Trade, Exports, Innovation and Productivity

Debate between David Rutley and Adrian Bailey

Wednesday 13th January 2016 Commons Chamber

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for Gloucester (Richard Graham), not least because I am an expatriate Gloucestershire person myself—and I have to say my late father made a significant contribution to the Gloucestershire economy near to him as a former aircraft fitter with Gloster Aircraft Company and more lately with Dowty company.

I do not have a lot in common with the hon. Member for Dundee East (Stewart Hosie), but I did mean to start my speech with the very quote he started his with. One part is worth repeating because it sums up the issue. The Chancellor, in his Budget of March 1911—I mean 2011; it is just me who’s old, not the Chancellor—said:

“We are only going to raise the living standards of families if we have an economy that can compete in the modern age.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

Our export performance and balance of payments figures are perhaps the most accurate measurements of how effectively we are competing in the modern age, and on that basis the Government have done very badly indeed.

That is partly as a result of problems that are long standing. I do not pretend that they all started with this Government, but some of the better things they have done did not start with them, but have built on foundations laid by the previous Labour Government. However, the Chancellor said that in pursuit of their objectives they would secure £1 trillion of exports by 2020; rebalance the economy away from the service sector towards manufacturing; ensure that economic growth was no longer fuelled by consumer demand based on unsecured credit but the outcome of rising real wages; and rebalance the economy away from London and the south-east to the regions. Those are all hollow words.

[David Rutley]

I recognise the hon. Gentleman’s expertise and the important work he did in the previous Parliament, particularly on life sciences, as Chair of the Business, Innovation and Skills Committee, but before he turns into an Eeyore, which I know he is not, will he not acknowledge—this is something he actively supported in the last Parliament—that life sciences are moving forward, including, notably, in Macclesfield, where the AstraZeneca site accounts for 1% of all UK goods exported?

[Mr Bailey]

If the hon. Gentleman will be patient, I will mention some of the things I think require recognition.

The triumphalism and overstatement of the Government’s so-called economic successes mask the sheer scale of the problem and leave us in danger of understating the change in Government policy necessary to address those problems. It is no consolation to be given a diatribe on increased employment and so on, when we have companies desperately seeking investment to invest and grow and workers on zero-hours contracts and when millions have seen their real wages reduce over the past five or six years. Ultimately, this all stems from our lack of productivity and weak exporting performance.

The 2008 recession was a serious one, but the Government do not mention, of course, that it has taken far longer for this economy to come out of it than any other comparable economy and that, most unusually, productivity has failed to increase, as it normally does when an economy comes out of recession. It has also failed to increase in comparison with other economies. Figures from the Office for National Statistics show that in 2014 output per hour worked was 21% lower than the G7 average. The reasons are not simple, but one main reason is that the primary driver of productivity is manufacturing, and our manufacturing output has stagnated over the last five or six years, despite the Chancellor’s claim to be backing the “march of the makers”.

In response to the intervention by the hon. Member for Macclesfield (David Rutley), I would emphasise that we have world-class manufacturing companies in automotive, defence, civil aviation, biosciences and so on. I often feel that the argument about services versus manufacturing is an artificial one: both are important. When we say that we no longer manufacture, what we are really saying is that manufacturing no longer occupies such a high proportion of our national output as do the service industries, but manufacturing is still vital to the jobs of millions of people in this country and above all to our productivity and export levels.