Tuesday 1 April 2014
[Mr Philip Hollobone in the Chair]
North Wales Economy
Motion made, and Question proposed, That the sitting be now adjourned.—(Stephen Crabb.)
Good morning, Mr Hollobone, and welcome to the Chair. It is a great honour for you to be here to share our Welsh discussions. I am pleased both to have had the luck to secure this debate, and that we have a strong showing from Members representing north Wales constituencies. We also have my hon. Friend the Member for Caerphilly (Wayne David) and my hon. Friend the Member for Llanelli (Nia Griffith), who is on the Front Bench.
This debate offers us an important opportunity to discuss the north Wales economy, for my colleagues and me to promote what is good and strong about north Wales to the rest of the United Kingdom, and for us to look at some of the key issues that can help our economy grow even faster and stronger and improve the living standards of our north Wales constituents. It is also an opportunity for us to press the UK Government to be an active Government who are engaged in promoting the economy and are not standing back. They should work closely with our colleagues in the Welsh Assembly to achieve economic growth and be active as a part of a wider Europe. In the run-up to the European elections, we need to emphasise strongly how important Europe is to the north Wales economy. I will emphasise our economy’s cross-border nature. The Deeside hub is a key economic driver for north Wales and for north-west England, the Wirral, Liverpool and Cheshire. Many of my constituents work in England and many people in England work in north Wales, and that cross-border working is extremely important to our economy.
The economy of north Wales was worth a staggering £10.6 billion last year, which represents £15,500 per person. That is 72% of the UK average, but that is because constituencies such as that of the hon. Member for Aberconwy (Guto Bebb) have a high retirement population that drags down the figure. Our economy is still growing, leading the charge for the UK economy as a whole. In north Wales, we have a number of economic success stories in renewable energy, such as West Coast Energy in my constituency, Mostyn docks and the wind farms off the north Wales coast, such as Gwynt y Môr.
I would rather see them as giant economic growth drivers. Only last week, we had a great announcement for Hull, with Siemens bringing manufacturing to the United Kingdom. In north Wales, we have a strong renewable energy offer and lots of expertise. We have wind farms and the potential for more wind farms offshore, and a good opportunity to build on our economic success in that area. We also have strong manufacturing in the paper sector, with Kimberly-Clark and SCA in my constituency. We still have, despite many years of contraction, a strong steel-making industry with Tata Steel in the constituency of my hon. Friend the Member for Alyn and Deeside (Mark Tami).
It is good news, and I welcome the investment in apprenticeships. Other companies, such as Airbus, do the same in our area. We also have a strong automotive industry, and this week Toyota made a strong case for engagement with Europe to ensure that we can export models from the United Kingdom to Europe.
North Wales has the strongest manufacturing base in the UK, and I shall focus on Airbus, which employs between 1,500 and 2,000 people in my constituency, with more employees coming from across north Wales. It is a vital manufacturing industry for UK economic growth. A potential 30,000 new aircraft will be built between now and 2032, representing a staggering $4.4 trillion-worth of business. Airbus has the opportunity, with active Government support, to secure a key part of that market. That is important, not just for the 7,000 people who work at Airbus, but also for many others, including those who are part of the UK supply chain. Airbus has spent £180 million on that supply chain in north Wales. The strong site at Broughton was developed with active support from the Labour Welsh Assembly and the previous Labour UK Government, and with the new wing development we have the potential to grow the site further.
We also have strong sectors in other areas. Tourism is a key activity for north Wales. We have a great tourist offer, which we can grow still further. Millions of people are within a two-hour drive or train journey of our tourism economy. We have a strong agricultural sector with sheep and cattle farming, as well as milk production. Food production and distribution are growing in importance. For example, we have food festivals in Mold in my constituency. That industry has a £3 billion value to Wales as a whole, according to a briefing I obtained yesterday from NFU Cymru. We have strong local and national Government, with many people putting their wage packets, through employment in the health service and the county council, into the economy. We have a particularly vibrant small business sector, which is extremely important in growing our economy. Many wage packets come into north Wales via the car manufacturers, such as Vauxhall at Ellesmere Port, the banking sector in Cheshire and the Deeside north Wales hub, which is one of the strongest areas in the United Kingdom.
The lesson that we must learn is that we need active Government engaged in all those issues, particularly the Deeside enterprise zone in the constituency of my hon. Friend the Member for Alyn and Deeside, which has the active support of the Welsh Assembly and has invested through a capital programme in schools and colleges in our constituencies. In my own county, £64.2 million of that programme is going into four facilities in my county of Flintshire, one of which is the community learning campus at Holywell high school. The theme I am developing is active Government. That investment is finding its way into construction and supply in the private sector, which is building and developing those facilities.
North Wales continues to benefit from EU funds. It is important, in the run-up to the European elections, that we do not allow people to take the stance that the EU is bad for Wales, because more than 8,000 new businesses have been created, and £665 million of contracts have been won. Some 13,000 businesses are supported in Wales, and north Wales has a considerable number of those businesses.
We face some key challenges, however. In Flintshire, wages have fallen in real terms by £3,000 per family on average since the economic crisis in 2007. A TUC study has shown that north Wales has suffered the biggest wage cut in Wales, with an average drop of £57 a week. The latest figures show that the number of unemployed people in my constituency has increased in the past year and that the number of unemployed young people is still rising. In my county, 1,567 people are each losing £880 because of the changes to the Government’s spare room subsidy—the so-called bedroom tax.
The cost of energy bills is also hitting the north Wales economy hard, with the cost of energy rising by some £300 over the past three years, meaning that money is taken out of the economy instead of being spent on creating jobs and services for the future. Although we do have strong sectors, such is the lack of recovery in the area that only yesterday Creative Foods, which is operated by Brakes, announced that it would consult on the loss of some 150 jobs and the closure of its food manufacturing plant in Flint. The consultation will end in late May. Will the Minister contact the Welsh Assembly and the company to see whether the factory can remain viable or whether an alternative buyer can be found? Brakes has operated in Flint for the 20 years in which I have been a Member of Parliament, and it is a vibrant factory. Aaron Shotton, leader of Flintshire county council, has arranged for the council’s enterprise department to meet Brakes to examine the situation.
In addition, this week I received a notification from Aviva as part of the Budget submissions. The letter states:
“Wales had one of the lowest levels of confidence in general economic conditions over 2013”.
Although our manufacturing, tourism, renewables, businesses and agriculture are strong, both the Welsh Assembly and the UK Government should use business policy to develop our offer and improve and grow our economy still further.
I thank my right hon. Friend for giving way a second time. Does he agree that the lack of business confidence may be due to the Conservative coalition Government always running down Wales, the Welsh economy, the Welsh health service and Welsh education, using that as a political tool for their election strategy?
It does not help. I hope that the Minister will not only focus on the positives but listen to the Members here today who represent north Wales. Every Labour Member from north Wales is present, along with the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) and the hon. Member for Aberconwy—the hon. Member for Arfon (Hywel Williams) is not present—so we have a strong cross-party group that is trying to back north Wales.
I want to discuss four or five areas where the Government can help to grow the economy. We have discussed transport infrastructure with the Minister before, but real opportunities exist for us to improve connectivity between north-west England and north Wales and between north Wales and the economic driver that is London. I want to put on the record my support for High Speed 2 and for Sir David Higgins’s decision to draw the Government’s attention to fast development at Crewe. I also support attempts by the Government and the Assembly to develop electrification between Crewe and the north Wales coast. I do so not for the sake of speed—an extra 10 or 15 minutes off journey times would be nice—but for the sake of capacity, which is crucial to our economy. HS2 will bring vital extra capacity to the area for tourists, for freight and for businesses.
My right hon. Friend highlights the importance of the European Union and of transport infrastructure, but the two are combined. North Wales lies on the trans-European network as a link between Dublin and London, so there is a strong business case for Ireland, Britain and the rest of Europe to work together to ensure that north Wales gets the best connectivity.
That is an extremely valid point. The link from Holyhead in my hon. Friend’s constituency along the north Wales coast and down through my constituency into north-west England, and even the links across to Humberside, down to London and to mainland Europe, are extremely valuable. I know that the Minister supports that, but I think that he wants to be sure that he has the support of Opposition Members who represent north Wales to go forward with HS2 and to try to make those links in a positive way.
This is not only about electrification and links to HS2 and the south, but about the links between north Wales and Merseyside and Manchester. My hon. Friend the Member for Halton (Derek Twigg) and I are meeting the Secretary of State for Transport regarding the Halton curve, which is a link to Merseyside and Liverpool airport that will provide access for business. A direct link to Manchester airport should also be considered. Two great airports lie within 40 miles of my part of Wales and while Assembly investment at Cardiff is fine, it does not serve the needs of the north. I hope that the Minister will be able to liaise with others on that.
Transport and rail infrastructure are key, but I also want to stress the importance of Europe. My part of north Wales does not benefit from European structural funds, but much of north Wales does. My hon. Friend the Member for Vale of Clwyd (Chris Ruane) played an active role over many years in developing that funding with two former Secretaries of State for Wales, my right hon. Friends the Members for Torfaen (Paul Murphy) and for Neath (Mr Hain).
My hon. Friend predicts my thoughts, because I was going to say that although my constituency does not depend on European objective 1 funding, the fact that many businesses in Flintshire such as Toyota and Airbus, and Vauxhall, which is nearby, are able to sell goods to the European market without tariffs is vital to the area’s economic growth. I want the Minister to commit to supporting a strong European Union.
Does my right hon. Friend agree that uncertainty is the enemy of investment? Even now, the Conservative party’s commitment, for internal party political reasons, to a referendum on EU membership in 2017 is negatively impacting on investment in our communities.
I absolutely agree with my hon. Friend. We may plan for five-year electoral cycles, but businesses plan investment over longer periods of time. Important business decisions on increasing investment will depend on whether companies see the UK, and north Wales in particular, as part of a vibrant wider Europe. I hope that the Minister can comment on that.
I have mentioned transport and Europe, and I want to touch on the cross-border nature of investment. I sadly could not participate in the Wales Bill’s Second Reading debate yesterday, but I hope that in taking forward the Bill’s proposals, the Minister is cognisant of the fact that the economy of my part of north-east Wales is linked directly to that of north-west England. Development agencies, infrastructure stakeholders, businesses and local councils on the English side of the border should be consulted on the Bill’s measures just as much as those on the Welsh side. The Welsh Assembly and the UK Government should work in tandem to develop both sides of the border. Some 400 of my constituents work for Vauxhall at Ellesmere Port, and it is sometimes quicker to get there than it is to get to places on the Welsh side of the border. We must accept and understand how integrated the United Kingdom is, and its cross-border issues.
The active issue for the Government relates to construction. My hon. Friend the Member for Wrexham (Ian Lucas) will talk about investment in the prison shortly, but there are a couple of other key issues that we should examine. We need a regional plan for north Wales and north-west England, with connectivity across the board; but we also need to think about three other issues that are particularly important. To raise the level of investment and economic activity in north Wales, we should seriously consider working towards a living wage. Local authorities should be involved in that, and we need an active Government to promote it. Money spent locally by people who earn a living wage will help to regenerate high street small businesses in places such as Holywell, Flint and Mold in my constituency. The money will not be lost to north-east Wales but reinvested in local small businesses and shops, and the community. I should welcome a commitment to a living wage; I know that my hon. Friends would give that commitment.
There is also a need for apprenticeships and training. Airbus in north Wales is key to that issue. Tomorrow other hon. Members and I will meet Airbus apprentices in the House of Commons. Capital-led investment by an active Government in colleges, schools and infrastructure will generate business in the economy. That is why I particularly welcome the Labour commitment to invest in new homes and try to build 200,000 of them by 2020. I hope that a future Labour Government will keep to that pledge and invest in public sector homes, and consequentially enable the Welsh Assembly Government to do so too. That will kick-start the construction industry and help people who are not now on the housing ladder.
Labour’s commitment to cut business rates for small firms, for the first two years of a Labour Government if we are elected in May 2015, is also welcome. That would also kick-start the local economy. The Labour party leader, my right hon. Friend the Member for Doncaster North (Edward Miliband), has taken key action on energy prices, which are vital to the cost base of many industries, particularly paper, steel and renewables. The ability to reduce and freeze energy bills will be a great help to the economy of north Wales.
I am pleased to have started the debate. I have tried to talk about some of the many positive aspects of our economy, but we must never be complacent. There are challenges, even with respect to big companies such as Airbus. There is a world out there trying to steal our markets and take our customers. Other parts of the world want to grow their economies, and we must be ever vigilant. There are things that the Government can do—I hope that a future Labour Government will do them—to strengthen transport links, improve infrastructure investment, provide a living wage, and help to secure the continual growth of an economy that is strong and diverse in several key sectors. That economy is of central importance not just to north Wales and the north-west, but to the whole UK.
Order. I do not want to call the Front-Bench spokesmen later than 10.40 am. Six hon. Members want to catch my eye and I do not want to impose a time limit, because I know you are a well-behaved lot with huge respect for one another. If you each speak for no more than seven minutes there will be time for the odd intervention and everyone will get in.
It is a pleasure to serve under your chairmanship this morning, Mr Hollobone. I shall try to keep my remarks to seven minutes.
It is a pleasure to follow the right hon. Member for Delyn (Mr Hanson). I agreed with many of the points he made in his positive speech. As to transport, I fully accept that we need to push for upgrades to the north Wales main line. I would like electrification of the line; slight upgrading of train speed is certainly needed, because that will result in greater capacity. I use the A55 regularly, as do my constituents, to get to work. We should recognise that it is on a Euroroute, and apparently it is the only Euroroute that still has a roundabout on it. There are two, and they are both in my constituency, at Llanfairfechan and Penmaenmawr, so in due course I would welcome any upgrades to the A55, especially in my constituency.
The big picture is that north Wales can expect exciting times. There has been concern about economic figures, in relation to employment, but in Aberconwy unemployment figures have fallen by 13%. Most importantly, the youth unemployment figures have fallen. I am sure that every right hon. and hon. Member in the Chamber would welcome 18 to 24-year-olds finding jobs. It is positive for those individuals, and for the economy of north Wales.
The opportunities presented by Wylfa Newydd are also part of the big picture. We cannot overestimate the potential of a new nuclear power station to transform the economy of north-west Wales. I am delighted about the partnership between Gwynedd council, Isle of Anglesey county council and Conwy county borough council, to work to ensure that young people in north-west Wales will have the relevant skills for that exciting industry. Those who have the skills relevant to Wylfa Newydd will also have the skills relevant to the wind farm developments that are happening, and to other forms of energy generation.
I will. I will not allow any party politics to stand in the way of the fact that that was a welcome decision. I also welcome the commitment by further education colleges, local authorities and the business sector to making that happen. It will provide young people with an opportunity to plan for a career in north Wales. I also welcome yesterday’s decision by the green investment bank to invest £220 million in the Gwynt y Mor facility. Every councillor in Conwy, including every Labour councillor, voted against that development, but the key thing is that the decision was made, and we need as much local value to be drawn from the development as possible.
To be fair, it is important that we should reflect on the concerns of the tourism sector in Aberconwy, and Conwy in general, in relation to the wind farm development. The concern was reflected strongly by local representatives of all political parties in Conwy. Denbighshire councillors saw things differently, but the key thing now is to build on those successes.
The successes of north-east Wales are not for north-east Wales alone. Constituents of mine work in the Airbus factories, and people travel from my constituency to Deeside in 30 or 35 minutes on the A55, if there has not been a crash or an overturned caravan. The economies of north-east and north-west Wales are linked, and things work both ways because a significant number of people from north-east Wales are more than happy to spend their weekends in my constituency, and further west in that of the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd).
