Oral Answers to Questions

Iain Wright Excerpts

Thursday 20th November 2014 Commons Chamber

[Vince Cable]

The hon. Gentleman describes a powerful trend. I am delighted that it is operating in his constituency and I congratulate the firms concerned. He refers to the process of onshoring production that had gone overseas, and I believe that around one in 10 British manufacturers are now considering that process. I have recently come back from India where I met a company called Amtek that is bringing car supply chain and production back to the UK—it may even be in the hon. Gentleman’s county.

[Mr Iain Wright (Hartlepool) (Lab)]

My hon. Friend the Member for Motherwell and Wishaw (Mr Roy) has already mentioned the importance of the UK steel industry, which underpins much of our manufacturing industry. Is the Secretary of State also aware of cheap imported steel being dumped into domestic markets, failing British standards and raising question marks about quality, traceability and reliability? Reinforcing steel used in the UK is certified under the CARES scheme. Is he confident that that scheme is working as well as it could be? What steps is he taking to ensure that such steel is tested, compliant with British standards, traceable and safe?

[Vince Cable]

That issue has been brought to my attention by British producers and it is a legitimate question. I am in the middle of an inquiry into whether the testing process operates effectively and takes proper account of different standards as between UK producers and those overseas. We have no ideological view on anti-dumping. It is a matter of proof and fact and operates through the European process, as the hon. Gentleman knows.

Small Business, Enterprise and Employment Bill

Iain Wright Excerpts

Wednesday 19th November 2014 Commons Chamber

[Jo Swinson]

So far 30 employers have been named and shamed, and, as I said in Committee, there will be a further tranche of naming and shaming shortly.

The previous system was much more permissive in terms of the number of cases in which naming could operate. Until the new rules were introduced, only one employer had been named over a period of many years. We introduced those rules on 1 October 2013, but they did not operate retrospectively, and hence applied only to investigations that began on or after that date. The previous criteria apply to the many current investigations that began before 1 October 2013, and in those cases employers are much less likely to be named. Many other investigations began on or after 1 October 2013 and are still ongoing, so the final stage of the issuing of a notice of underpayment and the consequent ability to name and shame has not been reached.

As I think has been recognised, the numbers are already increasing, but given that this is a new scheme, it is inevitable that they will start small and become larger as cases work their way through the system.

[Mr Iain Wright (Hartlepool) (Lab)]

The Minister will recall that, in Committee, I raised the issue of umbrella companies, in which people who may be receiving relatively high wages are, for a variety of reasons, subject to spurious deductions that take their earnings below the national minimum wage. Does the Minister think that the HMRC enforcement team could look into that as well?

[Jo Swinson]

The enforcement team can look into any breach of the national minimum wage, and it can enforce notices of underpayment in the case of spurious deductions. That applies even to deductions that would not be problematic if someone were being paid significantly above the national minimum wage. Some contracts suggest that employees pay for their own uniforms if they are paid significantly more than the national minimum wage; that does not necessarily get employers into trouble with the law, but in some cases it does. Obviously it is necessary to ensure that HMRC’s calculations are right, and that it has all the necessary evidence. Sometimes it takes a little time to ensure that the whole process is followed correctly, which is why cases are still working through the system.

--- Later in debate ---

[Jo Swinson]

I think that the hon. Gentleman is comparing apples with oranges. According to the most recent estimate, the number of employees who are paid less than the national minimum wage is lower than 300,000—about 236,000, I believe. I stress that that is an estimate. Obviously we do not have data on every single person in the country; such estimates are based on surveys. The figure of 30 companies is not an annual figure; those are cases that have been completed since the new rules came into force.

I can assure the hon. Gentleman that the vast majority of cases in which the national minimum wage law has been found to have been breached are being named and shamed once the notices of underpayment have been issued. Obviously there is still a job to be done: people must be informed about how they can ensure that their rights are being properly enforced. Let me say yet again that if people fear that they are not being paid the national minimum wage when they should be, they should ring the pay and work rights helpline, which is a free service and totally confidential. The number is 0800 917 2368, and I shall continue to take every opportunity to publicise it, because it is important for people to know that they can receive advice on a confidential basis and then make a complaint if they decide to do so.

Local authorities have been mentioned. I think it right that HMRC works in partnership with authorities—with some success—to ensure that enforcement happens, but I also think it right for there to be a national enforcement body. The issue of social care has been raised, along with the issue of travel time, which is well documented. Travel time, other than the times involved in travel to and from work at the beginning and end of the day, needs to be included in the national minimum wage. We are well aware of that, and HMRC is enforcing it.

We know that there are issues in the care sector. That is why targeted enforcement was carried out, and why my colleagues at the Department of Health have been working closely with local authorities to produce guidance to ensure that they contract providers who can provide quality care, along with fair terms and conditions for their work force. Authorities should not be pricing contracts at a level that prevents their basic national minimum wage obligations from being met.

Amendments 9 and 10 concern zero-hours contracts. We have already discussed the question of whether or not they are sometimes a good thing. It was the former Member of Parliament for Sedgefield, Tony Blair, who said, on 3 October 1995,

“There will be an end to zero-hours contracts.”

However, the Labour Government did not deliver that, perhaps because there are people for whom such arrangements work well, as we heard from the TUC during the evidence session in Committee.

While there are undoubtedly problems with zero-hours contracts, and I do not wish to dismiss them, I think it important to introduce some perspective to the debate. Last year the Chartered Institute of Personnel and Development conducted a survey to establish what was happening on the ground, and produced a report. It found that zero-hours contract workers were just as satisfied with their jobs as the average United Kingdom employee, that they were happier with their work-life balance, and that they were less likely to feel that they were being treated unfairly by their organisations.

[Mr Iain Wright]

Does the Minister think that the significant increase in the number of zero-hours contracts over the last four years is a positive or a negative development—or is it just a sign of a flexible employment market?

[Jo Swinson]

It certainly is a sign of a flexible employment market, which is good for the UK economy. It ensures that we are able to have a stronger economy and increased prosperity. As for whether a zero-hours contract is a good thing, that depends on individual circumstances. There are plenty of people for whom such contracts work well and plenty of people who are happy with them, but I entirely recognise that there are plenty of people who are not happy, and that there are employers who are not behaving as they should.

Some of those issues arose in the consultation on exclusivity, which is why we inserted the clauses that we are discussing. Other issues arose from it as well, and we agree that those too need to be addressed. The Opposition tabled amendments 9 and 10, and I welcome their contribution to the debate. We have argued that it is better to ensure that we can work with industry, sector by sector, in producing guidance on what constitutes responsible use of zero-hours contracts, so that employers are clearer about how they should be using them and employees can know what it is reasonable for them to expect.

Oral Answers to Questions

Iain Wright Excerpts

Thursday 26th June 2014 Commons Chamber

[Michael Fallon]

It took some 18 months to get that compensation scheme approved by the Commission, which is why it will take some time to get the compensation for the renewables obligation and the feed-in tariff and why that scheme will not apply until April 2016. The Commission did not agree to our request for backdating.

