HC Deb 08 July 2003 vol 408 cc179-200WH

Motion made, and Question proposed, That the sitting be now adjourned.—[Joan Ryan.]

9.30 am
Ian Lucas (Wrexham)

I welcome you to the Chair, Mr. Deputy Speaker, for what I hope will be an interesting and informative debate on this important subject.

North Wales, particularly north-east Wales, is a manufacturing area. In my constituency, 28 per cent. of the work force is employed in manufacturing industry, around twice the national average. That has been so for many years, but conceals the enormous change that has taken place in manufacturing industry in Wrexham during that period. The traditional coal and steel industries have been replaced by a different sort of industry, based less on the exploitation of existing resources and more on the development of skills serving consumer markets in the United Kingdom and beyond. We are entering a period of huge change in manufacturing, one that is different in kind but similar in scale to that in the 1980s and, to a lesser extent, the 1990s. It is very important that we prepare ourselves for that challenge now.

One of Wrexham's premier companies in the past 20 years has been Hoya (Lens) UK Ltd. Its story of inward investment from Japan and servicing of UK and European markets is typical of the recovery of manufacturing in Wrexham in the past 20 years. However, last week, despite recording a profit of £1.75 million in the past year, it announced the closure of one of its two Wrexham factories and the loss of 240 jobs. It is instructive to look at that example and to learn for the future of manufacturing in Wales.

Hoya, which I have visited on many occasions, supplies spectacle lenses to opticians in the UK and Europe. It does so in small, individual packs specific to particular customers. It is a source of astonishment to me that the company judges that such a job can be done more economically in Thailand than in Wrexham, but I must accept that that is so. Having visited the company, I am well aware of the high level of investment, the high-tech equipment and the excellent staff relations that have existed in the company for many years. There is nothing more that the Wrexham work force could have done to make the company more efficient and competitive.

That is an example of the globalised economy at its most ruthless. Competitiveness is all and low labour costs, often aided by poorer working conditions abroad, pose great threats. What can we as politicians do about that? When Wrexham's traditional industries shut down in the past, both Labour and Conservative Governments have intervened. I recall a discussion with a former managing director of Hoya who praised the work of the right hon. Member for Richmond, Yorks (Mr. Hague) who, when he was Secretary of State for Wales, did a great deal to bring a second factory to Wrexham for the Hoya company.

At that time, Wrexham benefited from assisted area status and grant aid helped in bringing those businesses to Wrexham. From 1983 to today, unemployment has fallen from 20 per cent. to less than 3 per cent. Industry has also benefited from the stable macro-economic framework in Britain since 1997; one of low interest rates and low inflation. The effect of those things is often underestimated by business and taken far too much for granted.

Following a very early start to what will be a packed morning, I have just attended the all-party group on small business at which Mr. Dennis Turner, the chief economist of HSBC, gave an entertaining and informative discussion about the macro-economic situation. He greatly praised the Chancellor, and his predecessor, for setting the boundaries for that stable economic framework.

Wrexham is a victim of its own success. It no longer has assisted area status because of the strides it has taken to reduce unemployment and its success in bringing companies to the town. It pains me to say this, but a certain complacency has entered Government thinking on manufacturing. The positives, which I fully accept are in place, are not enough. We must do more.

In Wrexham, the plain fact of the matter is that multinational companies are leaving. In the past six months, Owens Corning, a US company, left to go to central Europe, resulting in the loss of 230 jobs. There have been job losses at the multinational companies of Tetrapak and Intellicoat. Now, Hoya has closed part of its operation. Manufacturing industry is choosing to go elsewhere.

Lembit Öpik (Montgomeryshire)

I am listening to the hon. Gentleman with great interest. Is he aware that there is a similar problem in Montgomeryshire? In Llanidloes, KTH, which was a successful die-cast manufacturer, has been forced to close on account of the problems of its parent company, which is also choosing to relocate to other parts of central Europe. Does the hon. Gentleman agree that infrastructure development can help, but that it must have the support of Government?

Ian Lucas

I entirely agree with the hon. Gentleman and I intend to discuss infrastructure development.

What do we need to do to support manufacturing industry in north Wales and ensure that the present difficulties are overcome? The short answer is that the Government must do everything they can. First, we must maintain the stable economy that we have today. Low interest rates, low inflation and, above all, stability are the key things. We must not take them for granted. No business can plan for the future unless that stability, which is so hard-won, is maintained.

Secondly, we must encourage investment to increase competitiveness. As someone who ran his own small business, I remember that investing was the most difficult decision to make. The easiest cut to make is in investment, because machines do not talk back; it is much easier to get rid of a machine than to dismiss an employee, but it is a temptation that must be resisted. The best way for any company to compete in today's economy is to invest in plant and machinery and in the work force. The Government should be extremely active in offering financial incentives to invest, particularly in research and development.

Thirdly, we must make our region one that has such a high level of knowledge and skills that it would make no sense for multinational companies to forgo access to that skills base in favour of a low-tech alternative. There are examples in the area of such good practice. The optics model at St. Asaph and Bangor university shows us the way forward and we must build on it.

