Manufacturing and Engineering

Neil Carmichael Excerpts

Tuesday 6th March 2012 Westminster Hall

[Neil Carmichael (Stroud) (Con)]

It is a great pleasure to see you in the Chair, Ms Clark, not least because we are both on the much-loved Environmental Audit Committee, where we have some fun, as well as doing some serious work. [Interruption.] It is always good to set the scene and to highlight co-operation.

It is also great to see the new Minister. I congratulate him on his appointment to an important place—the Department for Business, Innovation and Skills. It clearly has some important tasks ahead, so I wish him good luck and good fortune.

This is a timely debate, not least because the north-east has just had the good news that Nissan is making a massive investment in the community of Sunderland. Incidentally, that investment was supported by the regional growth fund to the tune of £10 million, which is great news. I come from the north-east, and I know that people in the area are particularly pleased with the way Nissan has supported employment and contributed massively to our export position over a number of decades.

The debate is also timely because the Engineering Employers Federation conference is under way today. That is emblematic of the importance of manufacturing and engineering. The Leader of the Opposition will say a few words there, but so, too, will the Chancellor of the Exchequer. That is obviously worthy of mention.

Before I go into the meat of what I want to say, it is critical to underline the importance of the Government’s deficit reduction programme, which will lead to stability in the economy and to low interest rates. We cannot talk about rebalancing the economy if interest rates are not low enough to encourage investment and to support long-term, sustainable economic development. Fundamentally, our macro-economic policy is absolutely right, and we should rest every other argument on that central point.

In April, I am holding a festival of manufacturing and engineering in my constituency, and I am pleased to say that the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), is coming along to open it. The festival will run for five days, and I have three reasons for holding it. The first is to celebrate manufacturing and engineering in my constituency, because we have a large number of very effective firms making high-added-value, innovative products that are often destined for export.

The second reason I am holding the festival is that I want to create an environment in which people feel they want to invest even more in my constituency. It is necessary to point out where we are strong and to say that we can be stronger, with appropriate support.

The third reason I am holding the festival is that I am obsessed with the idea that young people need to be channelled towards manufacturing and engineering when they think about a future career. We have to make it clear that young people should think about manufacturing and engineering. They should do that for themselves because manufacturing and engineering would be a good prospect for them, and they should do it for the economy because it is absolutely necessary that we have the people with the right skills.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

I congratulate my hon. Friend on securing this important debate. On apprenticeships, is he aware that 30% of the senior management at Rolls-Royce, which has a large facility in my constituency, started their professional lives as apprentices? That demonstrates what a fantastic career people can carve out in manufacturing. It also clearly demonstrates social mobility in action.

[Neil Carmichael]

My hon. Friend is absolutely right, and I will talk about apprenticeships later. I notice that he has Airbus literally around his neck—its name is on his lanyard—and that is a signal that he understands the importance of large firms such as Airbus and Rolls-Royce in developing our manufacturing and engineering.

The programme for my festival will include investment. I will, for example, highlight the good work of Handelsbanken, which is an effective bank; I have mentioned it on the Floor of the House in connection with investment. We need the right banks—ones that know and understand the sectors they are trying to invest in and the people they are investing with. It is a question not simply of checking out the assets and borrowing against collateral, but of understanding business planning and recognising opportunities for business growth.

Next, the festival will talk about supply chains, which are critical to the economy. It is all very well saying that things are made in Britain when a large number of those things contribute to a bigger thing that is perhaps made in Europe. The importance of supply chains—certainly to my area—cannot be underestimated. The same applies to Wales, Scotland and all parts of England, and it has to be understood. I therefore welcome the measures that the Government are taking to promote good supply chains.

We will also have to talk about women in manufacturing and engineering. We cannot go on with just 2% of girls thinking that physics is a good subject to take; we have to encourage more girls to take it. If we check the economies that are doing as well as, or better than ours, we see they are better at recruiting women into manufacturing and engineering, and we have to do the same.

I am also going to talk about energy and recycling, because such new technologies are important in generating ideas for the future.