[Mr Iain Wright (Hartlepool) (Lab)]

The hon. Member for Warrington South (David Mowat) asked exactly the same question in April and today received pretty much word for word the same unsatisfactory response. The fact is that the Government have imposed a unilateral carbon price floor that is widely divergent from the EU emissions trading scheme, which has put Britain’s energy-intensive industries at a competitive disadvantage to our European counterparts and done nothing to prevent carbon leakage or encourage investment in low-carbon energy. What practical steps is the Minister taking to shape reform of the ETS to make it more credible and to level the playing field for British industry, or have the Government lost that battle in Europe too?

[Michael Fallon]

Other countries such as Germany can of course offer higher support to their industries, but they did not have the appalling deficit that we inherited, because of course they did not have a Labour Government. I intend to ask the new Commission this autumn for an early review of the ETS and to include new sectors, such as cement, that have missed out so far.

Oral Answers to Questions

Iain Wright Excerpts

Monday 24th March 2014 Commons Chamber

[Michael Gove]

I absolutely agree. The role that independent schools play in making sure that children from vulnerable backgrounds have access to boarding education is to be applauded, but it is vital that we stress that there are superb state boarding schools as well, and that there are a growing number of state schools providing excellent facilities for children from the most fragile of circumstances to flourish. It is important that we should recognise that whatever the type of school helping a vulnerable child, the actions of those who lead it should be applauded.

[Mr Iain Wright (Hartlepool) (Lab)]

17. What steps his Department is taking to encourage girls aged 16 to 18 to consider taking up engineering apprenticeships.

[The Minister for Skills and Enterprise (Matthew Hancock)]

Since 2010, the number of women starting engineering and manufacturing apprenticeships has increased threefold.

[Mr Wright]

The Institution of Mechanical Engineers says that 92% of girls choose not to take triple science as a subject beyond the age of 14, which effectively disbars them from a career in engineering. EngineeringUK says that 83% of all young people do not have access to STEM-related work experience. How on earth do the Government’s policies of ending face-to-face careers advice and downgrading work experience help to encourage girls into engineering?

[Matthew Hancock]

I recognise the situation that the hon. Gentleman describes as the situation of a few years ago. Fortunately, a record number of girls are studying triple science at GCSE and a record number of girls are studying physics. That does not mean that there is not more to do for the Government in sorting out the problems that were left behind. We must ensure that people are given inspiration and mentoring through careers guidance, which was not available in the past. We must promote the highest-quality careers to boys and girls, and ensure that everybody knows how to fulfil their potential.

Oral Answers to Questions

Iain Wright Excerpts

Thursday 23rd January 2014 Commons Chamber

[Michael Fallon]

I shall certainly see what more we can do in that regard. I know that food and drink exports will be one of the themes of our commitment to Expo in Milan later this year and I shall be discussing our pavilion in Milan this evening and tomorrow.

[Mr Iain Wright (Hartlepool) (Lab)]

I detect a real note of complacency in the Minister’s remarks. Let us not crack open the imported champagne just yet. The Secretary of State’s trade and investment White Paper of 2011 stated:

“The UK now needs to rebalance its economy…toward increased exports and investment.”

Yet the value of exports fell in the last quarter and net trade acted as a drag on GDP growth for much of 2013. Given that the trade gap remains persistently high and is growing, manufacturing as a share of our economy has fallen under this Government, and investment has continued to flatline, will the Minister now concede that an export-led recovery has not materialised?

[Michael Fallon]

I am disappointed that the hon. Gentleman should talk down British exporting and British manufacturing at precisely the time we see a renaissance not only in our automotive industry but in our aerospace and other industries. Of course trading conditions are tough, not least with problems in the eurozone and elsewhere, but exports are up and we continue to help drive increased export performance through supporting small and medium-sized enterprises and mid-sized businesses.

Engineering Skills (Perkins Review)

Iain Wright Excerpts

Tuesday 10th December 2013 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

May I begin by saying what a pleasure it is to serve under your chairmanship, Mr Havard? It has been an excellent debate. I thank my hon. Friends the Members for Ellesmere Port and Neston (Andrew Miller) and for Sheffield, Heeley (Meg Munn) and the hon. Member for Warrington South (David Mowat), who, like me, is a chartered accountant—there is nothing wrong with being a chartered accountant.

I particularly want to thank the hon. Member for Mid Worcestershire (Peter Luff) for securing the debate and advancing his argument in a knowledgeable and refreshingly non-partisan way. I, for one, will be sorry to see him go. He will be missed in the House, and there is much more that he could do in this place to advance the need for more engineers in this country. He was an excellent Select Committee Chair and an excellent Minister. He will be sadly missed.

I also thank Professor John Perkins for his review. What is clear from today’s debate and from the review is the enormous opportunity that we have in this country. From an economic point of view, Britain will create wealth and raise its standards of living by concentrating on high skills and innovation, centred on science, technology, engineering and manufacturing. We have world-beating sectors in areas such as automotives and, as the hon. Member for Mid Worcestershire said to me during the Division, we have the second biggest aerospace industry in the world and the biggest in Europe.

We have fantastic companies such as Rolls-Royce, Boeing and GKN Aerospace. I am particularly pleased that last week it was announced that Boeing will be using GKN as a supplier for its 737 winglet, which is displayed at the moment in the forecourt of the Department for Business, Innovation and Skills. It is an excellent reiteration of how valuable that supply chain is.

[Peter Luff]

I am grateful to the hon. Gentleman for giving way, and for his generous personal remarks. We also must not forget Airbus, which has given me so much encouragement in pursuing this agenda and which is one of the major contributors to making Britain the second biggest aerospace country in the world.

[Mr Iain Wright]

Absolutely. I was about to mention how important Airbus was as well. However, there are other sectors; we are not just wings and wheels. We have food and drink manufacturing—the biggest manufacturing sector in the country—as well as construction, life sciences, chemicals and great engineering in the energy sector. There is also a real ambition to have 10% of the global space industry by 2030. Those are all things that we will be using for our competitive advantage in the future.

[Jeremy Lefroy (Stafford) (Con)]

In JCB, there is also one of the major construction equipment manufacturers in the world. Just last week, it announced 2,500 extra new jobs in Staffordshire, bringing some of its supply chain back to the UK. It is a privately owned company —a world-beating one at that—investing right here in the UK.

[Mr Iain Wright]

That is certainly something to be encouraged. I want to see how the supply chain of manufacturing can be enhanced to ensure that we can have that reshoring back to the UK as much as possible. We have the need for an economic, competitive edge, but we will also be trying to solve big social issues in the 21st century such as climate change, the transition to a low carbon economy, an ageing population and tackling resource scarcity for food, clean water and energy. All that requires engineering skills, so the ambition must be nothing short of making 21st-century Britain an engineering nation.

However, that enormous opportunity is not being matched with a commensurate supply of engineers coming on stream. As the hon. Member for Mid Worcestershire said—I want to reiterate the figures, because they are striking—EngineeringUK states that the UK will need 87,000 people a year at level 4 over the next decade to meet demand, let alone to make sure that we can have expansion. However, the country has seen only about 51,000 and the number of level 3 engineering-related apprenticeships has actually dropped. We have an annual demand of about 69,000 but, as the hon. Gentleman said, the numbers are about a third of that and are falling.

