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Manufacturing Exports

Volume 604: debated on Tuesday 19 January 2016

Since 2010, we have cut corporation tax from 28% to 20%, which is the joint lowest rate in the G20—we will cut it further to 18% by 2020; we have set the annual investment allowance at its highest ever permanent level, at £200,000; and we have made research and development credits more generous and above the line, available in the early loss-making phase for the first time. In addition, UKTI has announced today enhanced support for exporters.

Is the Minister concerned about recent figures showing that the manufacturing sector is back in recession? What does he intend to do about that?

We have to get behind the manufacturing sector. That is at the heart of this Government’s approach, of the long-term economic plan and of the productivity plan, through giving enhanced access to leading technologies in the catapult centres; the apprenticeships levy; making sure that we build up our skills base by attracting more teachers into the STEM subjects—science, technology, engineering and maths; and a range of other initiatives.

With Derby being named as one of the No. 1 places to start a small business, may I ask the Minister what steps are being taken to assist and encourage small businesses to become expanding, exporting businesses?

UKTI has an ambition to increase the number of exporting businesses by 100,000. There are a number of aspects to that: moving to more direct support as well as advice; learning from some of the leading export promotion agencies in the world; and, as my right hon. Friend the Chief Secretary was saying just now, making sure that we leverage existing Government relationships with firms and sectors through a whole-of-government approach to supporting exports.

19. The slump in manufacturing exports at the end of last year has to be proof that the UK economy is still too dependent on consumer spending to drive growth, and the Government must stop being so complacent and so self-congratulatory in sessions such as this. With the risk of Brexit this year only making things worse, what are they going to do to expand manufacturing exports?

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Exports are a challenge; there has been a long-term change in the UK’s share of world trade, the majority of it coming before 2010. On the hon. Gentleman’s point about investment expenditure and consumption expenditure, business investment has grown by two and a half times that of consumption since 2010.

Does the Minister agree that supporting engineering and manufacturing is absolutely essential to our economy and productivity, and that we must do all we can to address the skills gap that is threatening local jobs and businesses in my constituency and around the country?

I absolutely agree with my hon. Friend about the importance of engineering. The evidence of that was shown in the spending review and the autumn statement, with enhanced support for science as well as the apprenticeship levy, which is an important structural change in the way we invest in our skills base.

Five years ago, the Chancellor said that he would rebalance the economy towards manufacturing, exports and the regions. The director-general of the British Chambers of Commerce recently said:

“None of those things have actually transpired in practice yet.”

Will the Minister tell me why not?

We are rebalancing the economy, but it is a long-term and sustained programme—indeed, it is our long-term economic plan. We have talked already today about some of the enhanced support for science, technology, engineering and mathematics and the skills base, the apprenticeship levy, and the catapult centres, which give British business access to the best in leading- edge technologies. Of course there are some things in international trade that we cannot control; for example, there was bad news again today from China. Nor can we control the world exchange rates. However, we are absolutely doing the things that we can when it comes to supporting British exporters.

There we go again—it is everybody’s fault but this Government’s. Here is the truth: the Chancellor promised to boost manufacturing, but instead it is in recession. Manufacturing output is now 6.1% below its pre-crisis peak and falling. The British Chamber of Commerce’s survey of firms found manufacturing close to stagnation, with export sales and orders falling. Instead of helping the sector, the Chancellor closed the Manufacturing Advisory Service in November without so much as a mention. Is it not true that British businesses and families are now paying a heavy price for this Chancellor’s failures?

That is not true. The enhancement of manufacturing is absolutely at the heart of this Government’s approach, but we should not forget that services are also a very large part—in fact a bigger part—of the economy. The overall performance of the British economy is such that we had the highest growth rate in the G7 countries in 2014 and the joint highest in 2015. We have rising real wages and more people in jobs than ever before.