I think things are moving in a positive direction. My constituency has the highest dependency on small businesses of any constituency in north Wales. If it were not for the small business community, the economic situation there would be dire indeed. We are experiencing confidence, investment, and the willingness of people to invest in their businesses, whether those businesses are new or are being refurbished. There are recent successes that we should all welcome. The one I am most pleased about is a small coffee shop in Llandudno Junction. In terms of economic change, it is not a big issue—four new employees in a small coffee shop in Llandudno Junction—but that business was funded through crowdfunding. It is the first business that I have seen in my constituency that sought crowdfunding because of the reluctance of banks to lend, which continues to be a big problem. That resulted in a brand-new coffee shop employing people in the Junction. That is the type of innovation from young people that will be key to the success of the north Wales economy.
My interest, which I share with the hon. Gentleman, is in finance for business. Would he support a regional bank for north Wales that was much more attuned to the regional economy, able to understand our local business community and therefore able to make the right decisions on investment?
There is certainly an argument for that, but let us be fair: our big problem in Wales is the fact that Finance Wales has been such a disastrous failure. Had it stepped into the breach as a lender of last resort supporting businesses, perhaps we would not need a regional bank. Businesses in my constituency, such as those in the Church Walks enterprise hub, which has 40 employees in the high-technology industries, were being charged 7% above base by Finance Wales. That is the type of lending that HSBC and other high street banks have been guilty of charging. When we see a publicly supported bank doing that, I have real concerns.
We are certainly seeing real signs of investment in my constituency. A vital investment has been the refurbishment of the Eagles hotel in Llanrwst. No small town can do without a key hotel, and the closure of the Eagles hotel caused concern about the future of Llanrwst. I welcome its reopening with significant new investment. Furthermore, on Friday, I was in Betwys-y-Coed, reopening the Pont y Pair inn—seven new employees, a significant £150,000 investment and, from what I saw, a guaranteed success. Even better, that investment means that we are selling the local brew, the Conwy Brewery beer; that shows how tourism can interlink with the food and agricultural community. That is the other issue that I want to touch on.
We sometimes forget when talking about the economy of north Wales how important agriculture and the food sector are. In my constituency, we see the links, because there is significant investment in the Bodnant food centre, which is supported by European regional funding; indeed, it is one of the 0.5% of European-funded projects led by the private sector. It is a success; European regional funding might have even greater success if more such projects were led by the private sector, rather than by the dead hand of bureaucracy. The food sector in my constituency is going from strength to strength. The Bodnant food centre is a fantastic success story, but it is building on top of the success of companies such as Blas ar Fwyd and Siwgr a Sbeis. Those companies are delivering for and serving the tourism sector—cafés, restaurants and hotels—and it is as if all the sectors of the economy in my constituency are coming together to give tourists and visitors a distinctly Welsh feel when they come to north Wales.
There is real, large investment in Llandudno, the queen of Welsh resorts, which gave a warm welcome to the Welsh Labour party over the weekend—we were delighted to see them, obviously. For a long time, it has had two large derelict hotels, which have been a stain on the town: the Clarence on Gloddaeth street and the St Tudno hotel, which can link the high street to Parc Llandudno. The good news is that both are being refurbished in multi-million pound investments, and there will be hotels, shops, other retail outlets and cafés in both locations, one at the top end of the high street and the other at the bottom end. They are significant, multi-million pound votes of confidence in the economy of Llandudno. Clearly, we are turning the corner. There will be employment growth and, more importantly, the slight decay that we saw on both sides of the town will be dealt with positively. I pay tribute to Mostyn Estates, to the investors and to the local authority for ensuring that we are dealing with those problems quickly.
The Government are also doing things. They are giving a huge vote of confidence to small businesses. In my constituency, a small partnership business, such as a husband and wife running a guest house, will be able to post a £20,000 profit without paying tax. That money will go back into the business, because running a guest house is like running the Forth bridge—people must keep investing to keep up standards. That tax break of the personal allowance increase is a tax break for businesses, and it makes a big difference in my constituency. The £2,000 rebate on national insurance is another vote of confidence in small businesses that want to employ staff; they will have a tax rebate if they do. Finally, the Welsh Government have seen sense on the small business rate subsidy of £1,000; that was announced by the Chancellor in his autumn statement. It took the Welsh Government four months, but I will not carp about that; I would rather see a correct decision made late in the day than a wrong decision. I welcome the fact that the Welsh Government are following in the footsteps of the Chancellor by ensuring rates relief for small businesses in my constituency.
I will curtail my remarks, having given, I hope, a positive view of how things are developing in my constituency. Of course, Aberconwy is not isolated; it is part of the wider north Wales economy. There are clearly concerns if unemployment figures in some parts of north Wales are increasing. That is not the case in Aberconwy, but we need a successful economy throughout north Wales. We benefit from investment in north-east Wales, just as I am sure that it will benefit from investment in the north-west. The prognosis for the north Wales economy is positive, as long as we have a Government who understand that their responsibility is to support businesses where they can and, most of the time, simply get out of the way.
It is a great pleasure to take part in the debate. I congratulate the right hon. Member for Delyn (Mr Hanson). As I recall, he and I were elected back in 1992 on the very same day.
In November last year, I wrote an article in The Independent, sparked by the disturbing news about wage levels in Dwyfor Meirionnydd: 40% of people in full-time work were earning less than the living wage, which is considered unacceptable where there is no help from tax credits and so on. In the article, I noted that rural poverty is just as grinding as urban poverty. What is most disappointing is that the area that I have the honour to represent was once an industrial area central to the cementing of Wales’s position as the birthplace of the industrial revolution. The question is about not the quantity of jobs, but their quality, and our problem is the low-wage economy that we all struggle with in north Wales. That is not a political point; it is something that we all need to aspire to get rid of. There are disparities within the UK, which is probably the state with the greatest disparities in the European sector.
There is hope and no lack of ambition, however, as the right hon. Member for Delyn said. Last October, I hosted a parliamentary day for Meirionnydd, alongside the Farmers Union of Wales, showcasing the constituency’s small businesses, which are thriving in a time of austerity. Cutting business rates, lending to businesses, and apprenticeships for young people lie at the heart of my party’s plan for the north Wales economic recovery. Indeed, that will benefit the whole of the Welsh economy, as the hon. Member for Aberconwy (Guto Bebb) said. We have long called for a living wage to ease the squeeze on people’s pockets. It would make a substantial difference to living standards in constituencies such as mine, and across the whole of north Wales. Fair pay is essential. We need to put an end to exploitative, zero-hours contracts. I will not enter the political arena on this issue, because I am not sure where my friends in the Labour party stand on it—there is one view in Cardiff and one here—but in any event, such contracts should have no place in a modern economy.
Transport links, as the right hon. Member for Delyn said, are essential for any development of the north Wales economy. We still await notification from the UK Government of the electrification of the north Wales main line. The Secretary of State has indicated that he is in favour of it, but has had remarkably little success so far in persuading his Cabinet colleagues. Wales still does not have a single mile of electrified track; it is comparable with Albania, in European terms. The trans-European network, as the hon. Member for Ynys Môn (Albert Owen) said, is another area where the UK Government, as well as the Welsh Government, have to get moving. The rail line to Holyhead has been left off the European top-tier corridor projects, thanks, unfortunately, to the UK Government illogically guiding the route to Liverpool for the ferry to Dublin, rather than along to Holyhead, which is the most obvious route. That decision needs to be looked at again.
Away from transport links, we in Plaid Cymru have been focusing on the need to develop the small and medium-sized enterprises sector in Wales. SMEs are the backbone of the Welsh economy. It is often said, and I believe it is true, that about 90% of employment in Wales is in the SME sector. Gone are the days of inviting large international companies to bring in a massive factory and showering them with cash, only to see them leave a few years later. We must build from within. Plaid Cymru has put forward a range of proposals on business rates and financial support for SMEs. Discussions are ongoing in the National Assembly on that issue, and Plaid Cymru and others are playing our part.
The right hon. Member for Delyn rightly referred to tourism, which is a vital part of north Wales’s economy. We have many things to brag about, such as the iconic Snowdon and the Snowdon railway, our lakes and the unique charm of Portmeirion. Last week, Antur Stiniog in Blaenau Ffestiniog opened a mountain bike circuit, and the following day there was a UK championship with 2,000 competitors. Coed-y-Brenin is another of the premier mountain bike venues in Wales and beyond.
Yes. When I represented the valley, I used to help him as well. I got him started, so I can take part of the credit. I am pleased to join the hon. Gentleman in congratulating his constituent. It is a great pleasure to see a business such as his succeed. We have fishing, climbing, sailing, hiking—the whole lot. Of course we need to increase footfall, but the main thing we need to address is the need to increase the visitor spend. We need to up our game, but it is not beyond our knowledge and ken to do that.
Other measures that can improve the north Wales economy include a private sector-led industrial development authority to leverage investment into the Welsh economy. That is not dissimilar from the suggestion that the hon. Member for Wrexham (Ian Lucas) made. I still believe it was a mistake to do away with the Welsh Development Agency. Yes, it was a quango, but it did a good job and it was a brand that was known worldwide. But it went, and with it went the Development Board for Rural Wales, and nothing has been put in its place. The small business sector in rural Wales has lost that important arm of assistance, which was always there and was effective.
We believe that we need a public development bank to lend to SMEs and help develop local industries. Five years on from the crisis, SMEs are still being squeezed and the banks are still not giving them fair play. We should focus on the productive economy, rather than using funding for lending to asset-lend in the form of mortgages and pumping up another house price bubble.
The hon. Gentleman is absolutely right. Not only that, but the four major clearing banks have an understanding that they will not support tourism enterprises unless they are heavily persuaded. Think of the effect that has on the Welsh economy.
We need a Welsh public development bank, which could be geographically tied to Wales, similar to the Sparkassen and Landesbanken in Germany. Plaid Cymru has been calling for that for years. I am pleased that the Minister, Edwina Hart, has moved on that issue and has called for another review. I hope the Welsh Government in Cardiff will give priority to it, because it is vital to enable the SME sector to trade out of the recession. It could assist us all, and give a massive boost to the Welsh economy. It is the main sector that we need to concentrate on.
Finally, although I have a high regard for the right hon. Member for Delyn, I disagree with him on having ever closer links with the Chester-Liverpool region—although my legal chambers are in Chester, so who am I to say that? The problem with the Wrexham-Chester-Liverpool city region is that Welsh interests may be drowned out and become subservient to those of the north-west. That is the likelihood, if the numbers living on both sides of the border are compared. The super-prison in Wrexham—we will hear from the hon. Member for Wrexham shortly—demonstrates that point. It is a priority for an England-centred justice system: a gigantic Tory-style, “lock ’em up and throw away the key”-type prison to house offenders from all over the north-west of England. There will be 500 prisoners from Wales, and 1,500 unfortunate people imported in. Strategically, it answers the needs of the north-west, not those of north Wales. I agree with much of what the right hon. Member for Delyn said about transport links, the living wage and many other things. However, when I hear talk about that sort of axis, I fear the likelihood is that we will come off second best.
It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb) and the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd). On a lighter note, both mentioned the zip-wire project. Would it not be a great opportunity for both to have a go on it, as Boris Johnson did?
I could not possibly comment.
This is an important issue. I pay tribute to my right hon. Friend the Member for Delyn (Mr Hanson), who has been a great advocate for his constituency, for north Wales, and, when he was a Wales Office Minister, for the whole of Wales. I give credit to him and his team for the dualling of the A55 across Anglesey, which was unfinished business. He and his team did much good for the north-west of Wales and, in particular, my constituency.
I welcome the fall in unemployment in Wales. For the first time in my political career as an activist and a Member of Parliament, average unemployment is lower in Wales than in the rest of the United Kingdom. When I first became a political activist in the ’80s, my constituency was top of the wrong leagues. It had double the average unemployment of the United Kingdom, but that has been transformed. According to the House of Commons Library, between 1997 and 2007, my constituency created an extra 7,000 jobs. My area has gone from the top of the unemployment league to below the average figure. That is a good news story, but it did not happen by accident. There was a lot of direct Government intervention, and I pay tribute to the Welsh Government for their intervention in job creation.
The hon. Member for Aberconwy is absolutely right that it is essential for our economy and our future that we get young people into training and work. That has been happening in Wales at a greater rate because of the jobs growth fund in which the Welsh Government are directly involved. It is due to that fund that we are seeing historically lower average unemployment in Wales than the rest of the United Kingdom.
We need such schemes and direct intervention. As the right hon. Member for Dwyfor Meirionnydd said, we need to change the fact that there is a low-wage economy in many areas, but I am confident we can do that. There are new schemes on the horizon—excuse the pun—such as Horizon, which in 2009 was established to build a new nuclear power station in my constituency. It was an investment of £6 billion to £8 billion—one of the biggest single investments in Wales, and as big an investment in north-west Wales as the Olympics were in London. It will have huge benefits not only for my constituency but for the whole of north-west Wales. It raises the bar for skills in the whole of north Wales, making it an attractive place for businesses to invest and for people with high skills to work. I welcome that investment.
I also welcome the £2.5 million fund announced by the Welsh Government for nuclear and energy skills training. We can become the centre of excellence for energy development in research and development, generation and other parts of the sector. It is hugely important for our energy security as a nation, and we want north Wales to be a big part of that. I welcome initiatives in offshore wind, nuclear and solar power. I also welcome the research and development that is being done in colleges and universities across north Wales. Coleg Menai in my constituency is central to that work. Decommissioning projects have gone ahead, with money set aside to train people for the future. As one wave of energy regeneration closes down, investment in skills as a result of money from decommissioning has gone into jobs for the future.
I have previously raised the matter with the Minister because I feel strongly about it. My right hon. Friend the Member for Delyn was right to highlight the importance of the Siemens investment in Hull. As I have said many times, Welsh ports are losing out. Other people and I lobbied the previous Chancellor of the Exchequer for money from the £60 million fund to release that blockage and to get money into the ports, but the present Government decided that Wales would not benefit, other than consequentially. Ports are a reserved matter and the United Kingdom should look at all its ports equally. We are losing out because there is lack of investment in Welsh ports. Hull is developing and that is good for the United Kingdom, but I want Holyhead in the west to develop too. That would be good for Wales, for north Wales and for the United Kingdom.
Previous speakers have rightly talked about the balance between industrial development and food, farming and tourism. That balance is extremely important, because those sectors are major contributors to the north Wales economy. I recently opened a £7 million upgrade at the Glanbia cheese factory at Llangefni in my constituency. Hon. Members may eat Domino pizzas, and the toppings are likely to have been produced in my constituency. High-tech, well-paid jobs use locally sourced resources. The cheese factory uses locally sourced milk, it is a good employer and it helps to produce a UK and international brand. Those jobs are worth while.
Last Friday, I visited Llandudno to attend the Welsh Labour party’s successful conference. More importantly, my mother-in-law lives there. She has worked in the hotel and leisure industry throughout her working life. She has contributed as a self-trader and business woman for many years. It is always good to go back to Llandudno to see her. I wanted to put that on the record because mother’s day has passed and I should probably have been there on Sunday, but I was there over the weekend.
I held a round-table discussion with hoteliers at Dylan’s restaurant, which is a fantastic new facility on Anglesey employing some 40 people. It brought together farmers, hoteliers, restaurateurs and people involved in tourism alongside my hon. Friend the Member for Ogmore (Huw Irranca-Davies), the shadow Minister for Environment, Food and Rural Affairs. We understand the importance to the region of the rural economy and jobs. Talking specifically about the tourism industry, I believe that there is an opportunity for the UK Government to consider reducing VAT in the hospitality and tourism sector. That call comes not just from politicians but from the business sector. Someone contacted me about the importance of doing so. They wanted to upgrade and to invest in their business.