Last but not least, we have to get into schools to make sure that they are properly linked to business and that there is a proper interchange of ideas and understanding. We cannot have schools simply saying, “We’re not interested in business, because that’s beyond our ken.” Instead, we have to make sure that schools fashion their courses in ways that encourage pupils to get involved, and interface with, the world of manufacturing.

[David Simpson (Upper Bann) (DUP)]

I agree entirely with what the hon. Gentleman has said, and I congratulate him on obtaining the debate, but does he agree that we urgently need to look at the cost of doing business? I was in the manufacturing business for more than 30 years, and the cost of manufacturing in this country has gone through the roof. Something needs to be done to help businesses to export and manufacture more.

[Neil Carmichael]

The hon. Gentleman is absolutely right. That is at the nub of the issues I am coming to. I thank him for his intervention, and I am grateful for his support.

Lots of firms are supporting my festival of manufacturing, and I should name them because they are doing a huge amount. Renishaw is a fantastic engineering firm with factories in my territory. It is really innovative and good at coming up with new products, and it is determined to promote exports. Incidentally, it is also interested in the protection of patents.

There is also Nampak Plastics. One would not think that designing milk bottles was an engineering activity, but it is. Nampak has come up with a milk bottle that is incredibly handy in terms of getting it out of the fridge, but which also uses recycled plastic. Another firm is BPI, which is very effective at turning farm waste products, such as silage wrap, into raw materials for firms such as Nampak to use. WSP—formerly part of Milliken—is the world’s best manufacturer of tennis ball covering and snooker table cloth. It operates in one of the oldest mills in my constituency, and it is a fantastic firm.

There is also Omega, which is a great recruitment firm in the technology sector. I have already mentioned Airbus. Although it is in Filton, near Bristol, it is also supplied by firms in my constituency. That underlines the point that I made about supply chains. Finally, there is Delphi, which makes virtually all the injectors for large, heavy lorries, and it is in Stonehouse.

The policy areas that I want to talk about are straightforward. To begin with banking, I have already mentioned the need for responsive local knowledge, with more emphasis on the plan than on assets, and I want to ensure that the reform of banking, through the Vickers report, brings that about. We must be certain that high street banks and new banks, with new approaches to investment, will be more flexible, and more willing to take early investment decisions. I would suggest that anyone who does not think that is important should go to Germany and ask businesses there what kind of banking they have. They will say that it is exactly what I recommend, and that that is one reason why German firms get started and keep going.

[Jeremy Lefroy (Stafford) (Con)]

On that point, does my hon. Friend recognise that in Germany the top four banks account for some 13% of lending to businesses, whereas in Britain the figure is 84%? That gives an idea of the diversity of banking in Germany, which obviously has a more successful manufacturing sector than we do.

[Neil Carmichael]

That is right, and a good point, which underlines the one I was making. I like statistics that do that, so I thank my hon. Friend. We simply must make sure that we have that kind of range and opportunity.

I wanted to discuss planning. We need a cultural change in local authorities. They must start to think in terms of economic growth, as well as slapping up houses, so to speak. We cannot have them being awkward about business planning applications. I came across a good example yesterday, relating to investment in our super-broadband highway. Too often planning authorities stand in the way of the very investment that is needed, by being awkward about granting planning permission; that is something we must deal with.

Procurement is the next area I want to mention. There is another great firm in my constituency: DuroWipers makes the best wipers imaginable for battleships, or any ships, in really rough weather. They will not break. What does the firm want? It just wants better access to the big buyers such as the Ministry of Defence. We say that we want small businesses to have that access, and we must make sure they get it. DuroWipers is a good example of the kind of firm that would benefit enormously.

My hon. Friend the Member for Filton and—

[Jack Lopresti]

Bradley Stoke.

[Neil Carmichael]

Yes. My hon. Friend will have to speak up, because I am a bit deaf. He talked about apprenticeships. Training and skills are critical. In virtually every firm in my constituency where I have talked to people, they talk about that. ABB, a global leader in power transmission and distribution technologies, is a good example. In Stroud—in Stonehouse—one of its biggest factories employs 250 people and makes gear for the water and power industries. Sixty per cent. of its products are exported, so that is an example of success not just for local employment but in the sense of reaching out to markets. That firm keeps telling me that we must narrow the STEM skills gap—science, technology, engineering and maths—and it is right to say that.

