[Christopher Fraser in the Chair] — Manufacturing and Employment

Part of the debate – in Westminster Hall at 10:22 am on 9th June 2009.

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Photo of Tony Lloyd Tony Lloyd Chair, Parliamentary Labour Party 10:22 am, 9th June 2009

We all agree with that. We want the rules to be used judiciously and carefully to the advantage of our employment and manufacturing base.

The Government must look at the role of Government procurement. I do not say that unkindly, but procurement over the years by all Governments has perhaps not shown Britain at its best. The civil service has not always known best how to work in partnership with manufacturing. That might seem like a plea for manufacturers. It is sometimes said that we have feather-bedded manufacturers in the past. We have allowed poor management to get away with an approach that allows them to become lazy and not as cutting edge as they ought to be. The Government ought to be using their purchasing power to promote the dynamic cutting edge. They should ensure that those who provide goods and services to them are at the forefront of global manufacturing.

I give the example—it is an important one—of BAE Systems. There is no doubt that in the past it got away with ridiculous prices, ridiculously slow delivery times and so on. The overly cosy relationship with previous Governments was not in the interests of BAE Systems or our employment and manufacturing base. Such things are now changing. There is a much tougher view in the Ministry of Defence and the Department for Business, Enterprise and Regulatory Reform about the procurement process, but we need to refine it to ensure that there is value for money and that the Government play a part in driving an industrial policy that leads to success.

I support my hon. Friends the Members for Chorley and for Stroud (Mr. Drew) in their plea for a proper look at a judicious use of employment subsidies in parts of industry. The Government rightly recognised that the importance of the banking system was not in whether individual banks succeeded or otherwise but in the fact that if the system had collapsed, knock-on effects would have spread throughout the whole of the UK's services and manufacturing economy. What the Government did was high risk but absolutely right, which is now being proven.

The argument for support for LDV, for example, is similar. The issue concerns not only LDV, but the supply chain that it is involved in and the importance of maintaining that whole infrastructure within our industry. We need to take a strategic view in respect of critical manufacturing firms and ensure that we offer support at this particularly difficult time. Conditions are likely to be difficult for manufacturing for some time to come, so I support the plea made by those who have already spoken.

The future will not be with the large manufacturers of the past but with small and medium-sized enterprises—those little firms that are highly innovative but often feel that they are not supported. I wish to make several points about them. First, while I agree with the arguments about traditional apprenticeships, we have to understand the position of the traditional apprentice in the modern world. A small firm on its own cannot devise a proper apprenticeship structure. There has to be a well-defined structure and access to further education. As I have said to Mr. Prisk, further education is fundamental, and any attack on it would be massively damaging to our manufacturing base. There has to be proper partnership between our education institutions, if we are to offer upskilling to the people who work in our economy.

We should bear in mind that this is not just about apprenticeships but about the reskilling of those who are in work and who already have good skills. My hon. Friend the Member for Stroud discussed labour subsidy. The reality is that people with skills who drift out of jobs usually do not come back, and we could lose that skills base in the future.

My final point is about the banking system. Historically, our banking system has seen itself as a great success, but it has always failed this country in the particular area of early innovators—those who do high-technology, quality research and who want to move into production. We are spectacularly bad in dealing with that gap, and many highly qualified, highly competent people leave these shores, often for America and the rest of Europe, to produce their products, because our banking system fails to take a risk at that risky stage of investment, which, nevertheless, is fundamental if we are to see a transition from idea to manufacture.

A firm in my constituency, Liberalto Engines, is currently suffering from that gap. Everyone says that its idea is great and that it will have all the backing that it needs, if it can get its idea into production. The idea is good, and the company knows that the product will work, but moving into prototype and demonstrating production capacity is, of course, risky. The company may fail, but the whole point of the banking system is to take risks and get a price for those risks. At the moment, however, the banking system is not doing that. That is one thing that the Government could do to ensure that we have a future in respect of the small, highly innovative, advanced technologies that we need.

We have some world-beating industries in this country. I visited a firm in my constituency last week called SSR. It is a training company that works with the media industries, which have produced bands such as the Happy Mondays, New Order and all the other great Manchester bands of the past. It trains people and gives them the skills of the future. There is a blurring of the distinction between services and manufacturing in that area, but those are the industries of the future. Those industries are massively high-tech and massively important for our future, and they are there now. They are successful and they will weather this economic storm and provide us with high-quality employment for the future. The future is good, but it needs a little bit of assistance from the Government now.

Annotations

Robert Battersby
Posted on 14 Jun 2009 3:52 pm (Report this annotation)

When the Government buys foreign it sends a clear message the UK Government does not care about UK manufacturing. They can give tax breaks to the Non-Doms who bleed Britain dry but not to manufacturers. We are Europe's weakling. Thank you, Gordy for selling British Energy to EDF. I'm sure it's good for France and French jobs.