I am happy to take an intervention if my hon. Friend wants to make one, but other hon. Members want to speak, and some hon. Members have spoken for a long time. We need to make the case for the tourism sector in north-west Wales.
The Governments in the Republic of Ireland and in France, our near neighbours, have reduced VAT to stimulate the economy. A campaigning group has carried out a study which shows that a cut in VAT in the first year would result in a loss to the Treasury, but would be cost-neutral in the second year, and result in profit thereafter.
Labour Members, particularly the hon. Gentleman, continue to use the example of France, where 1 million jobs have been destroyed. Here in the UK, more than 1 million jobs have been created, so he should be wary of harking back to the French example.
The Minister is being selective, because the majority of European countries have cut VAT. We are out of sync with many of our competitors. The Republic of Ireland is a great example of a country that is coming out of recession because it has provided a stimulus for small businesses. The Government should take that on board as we come out of recession.
My final comments are about borrowing. Yesterday, we had a long debate on the Wales Bill. It is important to have borrowing powers, and not just for the M4 relief road. We need relief roadworks in north Wales, particularly in my constituency around the Menai bridges, where there is a huge problem that delays traffic on both sides. That affects not just local traffic but visitors. I want Anglesey, north Wales and Wales to be a centre of attraction for high-quality jobs in rural and urban areas. I want that centre to be a place where people want to work, live and invest. Do not take my word for the fact that it is a beautiful place, Mr Hollobone—come and visit. Come and join the people who want to come to north Wales. It is a unique corridor between England and the Republic of Ireland and a place to do business. I want Governments to work together at all levels as we, the politicians in this debate, want to work together for the benefit of our constituents.
It is a pleasure to follow the poetic rhetoric of my hon. Friend the Member for Ynys Môn (Albert Owen) and it is a pleasure, Mr Hollobone, to serve under your chairmanship. I congratulate my right hon. Friend the Member for Delyn (Mr Hanson) on his speech. I will not repeat many of the things he said because he gave an excellent exposition on north Wales and I accept his speech in its entirety.
Mr Hollobone, you should visit the Pontcysyllte and Chirk aqueducts in the constituency of my good friend—
Order. Several references have been made to the question of whether I have been to north Wales. I have been there many times, and on a Territorial Army exercise I swam across the reservoir at Pontcysyllte and camped on the beach at Penmaenmawr. I know the area extremely well and I recommend that tourists visit it.
We have an endorsement at the highest level. I will say no more about tourism, except that north Wales is a beautiful part of the world and tourism is an important part of its economy.
Although I promote north Wales as much as any hon. Member, I want to speak about job losses in Wrexham. We have had a difficult six months. We lost more than 500 jobs at Sharp Manufacturing UK in February, only two months ago. We lost 140 jobs at Kellogg’s in Wrexham, and just outside, in south Clwyd, more than 200 jobs were lost at First Milk. This is a positive part of the world and I will talk about the positives, but we must bear in mind the fact that substantial, well-paid and valued jobs that have been there for many years are going in our local economy. We must realise that the type of grant aid that was available in Wrexham, for example, in the 1980s and 1990s and which sometimes led to investment from outside the UK and to inward investment is no longer available.
A strong theme in all parties is that we must grow the economy in north Wales from within and develop local investment—I was interested in what the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) said about banking—and mechanisms to support local businesses. We have excellent local businesses.
Only last week, I visited Magellan Aerospace in Wrexham, which is an important part of the supply chain for Airbus: a positive picture was presented and apprentices are being taken on. I was delighted to meet Mr Darryl Wright, a governor at a local school that encourages apprenticeships in the aerospace industry. We will meet some of those apprentices later this week. I am delighted that in Wales we are doing better with apprentices than anywhere in Europe, including England, with the help of the excellent Minister, Ken Skates—he formerly worked for my good and hon. Friend the Member for Alyn and Deeside (Mark Tami)—whose commitment is showing through and creating an enormous number of apprenticeships.
In our local economy, we must focus on the development not just of physical infrastructure but of colleges such as Coleg Cambria, to support apprenticeships, and Glyndwr university, to develop education within our region. In that way, we can support our local economy and make not just the physical infrastructure but the intellectual infrastructure world beating. The companies that I am talking about—for example, Magellan, which is a Canadian company—do not need to be based in our region and will go there only if it is a world-competitive economy and we provide the infrastructure that enables us to compete.
My right hon. Friend the Member for Delyn made points about the development of the road and rail networks. We absolutely must argue the case for our region at Welsh Government, UK Government and European levels. Unless we do so, we will lose the benefits of those majestic companies that we have in our area. The work being done by the Welsh Government is very positive. One scheme we have not mentioned is Jobs Growth Wales, which is very important. It has been mentioned on many occasions in my constituency by employers. I visited a business the week before last called Fotofire Ltd—I visit businesses a lot in Wrexham and liaise with them closely—and I was told that the scheme had led to the employment of a number of individuals in the business. They had been assessed by the employer, which had then made judgments that they were the right people for the business. That company works in media, in the web industry, and is a home-grown business in Wrexham. It is tremendous to see that sort of business developing. I am pleased that Jobs Growth Wales is making such a positive contribution. If the Minister was to take something on board, he would look at that scheme and consider whether it could be applied across the rest of the UK.
I also want to say a word on finance. A key issue for us is financing the local economy. It is not only about the past five years; it is now seven years since the great economic crash. I attended a meeting last Friday morning of Wrexham business professionals where, again, the issue of access to finance was raised by businesses that are still having problems with our uncompetitive banking system. I have argued over a long period for the development of a model based on the German Sparkassen method, with a banking economy linked to our local industrial economy. Our economy provides 30% of the manufacturing output of Wales. A lot of money and wages is being earned in our local economy, and I believe that the people of north Wales would like to invest in their local economy through models and through a local bank. The Sparkassen method is resilient; it has worked in Germany over many years.
I am delighted that the Labour party has committed itself to regional banking. If we are to have a competitive market that provides finance for local business, I believe that that type of investment needs to come through local banking, with individuals who know the local economy. I wish that the Government would see that current banking methods are not working, that we need to create a more competitive banking system, and that they would look at alternatives that have worked in other places. That would be very welcome for businesses in my constituency and is something I would be keen to promote.
We have a positive picture in north Wales, with some of the caveats that I have indicated. There is an issue relating to wages. I would say that this Government increased VAT—they did not decrease it—taking money out of the pockets of my constituents and putting it straight into the pockets of the Chancellor of the Exchequer, at a centralised level. That had a damaging effect on Wrexham and, I am certain, on other communities in Wales. Increasing VAT is a really bad policy, because it takes money out of local economies, and I hope that such a mistake will not be made again.
Thank you, Mr Hollobone. I could probably speak on this subject for about an hour—obviously my remarks will have to be rather shorter than that—especially as I have in my constituency the one world heritage site in north Wales, the Pontcysyllte aqueduct, but we will not boast about such things.
I would like to concentrate briefly on two things that specifically relate to my constituency, but that have close bearings to the north Wales economy. The first is the tragic closure—the final shift was yesterday—of First Milk in Marchwiel. There were 231 job losses at that plant. Many of the staff who spoke on the matter were extremely gracious in view of the circumstances; they thanked Wrexham county borough council, Careers Wales, the Department for Work and Pensions and other bodies that tried to help them get jobs.
However, my contention is that the original redundancies at the plant should never have happened in the first place. What we saw was a cursory lesson for those who seem to welcome supermarkets as a universal good. I know that the Minister and I, coincidentally, lived in the same London borough at one stage. He may remember that in parts of London there would be large anti-supermarket campaigns whenever a new supermarket was proposed. I am not suggesting that sort of approach, but sometimes in north Wales, I think we go a little too far the other way. With First Milk, we saw the board of Asda ditching an excellent supplier and causing those redundancies. I also think that a lesson can be learnt from that about the existing TUPE arrangements. There is a case to say that even if the plant had to go in the final analysis, the jobs should not have. I leave those thoughts at that.
More positively, I want to discuss Kronospan. My right hon. Friend the Member for Delyn (Mr Hanson) spoke fantastically at the beginning of the debate about real economic success stories in north Wales. Kronospan is one of those; it is in Chirk and opened in 1970. Its creation came after most of the coal mining tradition in that area had finished. Kronospan is a wood panelling plant and is one of the top 10 manufacturing companies in Wales. It is the largest manufacturer of wood panelling products and laminate flooring in the world and the entire production of wood-based panel products is controlled from Kronospan’s site in my constituency. It employs just under 600 people, 90% of whom live in a 10-mile radius of the site itself.
Kronospan is massively important. It has a thriving apprenticeship programme supported by the Welsh Government, teaching young people real-life employment skills. It works exceptionally well with the local community and works closely with Chirk town council, with which it has a liaison committee. Their joint work has led to fewer lorries and more logs carried by train, among their many other successes.
However, it is not just a good story, and this is where I want the Minister’s help. Kronospan and I are concerned by various incentives in the Government’s renewables obligations and the new Energy Act 2013 to purchase wood for energy generation. I assure him that this is not an anti-biomass move, but we are concerned about some unintended consequences of the Act. We are asking not for special treatment but for a level playing field. We do not want to lose our Welsh Kronospan to another country. I ask the Minister whether he will meet me and representatives from Kronospan to discuss the matter, which is most important to the economy in my constituency and in north Wales.
I start with a few key facts that we may not hear from Conservative Front Benchers, because their election team are too busy running down Wales. They have declared a war on Wales in the run-up to the election.
Welsh unemployment is 6.7%—better than England. Inward investment last year went up 191%, compared with 10% in England. Jobs Growth Wales, which puts young people into training and then employment, only has a 10% dropout rate. In England, the Work programme has a 50% dropout rate. The Prime Minister was caught with his waders down in the recent floods, because in Wales, we have been investing £81 per person in flood defences as opposed to £47 per person in England.
The Prime Minister said that my town of Rhyl is neglected. Let me tell him what neglect means in my town: it means Welsh Government investment of £28 million in housing; £10 million in a new harbour; £22 million in a college; £22 million in a hospital; £12 million in putting people back to work through Rhyl city strategy; and £11 million in flood defences. Let me tell him about neglect: neglect is when his Government are closing the tax office in Rhyl; the Crown courts in Rhyl; the Crown post office in Rhyl; and the army recruitment centre in Rhyl.
I pay tribute to the work that the Welsh Government have done. They have invested £1.4 billion in education, helping the Welsh economy get back on its feet and helping Welsh children to get a decent education. That includes £159 million in the Minister’s county of Pembrokeshire. I pay tribute to the work that Huw Lewis, as Education Minister, is doing in masterminding that, and to the work of Jane Hutt, who has had a positive engagement with Europe—£1.86 billion will be drawn down over the next five years. I also pay tribute to Alun Davies, the floods Minister, who is helping so much to put £240 million of anti-flood investment into the Welsh economy, protecting Welsh homes and Welsh families.
I congratulate my right hon. Friend the Member for Delyn (Mr Hanson) on securing the debate, which has been excellent, and on making a very good and full opening speech. I do not wish to repeat all of that; nor do I wish to dwell too long on the issue of transport infrastructure, as we had a debate about it last November, but it is crucial that we have joined-up thinking UK-wide whenever we talk about transport infrastructure. We have to be certain that north Wales is fully connected not just to Crewe but to the north-west of England more generally—to the Liverpool and Manchester airports, and then across the trans-Pennine route to the north-east. It is also vital that we are part of joined-up thinking across Europe and that people can go right through to Holyhead and across to Ireland. Transport infrastructure remains extremely important, and I hope that the Minister will continue to stress both that and the need for investment and careful thought about how we can link the north Wales economy to the rest of the economy of the UK.
The hon. Member for Aberconwy (Guto Bebb) mentioned the skills sector. The point was reiterated by my hon. Friend the Member for Ynys Môn (Albert Owen), who spoke about the recent investment by the Welsh Government in that sector, particularly with respect to the energy sector. The hon. Member for Aberconwy also mentioned the reluctance of the banks to lend. That point was picked up by my hon. Friend the Member for Wrexham (Ian Lucas), who explained the important way in which we could use a regional banking system, which would take money from the local economy and put it back into the local economy. It would make money available for local businesses to grow organically in their home towns, thereby securing that investment for many years to come. That point was broadly echoed in the call by the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) for a return to something like the Welsh Development Agency, the demise of which he much regretted. Those were important points about growing the local economy.
The hon. Member for Aberconwy also referred to the modern crowdfunding for a local coffee shop and stressed the importance of the food sector.
The right hon. Member for Dwyfor Meirionnydd talked about small businesses, and I certainly enjoyed meeting people from small businesses when they came to this place. He also mentioned the issue of the low-wage economy and asked what the Labour party policy was. Our policy is clearly that we very much want to incentivise employers to move up to paying the living wage by giving them a tax break to do so. While they were getting that tax break, we would obviously be saving on the additional tax credits that would have to be paid if people were paid less than the living wage.
The right hon. Gentleman mentioned zero-hours contracts. He knows full well that zero-hours contracts are zero-rights contracts. One of the key issues is that if people do not have a proper contract, they have no rights at all. We have said clearly that where there is abuse of zero-hours contracts when people are working on a regular basis, they need to be issued with proper contracts rather than being kept in that awful situation of having insecurity not only from week to week but about whether they will even keep their job. He also mentioned the need to increase the spend on tourism—in other words, to try to attract in more money per person than we have in the past.
My hon. Friend the Member for Ynys Môn talked about the huge investment in the nuclear sector on his island and the importance of that to the north Wales economy, but also about the importance of wind and solar investment. Again, he mentioned the importance of skills for the energy sector. He also made a key point about ports. I know that the Minister would not like to appear partisan; he would not like to appear to be looking for money just for his own constituency port. I ask him to take up my hon. Friend’s point that we did have money secured for ports that is now not coming to the Welsh ports. If the Minister could take the point up with the Treasury and see whether he can do something for investment in the ports in Wales, that would be a welcome outcome of the debate.
My hon. Friend the Member for Clwyd South (Susan Elan Jones) mentioned job losses. That point was emphasised strongly by my hon. Friend the Member for Wrexham—we have seen significant job losses in Wrexham. That brings me to the two major points that I want to make today. One is about the importance of giving a strong and clear message that we are fully committed to staying in the EU. I serve on the European Scrutiny Committee, and believe you me, Mr Hollobone, there are members of that Committee who wish not only to renegotiate the Lisbon treaty and go back to the Maastricht treaty, but to renegotiate the 1972 accession treaty. Those are the sorts of messages that people in Asia are getting, which is extremely damaging. If we look at the Welsh economy, we see that 150,000 jobs in Wales depend on our membership of the EU.
The uncertainty is worrying for existing firms that want to invest. They are thinking, “Shall we invest further in the UK, or play safe and invest in the Netherlands, Germany or France—in mainland Europe, where we know we will be okay and will not suddenly find ourselves outside the EU?” The uncertainty also deters new investors, particularly from outside the EU, who want access to that market. They do not want to invest in a part of the EU that might suddenly not be there any more. They do not want to think that they might face tariffs of anything from 5% to 200%. Nor do new investors want to be left out of the negotiations on the EU-US treaty. They do not want to be in a country if the head of that country is not at the negotiating table and is not at the centre of the negotiations on what will happen in the EU in future.