Research by Matchtech in the past couple of weeks showed that three quarters of engineers lacked confidence in the Government’s action to encourage innovation in the UK—that is up from last year—and more than half said that they were willing to leave the UK and find work abroad. Despite the welcome news about economic statistics, 54% of engineers believe that the state of the British economy is negatively affecting the industry—up a full 10 percentage points on the previous year. There is an immediate and urgent need to do something about the issue.

There have been four broad themes today and I want to touch on those. Every speaker has mentioned the perception, image and culture of engineering, and they have been right to do so. Britain is the nation of James Watt, Richard Arkwright, Isambard Kingdom Brunel and Frank Whittle, but I fear that this country does not value the status of engineers. It is deeply dispiriting that, when people are asked to name an engineer, the most recognisable in our country is Kevin Webster from “Coronation Street”. That sort of view reinforces stereotypes and prejudices that engineering and manufacturing are often literally backstreet, low skilled and low paid, rather than highly skilled, well paid and innovative.

[Andrew Miller]

Will my hon. Friend give way?

[Mr Iain Wright]

I will—as a north-west MP, I think my hon. Friend might have something to say about that.

[Andrew Miller]

As somebody from Granadaland, I ask who the heck is Kevin Webster?

[Mr Iain Wright]

In another context, I would be tempted to say, “He’s a popular beat combo, M’lud”, but I will not. In terms of the culture, perception and status of engineers, the issue is not the fault of this or previous Governments. Having said that, I absolutely agree with Sir John Parker, president of the Royal Academy of Engineering, who said:

“I have travelled around in business and seen how other nations organise themselves and tilt policy in favour of their industrial base. At the highest level, an industrial strategy in my view is about giving the right signals to society that industrial activity is very important.”

What is the Minister going to do to help to change perceptions?

I acknowledge, as we have heard this afternoon, that such things as The Big Bang, Tomorrow’s Engineers, See Inside Manufacturing and the Bloodhound supersonic car are valuable initiatives to help change perceptions of engineering and inspire a new generation. However, there is more that can be done and it must be, as the hon. Member for Mid Worcestershire said, high profile and sustained to overturn those long-held cultural perceptions. Will the Minister confirm that those initiatives will continue? What other plans does he have to alter the perception of engineering?

[Andrew Miller]

On a slightly more serious note, I was proud, with the parliamentary and scientific committee, to work with EngineeringUK to bring The Big Bang into Parliament this year. We intend that to be a continuing event to help improve the understanding of our parliamentary colleagues of the importance of engineering. Will both Front-Bench Members commit themselves to engage with that programme in future years?

[Mr Iain Wright]

I certainly would like to. My hon. Friend mentioned an important point. It should not be about this Government or this Parliament; it should be about looking at how Britain will make its money in the next 30 or 40 years. How can we transcend Parliament and Governments and work together for the long-term economic interests of the country to ensure that engineering has a proportionate status in our country?

Key to that, I would suggest, is ensuring that industrial strategy is at the heart of business policy. A moment ago, I mentioned Sir John’s comments that industrial strategy should give the right signals to society. I also suggest that a successful industrial strategy should give the right signals across Government. Business policy and engineering policy should not only reside in the Department for Business, Innovation and Skills, but be aligned right across Whitehall for the purposes of advancing our country’s long-term economic interests.

However, I have to say—it has been hinted at strongly during today’s debate—that there is a lack of joined-up thinking between industrial strategy and education and skills policy. Schools are not encouraged to prioritise engineering and science, and there is a failure to ensure that engineering is considered at a sufficiently early stage in a child’s education. As a result, as we have heard, many pupils are disillusioned by the time they get to the age of 14 and do not continue science-based subjects that could lead to a career in engineering. Science GCSE has dropped from third place in 2012 to fourth this year; design and technology has slipped from sixth place to ninth.

This is a particular priority of mine. In many cases, teachers have had no experience of the modern engineering plant or factory and are therefore not in a position to encourage pupils to think about a career in engineering. I asked a parliamentary question a couple of weeks ago about the Government’s policy on encouraging industrial placements for teachers and I have to say that I received a woefully complacent answer from the Minister for Schools.

What will this Minister do to ensure that more teachers are made aware of the exciting opportunities available in industry and engineering, so that they can pass on information about those fantastic opportunities to their pupils and, importantly, to their pupils’ parents? Will the Minister ensure that time is made available in the school timetable to allow those industrial placements to take place?

[Peter Luff]

The hon. Gentleman is making a very important point. Quite often, it is a matter of cost. Schools cannot release teachers for this kind of activity, because they cannot afford the cover required in the classroom. Sometimes it is a resource issue—particularly for schools in the poorest areas, which most need this kind of help.

[Mr Iain Wright]

I can agree with the hon. Gentleman in many respects, but this is such an important priority that I think that resources have to be made available. The question is how Government, industry and academia work together to do that. Perkins touches on it, but more needs to be done.

Everyone in the debate has mentioned careers guidance. It is woeful. The Select Committee on Education said in its recent report that what the Government have done with careers guidance is regrettable. I am not suggesting that before 2010 it was perfect—I speak as the Minister with responsibility for it before 2010—but the Government’s reforms to end face-to-face and impartial information, advice and guidance have seen investment in careers advice plummet and the service to many young people more or less evaporate.

The chances of people receiving good impartial advice about engineering at a sufficiently young age to make informed choices about what subjects to take next and how they can advance are as remote as ever. Will the Minister acknowledge that the Government have made a mistake on this one? What will he do to ensure that all pupils receive high-quality information, advice and guidance that includes, specifically, appropriate information on a career in engineering? Will he put in place an initiative to encourage work experience in industry—in engineering—and more effective collaboration between schools and businesses? That happens haphazardly. It does not happen in a consistent manner, but for the long-term economic interests of this country, it has to.

[Andrew Miller]

This, of course, is where Professor Perkins agrees with my Select Committee’s recommendations about continuing professional development. The simple reality is that people cannot teach about things or advise about careers that they do not have any knowledge of. We must create that space in the curriculum. If we do not, we will be failing these young people and failing British industry.

[Mr Iain Wright]

I agree. I think that that is incredibly important for our long-term economic interests.

I also want to touch on what the Government have done with their education reforms. Notwithstanding the welcome changes to the design and technology curriculum, which the hon. Member for Mid Worcestershire had a hand in influencing, a lot of what the Government have done has reinforced the perception that engineering, particularly at vocational level, is somehow second rate.

The downgrading of the engineering diploma by the Secretary of State for Education was a colossal mistake. I hope that the Minister will acknowledge that. The downgrading consolidates the perception that somehow engineering is second rate. The Royal Academy of Engineering has expressed concern that the attainment and accountability systems that schools are judged on favour a narrow set of academic qualifications over vocational and practical-based ones. Again, what will the Minister do to alter accountability systems to provide incentives for schools to prioritise engineering? They need to prioritise engineering.