That is a critical fact, and it means we must focus on maths and science in schools. We must ensure that pupils have access to good teaching, and that they get results that they are comfortable with, so that they can look for the jobs that are available, which will be good for them. That underlines the point I made before—but it keeps coming up in business—about the need for more contact with schools, and the need to get in early, to encourage young people to think of manufacturing and engineering.

One thing that I would like—I am not sure that we will get it, but the Budget is coming up, so I shall mention it—is national insurance relief for companies that support apprenticeships. That is an interesting idea and I am putting that marker down now. We need an update of careers advice, so that careers advisers are fully aware of the opportunities in manufacturing and engineering. Of course, ABB has had some successes in apprenticeships, because one of its apprenticeships is currently in the final of the Gloucestershire Apprenticeships Awards. That is great news; such local recognition is important to businesses and shows what good value apprenticeships are.

The Government have taken some great steps on research and development, but we must be sure that we do the best we can for those who are interested in it. It is true that the manufacturing sector, contains a large research and development sector, and that many firms produce groundbreaking products, but we must carefully manage the transition from academic research into the production of useful commercial products. I referred earlier to patents, and to firms such as Renishaw, which has a good relationship with academic organisations. However, we must think carefully about the question of patents. We need to ensure that the relationship between the academic and business worlds is mutually beneficial, and that it encourages the right degree of investment.

[Jack Lopresti]

Just for the record, my constituency is Filton and Bradley Stoke. My hon. Friend and I are virtually neighbours, so he should remember.

I wanted to ask whether my hon. Friend recognises the importance of university technical colleges in increasing the range of training and opportunity for young people, and providing the link between business, manufacturing and the education sector.

[Neil Carmichael]

I thank my hon. Friend for his correction about the name of his seat. I was slightly confused about it, because I know it is getting a new name in the boundary review, and I was discussing that with him yesterday. I apologise for my misunderstanding.

My hon. Friend is right. The UTCs are important. I fully support that initiative and I know that Lord Baker has been pivotal—as, indeed, has Lord Adonis—in supporting those projects. We want more of them. In my constituency, I have been vigorously promoting the engineering centre in Stroud college. Funnily enough, there is another link there with the constituency of my hon. Friend because the college has merged with the one in Filton—and quite right too, because is a good strategic alliance. The point I want to make is that it is necessary for engineering to be promoted in organisations, including colleges.

[Mr Iain Wright (Hartlepool) (Lab)]

I am enjoying the hon. Gentleman’s speech immensely and agree with much of it. What does he think about the decision of the Secretary of State for Education to downgrade the status of the engineering diploma? How will that help to promote engineering among young people?

[Neil Carmichael]

I thank the hon. Gentleman for that interesting intervention. Alison Wolf’s report is clear on the need for proper training in STEM subjects before beginning to worry too much about qualifications. It is right that there should be qualifications in engineering—and those are available in Stroud—but, as I have said, the STEM subjects need to be rigorously promoted in schools and colleges. Alison Wolf made a strong case for taking that line, and I hope the Government will pursue it with rigour.

I want to return to the subject of ABB, which is a member of the Enhancing Value taskforce launched by the Council for Industry and Higher Education. A report is coming out in July on how to make the most of UK research. I hope that the Government will read it and draw lessons from it, if it contains significant lessons; judging by the quality of ABB, I am sure that it will.

No discussion of engineering and manufacturing can fail to include a mention of the European Union. It is critical that we should recognise—as the Prime Minister did yesterday, powerfully—that 40% of our exports go to Europe. We are attached to Europe through all the supply chains that I have mentioned, and we must recognise that, in relation to trade development, Europe is a powerful magnet for interests and a strong promoter of our interests globally. A key point that came up in The Economist this weekend is the need to ensure that small firms can become big firms. We must look carefully at how the European Union is regulated and remove any barriers that prevent a small firm from growing.