Fourthly, we must build a first-class infrastructure, as the hon. Member for Montgomeryshire (Lembit Öpik) said. In the past year, the Welsh Assembly Government have built half a transport link to the Wrexham industrial estate, which is, I think, the biggest industrial estate in north-east Wales and where Hoya and Owens Corning are located. However, the Welsh Assembly Government have set back completion of the project for a further five years. What kind of message does that send out to multinational companies in an intensely competitive world? The answer is that they feel that they would get better support elsewhere.

I also appeal to the Welsh Assembly Government to change their attitude to the A5-A483 road development, which is due in England but not in Wales. That crucial link to the midlands and south Wales must be improved for the benefit of the north Wales economy. The failure on the roads has been exacerbated by the UK Government's failure to establish decent rail links to Wrexham and north-east Wales. Our area is currently in desperate need of a transport policy.

We still await broadband links for smaller businesses on the Wrexham industrial estate That fundamental defect must be sorted out between the Department of Trade and Industry and the Welsh Assembly Government as a matter of urgency. Again, other areas both within the UK and beyond are competing with us and taking jobs away because we cannot offer a vital business service in the modern world.

Finally, I shall come out—if that is the right phrase—on the climate change levy. Having visited companies throughout my two years in Parliament, I know that the climate change levy is having a substantial effect on the competitiveness of UK manufacturing. I speak as a member of the Environmental Audit Committee and I hope that my environmental credentials are strong. I am in favour of an environmental tax to reduce harmful carbon emissions, but it makes no sense to limit such a tax to the United Kingdom. The upshot is that certain companies—there is one in my constituency—are considering crossing the channel, where they will not have to pay a tax and can pollute our world and our country.

Virtually every manufacturing company that I visit in Wrexham has raised the issue. They are not old-fashioned, dark satanic mills-type companies; they are highly competitive, modern, high-tech companies that consider that they have done all they can to reduce their energy bills. The current structure of the tax is not conducive to their business because it makes them less competitive. The levy has been in place for more than two years, and I should like my hon. Friend the Minister to discuss with the Treasury the institution of an immediate review of its effects. The exemption system currently operates by exempting the most polluting industries from the tax. Smaller businesses, which in the past did not take the steps that they should have done to secure exemptions, are subject to prejudice. The matter is urgent and must be examined immediately.

Mr. Henry Bellingham (North-West Norfolk)

Does the hon. Gentleman agree that companies that invest heavily in machinery and plant are actually adversely affected by the climate change levy because they cannot turn it into a fiscally neutral tax? Other companies that perhaps employ more people and have invested less can get the money back on national insurance.

Ian Lucas

One of the unintended consequences of the operation of the levy is that it benefits service industries over and above manufacturing industries. That is one of the least satisfactory aspects of the tax, particularly when one takes into account the difficulties that manufacturing industry has had over the past few years.

Last week's Hoya decision was completely unsatisfactory. The work force, which was extremely loyal, was badly treated by the company. There was no consultation before the announcement that the jobs would go. The jobs are highly skilled and are filled by people who have worked for the same company for many years. I spoke to a constituent last Friday who had worked for the company for 10 years and had no idea whatsoever that there was any prospect of her job going.

Within the past year, the company has received the Queen's award for export—I was pleased to attend the ceremony six months ago—and the work force is deeply disappointed by the steps that the company has taken. It is about time that companies voluntarily informed their work forces of such situations and consulted properly before taking such decisions. Companies should also have the courtesy to discuss matters with agencies such as the Welsh Development Agency, which has been so supportive of them for many years through finance and advice. They need to give us the opportunity to deal with the difficulties that they may have.

If that opportunity is presented to us at the appropriate time, it is possible that things may need to be done. If we are presented with a fait accompli, nothing can be done to assist those companies. If employers will not consult voluntarily, we must impose obligations upon them to treat their work force with respect.

Will my hon. Friend also consider the terms under which grants are made to companies investing in the UK? I understand that equipment paid for by grants from the WDA is now winging its way to Thailand for Hoya to use in competition with British industry. That is an absolute disgrace, and cannot be right. [HON. MEMBERS: "Hear, hear."] I also think—this will be less agreeable to Opposition Members—that we need to revisit our attitude to Europe and the euro. The lack of clarity on the euro issue over recent months, and perhaps years, has not helped industry locally. It is ironic that one of the most successful manufacturing projects in Wales, and probably the UK, is one where we have worked most closely with our European partners.

In the constituency of my hon. Friend the Member for Alyn and Deeside (Mark Tami), Airbus employs about 400 workers, and is a hugely successful commercial venture, based on the closest co-operation between Government and an industry in the UK, and with other European Governments and businesses. As a result, we are wiping the floor with our competitors. We must tell our constituents that Europe can be a hugely successful project. It is not a matter of bent or straight bananas; it is about jobs. Whether people and their families have a decent standard of living depends on industries being able to compete. We exist in a world of intense competition. The ability to compete depends on the Government having a clear sense of direction so that industries know where they stand and can make firm, long-term investment decisions.