The third point that I want to mention is gender. This has rightly been raised as a key issue in the debate. The lack of female engineers is a very important issue. Perkins stated that the UK has the lowest proportion of female engineers in the EU—barely one third of the number that Latvia has. Fewer than 10% of engineering professionals are women, and fewer than one in 30 of those starting an engineering apprenticeship are female.

There are great initiatives in place, such as ScienceGrrl, but the culture that my hon. Friend the Member for Sheffield, Heeley mentioned is important. I was speaking at a round table of industrialists recently. I said, “You’re cutting off half your potential work force by not encouraging women into engineering. What are you doing about that?” They said, “Well, we provide them with their own toilets.” That is the sort of cultural issue on which we need to work together so as to advance, so what else can be done? We need to work together across Government, industry and education to enhance opportunities for all the population, not just half.

My fourth point is about deliverability. Perkins has 22 recommendations. The hon. Member for Mid Worcestershire said that there is an urgent need to have a marketing campaign. I think that we need to go further than that—we need delivery mechanisms. I would be very interested to hear how the Minister will ensure that every one of those recommendations can be implemented.

I will finish by reiterating my very warm thanks to the hon. Members who have contributed to the debate today and to Professor Perkins. The final words of his review are both telling and ambitious:

“There have been dozens of Government reports, select committees and independent reviews into the future of engineering skills over the past 150 years. I would go further. It is time for concerted action by the profession, industry and Government, to achieve the goals for engineering which we all share.”

The House has demonstrated today that it thinks that a key priority. I hope that we can transcend party politics and work together to make Britain an engineering nation.

Oral Answers to Questions

Iain Wright Excerpts

Thursday 24th October 2013 Commons Chamber

[Vince Cable]

I know the hon. Gentleman’s position, but that is the not the issue. The issue is certainty. There is a lot of risk in the business world. Reopening the matter creates massive uncertainty for employers and makes it even more difficult for them to invest.

[Mr Iain Wright (Hartlepool) (Lab)]

The Secretary of State has referred to the publication from EEF, the manufacturers organisation. The report states that 85% of EEF members said that membership of and staying in the EU is good for their businesses. My hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) mentioned the comments of the chief operating officer of Nissan, who has said that the threat of import tariffs between the UK and the rest of Europe in the event of an exit could be an “obstacle” to further investment by the company in this country. Who has more influence over Britain’s manufacturing policy: Britain’s manufacturers or the United Kingdom Independence party?

UK Trade & Investment

Iain Wright Excerpts

Thursday 12th September 2013 Westminster Hall

[Daniel Kawczynski]

My hon. Friend refers to the lack of interest in this debate from the Labour Benches. I must say that we have double the number of Labour MPs for this debate that we had for my previous debate, because at least there is one.

[Mr Iain Wright (Hartlepool) (Lab)]

Two.

[Daniel Kawczynski]

Well, there is only one apart from the shadow Minister. Last time, there were zero.

--- Later in debate ---

[Mr Iain Wright (Hartlepool) (Lab)]

May I begin by saying what a pleasure it is to serve under your chairmanship again, Sir Roger? I thank the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) for his hard work in producing his important report. It is well researched, with significant real-life observation of the difficulties businesses have experienced in securing help to export, and it provides astute and telling recommendations.

As the debate is on trade and investment, let me also take the opportunity to thank the outgoing Minister for Trade and Investment, Lord Green. In all his dealings with me, he has been the epitome of courtesy and decency. He has been admirably non-partisan in his approach, wanting only what is best and most advantageous for Britain and its businesses. I have not heard a single business man or woman speak ill of Lord Green—quite the reverse: they are unanimous in their praise and admiration of him. Opposition Members will sorely miss him, and I hope the Minister will pass on our best wishes to Lord Green as he reacquaints himself with his grandchildren.

I mentioned the non-partisan approach being taken to this topic, and there is not much dissent from the notion that the House—indeed, the whole country—would like to see an export-led recovery. There is a huge world of opportunity for British business. The global economy is expected to double in size within a dozen years. The number of middle-class people in the world, with higher consumption and higher disposable incomes, will triple to 5 billion, and they will all be eager to buy iconic British brands and fantastic British products. As has rightly been said several times this afternoon, the British brand is strong and well respected in international markets. Every constituency has businesses that are dynamic, productive and eager to sell abroad. Given its mercantile history and current strengths, this country should be at the forefront of modern exporting nations, but it often feels as though that is not the case.

Exporting is good for business. Actually, it is beneficial not just for individual companies’ short-term bottom line, but for the prosperity of the wider economy and society in general. All the evidence shows that an exporting business tends to be a successful, sustainable and socially aware business. An exporting company tends to employ more workers and offer better wages than an equivalent non-exporting company. Companies that export have been shown to be more productive and to invest more in research and development, thinking more about the long term, and they are anxious to capture and maintain international competitiveness. I want to concentrate on that point, because there is a strong link between innovation and exporting.

Export discipline can demonstrate whether a firm or a product can move away from the often insular domestic market and navigate the harsh seas of the global marketplace; it will demonstrate how competitive a business or a product actually is. A business with a desire to export overseas has the discipline and the ambition to develop new products and services that will better serve the new export markets. It will be sensitive and responsive to customer wishes—always the hallmark of a successful business. We therefore have the possibility of a virtuous circle for exporting businesses, whereby they are exposed to new demands, fresh ideas and increased competition, which in turn makes them leaner, more productive, more outward-looking and better disposed to thinking about new product development and improved profitability. We should all encourage that as much as possible.

In that general context, there is a lot of political agreement over the current strategy on trade: we should emphasise the need for an export-led recovery; move attention away, although not entirely, from the low-growth, traditional markets of the EU and the developed world; and consider the emerging, high-growth areas, by which I do not necessarily mean the ones that are often trotted out, such as the Brazils, Russias, Indias and Chinas—we may have missed a trick on that—but the next 11 countries, such as the Nigerias, Thailands and Vietnams of this world. Those countries—in Africa, the middle east, south-east Asia and Latin America—will experience very high growth. Britain has historic links with all those regions, so we should be exceptionally well placed to take advantage of them and to seek deep, long-lasting trade relationships with the growing markets in those countries.

However, the key point, and the central charge of the hon. Gentleman’s report, is this:

“There remains a gulf between the target set, and the tangible progress made thus far”.

An export-led recovery, with a greater proportion of our trade coming from high-growth markets outside the EU, simply has not materialised. Last week, the Office for National Statistics published data showing that the UK trade deficit was £3.1 billion in July, compared with £1.3 billion the previous month. That is the largest trade deficit since October 2012. The value of non-EU exports fell last month by £2.2 billion, to £11.8 billion.

The Minister will undoubtedly say that one should not make judgments based on one month’s data, and he would be right. However, the fact is that, based on longer-term trends, we have not made the substantial progress everybody wants to see in growing our way towards sustainable recovery through trade. The value of exports to non-EU countries is more or less where it was two years ago, when the UKTI strategy was launched. We have run a substantial trade deficit for many years—some Governments have fallen as a result of adverse balance of trade announcements—and the trade gap in the past four or five years has, more or less consistently, been about £8 billion. Despite the Government’s rhetoric, which the Opposition support, they have essentially failed to change that trade position. As the ONS said of UK trade performance,

“annual growth has slowed considerably since 2010 and 2011 when growth was seen to accelerate as part of the global recovery from the financial crisis in 2008 and 2009.”