It is concerning that we hear all these noises and that there is talk of uncertainty right up until 2017, with the issue of a referendum hanging over people. There is a real worry about whether we will get investment in jobs in Wales, and whether there will be certainty for the companies that are currently there and for new companies to come in. Of course, that is not to mention the huge support for the agricultural sector in north Wales through the common agricultural policy, or the European structural funds, which help north-west Wales. That uncertainty is one of the key factors in this debate, and I hope that the Minister will take back that message to his party.
The other point on which we want certainty is industrial policy on energy prices and on what is happening to things such as the carbon price floor. The Chancellor has now put in a freeze, but it is rather late in the day. Manufacturers are still concerned, because they see that a unilateral tax was imposed by the UK Government and they then had to go to the EU to try to get some state aid funding to mitigate it.
The Minister says from a sedentary position that we supported it. We did not support it at the level at which the Government set it. What is important is that we try to get some help in as soon as possible, rather than having to wait another two or three years, because that will be vital for investment in some of our industries and for whether they will be able to stay in north Wales.
We have mentioned on a number of occasions the failure of the banks—the way they change their terms and conditions and do no service to many of the small businesses in our region—and the work that needs to be done to increase bank lending and foster a much more positive attitude towards local businesses.
I would like to finish by mentioning the importance of borrowing. Borrowing is important to the Welsh Government and it is important for investment in north Wales. We very much support the measures in the Wales Bill, which is currently going through Parliament, on the issue of borrowing. We hope that the Minister will not only facilitate the interim funding that is supposed to come to south Wales, but ensure that the mechanisms are in place for borrowing by the Welsh Government to improve the economy of north Wales. That will mean that we can have a vibrant economy that is supported by investment on the English side in transport infrastructure and mechanisms that will help north Wales, and on the Welsh Government’s side by investment in transport and broadband infrastructure. In that way, we can have a flourishing north Wales economy.
It is a pleasure to serve under your chairmanship, Mr Hollobone, and to follow the hon. Member for Llanelli (Nia Griffith). I congratulate the right hon. Member for Delyn (Mr Hanson) on securing this important debate, and for the positive, constructive and intelligent way in which he set out his case. He emphasised the positive aspects of what is going on in Wales and the need to do more to secure the future of the excellent developments and facilities that he talked about so eloquently.
This morning, more people than ever before in north Wales went out to work. When we came into office in 2010, the overall employment level in north Wales was at a nine-year low. Over the past four years, notwithstanding the remarks of some Opposition Members, we have seen some really healthy growth in the labour market across Wales, but particularly in north Wales. Unemployment across north Wales is 6.3%, which is lower than the Welsh average and lower than the UK average.
One of the pleasures and privileges of my job at the Wales Office is that I get the opportunity to go out across Wales. Some of the most exciting, interesting and encouraging things that I see in the economy in Wales are happening in north Wales, so I concur with all the positive remarks made by Opposition Members about what is happening in the north Wales economy. I underline that we are seeing a sustained fall in unemployment. During the previous Parliament, unemployment in the constituency of the hon. Member for Wrexham (Ian Lucas) increased by 50%, but it has fallen by 10% since 2010. In Delyn, unemployment increased by 110% over the five years of the previous Parliament, but since 2010 it has come down by 17%. Of course, we want that to progress and go further, but the trend is positive. I will say a little more about that in a moment.
The right hon. Member for Delyn made an urgent point about Creative Foods. We are aware of that situation and have had a discussion about it at the Wales Office. In that case, as in the case of First Milk, in the constituency of the hon. Member for Clwyd South (Susan Elan Jones), and of the recent announcement by Avana bakeries in Newport, the Wales Office engaged closely with the companies to see what we could do, in conjunction with Welsh Government colleagues. It is no accident that all three of those companies, which announced significant job losses, are in the food sector. The hon. Member for Clwyd South raised an important question about supermarkets creating vulnerabilities for the food sector in Wales, and that is something that we should explore on another occasion. I reassure the right hon. Member for Delyn that we are certainly engaged on that matter.
Returning to the subject of jobs growth, there is positive growth across Wales, and particularly in north Wales. The right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) said that the important thing was the quality of jobs, not the quantity. In fact, the quantity of jobs is important, because one of the ways in which we can drive up wage levels is by creating more job competition. More competition for job opportunities drives up the wages that employers will offer.
It is worth pointing out that over the past three years, average wage levels in north Wales have increased by more than 6%. They are not back to where we want them to be. There was a huge destruction of value in the economy following the crash of 2008, which happened on the watch of the Labour Government, and that fed through to wage levels. Real wage levels fell for people right across the country. With the recovery, wage levels are starting to creep back up. Of course they are not where we want them to be, but there is progress. Average wage levels in Wales are increasing at twice the rate of inflation, which also happens to be at a four-year low. There is positive growth.
I am not disputing the fact that the situation as regards wages and jobs across Wales is patchy. Of course it will be, during the early stages of a recovery, but the trend is positive and will continue, bringing in new investment and creating more jobs.
As Members in all parts of the Chamber have highlighted, manufacturing is one of the bright points of the Welsh economy; there is the involvement of companies such as Airbus, Kimberly Clark—in the constituency of the right hon. Member for Delyn—and Kronospan. Growth has not simply been generated by a housing bubble in the south-east, as the hon. Member for Swansea West (Geraint Davies) argued in debate last night. There is real, balanced growth across all sectors in Wales.
On energy costs for manufacturers, the package of measures announced in the Budget by my right hon. Friend the Chancellor of the Exchequer was welcomed widely across the manufacturing sector in Wales, particularly by the energy-intensive industries that are so heavily represented in the Welsh economy. The measures directly address the concerns that the industry has raised with us. Companies such as Kronospan and Kimberly Clark are classified as energy-intensive industries and will benefit directly from that package.
Will the Minister do everything he can to bring forward those measures? The message from the industry is that it does not want to have to wait one or two years; it would like help sooner. We would be most grateful for anything that he could do in that respect.
We are taking action. We are making available £240 million. We can make those substantial resources available only because of difficult decisions that we have taken to cut the deficit and to put the national finances back in order—measures that the hon. Lady opposed on every single opportunity over the past three or four years. We are taking action where we can, and those measures have been welcomed by industry across Wales.
I move on to transport, which quite a few Members have mentioned. We at the Wales Office totally understand the concerns and the desire for electrification of the north Wales main line. That is something that the Secretary of State for Wales, my right hon. Friend the Member for Clwyd West (Mr Jones), is personally very engaged in, and on which we are in close dialogue and discussion with the Welsh Government and the Department for Transport. The right hon. Member for Delyn is quite right, because electrification of the north Wales main line and the development of the High Speed 2 hub at Crewe will open a hugely expanded range of opportunities for travel and for the economy of north Wales. That is something that we very much support.
I cannot offer any immediate good news on the Halton curve, which has been mentioned more than once this morning. The UK Government have no immediate plans to reopen that section of line, but we want to hear the arguments. If the right hon. Gentleman is engaged in work on the business case for reopening the Halton curve, I would like to see that, and I am happy to facilitate discussions with the Department for Transport where possible.
On the point about ports, we have discussed before the £60 million fund that the hon. Member for Ynys Môn (Albert Owen) raised. I salute him for the work that he does in championing not only his local port, but the port sector across Wales. The fund that was announced was an economic development fund designed to attract wind turbine manufacturing to port areas. He will be aware that economic development is devolved to the Welsh Government, so the Welsh Government received the Barnett consequentials of that £60 million fund. They received the resources, so if it had been a priority for them, they could have initiated something similar for Wales.
The Minister is trying to say that that is an economic issue, but the Government changed the rules because they were worried about the impact of state aid rules. On port development, will he join me in condemning Stena Line, which is talking about changing wages and conditions instead of investing in the ports of west Wales—something that I know he is greatly concerned about? Stena Line wants to cut wages and conditions and race to the bottom, rather than investing for the future.
No, I will not join in criticising Stena. I met with the company recently, and it faces a really tough battle to stay competitive and keep those services. It is a good company that has invested in the hon. Gentleman’s constituency and in mine. We have to work with it to see that it continues to make that investment.
The question of Europe was raised by several Opposition Members, and I repeat what I said at Wales Office questions last week: the vast majority of businesses across the UK and in Wales strongly support our desire for a change in our relationship with Europe regarding the level of regulation and the burden of cost that our membership places on the private sector. Businesses do not want to rush headlong to the exit and leave the European Union, but they want change. That is backed up by comments made by those who run the Institute of Directors, the British Chambers of Commerce and the CBI.
The point about multinationals being based in Wales and using it as a springboard into the European Union is important. I received a letter this morning from one of those multinationals, in which it welcomes the action that we have taken on energy costs but raises concerns about a regulation at the European level. Small and large businesses in Wales understand our issue with the European Union, and they support the action that the Prime Minister is taking to reduce costs and the burden of regulation for Wales.
In the few seconds that I have remaining, I again thank the right hon. Member for Delyn for securing the debate. I look forward to discussing the issues again in future.
Order. I thank all Members who took part in that very interesting debate. Will those who are not staying for the next debate please leave quickly and quietly? We now move on to the important subject of Government support for grassroots football. I call Mr David Crausby.
It is a great pleasure to serve under your chairmanship, Mr Hollobone. I thank the Speaker for granting this important debate, because grassroots football is in crisis.
The Football Association is about to lose £1.6 million of public funding for the amateur game in England, after it failed to reverse a sharp decline in the number of people regularly playing football. Sport England says that that is a clear message that football must change its grassroots strategy. The FA has called the funding reduction disappointing. Frankly, it should be more than disappointed; it should feel ashamed, because if it is failing the grassroots game, it is failing the game itself and everything that the FA should stand for.
Of course, it is not all the fault of the FA. Local authorities own 80% of pitches, and local government funding has been cut by 40% over this Parliament, with councils having to reduce their budgets by £20 billion by 2015-16. Local councils have tough decisions to make, and when faced with sacrificing investment in sport in order to protect vulnerable children and adults, they will inevitably—albeit reluctantly—opt for what they see as shielding the weak and defenceless.
The lack of local authority investment in football is bad enough, but many authorities feel that they will have to increase fees dramatically, which will inevitably discourage participation in the game. One midlands council has proposed increasing the price of pitch hire for junior football next season from £382 to £1,613—that is a 323% rise. What with poor pitches, weeks of play lost to bad weather, no changing facilities, no showers, increasing pitch fees, poor families priced out and other families deterred by the shoddy conditions, participation is unsurprisingly falling.
According to Sport England, 1.84 million people play football regularly—a fall of 100,000 since April last year. More than 2 million people played regularly in 200. We are witnessing a long-term decline. What was once a working-class game is steadily becoming a game that can be afforded only by those children with better-off parents. It is already difficult enough to drag our kids off the couch, away from the Xbox and into the car in order to play proper football in the open air, but for a child with poor parents who cannot afford the fees, let alone the kit and the football boots, and who do not have a car, the prospect looks even bleaker. Often, such children will be denied the opportunity to play.
I met a married couple in Horwich in the constituency of my hon. Friend the Member for Bolton West (Julie Hilling) who do a fantastic job running a league and a team of their own. Those people are the absolute salt of the British earth, because without them the game would flounder and die. They are not unusual in being expected to pay for their training courses, and they frequently put their own money into the sport because they know in their hearts how much good they do. They told me that they had started a boot club, because one of their players turned up in wellingtons as his football boots had become too small. They now collect boots from children who have grown out of them and pass them on to others.
I do not know about other Members present, but I hate the idea of wearing other people’s footwear, even in new socks. It takes me back to my days as a poverty-stricken child in the 1950s, but this is 2014. The fact is, we really should be doing much better. I know that these are difficult, austere times for the country’s economy, and no one really expects the Government to find the millions and millions of pounds needed to fund the game properly. However, while local authorities have lost income, the Premier League has been handed an even greater windfall. Domestic broadcasting rights for 2012-13, 2013-14 and 2014-15 were sold for £3 billion, with an estimated £2 billion expected from international rights. That is £5 billion in total—nearly as much as the value of Royal Mail. We need a new settlement for grassroots football. After all, it is the national game, not the Premier League’s game.
I congratulate the hon. Gentleman on bringing such an important issue to Westminster Hall for debate. Sport in Northern Ireland is a devolved matter. The Department of Culture, Arts and Leisure not only gives to teams in the premier league, but filters moneys down to the intermediate and lower leagues. Each level gets some of the money. Would the hon. Gentleman like to see that happen in England as well?
I congratulate the hon. Gentleman on securing this debate. I spotted that it was taking place only this morning, but I am a great fan of local and non-league football. Does he agree that such football is why people progress to watching premier league football? As a small boy I watched teams such as Buxton, and that fostered an interest that attracted me to top-tier football.
Absolutely. It is very much in the premier league’s interest that grassroots football survives. That is why I started an online petition that called for a new arrangement, whereby 7.5% of the proceeds from broadcasting rights is used to fund grassroots football. It called on the Government to ensure that grassroots football receives financial support from the Premier League, a call I repeat today. By the time it closed, the petition had received 30,599 signatures, and I did not receive one message, by any means, of principled disagreement from anyone.
Of course, the Government responded when the number of signatories to the petition passed 10,000—well, they did not actually respond right away, even though I wrote to the Leader of the House twice. I am sure that it was a coincidence, but they responded just after midnight on the day that I was listed on the Order Paper to put an oral question to the Minister, asking for a reply. Although the response was welcome, I am afraid to say that it was an apology for the football authorities, which even Sport England says have failed.
The resolution of the grassroots crisis will, of course, take a lot more money than the £1.6 million that has been cut by Sport England. In the football world of billionaires, £1.6 million is not exactly a fortune. It is probably about six weeks’ pay for a top premiership player. Now, do not get me wrong: I do not blame young footballers for accepting £300,000 a week for playing a game that they would probably play for the minimum wage. What do we expect them to do? Say to the multi-millionaire owner of the club—the Russian oligarch, American billionaire, or Arab oil sheik—“No thanks; keep the money and buy yourself another ocean-going yacht”? Of course not! Nor do I blame clubs in the premier league for offering the money, because they are caught in a trap, knowing that if they do not pay players ridiculous wages, one of their rivals will.
The fact is that the market is broken. There are clearly not enough talented young footballers, and, at the same time, billions of pounds are slushing around from TV rights. So what do we do? Well, it is not really that complicated. We should invest much more in grassroots talent, and we should do it by using much more of the money from rights.
I thank the hon. Gentleman for being gracious in allowing interventions. Ards football club in my constituency is in the Irish premier league. It is a locally focused, community-based club, and its relationships within Ards borough are the envy of many football clubs across Northern Ireland. It is focused on the community, which endears the club to the community. Does he feel that the Government should encourage more of that community-based spirit?
I very much think so. I am sure that the Government do encourage the community to participate in grassroots football; my argument is that more money must be made available to the volunteers who run the game, and that the place to take the money from is the lucrative professional game. Committing 7.5% of the £5 billion from television rights would deliver £375 million over three years. That would not exactly break the premier league, and I do not envisage any starving players, either.
The harsh truth is that the Government should top-slice the TV money before it gets into the hands of the professional game. The professional game is a hugely competitive business, and we cannot expect one professional football club to support the amateur game sufficiently if its neighbouring clubs do not. The premier league is the envy of the football world, with huge amounts of money pouring in and endless stories of enormous wages and excessive lifestyles. If English football is doing so well, why do we allow all the money to stay at the top of the game and not filter down to the grassroots? Why are our international teams so unsuccessful? The fact is that there is a short-term obsession with the premier league in British football. If we are to succeed as a footballing nation, we must broaden our horizons.