We must ask ourselves whether those industries want Britain to be at the heart of Europe or on the outside. We all know the honest answer to that question. I hope that, now, there will be a clearer commitment to using closer European economic links as a bulwark against the destructive forces of globalisation.

Wrexham suffered a huge setback during the past 10 days with the announcement of the Hoya job losses, but it has in the past shown great resilience and an ability to recover. It did so when its coal industry and steel industry closed down in the 1980s. At that time, it was difficult to see that the way forward was an era of inward investment and assembly jobs imported from abroad. That policy was successfully followed for several years, but the era of inward investment, particularly in a world where the economy is not strong, is coming to a close.

In north Wales, we need to begin to build, on the Airbus model, a modern, high-tech, visionary economy for manufacturing, which builds its own research base, develops skills locally and makes north Wales a place with which no other part of the world can compete. That is the only way in which north Wales will have a long-term future in manufacturing in a globalised economy. It is a huge challenge for the area, analogous to the one faced in the 1980s. I have confidence that local industry, working more closely with universities, colleges and the resilient work force in the area, can develop the type of economy and industry that will lead to north Wales becoming again the manufacturing powerhouse that it has been in different eras in the past.

9.49 am
Hywel Williams (Caernarfon)

I begin by congratulating the hon. Member for Wrexham (Ian Lucas) on securing this highly significant debate. As we know, manufacturing in Wales is extremely important in comparison with manufacturing in the UK in general and the south-east of England in particular. Manufacturing provides 30 per cent. of the gross domestic product in Wales, and has a fundamental role as a generator in the Welsh economy.

I do not say this in a partisan way, but I am rather disappointed that so few representatives of the north Wales group of Labour MPs are here. That is unfortunate. Members on both sides will recognise and welcome the recent fall in unemployment, and I give credit for that where it is due. In my constituency and neighbouring ones—such as Conwy and Ynys Môn–there is a stubborn rump of long-term unemployment, but there has been a welcome fall, to which I shall refer later.

We appear to have a tale of two manufacturing economies in north Wales. Manufacturing in the east is doing rather well; on the whole, I accept the points that the hon. Member for Wrexham made about Hoya. The A380 super jumbo jet has had its wings built in the constituency of the hon. Member for Alyn and Deeside (Mark Tami), at the biggest manufacturing facility to open in Britain during the past 10 years. That will bring 1,700 new jobs, 1,200 of them at Broughton where a £350 million plant is being opened. That is all well and good, and I welcome it tremendously. However, I am less happy that there is so little trickle-down to my constituency in north-west Wales. People travel the length of north Wales to take up jobs in facilities such as Broughton, but the trickle-down is generally fairly small.

Historically, north-west Wales has done less well than the north-east, and the reasons are well known; the historical reliance on primary extraction, the decline in the slate industry, the high levels of service industry employment and the high levels of economic inactivity, especially among older workers. Hon. Members who attended the recent Welsh Grand Committee were dismayed at the figures revealed there, which showed that the lowering of economic inactivity in the areas outside objective 1 areas is four times higher than inside objective 1. Clearly, objective 1 is not working in that regard.

In the north-west, we have higher levels of self-employment and a very fragile local economy, with low availability of venture capital. Reports in the past year have shown that 2 per cent. of new venture capital is invested in Wales. I have no idea how much of that makes its way to my constituency, but I think that it is probably a very small amount.

I referred earlier to the fall in unemployment, but is that figure masked by out-migration? We know that out-migration, a natural process, happens. People from my constituency move, perhaps to Cardiff, London and other metropolitan centres. My gut feeling is that out-migration from my area is greater than that from other areas. Is that taken into account when measuring unemployment, and in economic planning?

Before I go further, I shall refer to objective 1 plans and the current wisdom, which says that, at the accession of the new states to the European Union, there will be a lowering of the average gross domestic product. That will make it very difficult, if not impossible, for Wales to qualify for objective 1 in the next round. My hon. Friend the Member for East Carmarthen and Dinefwr (Adam Price) has informed me that—on current forecasts of GDP in the Wales objective 1 area— when the new accession countries come in, our level will be only 78 per cent. of the European average. Despite all the investment and efforts that have been made, we will only be marginally above the level at which we would qualify for objective 1, even with all the supposedly poorer countries coming into the European Union. There are probably areas in the accession states that are much better off than north-west Wales and, perhaps, north Wales as a whole. They are certainly much more prosperous than the objective 1 area in Wales.

In limited terms, objective 1 has been a success. For example, Gwynedd county council's scheme to encourage employment in small businesses has been a runaway success and is oversubscribed many times. It is important that we understand why that scheme has been a success. The crucial factors are a minimum of red tape—there is a very simple one-page application form—a minimum of fuss, quick decisions and a maximum fit to the needs of the local economy, which has a high level of self-employment. Clearly, the scheme fits with the requirements of businesses.