Given the recent fall in sterling’s value, we could and should, as the hon. Member for Windsor (Adam Afriyie) said, have had a boost to our exports, as the pound’s fall made our products cheaper to the rest of the world. Does the Minister share the disappointment of the House and the Bank of England over Britain’s trade performance? Does he concede that Britain should be doing better on exports than it is?

In their White Paper and the UKTI strategy, the Government announced the objective of doubling British exports to £1 trillion by 2020, which is quite commendable, and we would support that. However, as the report by the hon. Member for Shrewsbury and Atcham says, the Government are expected to fall significantly short of that target—by about £150 billion. Does the Minister accept that forecast? Does the doubling of UK exports to £1 trillion remain a Government objective, and is it still achievable? Will he take this opportunity to reaffirm or revise the value of UK exports the Government are working towards for 2020?

As has rightly been said several times, the way in which UKTI interacts with companies and their products is vital to our success, or otherwise, in boosting exports. Companies in every constituency will be at different stages. Some will never even have thought of exporting, and they need to hear—often at a very basic level—of the real potential benefits for their business. Some will already appreciate the value of exporting and will be seriously and actively considering it, but they need to make that first step, so they need practical help with making contacts and mitigating risks. Others will be well versed in exporting, and they will be familiar with, and confident about, supplying overseas, but they may need help to identify potentially lucrative new markets and territories. Identifying what stage a company is at and ensuring that UKTI’s service is meaningful to it at that stage are the hallmarks of whether UKTI is successful in boosting exports.

The hon. Member for Shrewsbury and Atcham’s report rightly makes clear the need for UKTI to provide tailored services that are relevant and applicable to businesses at their particular point in the export cycle. Is the Minister therefore confident—this point is raised in the report—that UKTI is proactive enough and has the right skill set, processes and individual product lines to achieve the objectives we all share on boosting exports?

I want to think about things from the viewpoint of a company in Hartlepool or Shrewsbury with a great product that it wants to export. The hon. Member for Wealden (Charles Hendry), who was a great Energy Minister, knows that we are a centre of excellence for energy and for oil and gas companies. If a small company in Hartlepool was thinking about supplying the Kazakhstan oil business, what on earth would be the right way to help with that? What on earth should the company do to learn about exporting—especially if, given that it was a small firm, it was juggling many other things? Those running the company would worry about lack of contacts, possible language barriers, regulatory and taxation problems in a foreign land, and the fear of not being paid from halfway around the word. How would UKTI identify such a company in my constituency or any other constituency as a potential exporter? How would it get the astute understanding to know what the business was about, and provide, at the time it was needed, a bespoke service to help it navigate through the challenges of exporting?

The hon. Member for Shrewsbury and Atcham referred to skill sets in his report. I do not want to disparage the skills and expertise of UKTI staff. The hon. Member for Wealden said that they were lean and thinly spread—if only I were that lean and thinly spread. However, I want to ask the Minister a question on an important aspect of the issue, which we hear a lot about with respect to more general Government support and advice for business. What proportion of UKTI staff have practical, tangible experience of running a business and exporting? Are there staff in a position to offer tailored, relevant advice so that firms will respect their opinion, because they have been there, done it and, probably, exported the T-shirt to prove it?

Communication and dissemination of information seems to be a particular weakness. The hon. Gentleman’s report cites another report, from the Federation of Small Businesses, stating that only one fifth of small firms export, and that that rate has not changed since 2010. That statistic causes me concern, because on that basis the penetration of UKTI’s message to small firms has not materialised.

The hon. Gentleman’s report also cites the conclusion of the Institute of Chartered Accountants in England and Wales, of which I am a member, that knowledge of UKTI in the business community is “worrying”. Some 68% of small and medium-sized firms and—this astonished me—81% of large firms are not familiar with UKTI. What can be done to address that big weakness? Will the Minister take the opportunity—with what I think would be the full support of the House—to make sure that the export week coming up in early November will be strongly communicated in every constituency and media outlet? That would show that Britain is open for business and the world wants to trade with us, and it would give British-based companies the opportunity to do so.

[Daniel Kawczynski]

I am grateful to the hon. Gentleman for giving way. He has hit the nail on the head. I am delighted to have heard a Labour spokesman make those comments, and I hope I was right in understanding that he agrees it would be better for UKTI staff—and would enhance their credibility—if they had direct previous experience of running companies and exporting. One of the biggest problems is that historically many people in UKTI have come from the civil service and have not had experience of running small businesses or trying to export. Does the hon. Gentleman also agree that those staff need a salary structure geared around targets, so that there is an incentive to go the extra mile for additional business?

[Mr Wright]

I agree with a lot of what the hon. Gentleman says. The Hartlepool company wanting to export its products to the oil sector in Kazakhstan would respect UKTI if the official could say, “I’ve been there; I know exactly what you are going through. These are the problems that I had to overcome when I was running my own businesses, and you may want to consider them.” When companies feel that there is relevance, there is immediate buy-in. I shall come on to the question of how UKTI staff are remunerated. It is an important point that the hon. Gentleman covered in his report, but at this stage I would say the emphasis on quality as opposed to quantity in UKTI is vital and needs to be attended to.

I want to return to the question of how UKTI can be more meaningful and provide a more bespoke and tailored approach, as well as how the Government can adopt a more co-ordinated approach across Whitehall and central and local government. I am interested in the Minister’s thoughts on what happens when a firm must interact with the state on some formal point such as registering for VAT for the first time, filing a tax return or paying business rates. How can we make sure that the state can recognise that firm as a potential exporter and be proactive about outlining UKTI’s offer to it, understanding that the firm has reached a certain stage in its business life and growth and asking “Have you thought about overseas markets as the next step?”? Can we nudge that to happen when businesses must interact?

UKTI has a target to contact 50,000 firms annually by 2015, which seems to me at once ambitious and far too low. Given current trends, I do not think it is likely to be achieved. The Minister may correct me on the precise, up-to-date figures, but I think that we have reached about 32,000 firms, with two years to go. Is the Minister confident that he will achieve his target, and, if so, on what does he base that confidence? On the other hand, if British ambition is to increase and British firms are to export at the EU average rate of one in four, UKTI needs to make meaningful contact with about 250,000 extra firms, based on the country’s company base of about 4.8 million enterprises. I am interested in finding out from the Minister how the figure of 50,000 was arrived at, and whether UKTI should be stretched more with respect to its active involvement in seeking out firms.

I want to investigate further what a contact is. Is it a passive, single phone call? Is it saying, “We have a website; please have a look at it”? Is it a visit to the firm, actively delving, and saying, “What are your ambitions? What do you want to achieve? How can we help you do that?” The report, as I mentioned, says that the emphasis is on quantity over quality, and I think that is a fair point. My central question, therefore, is how UKTI provides meaningful engagement and contact with firms, and how that contact is maintained and deepened over time. Crucially, instead of contact being reactive and passive, how are leads and contacts followed up? The report is full of examples of a lead or inquiry not being followed up. I was particularly dismayed to read about a national trade association giving UKTI a list of about 300 members that were export-ready and seeking help with their first step, so that UKTI would pursue them.