Every Saturday morning, premier league scouts tour children’s football grounds scouring for talent. When they find it, they tempt the child and his parents away, delivering the best of coaching and facilities, not to mention various other goodies, but leave all the other children in the team behind, with no changing facilities and no showers, stripping off at the side of the pitch in the depths of winter. Talented young footballers are obviously important, but so are the rest. I want to live in a country where all of our children who want to play football get the opportunity to do so. If we do not pay urgent attention to the grassroots game, there will be no one left in the UK for the professional football club scouts to recruit, leaving the leagues to ever younger foreign players recruited from around the world, some of whom are, frankly, too young to be away from their parents.
My concerns do not just include children. Football can make an enormously positive difference to the lives of developing young people. I talked to a mother who told me that her two sons had been picked up by a premier league club and were very well supported, but when they got to 15 and 16 years old, the club decided that they were not strong enough and let them go. The boys inevitably found that difficult to take, but what made it much worse was that once they were dropped from the club, they had nowhere to play the game that they loved so much.
In 1999, the football taskforce report committed the Premier League to a 5% contribution of its broadcasting income to grassroots projects, which was agreed, but the Premier League never fulfilled that commitment, and anyway much of the money has gone to professional football clubs lower down the leagues. Less prosperous professional clubs are important, of course, and I want them to survive as much as anybody does, but the grassroots game, especially children’s grassroots football, is even more important to me, and it should be more important to the country.
The present arrangement is just not good enough. The Football Association, the Premier League and Sport England work closely together to invest in facilities through the Football Foundation, but between 2007 and 2013, only 6% of football facilities were redeveloped. We clearly need many more artificial pitches. Grass pitches can sustain only five or six hours of football a week, but artificial pitches can take up to 80. In the present economic circumstances, we will not have the number of pitches that we need for at least another generation.
The hon. Gentleman is being generous in giving way so often in a 30-minute debate. I concur. We have an artificial pitch in my constituency at Glossopdale school; it can be seen as one comes over the hill into Glossop. Every evening it is floodlit, and kids play on it night after night. To mention something that we have not discussed, on Sundays there is football for elderly gentlemen—I actually qualify—which gets people of my greying years out playing football as well. That must be good for the health agenda.
Those pitches cost money, and the only source of honestly available money is the Premier League’s billions. If we do not deliver the number of artificial pitches necessary, we may well destroy our seedcorn for the premier league.
I end by quoting Bill Shankly, who once famously said:
“Some people believe football is a matter of life and death. I am very disappointed with that attitude. I can assure you it is much, much more important than that.”
I think Bill Shankly only applied it to Liverpool FC, to be honest, but I apply it, as we all should, to the grassroots game.
It is a great pleasure to serve under your chairmanship, Mr Hollobone. I am grateful to the hon. Member for Bolton North East (Mr Crausby) for securing this important debate, and to the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for High Peak (Andrew Bingham) for their important contributions. Along with many parliamentary colleagues, the hon. Member for Bolton North East has been a vocal advocate for grassroots football for a considerable time. I reassure him that I, too, want a vibrant sports sector that encourages participation and provides opportunities up and down the country.
Apart from the health and social benefits of sport participation, sport is vital to raising aspirations in young people, and it has the ability to transform lives. Through Sport England, we are committed to delivering community sport, including football, and the many programmes tackling barriers to participation in sport. The youth and community sports strategy, announced in January 2012, committed £1 billion of investment to community sport to 2017. The strategy is led by the national governing bodies of sport, which will receive nearly £500 million of investment for 2013 to 2017 to deliver year-on-year increases in the number of people playing sport.
The latest active people survey figures from December 2013 show a long-term trend of sport participation increasing, which is very good and is what we want. There are now 1.5 million more people playing sport once a week than when we bid for the Olympic games in 2005, participation among disabled people is at an all-time high and more women are getting involved, which is beneficial in closing the gender gap. I am absolutely determined to see that progress continue.
Football is, of course, an important part of that picture, and the Government’s support for grassroots football is strong. Sport England is directing significant levels of funding at the sport to boost participation via the national governing body and through other direct investments in programmes and facilities. Between 2013 and 2017, the FA will receive £28.4 million from Sport England for delivering against its whole sport plan.
Football remains one of the biggest participation sports in the UK, with more than 1.8 million people playing the game on a regular basis. However, there has been a sharp fall of more than a quarter of a million participants in the last year, so clearly something has to be done. Several hon. Members have noted today the £1.6 million of lottery funding that Sport England has withdrawn from the FA’s whole sport plan funding, as a result of the decrease in participation. I want more people to get involved in all sport, and I am pleased that Sport England is committed to working closely with sports governing bodies to make that happen. However, we have to get results from the £500 million of public money that is invested through those bodies. If their plans are not working, it has to be right that Sport England invests some of the funding in other ways.
However, there will certainly not be a financial loss for grassroots football. Instead, Sport England will reinvest that £1.6 million to create a grassroots “city of football”, working in one place to create a range of new opportunities to encourage more people to play football regularly. Sport England will also share with the FA the insights that are gained, to help the FA continue to grow the game across the country. To date, that model has proved successful in an intensive year-long pilot in Bury, which has looked at ways to break down barriers and to get the town’s women and girls more active and involved in sport. I look forward to there being similar exciting innovation in developing the football city.
Although innovative opportunities can increase the appeal of, and participation in, all sports, high-quality facilities for community sport remain absolutely essential in supporting football. The hon. Member for Bolton North East referred to the importance of such facilities. I am very pleased indeed that Sport England has invested more than £80 million of Exchequer and lottery funding in facilities for football during the past three years. It has also been working very hard to protect playing fields, to fund the Inspired Facilities programme, to fund iconic facilities and to improve existing sites.
The hon. Gentleman also mentioned the undeniable impact that the winter’s floods have had on sports facilities in affected areas. I am sure that he has already read about this in newspapers and various statements, but I am pleased that we have been able to respond to the flooding with a £5 million Sport England fund to support affected sports facilities.
We also invest in the Football Foundation, which the hon. Gentleman referred to, along with the Premier League and the FA. The new grassroots fund will improve existing facilities and create new pitches across the country, including the invaluable astroturf pitches that the hon. Gentleman referred to. I absolutely agree with him that such pitches are brilliant at maximising the capacity of various grounds, and the contribution made by the Premier League, the FA and ourselves amounts to more than £100 million during the next three years. I hope to see many more 3G pitches constructed.
Of course, that shows that it is not only the Government who are investing in and funding expertise in grassroots football. The FA invests approximately £40 million a year to support its national game programme, most recently implementing the outputs of its youth development review. Typically, the FA spends a further £15 million a year on projects that benefit every tier of football, such as the FA’s Respect programme, which aims to improve the conduct of participants and spectators right across the game.
The hon. Gentleman also referred to the contribution that is made by the Premier League. The Premier League is investing £56 million a season between 2013 and 2016 on community-focused projects and facilities, and as he will know, the constituent Premier League clubs often deliver significant programmes in their own local communities, independently of the FA’s collective action.
I will make a further point about the contribution that is made by the Premier League. I just want to clarify to the hon. Gentleman that during the next three seasons, it will redistribute more than £850 million in total to help to strengthen football below the top tier, which includes solidarity payments to support the 72 clubs in the Football League and the 68 clubs in the three divisions of the Football Conference. Those payments are partly ring-fenced to support the work of those clubs in their local communities. I know that such work is very important to the hon. Gentleman.
With regard to the question of whether any more can be done, let us see what can happen. I am open to discussing new ventures with the FA and the Premier League. However, I believe that they are already making significant contributions of their own accord, which should not be underestimated.
The hon. Gentleman also rightly referred to the fact that some local teams cannot afford the fees that local authorities are charging to use various facilities. That issue is of concern to me; I am aware of it and I am investigating it. I had a meeting with the FA this morning and raised the matter again. I know that the FA and Sport England are working hard on that issue, which has to be dealt with. All sorts of ideas are being considered, one of which is encouraging the county football associations to work much more closely with local authorities to manage community sports budgets. Ultimately, however, that arrangement sounds perhaps a little ad hoc, so some new model of ownership of sports facilities may need to be looked at. However, I reassure the hon. Gentleman that I will work closely with others to establish what can be done to deal with that important issue.
I hope that hon. Members will see the considerable sums of money that the Government and the football authorities are ploughing into football right across the country. In my opinion, the outlook remains very bright indeed for opportunities to participate in football, and I am pleased that the Government play a big part in that process.
UK Automotive Industry
[Sir Alan Meale in the Chair]
It is a great privilege to have secured this debate about the United Kingdom’s automotive industry. I hope that we will approach it in a consensual manner, discussing some of the successes we have had and how we move the industry forward. I think hon. Members are here not just because we understand how important the UK automotive industry is to our whole economy, but because we have a passion for the automotive sector itself.
I am a great fan of the BBC’s “Top Gear”. It is one of those programmes that is on every Sunday, and I dedicate myself to watching it. I am not sure whether you, Sir Alan, have the same enthusiasm for the programme, but I certainly do. One of the finest episodes I ever saw was in the most recent series, where the last part of the episode was dedicated to celebrating the UK’s automotive industry and everything we produce here, whether it was a Dennis or Leyland truck; a product from JCB or Caterpillar; a Norton or a Triumph motorcycle; one of many family cars that are produced in the UK by Toyota, Nissan or Honda; or some of the luxury cars that are envied the world over—Bentley, Rolls-Royce, Aston Martin, Jaguar and Land Rover.
The episode also celebrated our success in Formula 1, for which we are producing the finest racing cars in the world—from Petronas, Red Bull and McLaren to Williams and Lotus. The Italians hold nothing on us, as we beat them consistently. Quite simply, we produce the best in Britain, and a lot better than what is produced in Italy.
I do not want this debate to be about how we produce better things than the Italians, the French or the Germans, as it could go on for many more hours than the hour and a half that we have been allotted. Many people have a livelihood in the automotive sector. Some 731,000 people are involved in the wider automotive sector, while 146,000 are directly employed in automotive manufacturing. The industry expects the sector to grow, not by 5,000 or 10,000 jobs, but in the region of 100,000 extra jobs by 2020.
We are producing more and more. Often we look back to the ’50s and ’60s as the heyday of automotive production, but we are rapidly gaining ground. Last year, 1.5 million cars were produced in the UK. Production is forecast to be up to 2 million by 2017—more cars produced in Great Britain than ever before. Those are high-value cars, which make a difference to our balance of trade. Some 10% of all the things that we export from this country are automotive products.
We are the second largest exporter of construction equipment in the world. We are leading the field—for example, with JCB, which is based in Staffordshire—in developing technology and world-leading products. If we go to building sites in China, Russia, India and Brazil, we can see British products digging the foundations for their economies.
Does my hon. Friend agree that it is not just about British products going abroad, but about overseas companies seeking to come to Britain to make use of our expertise? For example, Nissan recently announced its largest investment outside Sunderland—a new £6 million investment with ADV in my constituency. That sort of confidence from overseas companies coming to the UK is vital.
My hon. Friend is absolutely correct. Much of our success has depended on learning from foreign businesses. They invest in the UK because they see that we have the right environment and structures to succeed.
Since 2010, £7 billion has been invested in the automotive sector, growing success and bringing jobs to the UK. My constituency of South Staffordshire has been incredibly fortunate to benefit from that investment; Jaguar Land Rover has announced a £500 million investment to build a new engine manufacturing facility on the i54 South Staffordshire site, creating 1,400 jobs directly and another 3,500 jobs across the UK in our supply chain.
I am sure that the hon. Gentleman recalls that one of the starting points for the turnaround of the motor car industry was when Tata took over Jaguar—before the 2010 election, by the way. I remember meeting Tata at the time, along with the trade unions.
We once tried to get Nissan to invest in Coventry airport and turn it around for car production. We did not get the grants at the time, which is why Nissan went to Sunderland instead. Nevertheless, we welcome any increase in production and manufacturing generally, but most importantly in Coventry and the midlands. The motor car is a big thing; Coventry was once known as the motor car city.
The hon. Gentleman is absolutely right. Let us not forget that the west midlands are the beating heart of the automotive industry in this country. The west midlands are what drive the automotive industry and have the most to gain from an expanding automotive industry. Almost one third of those employed in the industry live and work in the west midlands. That is why many hon. Members from the west midlands are present for today’s debate. We know that it is important to our constituencies and our region to drive economic growth and success. We have to be committed, both as a Government and as constituency Members of Parliament, in order to support businesses, whether foreign or domestic, to invest.
While much has been done, there is much more to do. The hon. Member for Coventry South (Mr Cunningham) pointed to the success of Jaguar Land Rover, much of which is down to research and development and which, importantly, leads to excellent products that people want to buy.
I congratulate my hon. Friend on securing this debate and on all the work that he has put in to ensure that JLR’s move to South Staffordshire will be a great success.
Does my hon. Friend agree that one of the areas in which the UK has a tremendous competitive advantage, based on excellent, top-quality R and D, is the development of engines? We have engine plants all over the country, including in my constituency—although not for the automotive industry—Perkins Engines, which makes the largest engines. It is vital that long-term investment in research and development in an area in which we have such a competitive advantage continues to grow.
My hon. Friend is absolutely right. He is right to point out the valuable work that Perkins Engines does to supply the heavy construction sector. We are seeing a build-up of expertise in engine design and manufacture, not just in the west midlands but right across the UK. That can be seen not just in JLR’s investment in its new plant or in Perkins’s work, but in BMW, which produces many of its engines in Hams Hall, and in Ford, as a third of its cars, which are produced across the globe, have engines manufactured in the UK. That is why it is vital that the Government keep their commitment to invest in research and development, whether through the Technology Strategy Board or the regional growth fund.
I am pushing for the Government to support and commit to the regional growth fund, and I hope the Minister will reassure us on that. I seek real Government commitment to help British industry and automotive production so that the technology and research and development bases may grow and develop. It is vital that R and D is based here in the United Kingdom, because if we can get businesses to invest in R and D in the UK, they will often base their manufacturing here, too.
I congratulate the hon. Gentleman on securing this debate. An important driver in the west midlands, and certainly in Coventry and Warwickshire, is the university of Warwick, where a lot of research and development and business innovation take place. Many companies, including companies from Germany, are investing because of that research and development, which helps the economy not only of Coventry and Warwickshire but of the west midlands. That is vital.
The hon. Gentleman is correct. The finest engine ever produced is being designed and engineered at Whitley in his constituency and will be built in my constituency by Jaguar Land Rover. Having that research and development based here in the United Kingdom is vital when businesses decide whether to invest in manufacturing in this country. Sadly, we do not have enough manufacturing, and we need more, which is why I urge the Minister to do all he can to start a dialogue with manufacturing companies, whether it is Nissan, Toyota, Honda or any of the many others, to carry out more research and development here in the UK. Some of the greatest automotive designers have come out of British design schools, and some of the best technical expertise comes out of British universities, but we have to leverage that much more.
One of the UK automotive industry’s great weaknesses is our supply chain. Although we have a very developed assembly sector, the supply chain is incredibly weak. The industry runs a trade deficit of close to £7 billion in components that have to be imported, which is not good enough. We need to make progress by encouraging businesses to invest in the UK from abroad, but we also need to strengthen our supply chain’s domestic infrastructure. We need to help small businesses to grow so that they can become medium-sized businesses. We need medium-sized businesses that are already supplying the automotive industry to grow into large businesses, and we need to support them as they take their first steps towards investing in research and development. If our automotive sector does not have a developed supply chain, it will become much more difficult for the sector to develop the new products that it needs to succeed. Let us not be so naive as to think that large automotive companies do all their product development purely by themselves; they do it hand in glove with their supply chain, working incredibly closely to ensure that the components, parts and products are in place for them to deliver new models.