On Friday, I met Professor Jones-Evans at the University of Wales in Bangor. He told me about the new £10 million business education centre, which is targeted specifically at the needs of developing local business capacity and working with the North East Wales Institute of Higher Education in Wrexham. I hope that there will be greater co-operation between those two institutions in the future, perhaps in establishing a north Wales university.

The crucial point about the business centre is that it targets its education services at the local business community and sells those services to students from abroad in a very innovative way. It reminds me to some extent of the situation in Galway in the west of Ireland, which also supposedly has a marginal economy and where another main language is spoken. Galway is doing rather well. I understand that the reason it is doing rather well is that there has been a great deal of investment in road, rail and air links. It is unfortunate that the hon. Member for Ynys Mon (Albert Owen) is not here, because I am sure that he would have intervened on me and pointed out the real need for an air link for north-west Wales, possibly from Valley. Of course, we have an airport in Caernarfon that is modest in size, but road, rail and air links are important, as they have been in Galway.

Investment in the higher education sector has also been very important to Galway. It has a very good university and a large media sector. The circumstances in the Caernarfon and Bangor area are similar.Galway also relies on endogenous growth, to use the Chancellor's favourite term, whic is growth from the inside. People from outside have invested, but the reliance on endogenous growth has been a key factor. We heard from the hon. Member for Wrexham the sad tale of Hoya's investment.

I shall now concentrate on manufacturing and ask the Minister to elaborate on some of the issues arising from a reply of the Secretary of State for Wales on 1 May. If the Minister finds it difficult to reply this morning, I should be grateful for a written response. I wish to ask first about research and development tax credits, which are a central plank of the Government's policy. How many manufacturing firms in north Wales are taking advantage of those tax credits? If the figures are not clear at present, will she say how many firms are expected to take advantage of the research and development tax credits and what the Government are doing to minimise the red tape associated with them?

Last night, we had a very lively debate on the working families tax credit. Unfortunately, the prospects for that tax credit are rather similar to those for the research and development tax credit. There is certainly great potential benefit, but the tax credit is complicated. It is unclear how to apply for it and who should apply, and there is a great deal of red tape. There are, in effect, disincentives. I hope that the Minister will refer to the tax credits in her reply.

I should also like to ask the Minister about regional centres for manufacturing excellence, which also form a central plank of the Government's policy. I understand that, so far, they have been located in the south-east, the east midlands, the south-west, the north-east, the west midlands, the north-west, Yorkshire and Humberside; at least, that is the list that I have been given. I should be grateful if the Minister said whether any regional centres for manufacturing excellence are to be established in Wales, particularly in north and north-west Wales.

Furthermore, the Department of Trade and Industry reports that the Government's response to the review under Sir Gareth Roberts, which is aimed at ensuring a strong supply of skilled scientists and engineers, is to say that the minimum PhD stipend needs to be increased to £12,000 in 2005 and £13,000 in 2006. There will be an additional investment of £100 million by 2005–06 under that strategy, and the Government will also invest in research careers by increasing funds for PhD training, career development of post-doc researchers and, over a five-year period, establishing 1,000 new academic fellowships. Those will be crucial to the development of manufacturing industry. Again, I do not know whether the Minister has any figures for Wales, but I should be interested to know how many of those post-does are to go to Wales and how much of that money is being invested there.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

Is my hon. Friend aware of the current practice in Ireland? In Ireland, lists are prepared of PhD students who qualify from Irish universities and where they reside worldwide. Large manufacturing and high-tech concerns are then approached, and asked, "Look, we have a number of PhDs available, so come and set up shop in Ireland." That has been successful. Does my hon. Friend think that we could emulate it in Wales?

Hywel Williams

My hon. Friend makes a very good point. We have as many resources spread across the world as any country of our size; in fact, being a Welsh nationalist, I would contend that we perhaps have rather more. We have the people, but we need the networks, the ability and the will to make use of those networks.

In a reply, the Secretary of State for Trade and Industry said that: The role of the Minister of State for Employment Relations, Industry and the Regions has been strengthened—effectively creating a Minister with responsibility for manufacturing."—[Official Report, 23 July 2003; Vol. 389, c. 948W.] Perhaps the Minister could say what meetings and relations that Minister has with the Wales Office, and what is to be produced. How does the Minister see that developing?

To focus on a less happy development in north Wales, and north-west Wales in particular, the hon. Member for Wrexham referred to the difficulties at Hoya. Such difficulties have to some extent been replicated in the disputes at Friction Dynamex in my constituency, which is not a high-tech company; in some ways it is associated with the metal-bashing industries of the 1960s and the motor industry. To quote the recent reply from the Secretary of State for Wales: While some traditional manufacturers are moving to Asia and the Far East, many new jobs are being created in Wales in hi-tech sectors."—[Official Report, 1 May 2003; Vol. 404. c. 478W.] Although the hon. Member for Wrexham referred to high-tech jobs, there is, in addition, a great danger in Friction Dynamex that some of the more traditional jobs will disappear.