[Daniel Kawczynski]

indicated assent.

[Mr Wright]

The hon. Gentleman is nodding as he recalls what he said in his report, which is that after four months, no contact had been made by UKTI with any of those companies. If that is what is going on, this country is undoubtedly missing lucrative commercial export opportunities, so what sort of meaningful engagement and follow-up is being carried out?

What work is done after trade delegations? The aftercare is the crucial bit to ensure that leads are picked up and vital relationships maintained. The hon. Member for Stafford (Jeremy Lefroy) mentioned Germany. France and Germany are masters of maintaining long-term relationships overseas, for the purpose of starting and developing export markets. What are we doing to achieve the same? He also talked about financing exports. Many companies struggle to get the necessary finance to export, whether that is loans to expand production or research new markets, finance to pay for the order, or insurance against bad debts in overseas markets.

A report on finance and exports by the House of Lords Select Committee on Small and Medium Sized Enterprises said that banks were not interested in helping with export finance, and that they demanded that directors put up their home as security. The report refers to Steel Services Direct Ltd, an exporter, which stated that

“trying to expand in an overseas market whilst worrying about losing your home would put off most people”.

I agree. That is part of a wider context in which bank lending to businesses has contracted in 21 of the last 24 months. I appreciate that UK Export Finance has introduced new products with the intention of addressing the issue, but the hon. Member for Stafford is absolutely right in what he said about scale and penetration when it comes to ensuring that firms have export finance available.

Will the Minister tell the House how many small and medium-sized firms have benefited from each of the new products—the bond support scheme, the export working capital scheme and the foreign exchange credit support scheme? What was the result of the review of those products a year after their launch, and what variations are being planned? Crucially, will he outline what role the business bank will play in encouraging exports when it is finally up and running properly? What sort of time scale are we talking about, and what, if any, new products will be launched?

I keep referring to the hon. Member for Stafford, and I do not want to embarrass him by agreeing with him all the time, but he rightly mentioned the link between inward investment and exports. In my region of the north-east, over the past 20 years or so, and certainly over the last five years, there has been great work from Nissan, which has produced new developments, become ever more productive, and has a focus on exports—some 85% of Nissan cars made in the north-east are exported. Nissan is not seen as a foreign company; it is seen as a north-eastern company that is exporting to the rest of the world. The hon. Gentleman’s point about inward investment having a virtual loop into export markets is well placed.

Does the Minister share my concern that we are slipping in the rankings when it comes to competitiveness and attracting foreign direct investment? Ernst and Young’s attractiveness survey this year said:

“The UK slipped behind Germany…for the first time in new projects…In another first, Germany”

now outperforms

“the UK in attracting Sales and marketing investments, a traditional area of UK”

strength and leadership. Those are concerns. We must always be vigilant to ensure that we maintain our competitiveness and attractiveness, and Germany is snapping at our heels. What is the Minister doing about that?

The report from Ernst and Young also states that investments in England, outside London, were 24% below their 2010 level and that it

“appears that the abolition of the RDAs may be starting to undermine not only the regions in which they operated, but also the UK’s ability to sustain its overall leading position for inward investment.”

It goes on to say that if it continues,

“The weakness of the English regions could damage the UK’s overall ability to attract FDI, in comparison to countries such as France and Germany, which have much more balanced regional portfolios.”

Is the Minister worried about that?

There has been discussion about ensuring that industrial strategy can have a co-ordinated approach to attracting foreign direct investment and exports. I do not want duplication, but is the Minister worried that with abolition of the regional development agencies there seems to be a real loss in confidence in the regions? We have been lucky in the north-east and have attracted Hitachi to help with train production, but that started with One North East. Could it happen again with the loss of the RDAs and their replacement with local enterprise partnerships?

I want to refer to points raised by my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke), and by my hon. Friend the Member for Islington North (Jeremy Corbyn), who made a characteristically passionate speech. He referred to the defence and security export business, but I want to widen that to include the wider export licensing process. The Minister is obviously aware of reports that surfaced earlier this month showing that his Department, the Department for Work and Pensions, granted export licences for chemicals to Syria in 2012. Those chemicals could have been used in the manufacture of chemical weapons. Does he accept that there should be a full explanation of why the export of those chemicals was approved, especially when there were real concerns about the regime before those licences were granted?

We must make sure that we have absolute confidence in the export licensing process and can ensure that Britain is a world leader in fairness and honour when selling products around the world. Is the Minister looking again at the process to ensure that we do not sell to regimes such as Assad’s? What is being done in response to those concerns?

At a time of rapid and irreversible globalisation, there are huge opportunities for British export companies. It has already been said that much of this country’s historical wealth, whether in Elizabethan or Victorian times, was based on using this country’s skill, imagination and talent to sell our goods to the rest of the world. I passionately believe that in the 21st century, there is greater opportunity than ever before for export markets to provide scope for greater profits for British firms and higher skills and higher wages for British workers.

The role of the state is to offer a sustained, long-term, proactive, tailored and co-ordinated approach to help British-based firms to achieve their potential. We are missing an opportunity to achieve all that we could at a time when other countries—our rivals—are eagerly jumping on those same opportunities. The report of the hon. Member for Shrewsbury and Atcham is an honest, balanced and fair account of where improvements need to be made to help boost exports. We all share the sentiments and passion that he has expressed today. I hope that the Minister will act on a lot of what the report says.

--- Later in debate ---

[Mr Iain Wright]

I thank the Minister for citing those figures, but am I right in thinking that UKTI’s annual report sets a target for satisfaction levels of 80%, yet it has consistently failed to achieve that? What active steps will the Minister take to ensure that it hits its targets on customer satisfaction?

[Matthew Hancock]

It is indeed important to have a target for satisfaction, and if three quarters are satisfied or very satisfied, that shows we are heading in the right direction, but more can always be done. For instance, since 2011, a realignment of UKTI has taken place to ensure that it can better serve the needs of UK plc. The process has included: the introduction of stronger senior management with private sector experience; new private sector delivery of trade services in England, with incentivised contracts, which my hon. Friend the Member for Shrewsbury and Atcham asked for; improving performance overseas and strengthening teams in key growth areas, such as China and India; and reviewing targets to ensure that they incentivise the behaviour of individuals on the ground. The right balance is having strong direct accountability to Ministers, which is appropriate, alongside the right incentives to give individuals on the ground the autonomy to be able to promote trade.

Several hon. Members mentioned—favourably or otherwise—the fact that UKTI reports to two Departments. I am a Minister in two Departments, and it is true that it is necessary to have co-ordination between the two. It would not be right to remove accountability for UKTI from either the Foreign Office or the Department for Business, Innovation and Skills, because UKTI is precisely about the link between business and our international relations. This is about, on the one hand, strengthening links between UKTI and domestic business, for which the Business Department is responsible, and, on the other hand, strengthening links between UKTI and our diplomatic service, which has happened a great deal over the past two or three years. Both those are valuable and necessary if the service is to perform, so it is therefore right that UKTI reports to a Minister who sits in both Departments but, of course, it is accountable to one Minister—my noble Friend in the other place—so there is a clear line of sight for ministerial accountability.