The hon. Gentleman raises some interesting points. Talking about the supply chain—I will leave the automobile industry aside for a moment—unless companies such as Rolls-Royce get their spare parts on time, they cannot finish their engines on time, which often results in a financial penalty. That illustrates the point that it is vital that we get the supply chain right, whether we are talking about the automobile industry, manufacturing in general or companies such as Rolls-Royce.
The hon. Gentleman makes another strong point. When the disaster happened in Japan, many Japanese companies that produce large numbers of automobiles here in the UK were badly hit by disruption to their supply chain. There is a real benefit, not just to the British people but to companies based here in the UK, in having more of the supply chain on our doorstep. We need to do all we can not just to encourage small and medium-sized businesses but to encourage foreign businesses to invest in the UK.
I would like the Government to consider more closely how to give foreign investors greater reassurance that, if they invest here in the UK, they will have the support they need, whether through the regional growth fund or some other mechanism. That would help the UK to attract such investment. The Government must consider how we can reassure companies that we will give them training and skills support so that they have the right work force to deliver and manufacture their goods here in the United Kingdom. Education and skills are vital to this high-tech industry. Although we are making up ground, we still lag a little behind other countries. Every automobile manufacturer always says that its area of greatest concern is whether the skills will be in place for the next generation of workers.
I congratulate my hon. Friend on securing this debate. Will he join me in congratulating automobile companies such as Ford, which already has 68 advanced apprentices in engineering and 15 higher apprentices in engineering? Ford is going further this year and has committed to an additional 50 apprentices in both engineering and craft at the higher level.
I congratulate companies such as Ford on their work. In the run-up to 2018, the automotive sector hopes to take on 7,600 new apprentices and 1,700 new graduates. The sector is a growth area for young people, which is one reason why I am championing a £5 million investment in an engineering studio at my local high school in Codsall. Such a studio will concentrate on training the engineers and designers of the future so that South Staffordshire can provide the very best work force to Jaguar Land Rover and the aerospace sector and companies can grow with the best talent.
My hon. Friend makes a valid point. At the weekend, I took my two daughters to the Enginuity museum at Ironbridge near Telford. We saw a cross-section of a Mini. Although the design is amazing and out of this world, it is all pulleys and levers. Now, much of a Mini’s design is down to electronics. We must not forget how high tech or capital-intensive the automotive industry is, but it is about getting the skills and technology in line, and the Government have an important role in ensuring that that happens. Let us not forget that if youngsters and people of all ages do not have the skills, and if we do not support companies constantly to skill up and improve their work force so that they can move forward, we will lag behind.
I am conscious that other people want to take part in this debate. In summary, I seek assurance from the Minister that the Government are committed to ensuring that the regional growth fund continues to deliver jobs and investment not just for the west midlands but for the whole country. The fund has already achieved a great deal, but it can do more. Let us not kid ourselves, because the automotive sector is one of the most international industries in the world. The sector can move to virtually any country. We would be very naive to think that countries such as Germany, Italy, France, Spain, Portugal, India, China, Russia, Brazil and the United States are sitting back and not being proactive in attracting investment, because those Governments are going out to seek and deliver investment. I want to see the Government continuing to do that, ensuring that it is clear to everyone not only that we have the most skilled work force and the best designers in the world and produce the best cars, but that we are the best place to produce them.
Order. Before we continue, I have permission from the Speaker to impose time limits on speeches if necessary. Seven Members have indicated that they want to speak, and we need to give a proper opportunity for the Minister and the shadow Minister to respond. I will impose a five-minute limit on speeches, which includes any interventions. It is up to individual Members to decide if they want to give way.
I congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing this debate, and I join him in his paean of praise for all sectors of the UK automotive industry and his ambition for its future. He referred to Jaguar Land Rover; its success is great news. I am pleased about the part that Unipart, which is based in my constituency, has played in that success. On the important point he made about the supply chain, he might be aware that Unipart’s after-market logistics were, with Jaguar Land Rover, the overall winner at the independently assessed European supply chain excellence awards last year, reflecting innovation, delivery and collaborative commercial success over many years. We have examples of excellence in this country that can be built on and emulated.
I take this opportunity to praise the achievement of the 4,000-strong work force at Cowley and BMW’s investment of £1.75 billion in the UK, which has made possible the continuing stunning success of the Mini. It is a very good example of what can be achieved by British manufacturing in the most competitive markets, so long as there is the right investment, the best design and engineering, a skilled and committed work force and a management adept at securing continuous improvement in product quality and responsiveness to customers. Whenever I visit the plant, I am struck by just what a staggering logistical accomplishment it is to manufacture a car these days. The Mini has 3,600 parts, arriving from several suppliers in different parts of the UK and abroad, with countless variations per model, five different models going down the line at the same time and the right parts arriving in the right place in the right order at the right time. I cannot help thinking that if Government policy, and IT projects in particular, were delivered as well as car production, we would all be a lot better off.
Partnership with trade unions is important. Industrial relations at Cowley have been transformed since BMW took over. That is not because the union is weak or has caved in—it has not—nor just because BMW’s ownership and management are so much better than what went before, although they certainly are. That transformation has happened because there is a constructive partnership, with real commitment to and a mutual interest in success. Negotiations are sometimes hard, but the outcomes are good. A recent example was Unite’s success in securing agreement that 1,000 agency workers on temporary contracts would become eligible for permanent contracts, giving a massive boost to security and well-being for the workers concerned and their families. The Mini plant is not only a premium employer locally, but is leading the way in training, with £1 million invested in its Oxford training school and 95 apprentices. It is important for the future of the plant that we nurture the skills and application needed to sustain advanced manufacturing success.
Across the industry, the quality of apprenticeship training remains too variable. The Minister should look, through the Automotive Council, at how we can achieve a standard automotive framework with high levels of quality assurance. We also need to sustain a competitive business environment, simplify energy efficiency regimes and keep business rates down. Through that, we can build on the Mini’s fantastic success, with 2.4 million models produced and 80% of production exported to 108 different markets. That represents a massive contribution to the UK balance of payments, exemplifying UK manufactured export achievement at its best, and is a performance the country needs to emulate more generally.
The new model of the new Mini went on sale last month and is showing every sign of carrying that success forwards, with more than 4,000 UK orders taken even before it was in showrooms. Obviously, as with every other car Britain is looking to export, what we most want is sustained world economic growth in demand, but through this recent difficult period, the Mini has shown what is possible. I thank the work force for all that the success of the Mini means to Oxford, and our partners in both the Mini production triangle at Swindon, where the body panels are made, and the engine plant at Hams Hall, which enabled Mini engine production to be repatriated from Brazil. I also thank BMW for the sustained investment and its commitment to the future, which can keep Plant Oxford and all its workers in my constituency at the forefront of automotive success for years to come.
I am delighted to congratulate my hon. Friend the Member for South Staffordshire (Gavin Williamson) on securing this debate, and I am also pleased to follow the right hon. Member for Oxford East (Mr Smith). I worked for MG Rover, which was one of the most iconic firms in the country, between 1997 and 2004. When I suggested to the work force that I wanted to become a Member of Parliament, they took it with much hilarity. As I did not make it in 2001 or 2005, they were partly right. I did say, however, that if I ever got to this place, I would be delighted to speak on behalf of our manufacturing community and, in particular, our automotive sector.
It was interesting to hear from the right hon. Member for Oxford East about the success of the Mini, which was one of the reasons for the demise of MG Rover—it did not have the good fortune of manufacturing the Mini at its plant—but I congratulate him on his particular success. I am delighted to see the hon. Member for Birmingham, Northfield (Richard Burden) here. He was the first Member that I debated against, when I was working at the MG plant.
As co-chair of the all-party manufacturing group and the Member for Warwick and Leamington, I am aware of the importance and enduring heritage of manufacturing and the automotive sector supply chain, which runs through the whole west midlands, as my hon. Friend the Member for South Staffordshire said. I am also very much aware of the need to re-shore manufacturing and encourage the export of British-made goods. The trend of re-shoring is growing, I am pleased to say. A recent report from the EEF found that one in six firms has brought part or all of its production back to UK suppliers. The Minister has encouraged and achieved action on reduced operating costs, affordable finance and investment. Britain has the most productive automotive sector in Europe and in 2012, as has been recognised, we exported more vehicles than ever before.
Until recently, it was often assumed that manufacturing cars in Britain was a thing of the past, but new technology and a renewed focus on research and development in recent years has turned that around. The national automotive innovation campus at the university of Warwick is one example of that renewal. An investment of nearly £100 million over 15 years will provide an unparalleled centre for research and innovation, which Members will recognise as a magnet to bringing manufacturing home. Over more than 30 years, the Warwick Manufacturing Group has been a clear example of how collaboration between universities and industry can benefit both sectors and provide a strong foundation for practical and innovative research. Making cars more efficiently has been a defining feature of the past decade and has widespread positive benefits. Improvements to manufacturing processes have reduced energy use by 43% and water use by 48%.
Another key Government focus, on skills and apprenticeships, is also having a significant positive impact on the manufacturing and automotive industries. Developing a more skilled work force starts in schools, where a variety of schemes are in place to encourage the uptake of STEM subjects and to encourage career paths through apprenticeships. The Government’s introduction of employer-led and designed apprenticeships is important and allows skill development to be tailored to the needs of the sector.
My constituency has a proud tradition of manufacturing, and I am particularly pleased that the automotive business, both locally and in the wider economy, has improved greatly over the years. We must ensure that Britain continues to build on the momentum of recent years and continues to be the home of a thriving automotive sector.
It is a pleasure to serve under your chairmanship, Sir Alan.
I received an e-mail on Sunday from a young man from Castle Vale who was desperate because he has been out of work for two years—one in four young people in my constituency are out of work—and he said, “Jack, can you help me to get into Jaguar Land Rover?” For him, times are bleak, but Jaguar Land Rover’s remarkable transformation and success story over the past five years offers hope.
The future looked bleak when Ford was in control. When I was elected in 2010, the assumption was that the Jaguar plant would close. Mercifully, Tata, an excellent company, took over and brought in two outstanding Germans, Carl-Peter Forster, managing director and group chief executive officer of Tata, and Ralf Speth, the new CEO, to have a fresh look at the business together with the remarkable Lord Kumar Bhattacharyya. I remember meeting them within days of the general election, as they were having a fresh look at the fortunes of Jaguar Land Rover, and two points stick out in my mind.
First, the people brought in by Tata said that notwithstanding the run-down of the automotive industry in the west midlands, there were great residual strengths. There are both primes and component companies, from GKN on the one hand to Jaco-Sumal, which employs eight engineers just off Erdington High street, on the other. There are logistics companies, research and development facilities and universities, such as the university of Warwick. That goes all the way down to the midlands’ world-class games industry, with which the automotive industry wants to collaborate on the next generation of in-car entertainment. Secondly, they said that they welcomed the Labour Government’s commitment to an automotive sector strategy and the incoming Government’s commitment to continuity of policy.
Over the past four years, what we have seen is nothing short of a remarkable transformation. Jaguar Land Rover is now one of the jewels in the crown of British manufacturing. Like my right hon. Friend the Member for Oxford East (Mr Smith), I want to pay tribute both to the company and the work force. It is sometimes popular in this place to knock Unite, which does get it wrong from time to time, but its role in the transformation of the automotive industry and in what happened at Jaguar Land Rover has been nothing short of outstanding.
I have two points about what the next stages should be. First, I hope that the Government back Jaguar Land Rover’s skills bid. The hon. Member for South Staffordshire (Gavin Williamson), whom I congratulate on securing the debate, was right to focus on skills. JLR wants 5,000 more people in its factories and 20,000 in its supply chain. It is already running into skills bottlenecks and is therefore crucially working with its supply chain, but it needs Government support if it is continually to ramp up the necessary skills.
Secondly, just when we are seeing a major transformation of the industry into a world-class success story, it is crucial that we do nothing to put it at risk. The continuing uncertainty over our membership of the European Union is damaging to the automotive sector. Inward investment is key to the success of the sector, but key to inward investment is our continuing membership of the European Union. The problems within the Conservative party over membership of the EU do not help to secure the industry’s medium to long-term success.
In conclusion, we are rightly celebrating a success story, but we must sadly mourn the fact that Dunlop Motorsport is leaving these shores after 125 years of production in our country. It is a bitter irony that just when automotive industry is increasingly onshoring its supply chains, Goodyear, which is based 3,500 miles away in Ohio, is offshoring. Having said that, the main emphasis today has rightly been on celebrating and building on the success stories, but the Government’s role is crucial.
It is a pleasure to follow my fellow Birmingham Member of Parliament and hon. Friend the Member for Birmingham, Erdington (Jack Dromey) and the hon. Member for Warwick and Leamington (Chris White), whom I have known for many years—I remember well that first debate. I also congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing the debate. He started off his remarks by talking about “Top Gear”, and I think I may be the only Member in this debate who has actually been on the programme. I appeared on a feature looking for the fastest political party, and the good news, at least for the Opposition, is that I soundly beat the Conservative candidate, but the rather bad news is that I was beaten by the Legalise Cannabis Alliance, so I do not necessarily talk about that too much.
Thank you, Sir Alan; it is much appreciated.
As my hon. Friend the Member for Birmingham, Erdington said, ask anyone in the automotive industry what they want from Government and two words will come up time and time again: continuity and predictability. It is not always exciting for politicians, because we all love to blame everything that goes wrong on the other side and to corner the market in everything that goes right for our side, but the automotive sector does not work that way. The reality is that all major political parties underestimated the importance of manufacturing for too long, but that has now turned around.
The automotive industry has been a trailblazer, with great partnerships within the industry, which my hon. Friend the Member for Birmingham, Erdington and my right hon. Friend the Member for Oxford East (Mr Smith) discussed, but also with the Government and with Parliament. The industry forum that thrived under the previous Government was a building block of that success, as was the creation of the Automotive Council, which creates road maps for future issues facing the industry, such as skills and the low-carbon agenda. Other hon. Members have referred to the figures that highlight the automotive industry’s success story. Despite your offer that I can speak for longer, Sir Alan, I will not repeat them, but suffice it to say that some of the figures are startling.
I want to discuss something that the hon. Member for South Staffordshire mentioned, namely the role of the motorsport and performance engineering industries in the automotive sector. Eight of the 11 Formula 1 teams are based in the UK. Lewis Hamilton won the Malaysian grand prix on Sunday, which was very good, and the results state that he was driving a Mercedes, which he was, but that Mercedes was built in Brackley. The factory in Brackley has been Honda, Brawn and Mercedes, but it has always been British. Motorsport companies are involved in so much more than what many people usually think of as motorsport, such as the fantastic work being done in a range of areas at the McLaren Technology Centre by McLaren Applied Technologies. How many people know that the skeleton sled on which Lizzy Yarnold did so well at the winter Olympics was designed by McLaren here in the UK? Williams Advanced Engineering’s centre is also doing much great work, and companies such as Prodrive and Cosworth are also involved in state-of-the-art work.