I shall end with the story of the strike and lockout at Friction Dynamex, the most significant events to take place in manufacturing in my constituency for many years. I do not need to go into the history of the strike, save to say that it arose because an outside investor, using a good measure of state aid, bought a plant that was in difficulty. He then sought to squeeze what value he could out of both the physical and the human capital in a classic asset-stripping operation. He eventually provoked a strike over the terms and conditions that he imposed—longer hours, lower wages and so on—and, after eight weeks, he locked the workers out. They have now been out for two and a half years.

People who pass on the road between Caernarfon and Bangor will see them picketing, 24 hours a day, six days a week; thankfully, they rest on a Sunday. They have won their case in the industrial tribunal and have received great sympathy and much material help, not only from their local community but from others in Wales, elsewhere in the UK and throughout the world. They have done all that they can to settle the dispute. However, they are still out and there is no prospect of a settlement until November at least when the employers' appeal against the tribunal decision is heard. By then, it will be two and a half years after they were locked out after a strike that was provoked by what can only be described as a very bad employer.

I was on the Committee that considered the Employment Act 2002. I listened day after day to Ministers talking about the quick, informal settlement of disputes without recourse to tribunals or to the courts; that was the Government saying that they did not want to go down the formal route. The Friction Dynamex dispute has shown that quick settlement is a rather pious hope. It has demonstrated the calibre of the workers that Mr. Smith tried to sack—people of principle, dignity and determination—and the fact that the Government's talk of quick settlements is unrealistic. That is crucial to manufacturing industry in general, to manufacturing industry in North Wales and to the strikers at Friction Dynamex.

The hopes are pious because of the fundamentally skewed situation in industrial relations, caused by the eight-week rule, which is as significant as the Taff Vale decision many years ago. The terms of discussion between workers and employers have been skewed and workers have been very much weakened. I am not optimistic about the reply, but may I ask the Minister what plans the Government have to change the eight-week rule to ensure that the Friction Dynamex situation never happens again and that a relationship of respect and of equal power, status and worth is established between workers and employers? Lastly, I commend my early day motion 1506 to that effect to all hon. Members.

10.8 am

Mark Tami (Alyn and Deeside)

I thank my hon. Friend the Member for Wrexham (Ian Lucas) for securing the debate. As a number of colleagues have mentioned, last Friday the Prime Minister opened the new Airbus facility in Broughton, where the wings for the new A380 will be built. It will be the world's largest airliner and is receiving a large number of orders. It will certainly not be a jumbo jet, as the hon. Member for Caernarfon (Hywel Williams) has said; that is a Boeing aircraft. The design of the 747 is over 30 years old, whereas Airbus is producing the aircraft that the world's airlines want today.

The facility that the Prime Minister opened received over £1 million a day of investment at the height of its construction. It currently employs just over 5,000 people, and another 1,200 are being recruited. Another important point is that there will be 274 apprentices on site, with a further 80 starting in September. When Broughton gears up to reflect those numbers, it will be the largest manufacturing plant in Britain. Airbus is a world leader in wing technology, and we can be very proud of such a great success story. It is an example of value-added manufacturing, but the key point is that we have the intellectual property that made it all possible. My hon. Friend the Member for Wrexham talked about jobs being exported, and there is always a danger that companies will up sticks and move the work or, in some cases, the plant if one does not have the necessary intellectual property.

There is also the Filton site in Bristol. Indeed, more than 84,000 jobs in this country are directly and indirectly reliant on Airbus. In the main, they are skilled, well-paid jobs; the sort of jobs that we all want to come to Wales and the rest of Britain. However, I do not want people to think that Flintshire is just about Airbus, because we have several other important manufacturers. Corus still employs more than 500 people at Shotton, although that is obviously down from a high of almost 14,000. We also lost jobs with the end of the ZT line.

Equally, however, there was some good news at Shotton, which is rare in today's steel industry. A new company called Building Solutions has been set up to manufacture purpose-built, lower-cost housing that can be quickly put up. It is also looking to secure orders for service personnel quarters, where there are opportunities because the state of such quarters is extremely poor. There is also a need, particularly in some inner cities, for social housing that can be built quickly to house public sector workers and the nurses whom the Government are clearly recruiting. Obviously, there was not the same need under the previous Government, who did not recruit such numbers.

There are other large manufacturers beside Corus, although people may not have heard of them. There is ConvaTec, which manufactures medical products and employs more than 800 people in Flintshire. There are many others, including the Toyota engine plant, Shotton Paper, Raytheon and Faurecia, which makes products for the car industry such as seats and bumpers. In fact, there are more than 100 manufacturers at the Deeside industrial park, and, together, they employ more people than Airbus. That is a key point, because it is important that all our eggs are not in one basket. That was perhaps a problem in the past.

As a whole, Flintshire accounts for 25 per cent. of north Wales GDP. My hon. Friend the Member for Wrexham said that 28 per cent. of people in Wrexham relied on manufacturing for their employment, but the figure in Flintshire is 43 per cent. Indeed, 20,500—or more than 10 per cent.—of the 200,000 people employed in manufacturing in Wales live in Flintshire. The challenge is to keep those jobs and to build on our success, and we must learn the lessons of the past.