Several hon. Members talked about the links between UKTI and the Department for International Development. UKTI has an aid-funded business service that works with DFID to try to ensure that opportunities for procurement through DFID, not least from SMEs, are valuable. UKTI holds seminars with businesses, including SMEs, and it will hold another seminar in November to ensure that SMEs and domestic British companies have the opportunity to make the most of procurement through DFID, which these days, of course, bears the Union Jack.

My hon. Friend the Member for Stafford (Jeremy Lefroy) talked about the importance of inward investment and the business bank. It is vital to ensure that finance is available for exports, and funding for lending and strengthening the domestic private banking system are important parts of that. We are also seeing the growth of challenger banks, which are increasingly providing business finance. We will, of course, have the first ever British business bank, which is being set up precisely to look at the sorts of investments that he talked about. It is right that the British business bank does not take direct instruction from Ministers for each loan because, quite properly, they have to be made on a commercial basis.

--- Later in debate ---

[Matthew Hancock]

Well, there you are. It sounds as though it works in practice in Shrewsbury as well as in Haverhill, and I am sure that there are other parts of the country to which it can also reach.

There was a brief discussion about trade figures. I gently point out to the hon. Member for Hartlepool that the Opposition cannot have it both ways. They cannot blame the fact that growth has been slower than was forecast in 2010 on the Government’s domestic policies and then complain that growth in exports has not been as strong as we would have liked. In the past three years, there has been a massive crisis in the eurozone; I do not know whether he has been watching TV. One of the Government’s arguments has been that that has had a negative impact on the British economy. That argument is supported by a huge range of independent and international experts.

It is great to hear a Labour Front Bencher come to his senses and make the argument that, partly owing to the eurozone, export performance has unfortunately not been as impressive as we had hoped and that that has had a dampening impact on the UK economy. I will report back that the Labour party seems to be getting the message that that has been one of the main problems, as was set out in reports by the Office for Budget Responsibility, the OECD and other organisations. That is absolutely terrific.

Exports to India have risen 13% on the year and exports to non-EU countries rose by just over one fifth between 2010 and 2012. The move has been gradual, but for the first time in my adult life, exports to non-EU countries have become bigger than exports to EU countries. It shows the importance of rebalancing trade institutions such as UKTI around the world, in the EU as well as outside it.

[Mr Iain Wright]

The Minister selectively quoted the growth in non-EU exports between 2010 and 2012, but he will recall that I mentioned the £2.2 billion drop in non-EU exports last month. Given sterling’s performance and declining value, how does he explain that and what is he going to do about it?

[Matthew Hancock]

We will pursue the strategy on which we have set out, which is ensuring that the UK economy is strong at home by dealing with our debts, making it more competitive, doing everything that we can to win what we have called the global race and ensuring that UKTI plays its part, not least by delivering a UKTI budget increase over the past couple of years, so that it can reach the target of doubling exports to £1 trillion, as the hon. Gentleman mentioned.

The Government’s ambition of doubling exports to £1 trillion by 2020 also involves getting 100,000 more UK companies exporting. The hon. Gentleman asked how we are doing on that. As he said I would say, the monthly figures fluctuate, but UKTI is on track to achieve its target of supporting 32,000 businesses for the 2012-13 financial year. Some 90% of those 32,000 businesses are small and medium-sized enterprises. That support has helped generate additional sales of more than £33 billion. I would say that that is money well spent.

My hon. Friend the Member for Gloucester (Richard Graham), who is no longer in his place, discussed the importance of encouraging small businesses to export. He particularly mentioned chambers of commerce and other business groups. We are piloting the use of chambers of commerce; as non-governmental organisations, they can play a different role and fill a niche. There are 20 pilots, including in Brazil, India, Hong Kong, Russia and Singapore, using chambers of commerce as well as UKTI. He also mentioned one of my personal passions: Education UK—a specific unit within UKTI to help our education exports.

I will also come to the point about the link with the British Council. My hon. Friend mentioned the West Kowloon cultural district project, which has been supported by both UKTI and the British Council working together. That is an example of those two organisations working collaboratively to very good effect.

The good news on languages is that, although entries to A-level were down, entries to GCSE rose sharply. I hope that after a long period of decline, the increase in GCSE entries this year shows that people in English schools who take languages are coming through the pipeline. Let us hope that that is an early indicator of better things to come.

The hon. Member for Islington North (Jeremy Corbyn) asked about defence exports. Of course, as he said, the end user certificate system has been in place for a long time—more than 20 years—and the Government have confidence in the export licensing system, which we think is thorough and robust enough to address human rights issues that might arise from individual sales to individual countries. Any application for an export licence is considered against consolidated criteria in the light of circumstances in that country.

That brings me to the point raised by the hon. Member for Hartlepool about exports to Syria specifically. He mentioned two licences issued in 2012. I can confirm that those licences were never used to export chemicals and were revoked under the new EU sanctions. I hope that that addresses his question.

Manufacturing and SMEs

Iain Wright Excerpts

Wednesday 4th September 2013 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

Good afternoon. It is a pleasure to serve under your chairmanship, Dr McCrea. I join others in congratulating the hon. Member for Carlisle (John Stevenson) on securing this important debate. I am pleased that there have been so many contributors to a well-informed and consensual debate.

It is clear that manufacturing matters to this country and to the House. Indeed, manufacturing is essential to any advanced economy that wishes to maintain or enhance its living standards. An effective manufacturing policy, based on innovation, is the means by which productivity and wage rates will grow. It is equally clear from listening to hon. Members’ contributions that in every corner of the country we have dynamic, enterprising manufacturers—Mallinson Fabrications in Carlisle or Burgon and Ball in Hillsborough, among others—keen to expand, export into new markets, invent new products or processes and employ more people. An effective and proactive industrial policy will ensure that Government can work with industry for the long-term and tap into that huge potential.

We warmly welcome recent increased output in manufacturing and order books, and the Opposition will encourage any sign of recovery. There is a long way to go however: manufacturing output remains 10% below pre-crisis levels and is still performing below the wider economy, which is 3% off its peak. Despite the positive news, manufacturing is still expected to contract by 0.5% this year. Despite the good news, we are not seeing the much-vaunted march of the makers that the Chancellor promised. Will the Minister comment on that and on today’s news that the World Economic Forum’s global competitiveness report shows that we have slipped down the competitiveness rankings from fourth to seventh and down the infrastructure rankings from fourth to 28th? It is a long-term concern for the productivity and innovation of our manufacturing base, so will he comment?

Every Member who spoke mentioned access to finance. It remains the most significant barrier to manufacturing businesses’ growth. Every initiative the Government have attempted to put in place, from Project Merlin to funding for lending and from the national loan guarantee scheme to the enterprise finance guarantee, has failed in its objective. Net lending to businesses has contracted in 21 of the past 24 months. Commenting on the funding for lending figures, Dr Adam Marshall, director of policy at the British Chambers of Commerce, said that

“the credit environment is not where it could or should be, and many dynamic, new businesses are still struggling to find the funds they need to fulfil their growth potential….A fully functioning Business Bank is essential to plug this gap, but it must be delivered with greater urgency and scale than is currently being proposed by the government.”