[Glyn Davies (Montgomeryshire) (Con)]

I thank my hon. Friend for allowing me to intervene and to associate myself with his speech, almost all of which I agree with. The point he makes about small firms becoming large firms is crucial in a rural area. Manufacturing can be a key part in promoting a rural economy. I have spent quite a long time involved in this industry. In mid-Wales, the proportion of manufacturing has grown over 20 years from about 7% to 25%. In an imbalanced economy in which financial services are dominant, a concentration on manufacturing can be particularly beneficial in a rural area. Does my hon. Friend agree with that assessment?

[Neil Carmichael]

Definitely. My own constituency is rural. I have been celebrating, and will continue to celebrate, manufacturing on my patch. I have made it clear that there are still great opportunities for developing manufacturing and engineering in my rural constituency. The issue is to ensure that the right infrastructure is available, which I will come on to shortly.

Let me just finish the question on the European Union. The EU matters to us; we need to be there to promote our economic interests and the interests of our manufacturers and engineers, but the terms of the debate about Europe sometimes become confused. It is essential that we recognise, understand and promote the fact that Britain is part of the European Union and that Europe is a place in which we can and should do business in the most unregulated and appropriate way. We need to send out a signal to our businesses that we are behind them in that project.

There are one or two measures that I wanted to cover, but many of the interventions have already touched on them. One area of Government policy that has not been mentioned is the role of local enterprise partnerships. My own in Gloucestershire is doing some useful work in analysing the needs of businesses, the supply of skills, and the supply chain issues in connection with business. LEPs should work well with local authorities. As it happens, ours is coterminous with Gloucestershire county council, which is doing a huge amount of work in promoting economic development in our area.

A £100 million investment programme is under way and is geared towards focusing on better skills, which is consistent with the work of the LEP. It is also geared towards infrastructure. It has already contributed to the campaign to redouble the Swindon-Kemble line, which will improve the speed and quantity of our rail links, thus ensuring that we have infrastructure that is fit for purpose. It has also invested £7.5 million in broadband, to which I have referred. It is absolutely brilliant that our county council and LEP have a local focus. Critically, I applaud the Government for creating LEPs and for ensuring that local authorities work together and have a duty to co-operate in developing economic growth.

[James Morris (Halesowen and Rowley Regis) (Con)]

I congratulate my hon. Friend on securing this debate. He is making some important points about local enterprise partnerships. The black country LEP, which covers my constituency, has been instrumental in developing a skills agenda for the area, which is absolutely vital, and in getting investment into the i54 enterprise zone. Some £500 million of investment has come from Jaguar Land Rover, which is already having a big impact on the automotive supply chain in the west midlands. I went to visit the high-tech engineering firm Sandvik in my constituency. It said that demand for its machine tools is at a very high level, so I commend the black country local enterprise partnership for the work that it is doing in my area.

[Neil Carmichael]

I thank my hon. Friend for his appropriate and useful intervention. The fact of the matter is that we need a degree of co-operation; we need to work together. Business has recognised that partnership is a good thing. However, there is also a need for competition, so we need to strike the right balance between the role that Government agencies perform, which is largely through partnership, and the role that businesses perform, which is largely through competition. We need the right framework for partnership and for competition. That is how we should look on our relationship with the European Union, the Government and the local authorities.

As I come to the end of my speech, I must say that I am overwhelmed with this general sense of agreement. That is a message that I will promote not just here to the Minister but to my constituency. I am quite determined to ensure that Stroud is on track for economic growth and, broadly speaking, that the whole of Britain is too. The key issue is ensuring that our businesses can have access to the appropriate investment. We need to work hard to get the banking sector right so that that happens. I urge the Minister to think carefully about that. It is necessary to redouble our efforts to ensure that the STEM subjects have predominance in the school curriculum. It is no good just talking about manufacturing and not actually ensuring that young people are enthused to become involved in that critical sector.

Whenever I visit factories in my constituency, I am always struck by the cleanliness, the modern sense of technology, the new approach, the research and development and the fact that young people would, if they ever got there, be really impressed and encouraged, which is why it is so important that schools have a strong and sustained relationship with the world of business.

Finally, we ignore our relationship with the European Union at our peril. We must recognise that manufacturing and engineering are a core part of our country; they need to be grown, nurtured and developed. We can do that by having good relationships with the European Union—Germany, France, Italy and elsewhere. That is the key point on which I want to rest. I thank all hon. Members for listening.