I mentioned the Corus plant, which still holds the record for the highest number of job losses on a single day at a single plant. In some ways, I do not want to lose that record, because I do not want anyone else to suffer such terrible losses. Unemployment was forced up to 27 per cent; one can still see the effects now, even though unemployment is at a low level thanks to the Government's policies, which are very welcome. The high street in Shotton, for example, is still suffering from what happened in the early 1980s. The area was also very dependent on the textiles industry, but that has gone altogether.

Also, in manufacturing, job losses or plant closures may happen that one cannot see coming. Corning was a classic example of that; 600 good-quality jobs were lost in the optical fibre industry. The plant was investing and gearing up, and doing all the right things, but world demand for optical fibres virtually collapsed overnight. Because of the drop in demand, there was enough optical fibre on the shelves to meet world needs for the next six years. It was unforeseen, but 600 jobs were lost. We must always be aware of the possibility, which is why it is so important to renew and build on areas where we can hope to grow.

Another danger is caused by the failure to innovate and to look to the future. Many manufacturers that are doing quite well will just carry on doing well, but the danger is always that unless they invest for the future a time will come when they will be outstripped by their competitors or find that their products are no longer required.

We need to invest in industry, but as my hon. Friend the Member for Wrexham said, we need also to invest in people. In that respect, we—Britain as a whole, but especially Wales—always let ourselves down. Airbus has 274 apprentices at the moment, with another 80 coming on stream. The company can be proud of the fact that it recognises the importance of training. It costs between£25,000 and £37,000 each to train the apprentices, and the company retains more than 90 per cent. of them. The company recognises that it is investing in its apprentices, and it has to guarantee them a job so that they stay with the company.

The problem is that that commitment is not being repeated in other industries. I think that Airbus is the largest employer of apprentices in Britain; it certainly has more apprentices than the rest of Wales put together. That probably says more about the rest of Wales than it does about Airbus, because companies and employers would rather poach staff than go train their own workers. In my old life, when I worked for a trade union, people would say to me, "Why should we train staff when others are doing it? We need pay them only slightly more and we will get those workers." If everyone did that, we would have a major problem; when we see big growth in the economy or in a manufacturing sector, that is what happens.

Mr. Llwyd

The hon. Gentleman has hit on an important issue. Should not the Government actively intervene to create real, modern and proper apprenticeships? The hon. Gentleman is right about poaching. Economics being what it is, companies prefer to take on qualified people rather than train new staff. Does the hon. Gentleman agree that it is now time to intervene forcefully in that area?

Mark Tami

Yes, I do. Indeed, I would support a training levy. That may have gone out of fashion, but I have become convinced over the years that employers who stay out of training are being unfair to those who do train. Those who train put a lot of work and money into it, while others just sit by. I believe that employers of a certain size should he obliged to train a number of people. We would then have a level playing field; it would be the same for everyone.

At the moment, many employers save themselves large sums of money by not training people. That is a dreadful message, because if no one trains, the time will come when we do not have enough trained employees. As the economy grows, the demand for trained people will grow, but if we do not train it will leave us with a gaping problem.

There will always be a churn effect—I do not like that phrase—in manufacturing. Clearly, if one is being churned, it is not much fun. We have to accept that factories will close for one reason or another. They may have failed to meet the new challenges, or technology may have moved on.

Chris Ruane (Vale of Clwyd)

I congratulate my hon. Friend on securing the debate—[Interruption.] I congratulate my other hon. Friend, the hon. Member for Wrexham, on securing the debate. I apologise for being late; I was at a Wales Office ministerial team meeting. Does my hon. Friend agree that it is not just a question of training, but of transport? When training 16-year-olds and 17-year-olds, one must take into account the fact that they cannot drive. We need to look at train, bus and coach transportation, and shared car journeys, to the big factories such as Airbus in north Wales.

Mark Tami

Yes, I agree. That is an extremely important point. I welcome the improvements that have been made to the A55, and it is a matter of working in partnership with the local authorities and the WDA to put a package together. We are fortunate in north-east Wales because of our transport links. Certain industries will always be attracted there.

Ian Lucas

Does my hon. Friend agree that public transport links in Flintshire are substantially better than those in Wrexham? That may account for the discrepancy between the figures of 43 per cent. and 28 per cent. of the work force employed in manufacturing, a discrepancy that I hope to overtake in due course.

Mark Tami

I thought that my hon. Friend would make that point; perhaps I should not have strayed into that area. He makes a fair point. Geography has been kind to my constituency, but we have to build on that. People who work at Airbus live as far away as Anglesey, and England as well, although not as many of those who work at Airbus come from England as some hon. Members often claim. Even so, many people in Alyn and Deeside work at Ellesmere Port for Vauxhall, and in the Chester business park. That is a fact of life; there is not a wall between Wales and the north-west. If there were, we would be the loser. We rely on the north-west, and the north-west relies on us. It is an important relationship upon which we need to build.