The UK, however, is the home of motorsport not only in Formula 1, but in so many other ways. The national and grassroots series are among the building blocks that make our motorsport and performance engineering industries as world-class as they are. The premier national racing series is the British Touring Car championship, the opening round of which was on Sunday. The main sponsor of the series is Dunlop Motorsport. Why therefore is Dunlop Motorsport, as part of that cluster, turning its back on the home of motorsport? When the Minister responds, will he update the House? I know that approaches have been made on the matter from both sides of the House. My hon. Friend the Member for Birmingham, Erdington and I have worked hard on the issue, and it needs to be said to Dunlop that it has still not answered satisfactorily the questions that have been put to it, and that the reasons it has given for doing what it seems intent on doing have not been convincing. It will be bad for motorsport, for the cluster and for Dunlop if it goes ahead with what it is doing.
I mentioned the British Touring Car championship. Two of the races on Sunday were won by Hondas built in the UK. The road car, the Civic, is also built in the UK. Despite the success of the automotive industry, we sometimes find things that are not great, and it is worth pausing for a moment to reflect on the fact that just in the past week Honda has had to cut back on some shift working at Swindon, which is something to be mourned by all of us. If we ask the people at Honda why that is, they say that it is about the market for their cars, and crucially the European market. Europe is still the largest export market for UK vehicles.
In my constituency, Shanghai Automotive still produces MGs and has its European technical centre there as a base, a foothold and a bridge into Europe. The hon. Member for South Staffordshire was right that the automotive industry needs reassurance, but it needs reassurance that we will not play fast and loose with our membership of the European Union. That is important not only to the motor companies exporting into Europe. Jaguar Land Rover, for example, has fantastic export achievements in other parts of the world, but ask it and those who want to export to the United States about the European Union and they will also say that continued membership is vital to them, apart from anything else because of the free trade agreements and other ongoing negotiations. I accept that the Conservative party might have one or two problems, looking at its flank with the UK Independence party, but frankly the interests of Britain are more important. Continued membership of the EU and reducing the uncertainty about our membership are very important.
On the supply chain, the hon. Member for South Staffordshire was right that one way in which we can and should do more is by ensuring that its component sections—the original equipment manufacturers—in the UK are firmed up and developed. About two years ago, KPMG produced an important report for the Society of Motor Manufacturers and Traders which showed that about £3 billion-worth of opportunities are being missed in the supply chain. That is why it is important for us to do more.
Some good things are going on: the Automotive Investment Organisation, headed by Joe Greenwell, formerly of Ford of Britain, has been set up to attract vital foreign investment, which is good news; the advanced manufacturing supply chain initiative has been established, which is good news; and the advanced propulsion centre is being established, which is important to ensure that there are opportunities for small and medium—and not so small and not so medium—companies in the development of ultra-low-emission vehicles and so on.
We need a sustainable framework, however, which is why the hon. Member for South Staffordshire was right to stress the importance of predictability and speed of action by things such as the regional growth fund. I believe that it was a mistake to get rid of the regional development agencies. We may disagree about that, but they at least provided a framework for making decisions and ensuring that those decisions were carried through. All too often, things are too hand-to-mouth at the moment. I hope that the Minister will address that issue, because the automotive industry is very much the jewel in our industrial crown.
Many other sectors in the UK and beyond are asking, “How did you do it in automotive?” They want to copy things such as the Automotive Council or the partnership. That is good news, but we must not rest on our laurels. There is a huge skills agenda to be developed and so much more yet to be done with the supply chain to ensure that we achieve our potential.
In conclusion, I hope that the Minister will say a few words about Dunlop, because that is still not a done deal and we still need to apply pressure. I hope that he will join me in applauding the work of the Automotive Council. I also hope that he will say a little more about the advanced propulsion centre; about how the UK will accelerate on the ultra-low-emission vehicle agenda, because we are lagging behind other countries in the take-up of such vehicles; and about what we can do to better address the concerns expressed by the industry about skills and the supply chain.
I appreciate the opportunity to speak in the debate, which I had not intended to do, but with the slight west midlands bias I thought that I might divert attention back down to the south-east and speak about a specific aspect of the automotive industry and the impact that it has had on my constituency.
I imagine that the instant inclination is to think that I will talk about Ford, and of course it was a huge loss to Southampton when the Transit plant closed last year. In fact, the Transit had been made in Southampton for my whole life and, historically, there were always adverts in the local paper claiming Southampton as the home of the Transit. I pay tribute to the hard work of Ford to ensure that an automotive base remains in the city, as well as a level of employment in my constituency that, at the time of the original announcement to close the plant, we had not expected. One hundred and thirty-four jobs remain in the city, but much of the focus has moved to the port and to the export of vehicles through Southampton docks.
Even at the height of the recession, when economic conditions were difficult, we saw significant expansion in Southampton, particularly of multi-deck car parks. Massive numbers of cars from all the main manufacturers that have been mentioned this afternoon are exported through the port of Southampton—at the moment the figure stands in the region of 0.5 million vehicles every year. We rightly regard the port as one of the significant economic drivers of our entire region. I was privileged to be there yesterday at the opening of the new Southampton container terminal, SCT 5, and there was no doubt that the emphasis was on the automotive sector and its contribution to jobs in the city and to the export of cars through Southampton.
Ford did a fantastic job locally, in partnership with the university, on the Ford scholarships, providing 10 scholarships a year of £10,000 to young people seeking engineering jobs in the automotive industry. Significantly, 50% of the scholarships have gone to women. I notice that the debate has been all-male so far this afternoon, but there is role for women in the automotive industry. I remember the chairman of Ford telling me several years ago that some of the attitudes towards women that he encountered in Westminster would not be tolerated on his factory floor. He is absolutely right; Ford has been a trailblazer in ensuring that the automotive industry is one in which there is an equal place for women. I congratulate Ford on that, as I congratulate my hon. Friend the Member for South Staffordshire (Gavin Williamson) on securing the debate.
It is a pleasure to serve under your chairmanship today, Sir Alan. I, too, congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing the debate.
Today in the UK, we produce more than 0.5 million vehicles and 2.5 million engines each year, of which we export some 80%. That equates to a vehicle rolling off the production line every 20 seconds, making us the 14th largest producer in the world. Of course, as we have heard, the west midlands dominates the car manufacturing industry in terms of employment, but UK manufacturing industry as a whole employs about 2.6 million people, which is 8% of all jobs. Sadly, only 2,000 people now work directly in the automotive industry in Scotland, but I am old enough to remember the heady days of manufacturers such as Rootes and Chrysler just up the road from my constituency in Linwood. What plans do the Government have to encourage vehicle manufacturers to locate elsewhere in the UK and to take advantage of Government help north and south of the border and the skills that still exist in those areas of the country?
We should not forget that there are also jobs in the supply chain. More than 2,000 UK companies regard themselves as automotive suppliers, and they employ about 82,000 people. The UK automotive supply chain generates £4.8 billion of added value annually, with an estimate now of a possible further £3 billion if the opportunities are taken. They should be taken, because about 80% of all components required for vehicle assembly operations can be procured from UK suppliers. I repeat my question to the Minister about how he is encouraging sourcing from UK suppliers.
What will build the future of the automotive industry in the UK? It can probably be summed up in a few words: innovation and quality in design. Innovation means product improvements, and challenging accepted practices, processes and design limitations. This country has been a trailblazer of vehicle innovations that pushed boundaries and showed our competitors a clean pair of heels. In the past those innovations included transverse engines, limited-slip differentials and independent suspension, as well as numerous safety features and a reduction in weight by using new metals to build our engines. I could go on—I am an old mechanic and I could spend hours reciting British vehicle innovations.
Quality in design is what makes products timeless. Anyone who thinks of iconic cars of the past will recognise that British design is there. Hon. Members have spoken fondly today of the forerunners of the small family cars we see so much of today, such as the Mini, whose subframe chassis allowed the first transverse engine, with new positioning of the gearbox. That was a revelation. The Hillman Imp, built in Linwood in Scotland, had a cutting-edge rear-mounted aluminium alloy engine. With its less than 1-litre engine size it produced the same power as a much larger vehicle by cleverly optimising a 9:1 swept volume ratio. That gave sports car performance to a small family saloon. Further up the market range are classics such as the E-Type Jaguar, which is still one of the most iconic sports cars around. With its limited slip differential it was the forerunner of the 4x4. The weight that heavy goods vehicles can now carry is the result of our development of the air braking system.
Unfortunately, we lost our way for a while and stopped pushing at the design boundary and quality mark. The world overtook us. Most significantly, at first, the Japanese took quality to a new level. However, the way of thinking I have described is being revived by manufacturers in the UK, including Jaguar Land Rover and Nissan, not to mention bus and truck builders. The vehicles they are developing and the innovative designs they are offering are the reason why they are winning markets. That is why I firmly believe we need to plan for manufacturing; the resurgence cannot be left to chance, or to peter out. We need to plan for continued success and maximise benefit around the country. The Government need to encourage more research and development and put their foot on the accelerator.
We need small and medium-sized firms to be a critical part of the supply chain. How do the Government intend to promote a fully integrated UK supply chain and green procurement? We need to overcome supply and demand problems in relation to products and skills, and we need to tackle the culture that refuses to take pride in professions such as engineering and prevents good manufacturing firms from coming to schools to talk to young people. We need high-skill jobs; we need to win the race to the top; and we need many more apprenticeships like the one I served. We need to move up the chain of employment and skills.
Any plan should include green jobs in the automotive industry. We need to design cleaner factories and vehicles, along with cutting-edge production flow and quality assurance techniques, to embrace fully the culture of right first time and defect-free manufacturing. We need procurement that sources around the country to create jobs, but we also need to reduce lead times and promote a just-in-time procurement practice that complements a constant-flow production strategy. We need to end the competitive strategies that value low wage costs over a trained work force. For the consumer, price is not the only factor when purchasing.
As we have heard, one of the most important issues for the industry and the country is the debate about the UK’s membership of the EU. Ahead of the European election, the Society of Motor Manufacturers and Traders wants to ensure that its voice is heard in the automotive sector. Given that we are a significant part of a global industry, and that 80% of all cars manufactured in the UK are exported, the SMMT has commissioned a report, to be published tomorrow, that will provide an economic assessment of the value of the EU to the UK automotive industry.
Labour is clear that business is the solution, not the problem. A plan for manufacturing, with business working in partnership with the Government, is central to building an economy that works for everyday working people, resolving the cost-of-living crisis, delivering jobs that pay a wage people can live on and ensuring that we can pay our way in the world. All that can be made in Great Britain.
It is a pleasure to serve under your chairmanship again, Sir Alan. I thank the hon. Member for South Staffordshire (Gavin Williamson) for securing the debate. It has given us a welcome opportunity to discuss what he rightly said is a hugely important part of the British economy.
I think that the hon. Gentleman began by mentioning Italy; he also mentioned the importance of the west midlands for the UK automotive industry. That is true, but in God’s own country, the north-east of England, a single Nissan plant produces more cars than the entire Italian car industry. That is a remarkable achievement and shows how the British car industry has been transformed. Forty years ago, it was a symbol of industrial decline, inferior products, obsolete manufacturing processes, poor industrial relations and a lack of competitiveness. The sector has undergone a remarkable and welcome transformation in fortunes in the past seven or eight years. As the hon. Gentleman said, the task for all of us is to maintain that competitive edge for the UK automotive sector, with an emphasis on high productivity, high skill levels and innovation, with the aim of raising living standards for all within the industry.
As has been mentioned, there has been great news recently, including the launch of the new Quashqai by Nissan at its plant in Sunderland, the new factory being built by Jaguar Land Rover in Wolverhampton, and the new Mini in Oxford, but there has been bad news too, with the recent announcements at Honda. Anne Snelgrove, whom you will remember from her time in this House, Sir Alan, has been championing the issue in Swindon.
Last month, my hon. Friend the Member for Streatham (Mr Umunna), the shadow Business Secretary, framed the challenge facing the British economy, terming it Agenda 2030. It has four clear pillars: active government investing for the long term; liberating the talents of all; solving tomorrow’s problems today; and an outward-looking, open approach to the world, not isolation. I want to base my discussion of how we can maintain the comparative advantage of the UK automotive industry on those four pillars.
As for an active industrial strategy, it is, as my hon. Friends the Members for Birmingham, Erdington (Jack Dromey) and for Birmingham, Northfield (Richard Burden) said, vital that the Government provide long-term policy certainty and predictability which transcend electoral and political cycles and align more closely with industry’s investment and process cycles. We should be thinking not only about next year or the next five years, but the next 15, 20 or 30. That is why my hon. Friend the Member for Streatham chose the title Agenda 2030. It is five years this month since the Labour Government published “New Industry, New Jobs”, with an emphasis on activism and targeted investment. A grant was provided to Nissan to support a new battery plant and the manufacture in the UK of the Nissan Leaf. The scrappage scheme helped maintain the industry at a time of acute falling demand. More importantly, as we have heard today, the Automotive Council was set up to lay the foundations for a long-term partnership between the industry and the Government and to build long-lasting capabilities and create supportive policies for the automotive industry; it is something that we strongly support. We remain committed to the long-term continuation of the Automotive Council as the key institution for driving strategy, collaboration and innovation in the sector. As we have heard today, we cannot achieve that without the pride, professionalism and commitment of the industry’s work force.
My right hon. Friend the Member for Oxford East (Mr Smith) mentioned Cowley, and my hon. Friend the Member for Birmingham, Erdington mentioned Jaguar Land Rover. As my right hon. Friend the Member for Oxford East said, trade unions often get a raw deal in the media and the House. However, we must give Unite credit for playing a leading and proactive role in the automotive industry in general. I am pleased that it did so much great, proactive work to ensure the next generation Astra will be built at Vauxhall’s Ellesmere Port plant. I hope that the Minister agrees that the collaborative approach of the industry, the work force and the Government is the model we should take forward for the long term.
To ensure the UK’s automotive industry achieves its potential, we must address the issues surrounding the supply chain. The Automotive Council estimated that an additional £3 billion per annum could be provided in the UK’s automotive supply chain—a 40% increase on current levels of UK-based supply chain activity. Reshoring is an exciting opportunity. KPMG estimates in its excellent report from about 18 months ago, “Capturing opportunity”, that supply chain opportunities could result in tens of thousands of additional jobs in the UK automotive supply chain by 2017. The prize of more and better-paid jobs, additional industrial capability and renewed competitiveness is huge, and we must grasp it. That is why the Labour party asked Mike Wright of Jaguar Land Rover to undertake an independent review of the manufacturing supply chain to ensure that it is as collaborative, co-ordinated and competitive as possible.
Will the Minister update the House on what he is doing to bring more of the global supply chain in the sector to the UK? How many firms in the automotive industry have received funding from the advanced manufacturing supply chain initiative? Does he plan to put AMSCI’s funding on a more permanent footing to give industry the long-term ability to plan for the future?
As the Minister knows, access to finance remains a problem in the supply chain. Firms often require funding to purchase tooling to complete an order, but they are not paid by the customer until the products are shipped, which puts immense pressure on their cash flow and undermines the potential of the UK automotive supply chain. We need the banking system to work with and for British industry, especially the excellent and promising automotive industry. Far too often it does not. The automotive industrial strategy states:
“The Automotive Council will…work with the financial services industry to develop long-term investment finance products that meet the needs of the automotive industry”.
Will the Minister update the House on progress with that? What has been the flow of finance to the automotive supply chain, and what else will be done?
I mentioned the potential to create tens of thousands of additional jobs, which brings me to the second pillar of Agenda 2030: skills. Every right hon. and hon. Member mentioned skills in their contribution, and they are a massive issue in the automotive industry, and in manufacturing in general. It will make or break the potential of our country’s automotive industry in the next 20 or 30 years. The automotive industrial strategy states that the pipeline for new entrants into the industry narrows too early, with too much leakage at important points. In addition, I am struck that in several of the automotive industry’s bright spots, such as my region of the north-east, as well as the west midlands, unemployment is appallingly high. The unemployment rate in Birmingham, Erdington is the 53rd worst in the country and in Birmingham, Northfield it is the 59th worst. My hon. Friend the Member for Birmingham, Erdington said that one in four young people in his constituency are jobless. We need to marry up skills and potential with the potential work force of the future.