Will the Minister comment? Businesses are not confident that the Government’s business bank will help them. A recent survey by Bibby Financial Services showed that only 6% of small and medium-sized businesses believed that the business bank would benefit their firm. David Petrie, head of corporate finance at the Institute of Chartered Accountants in England and Wales, of which I am a proud member, stated:

“The proposals put forward don’t appear to address the needs that businesses have and the finance gaps that exist. It is shaping up to be a missed opportunity to make a real difference, especially to micro and smaller businesses.”

Will the Minister outline how he will ensure that the British business bank works for manufacturers to ensure that long-term capital is put in place to allow manufacturing firms to innovate and grow?

I think that every hon. Member also mentioned procurement, which can be an effective lever for Government to enhance skills, attract apprentices, improve and incentivise innovation and ensure that we have a resilient manufacturing base. What are the Government doing to ensure that smaller and medium-sized businesses, particularly in the manufacturing sector, benefit from Government contracts?

[Mr Andrew Smith]

My hon. Friend is making an excellent speech. Will he also ask the Minister whether he saw the report in The Daily Telegraph that quoted research by Opinion Leader? It said:

“Despite efforts to cut red tape and promote competition, only 6pc of small and medium-sized enterprises…believe it has become easier to win public sector contracts”

in the past two years,

“and 26pc say it has become more difficult”.

Should the Government not explain why they think that is?

[Mr Iain Wright]

My right hon. Friend makes an excellent point. The article goes on to say that the Government have a target of awarding 25% of public contracts to small and medium-sized businesses, but the figure for 2012-13 is only 10.5%. We are a long way from the target. Is the Minister confident that he will hit the target and ensure that small and medium-sized businesses in the manufacturing supply chain have a chance of winning Government work?

Business investment is the means by which we can enhance and strengthen manufacturing growth, as the hon. Gentleman for Warwick and Leamington (Chris White) mentioned in his thoughtful, well-informed speech. Since 2010, Britain has experienced the biggest fall in investment as a share of national income of any G8 country, other than Italy. We have seen a 0.8 % drop in the level of capital investment. Our competitors, such as Canada, France, Japan, Russia and the United States, are improving their business rates. Most other nations do better than us; according to The Economist, we are ranked 159 out of 173 countries for investment as a share of GDP. We are on a par with Mali.

The situation is not improving. According to last week’s figures from the Office for National Statistics, general investment for quarter 2 of 2013 fell by 4.8% from a year ago and investment in machinery and equipment, which is probably most related to manufacturing, fell across the same period by 3.4%. To improve our competitiveness, our business investment performance must improve. Will the Minister acknowledge that the levels of business investment are unsatisfactory? They are getting worse on his Government’s watch and are inconsistent with the House’s and the country’s aspirations to being an innovative and competitive high-value manufacturing nation. What will he do to ensure an environment of better business investment?

Supply chain resilience is key. Over the past 30 years, with de-industrialisation, we have seen the hollowing out of the UK manufacturing supply chain, and that is hindering the potential of manufacturing and growth. In an excellent speech this afternoon, the Chair of the Business, Innovation and Skills Committee, my hon. Friend the Member for West Bromwich West (Mr Bailey), made that point in relation to aluminium foundings—I think I have that right. He pointed out that the Society of Motor Manufacturers and Traders stated that the lack of an adequate supply base is forcing some vehicle manufacturers, such as Jaguar Land Rover, but also Nissan and others, to limit their activities in the UK to final assembly operations, relying on foreign R and D and component development and manufacture. The Automotive Council concluded that at least 80% of components in vehicle assembly could be sourced from UK suppliers, but at present only about 36% are. There is enormous scope and potential for manufacturing here, and I hope that we can work together in the House to support it.

In that vein, I applaud what the Government were trying to do with the advanced manufacturing supply chain initiative: trying to improve the global competitiveness of UK advanced manufacturing supply chains, by supporting innovative projects where the UK is well placed to take a global lead. It is an important initiative, and I want to see it succeed for the good of the British manufacturing base. Will the Minister let the House know how much of each funding round—I think we are up to the fourth round—has been not just allocated but provided to the relevant firm, how much of each round has been spent, and how many jobs have been created or safeguarded?

In the short time I have available, I want to finish on skills. Several hon. Members have mentioned that manufacturing firms are finding it difficult to recruit appropriate skills, and a recent CBI/Pearson survey found that two fifths of employers who required employees with skills in STEM—science, technology, engineering and maths—found it difficult to recruit. The hon. Member for Carlisle placed the issue in the context of demographic changes—more and more workers will be retiring shortly. How are the Government dealing with that urgent issue? Does the Minister believe that recent changes, such as the downgrading of the engineering diploma and the dismantling of impartial information, advice and guidance, provide a co-ordinated, cross-Government approach to business and industrial needs? He straddles the Departments for Business, Innovation and Skills and for Education, so what is he doing to ensure that we have a co-ordinated approach to providing the skills that manufacturing needs?

It has been clear, in what has been an excellent debate, that manufacturing matters to this country as a means of improving our competitiveness and raising living standards. We all want manufacturing to succeed and a Government who support it, and I hope that the Minister can address the concerns raised.

Oral Answers to Questions

Iain Wright Excerpts

Thursday 18th July 2013 Commons Chamber

[Vince Cable]

The hon. Gentleman is correct to say that our overall export performance would improve considerably if more British companies were exporting. The big contrast with Germany is that roughly twice as many of its small and medium-sized enterprises are involved in exporting. UKTI has been substantially reformed in the past couple of years, and it now has a much more small and medium-sized company focus. It has activities around the country, and we have a lot of evidence that its outreach is substantially improving. I hope that it will reach the companies in the hon. Gentleman’s constituency too.

[Mr Iain Wright (Hartlepool) (Lab)]

At the last Business, Innovation and Skills questions, the Secretary of State admitted:

“The figures on exports are not great”.—[Official Report, 13 June 2013; Vol. 564, c. 470.]

Since then, the UK trade deficit has widened to the point at which it is now the largest trade gap in the European Union, and the widest it has been since 1989. Following on from the question from my hon. Friend the Member for Blaenau Gwent (Nick Smith), will the Secretary of State tell the House whether he is happier with export performance this month? What changes to policy or priorities will he now make to facilitate an export-led recovery, or does he not think that changes are necessary?

[Vince Cable]

Monthly variations are not the issue, but there is an underlying problem. British exporters are currently doing extremely well in the big emerging markets. We have rapid export growth to countries such as Russia, China, India and Brazil, for example, but exports to the eurozone are weak, for obvious reasons. We accept that there are underlying weaknesses. We have not had the recovery of export volume growth that we would expect following a substantial devaluation. Much of this relates to the way in which supply chains were hollowed out in the long period of manufacturing decline, but we are trying to rebuild them through the industrial strategy.