Equally, where we have successes such as Airbus, we have to attract supplier companies around it. That makes sense for Airbus and those supplier companies. The WDA and Flintshire county council are trying to encourage people to do that, and it makes good business sense to do so.

We are well positioned in north Wales to retain and grow our manufacturing base, but we have to look to the next generation. Even at Airbus—where we can say that there should be work for 20 or 30 years, which we cannot say of many manufactures—we have to look to the next generation of wings, which will be carbon-based. We can be sure that the Germans and others will be looking for that work. We have to look to the future to ensure that we keep our lead, and the work stays with us. It is key that we work in partnership with the Government and the Assembly to secure that, so that we can ensure a bright future for manufacturing in north-east Wales.

10.24 am
Mr. Roger Williams (Brecon and Radnorshire)

May I correctly identify the hon. Member for Wrexham (Ian Lucas) as the hon. Member who obtained the debate, and congratulate him on introducing it? I understand the problems that he is facing in his constituency with Hoya and its decision to pull out and relocate its activity to Thailand.

All hon. Members, in some way or another, will have experienced redundancies caused by important employers in their constituency. Our sympathy goes out to those people who have lost jobs and invested much of their lives in obtaining skills to work in the industry concerned. I am sure that the hon. Member for Wrexham is doing as much as he can with the available agencies to ensure that those people have job opportunities, and perhaps the opportunity to retrain for other jobs in the area.

The hon. Member for Alyn and Deeside (Mark Tami) mentioned the churn in manufacturing industry. I believe, as does he, that that is an unfortunate metaphor, but everyone is conscious that some industries develop, evolve and become more successful, while others, because the product on which they are based is not in demand in the economy, find themselves on a downward, rather than an upward, track.

The real concern is that manufacturing in the whole UK is on a downward, not an upward, track. Jobs have been lost in manufacturing over the years, and that seems to be continuing at the moment. Before the hon. Member for Ribble Valley (Mr. Evans) gets too excited and says that I am stealing his lines, I lay the blame for some of that on the events of the 1980s, when a Conservative Administration gave the impression that Britain could exist without a manufacturing industry; they suggested that service industries were the future for Britain, while the dirty type of industry based on manufacturing was not a key to our future success.

Hywel Williams

Perhaps the hon. Gentleman is familiar with the statement made by Lord Healey at that time. He said that from listening to the Conservative Government, one might think that we could all get by by selling hamburgers to each other.

Mr. Roger Williams

I was not aware of that particular quotation. One actually has to manufacture hamburgers, although I am not sure that that is a key issue. I am certainly aware of the strange concept then that everyone could make a living by repairing each other's cars.

Mark Tami

The hon. Gentleman made a point about dirty manufacturing, which is still an issue today, especially for younger people. They have an image that, in manufacturing, there is smoke everywhere and oil all over the place. In fact, the vast majority of manufacturing, especially high-tech manufacturing, takes place in a clean working environment. Manufacturing has an image problem, particularly when it comes to attracting younger people to work in the industry.

Mr. Roger Williams

I was coming to that point; when a generation of young people was put off, there was no future in manufacturing. It was not a job that the more capable and active people would aspire to enter. It has been very difficult to turn that round in a generation. People who wanted to be involved in the workplace and on the factory floor were one thing; almost more important were those who might become leaders in industry. The fact that they were given the impression that manufacturing would not be a key economic driver in this country led many people with skills and energy to enter industries other than manufacturing. I may return to that point later.

During the late 1980s and early 1990s, it seemed that foreign investors had more confidence in the manufacturing capability of this country than indigenous business leaders had. That led to considerable foreign investment. Although we welcomed that at the time, in retrospect we might look back and see that many of the activities introduced were based on assembling products rather than designing and carrying out the research that is so necessary to remain at the forefront of a competitive economy. I guess that those investors decided to come to this country because it was a base in the European Union that had low labour unit rates, so they could manufacture more competitively in this country than elsewhere in the EU. However, as the EU expands and globalisation takes over, those people are seeing opportunities to bear down on their costs again. The experiences of the hon. Member for Wrexham over the past couple of months bear that out.

The need for research and development is all the more keen when we remember that a third of all the products on shop shelves at the moment will be replaced in three years' time. Consumer fashion is a fast-moving animal and new products must be designed to respond to consumer choices. If manufacturing units have not got the necessary research and development capabilities, such things are often lost to this country.

Whether there is an economic environment conducive to manufacturing depends on the Westminster Government, and on the Assembly. If we are to have a welcoming attitude to manufacturing in Wales, it is essential that Westminster and the Assembly work well together. We have gone through a time of Government reorganisation, but I ask the Minister to ensure that she and her Department maintain a close connection with the Wales Office. Only when connections are working well will Wales, and particularly north Wales, succeed in manufacturing.

