lady said, gathering dust. It is very important to us. As for the local industrial strategy, it is really beginning to develop, and not just in three areas; it is being tested across places with different economies to see how it works.

We heard many other contributions. My hon. Friend Trudy Harrison represents a constituency that she is always fighting for, because she understands, as do her constituents, the need for skills and new technology, and the need to drive down costs, which is key to the whole industrial strategy. I look forward to visiting her constituency tomorrow and on Friday.

I have a lot of respect for Mr Bailey. We have worked together in various capacities. We might have been on opposite sides of the table, but we have not always been in opposition to each other. He mentioned Jaguar Land Rover, as did Jack Dromey, and the recent announcement not to renew the contracts of 1,000 temporary staff at Solihull. I spoke to the managing director of Jaguar Land Rover on Monday, and he made it clear that that decision has been taken to safeguard the competitiveness of the plants in the European market. The automotive industry is a very good example of how the industrial strategy works, and I know it has an extremely bright future.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I hope the hon. Gentleman will excuse me, but I do not have time to give way.

My hon. Friend Martin Vickers mentioned a town deal for Grimsby and Cleethorpes, and I heard him speak very eloquently about it. There has been a meeting, and it is an absolute priority for us.

My hon. Friend Mark Menzies mentioned an aerospace growth partnership. This shows, as he knows, the benefits of a strategy that involves business and the Government working together. That is an intelligent way to channel money from business and from the Government together, which really summarises what the whole industrial strategy is about.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I am very sorry, but there is not time to give way.

Following an Adjournment debate held by my hon. Friend Jack Brereton, I have met representatives of the ceramics industry and we are making progress—thanks to his efforts and those of other Members of Parliament, as well as the efforts of Laura Cohen and Kevin Oakes. We understand the ceramics business and we hope to be able to progress matters with them.

I thought at first that my hon. Friend Matt Warman was living in the 1840s, but the only person I know who does that is the Leader of the Opposition and he is not in the Chamber this afternoon. My hon. Friend showed us very eloquently that the lessons of the 1840s and the Government’s responsibility to harness developing technology go absolutely to the centre of the industrial strategy.

My hon. Friend Michelle Donelan talked about the skills gap in Wiltshire—another important aspect of the industrial strategy—and mentioned a retraining scheme, which is about people and places. My hon. Friend Vicky Ford mentioned many sectors in Chelmsford. She showed that she had really read the industrial strategy and seen what it means in her constituency, and she is continuing to support it.

My hon. Friend Rachel Maclean said that Birmingham is better than Manchester. I cannot comment on that, although I would say that neither of them is as good as Watford, but you would expect me to say that, Mr Speaker. Seriously, she continues to argue for a town deal for Redditch, and I am very happy to meet her to discuss the idea of a free port.

My hon. Friend Stephen Kerr is absolutely right to say that the University of Stirling is a jewel. Our universities are jewels, but the industrial strategy is helping them to work together with business and the commercial world, as I saw only two weeks ago when I helped to launch a new science hub at the University of Hertfordshire.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

As hon. Members will know, I usually do my absolute best to take interventions, but I cannot do so on this occasion.

The attitudes we have demonstrated are based on fact, not fantasy. This industrial strategy is absolutely real, as well as imaginative, rounded and ambitious. We have had such attitudes for centuries—this goes back to the point about 1841—but this is the way in which the relationship between the Government and business will evolve. Those attitudes are a source of strength, just as our world-leading universities, businesses and workers are a source of strength. I believe that such attitudes are unique to the United Kingdom and, in combination, they are an asset that no other country can match in the same way.

The industrial strategy builds on our existing strengths and addresses any weaknesses. There is a wealth of potential in this country, and it is our duty to see it realised. It is my contention, and that of the Government, that our industrial strategy, which is available in as many languages as people want, will help this potential to be realised and will build an economy that is—I think this is the expression, which you may have heard before, Mr Speaker—fit for the future. I am very proud of it, and it is my job, and that of my right hon. Friend the Secretary of State, to see it delivered in the weeks, months and years to come.

Question put and agreed to.

Resolved,

That this House
has considered the Industrial Strategy.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

I am anticipating events. We will see what happens.

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

Indeed. The hon. Gentleman always has a keen sense of what is about to follow, which, colleagues—I merely remind you; you will be keenly aware of it—is motion 5. I call the Whip to move.