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Economy: Manufacturing

Volume 752: debated on Monday 10 February 2014


Asked by

To ask Her Majesty’s Government what recent assessment they have made of the levels of manufacturing activity in the United Kingdom.

My Lords, manufacturing output increased by 0.8% in the final quarter of 2013 and by 2.5% over the course of the year. A strong manufacturing sector remains crucial to the UK economy, both now and in the future. Manufacturing is a major driver of productivity growth. It accounts for £12.2 billion of UK business R&D and over half of the UK’s exports, and provides employment for 2.6 million people.

I thank the Minister and am delighted to know that my Government are doing so well. However, if we are to fill industry’s growing need for a young workforce who are skilled in new techniques and disciplines—such as those required in the pharma industry—it is time that careers advisers and teachers in our schools understood and offered equal status as regards the choices between universities and apprenticeships. EAL’s survey of 600 apprentices found that fewer than one in 10 of them found out about their options from schools. It cited the case of a girl with A grades who wanted to be an apprentice but was told that her adviser could not help. She has gone ahead and done it on her own: she has trained as an apprentice with BAE and is now fully qualified and fully salaried. She has a car of her own and is putting down a deposit on a house—good girl.

We have placed a legal requirement on schools to secure independent careers guidance, including information on apprenticeships, and we are successfully increasing the numbers of apprentices in the engineering and manufacturing technology sector subject area. In 2012-13, there were 138,700 such apprentices, an increase of 10.3% on 2011-12, and we have opened 17 university technical colleges, with a further 33 in development.

My Lords, is the noble Viscount aware of the recent Jaguar Land Rover publication which talks about busting the myths? This company—along with Semta and EAL, which the noble Baroness mentioned—is doing a magnificent job with apprenticeships. However, it is perhaps a little unfair to suggest that all this started with this Government. Jaguar Land Rover now has seven plants in the UK, four of which were opened, with R&D and apprenticeships, way back in 2004. The Government are to be applauded for carrying on what was already in place. Over that period apprenticeships have grown, on which I congratulate them.

My Lords, I would not disagree with the noble Baroness but I would echo her thoughts that Jaguar Land Rover has done a magnificent job in leading our exports into new markets abroad. This is on top of the excellent news about Bombardier in the Midlands, a decision which gives a new vote of confidence in British manufacturing and which supports 760 manufacturing jobs and 80 apprenticeships in the UK.

My Lords, I am sure the Minister will agree that the Technology Strategy Board’s catapults have been a very positive move forward in driving innovation for manufacturing, especially the high-value manufacturing catapult. These catapults were to a certain extent based on the Fraunhofer-Gesellschaft, but our effort is rather small compared with Germany, which has 60 while we still have fewer than10. Are we going to expand this programme?

The noble Lord makes a good point. It is true that we are behind France and Germany in this aspect, but we are taking several actions, particularly with our catapult programme and the EPSRC—the Engineering and Physical Science Research Council—which will lead us forward and enable us to compete in markets. It is essential that we do this.

My Lords, I am sure we all want to encourage a much more robust manufacturing base in this country. An article in the Economist last week pointed out that, unlike the rest of the country, the north-east and south-west regions still saw an increase in unemployment up to the year ending November 2013. There are huge problems at the moment in the south-west, which was already facing a downturn in its tourist industry and now has floods and difficulties with trains. Is there anything the Government can do to encourage a more long-term, stronger economic and, indeed, manufacturing base in the south-west of England?

Our industrial strategy focuses on the whole country. I note the right reverend Prelate’s point about the south-west where they are suffering so terribly from the floods. The industrial strategy has five main strands which are bearing fruit, particularly in places such as Liverpool and Tyneside, and the south-west is just as important.

My Lords, I am sure the whole House welcomes a recovery in manufacturing, but can my noble friend tell us about the Government’s preparations for potential shortages in technical skills as economic growth picks up? What plans do they have to extend the higher apprenticeship scheme?

My Lords, the Government will provide an extra contribution of £40 million to deliver an additional 20,000 higher apprenticeship starts in the 2013-14 and 2014-15 academic years. Professional bodies are playing a key role in developing a professional apprenticeship route. The changes we have made to higher apprenticeships now provide a clear, work-based progression pathway from an apprenticeship through to higher education and professional careers.

My Lords, the Minister recognises that the north-east is a very strong manufacturing area but has continuing unemployment. Will he guarantee that the Government will eventually support the UTC that Hitachi wants to sponsor in Newton Aycliffe in order to get a highly skilled workforce for train building in the north of England?

I will need to write to the noble Baroness about that specific example, but I hope she will be greatly encouraged by the huge amount of work going into progressing the UTCs. There are 50 of them, creating 30,000 opportunities for young people to train as engineers and scientists for the future. These are the skills that we need to build up.

My Lords, I wish to ask the Minister about the definition of manufacturing versus services. A lot of the new technology sector that I am aware of does not really fit into either category, and I suspect that the overall assessment of manufacturing is underassessed as a result of technical developments.

My noble friend makes a very good point. Indeed, manufacturing has changed enormously. Although I do not have a precise definition for him, it is true that manufacturing includes myriad small businesses that are working very hard not just within the UK but in helping our export drive.

My Lords, any growth is welcome but it is worth noting that manufacturing is still lagging behind services and construction in this week’s PMI figures, which measure business confidence. Is the Minister aware that concerns have been voiced by major manufacturers, including Nissan and Hitachi, about pushing Britain towards the exit door in Europe? A report from the manufacturers’ association, EEF, shows that manufacturers want to remain part of the European Union with no ifs or buts.

I shall give a very quick answer to the noble Lord. We are working extremely hard to develop markets in Europe, which at the moment are proving to be quite challenging.