My hon. Friend the Member for Inverclyde (Mr McKenzie) talked about the cost-of-living crisis. It is more fundamental than simply prices versus wages; it is about how our kids get decent jobs, a high standard of living and a good career. A co-ordinated industrial strategy should link education policy and curriculum content with the automotive industry’s needs. Will the Minister update the House on how the skills road map for the sector is progressing? How will it improve skills and ensure there are more opportunities and fewer vacancies in the industry? The strategy states that 7,600 apprentices and 1,700 graduates will be recruited in the period 2013-18—the hon. Member for South Staffordshire mentioned those numbers. How is that progressing? What are the Government doing to promote better collaboration between firms in the industry to address the sector-wide problem of skills?
The third pillar of Agenda 2030 is solving tomorrow’s problems today, or the importance of innovation, which my hon. Friend the Member for Inverclyde discussed in his strong contribution. In a debate last month on the automotive industry in the other place, it was said that the chief executive of Jaguar Land Rover expressed the view that the most important thing to his company was innovation. We have a lot of so-called “sticky” technologies and comparative strengths that we need to enhance. This country is particularly strong in designing, producing and manufacturing engines. I am pleased to see the hon. Member for Romsey and Southampton North (Caroline Nokes) in the Chamber. She mentioned Ford. It should be a source of enormous pride to us that one in three engines produced by Ford globally are produced in the UK. We must continue to be strong in engine technology. Will the Minister tell us what progress is being made in setting up the advanced propulsion centre?
This morning, I met Air Products, a firm that is a leading player in the hydrogen industry. It is normally a business-to-business firm in the chemicals industry. What is the Minister doing with the Automotive Council to develop capability and infrastructure for hydrogen fuel cell technology in cars? How successful has the planned collaboration been between the Automotive Council and the Engineering and Physical Sciences Research Council? Will the Minister update us on the work that the Automotive Council has done to identify evolutionary and disruptive technologies that will have an impact on the UK automotive industry and which could hinder progress or provide benefits to our comparative advantage?
The fourth pillar of Agenda 2030 is being outward-looking and open. It is clear from today’s debate that the House wants to encourage inward investment, so original equipment manufacturers and tier 1 and tier 2 automotive manufacturers base their European operations in the UK. The domestic market is important, but that springboard to a European marketplace of half a billion customers is the key selling point for reshoring and encouraging inward investment. As my hon. Friend the Member for Birmingham, Northfield said, internal wrangling and navel gazing will not help potential investment into the UK. We may lose our competitive edge if we do not address the policy certainty issue about European issues.
Will the Minister address directly the point made by the head of Nissan late last year, when he said bluntly that the car maker may have to evaluate its UK operations if Britain pulls out of the EU? Does that not concern him? Has he seen the report on UK jobs supported by exports to the EU published this week by the Centre for Economics and Business Research, which shows that 4.2 million jobs—particularly those in the north and in the motor trade—are associated with the demand in exports to the EU? It is vital that we remain part of the EU to ensure that manufacturers can base their operations in the UK.
I congratulate all hon. Members who have spoken today. It is clear that the automotive industry is a massive success for British manufacturing. It is a great case study in how industry, the work force and the Government can work together for the long term, with an emphasis on innovation, productivity, competitiveness and exports. We cannot be complacent in the fiercely competitive world in which we live. We must work together for the long term to maintain and strengthen the enviable comparative advantage of the automotive industry in the UK. I look forward to working with all hon. Members to meet that challenge.
Thank you for the way you have chaired the debate, Sir Alan, and for allowing me a reasonably generous time to respond to the points that have been made. I congratulate my hon. Friend the Member for South Staffordshire (Gavin Williamson) on securing this debate on a subject about which he feels passionately. He made an excellent speech, and I want to echo his comments about the Jaguar Land Rover decision to invest £500 million in a new engine plant in his constituency. That is very welcome news indeed and will bring a massive boost to the area and the supply chain, creating some 1,400 jobs. I am pleased that JLR is already making good progress in recruiting to fill those positions. I am also pleased that the Government are able to support that investment with a £10 million grant.
Various points were made by several hon. Members in excellent speeches. I will touch on as many as I can in addressing the three themes that have emerged today: the supply chain and the need to continue to strengthen it; skills and the need to continue to attract people, including women, into the industry; and what we are doing to advance our enormous strengths in innovation, technology and design.
Our economy is growing now, and the automotive sector is contributing hugely to that growth. Last year, turnover in the automotive industry reached an all-time record, exceeding £60 billion, and was up 9% on the previous year. We have overtaken France, and the UK is now the third largest car producer in Europe, just behind Germany and Spain, producing more than 1.5 million vehicles in the UK in 2013. We have the most productive automotive workers in Europe.
Last July, with the industry we set out a long-term strategy—some hon. Members today reinforced the need for that strategy—for growth and sustainability for the automotive sector in our automotive industrial strategy, which will help to keep Britain at the forefront of the global auto market. We are working closely with the industry, through the Automotive Council and the strategy, to remove barriers to growth when we find them, and to create opportunities across the sector.
An excellent example is the co-operation between the Government and industry on an advanced propulsion centre over the next 10 years and investment of £1 billion from both the Government and the industry to help to research, develop and commercialise the next generation of low-carbon technologies, ensuring that the UK stays at the forefront of the design, development, manufacture and use of ultra-low emission vehicles and in so doing helping to secure up to 30,000 jobs.
The Automotive Council met last week to review developments since the publication of the industrial strategy last year. The advanced propulsion centre is progressing ahead of schedule with a senior team in place and two funding competitions well under way, covering innovation and the centre’s location. The council heard that the first successful collaborative research and development projects will be announced later this month with significant public support. A decision on the location of the centre will be made by the executive in the summer.
On the supply chain, the automotive investment organisation reported good progress with early wins and numerous investment opportunities in the pipeline. On skills, the council noted a successful skills bid to the advanced manufacturing supply chain initiative, and continuing progress on the industry employer ownership pilot bid.
Will the Minister clarify a couple of points about the advanced propulsion centre, particularly the competition around the development of ultra-low emission vehicles? I understand that the budget for that development is £500 million, but it is projected that only £230 million will be spent in this Parliament and there is a question mark about whether any roll-over is anticipated. Will he clarify exactly how much of that £500 million will be spent and how?
I am certainly happy to write to the hon. Gentleman about that. The Government have committed our side of the £500 million funding, but we cannot commit expenditure through and beyond the next Parliament. Perhaps the hon. Gentleman will allow me to write to him about that specific point.
Although there has been recent growth and expansion in the centre, and a lot of positive news, we should not become complacent. There is much more to be done to ensure that the growth we have seen in recent years is sustainable, particularly in building the capability and capacity of the supply chain, and I will turn to that now.
My hon. Friend the Member for South Staffordshire is right in saying that there is much more to do to strengthen the supply chain. Currently, only about 40% of the components of a UK-built vehicle come from a UK supplier, so there is clearly an opportunity for us to capture more of the supply chain. Through the strategy and the council, the Government and industry are working together to boost the competitiveness of the UK’s supply chain growth. We are investing some £129 million to strengthen advanced manufacturing supply chains that will create around 1,400 jobs, and we are supporting a Society of Motor Manufacturers and Traders-led project with £13.4 million of funding to help to improve the competitiveness and capability of 38 automotive supply chain companies.
The sector is also benefiting from Government funding worth more than £56 million for a total of nine AMSCI bids across four rounds of the competition. Between them, the projects aim to create more than 3,700 jobs and to safeguard a further 3,800 jobs. The Automotive Council has identified a potential £3 billion of opportunities for UK-based vehicle and engine manufacturers, where components are currently sourced from overseas.
The sector has also been successful in gaining funding from the regional growth fund, and has secured some £236 million in awards from that funding in rounds 1 to 4. To marry the opportunity with investor appetite, the automotive investment organisation, to which several hon. Members referred, aims to double the number of jobs created or secured in the automotive supply chain through foreign direct investments over the next three years to 15,000, and is currently on target to achieve that. It has had some early wins and has many investment opportunities in the pipeline.
The hon. Member for Inverclyde (Mr McKenzie) asked about the supply chain and what I have been doing to help to promote supply chain events. I have attended and spoken at events in London, Detroit and Milan for suppliers in the Po valley, and I have done the same in Tokyo and Nagoya, where tier 1 and 2 component suppliers already have some interest in the UK. I have been working very hard with UK Trade and Investment, and now the automotive investment organisation, to persuade suppliers to increase their presence in the UK and to do more closer to the prime producers.
Does the Minister agree that encouraging a green supply chain would enable more manufacturers to source in the UK, and to get round what is always put up as an excuse—the idea that EU procurement legislation does not allow them to source as close to home as they would like?
I will certainly consider that and draw it to the attention of the Automotive Investment Organisation. It is an intriguing thought. We are obviously working closely on procurement issues in preparing to help manufacturers here with negotiations under the transatlantic trade and investment partnership with the United States, and we are looking at EU procurement rules in that context.
We know that the industry has concerns about the skills levels in the supply chain, and we share those concerns. To capitalise on the growth of the major manufacturers in the UK, we must tackle those skills gaps, so that we can build a strong UK supplier network. We are providing significant support through the employer ownership pilot. In the west midlands, for example, £1 million will support the Telford manufacturing partnership, led by DENSO, in assisting in pre-employment activities and in upskilling employees. We are working with the industry through the Automotive Council to ensure that we target the next phase of support where it is most needed.
Apprenticeships are at the heart of our approach to improving work force skills. In 2012-13, we supported over 66,000 apprenticeship starts in the engineering and manufacturing technologies sector subject area. Trailblazers are leading the way in implementing new apprenticeships and in helping to design the first apprenticeship standards.
Please accept my apologies, Sir Alan; I was detained on other parliamentary business, so I arrived late for today’s debate. I apologise to the hon. Member for South Staffordshire (Gavin Williamson). Would the Minister like to congratulate Toyota, which is based in South Derbyshire? It has taken on the challenge of expanding its apprenticeship centre, so that it is producing apprentices for the supply chain as well. It is over-extra-supplying in the apprenticeship area, and that is very important for the future.
Yes. That is a very important approach, and I hope that it will be copied more widely.
The Trailblazer group is chaired by Ian Eva, the apprenticeship manager from Jaguar Land Rover, with the involvement of a number of other companies, including Toyota and BMW. Traineeships are another key strand of our strategy to help unlock the potential of young people who are motivated to work but lack the skills and experience needed to compete for apprenticeships and other jobs. Hundreds of employers are already on board, including household names in the automotive sector, such as Jaguar Land Rover and Nissan.
Yes, I will. We need to drive up the quality of apprenticeships, and that is part of what is called the Trailblazer exercise. Those involved will help to draw up the standards, and ensure that there is a rigorous test at the end of the apprenticeship and that we improve the quality of what is on offer.
I turn to what we are doing to support innovation and technology. Our aspiration is for almost every car and van in the UK fleet to be an ultra-low emission vehicle by 2050, with our industry at the forefront of the design, development, manufacture and use of those vehicles, delivering opportunities and contributing to the decarbonisation of road transport. We have made a commitment of £400 million over this Parliament to making the UK a leading market for ultra-low carbon vehicles, and we announced an additional £500 million of capital funding for the period between 2015 and 2020.
To ensure that we maintain our position at the forefront of that technology, as I have said, we have already agreed the investment in the Advanced Propulsion Centre, and we are supporting further innovation, research and development through an £82 million investment up to 2015 from the Office for Low Emission Vehicles through the Technology Strategy Board.
As my hon. Friend the Member for South Staffordshire said, we have great automotive design capacity in this country. Nissan has a cutting-edge European design centre based in Paddington—London, of course, is one of the creative hubs of the world—but with its sister Nissan technology centre at Cranfield and the largest single production plant at Sunderland, we can be proud to say that the latest version of the best-selling Qashqai has been designed and developed, and is being successfully manufactured, here in the UK.
Nissan is not alone in that. Ford invests some £450 million each year in designing, developing and researching advanced gasoline and petrol engines for its global product range at Dunton. Volkswagen spends £200 million each year at its engineering centre at Crewe, which, of course, designs the interior and exterior of Bentley cars. The scale of JLR’s research and development investment places it in the top 10 of all R and D investment in the UK. Some £2.75 billion was invested in 2013-14.
Let me turn to points that have been raised. The hon. Member for Birmingham, Northfield (Richard Burden), asked me about Dunlop. We have been working closely with Dunlop to see what we can do in Government to secure a better outcome for all parties concerned, particularly the Dunlop workers, given the expiry of the lease next year. The company met the Secretary of State for Business, Innovation and Skills recently. There have also been key meetings at official level. We continue to offer our full support to Dunlop. The company has acknowledged that offer of support and will contact officials once the consultation has concluded.
The hon. Gentleman also asked me about the regional growth fund, which I have referred to. It is true that in the first couple of rounds of the regional growth fund, a proper time scale was not in place. I put that in place for round 3. It is in place for round 4, and it will shortly be put in place when we announce the award winners for round 5, so I think we have a more systematic process for looking at the allocations.
The hon. Member for Inverclyde asked me specifically what we were doing to make sure that all this growth was more evenly spread throughout the United Kingdom. It is fairly spread, certainly across England. I recognise the decline of some elements of the Scottish car industry. Industrial policy, of course, is a devolved matter, so the instruments at our command here—the regional growth fund and AMSCI—are not available in Scotland. It has its own separate instruments, but companies from all over the United Kingdom are represented on the Automotive Council, and we work closely through UK Trade & Investment with counterparts in Scotland.
The hon. Member for Hartlepool (Mr Wright) asked me about a number of points. He referred to the partnership with the unions. I, too, would like to place on record the important part that unions have played in the revival of our automotive industry. We saw that in emphatic fashion in the negotiations over Ellesmere Port; it was the constructive partnership—the agreement on more flexible working practices—that made it able to win investment in the face of a competing bid for Germany. I remind hon. Members that Unite is represented on the Automotive Council. It is right that it has its place there, and I, too, pay tribute to the constructive way in which it has worked on a number of the changes that have taken place in the industry.
The hon. Gentleman asked me about the supply chain, but I think I have answered questions about the efforts that we are making to improve supply chain capabilities right across the world.
Finally, let me say that the United Kingdom is now a competitive place to do business. When we came to office back in 2010, the rate of corporation tax was 28%. Yesterday it was 23%, today it is 21%, and next April it will be 20%. Our labour costs are already among the lowest in western Europe. We have an attractive research and development tax credit regime and the patent box. All those combine to make this country an attractive location for innovative industries such as the automotive sector. With the automotive sector investing over £2.5 billion in our country last year, it is very clear that vehicle makers value the UK as one of the best places in the world to do business. Through the Automotive Council, the Government are working in close partnership with automotive companies to continue to improve the overall competitiveness of the business environment, both domestically and internationally.
Thank you, Sir Alan. It is always a pleasure to speak again and to thank everyone, as you so kindly prompted me to, for their contributions.
The debate has shown that, as I said at the start, we are all passionate about this industry, and we all have a clear idea of some of the challenges to it. I have a great feeling that there is an immense amount of consensus on making sure that the industry thrives in future, so that instead of being the third largest car manufacturer in Europe, we will be the largest, hopefully in the not-too-distant future.