The CBI consulted its members on how politicians were regarded by industry; I am afraid that we did not come out of that very well. Leaders in industry think that politicians do not understand how commerce and competition work. The CBI suggested a number of ways in which to improve relationships with the National Assembly, including political parties signing up to a minimum of six structured visits to businesses a year by each of their Assembly Members. I am sure that that would not be a bad idea for Members of Parliament as well, particularly for those who have not been involved in industry and commerce. The CBI goes on to say that Assembly Ministers should re-introduce twice-yearly meetings between the main business organisations and the Assembly Cabinet.

Businesses find the continual consultation, as part of the political process, difficult. Not only have they got to spend a considerable amount of their resources acting as unpaid tax collectors for central Government—in terms of VAT, PAYE and, for people who are self-employed and involved in small businesses, self-assessment—but they are now required to be part of the political process by taking part in consultations all the time.

A number of the academics who take an interest in such matters are concerned that the entrepreneur is being squeezed out of the process because rather than committing all his time and energy to—and being driven by—the business that he is trying to create and maintain, he is being drawn into extensive consultation that does not deliver an awful lot for his company.

Professor Dylan Jones-Evans, who is professor of entrepreneurship at the university of Wales, Bangor, stated: A lot of the policies in the public sector are being strangled by the fact that you have to talk to everybody under the sun to ensure you don't offend anyone. That's not the way to run an economy. There are all these consultations going on—the Assembly consults on something every week—but you have to ask, who are they consulting? Usually it's the interest groups, who are geared up to answering. Businesses don't usually have the time to respond. It's the same crew that turns up to meetings. We must address that problem and give young people—who will create the businesses of the future—the freedom and the opportunity to work at their businesses rather than dragging them into huge consultation exercises.

The hon. Member for Wrexham mentioned the euro and the European Union. Without getting into that huge debate, a number of economic areas in Wales would benefit greatly from a change in the exchange rate from which we have suffered for a number of years, because the rate has not reflected the relative competitiveness of a number of our industries. It is not only tourism and agriculture; manufacturing has suffered from the exchange rate.

It is key to the success of manufacturing of Wales in general and north Wales in particular that the Minister assures us that there are still strong links between central Government and the Assembly and that the Secretary of State of Wales, who is part-time, will play a key part in ensuring that that relationship continues.

10.36 am
Mr. Nigel Evans (Ribble Valley)

I congratulate the hon. Member for Wrexham (Ian Lucas) on securing this important debate. As he said, manufacturing is proportionally more important in north Wales than it is in the rest of the United Kingdom.

The hon. Member for Alyn and Deeside (Mark Tami) mentioned the importance of the north-west to north Wales and how jobs are cross-fertilised between the two areas. People are mobile and can live in England and work in north Wales, or vice versa. Today, I learned that BAE Systems is announcing 132 job losses in Samlesbury in my constituency and a further 32 job losses in Wharton. Everybody recognises that it is not only the loss of manufacturing jobs that is important, but the ripple effect on other jobs that are dependent on them. It is estimated that three jobs in the service sector and the supply chain are lost for every job lost in manufacturing. Those job losses will hit people throughout the north-west region.

The debate has been interesting. Hon. Members have discussed the need for co-operation between the Welsh Assembly Government and central Government. We all agree on the strategic importance of manufacturing. The issue is not party political and we must decide whether we want a manufacturing base in this country; I certainly do. At the end of last week's Welsh questions, I asked the part-time Secretary of State for Wales if he would set up a taskforce to examine manufacturing in Wales. We should assemble representatives from Westminster, the Welsh Assembly, the CBI, the Institute of Directors, Welsh manufacturers and the WDA to sit round a table and come up with the answers to manufacturing's current problems.

Chris Ruane

Did the previous Conservative Government establish such a taskforce when there were massive job losses in north Wales in the 1980s, when there were 15,000 job losses at Shotton and 3,000 job losses in the pits?

Mr. Evans

This is not funny in a humorous way, but if we compare manufacturing's current position with its position then, many more people were employed in manufacturing in the 1980s, which is desirable. We have mentioned the work of my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) when he was Secretary of State for Wales to obtain inward investment. We can thank Wyn Roberts for the enormous work that he put in on the dualling of the A55. We all joked at the time that it was to enable Wyn to get home to his constituency more quickly, but the work played an important role in assisting job creation around that area. We should recognise that.

Peter Walker, when he was Secretary of State for Wales, introduced a number of initiatives with local authorities. We should recognise their importance and get them to work together. Now is the time to put aside our differences and to recognise that manufacturing is important and that there are problems in manufacturing in Wales. We should have a taskforce so that we can all work together.

Hon. Members have mentioned a number of companies in their constituencies in north Wales where there have been severe job losses. Hoya is the most recent, with 200 jobs being exported from Wales. I have a list of household names in manufacturing where there have been job losses ranging from only 10 or 20 up to 480. The hon. Member for Alyn and Deeside mentioned several hundred jobs that were lost and referred to the churn factor; I also hate that word. Global figures show that there has been a net reduction in manufacturing jobs. There will be a churn in the service and financial sectors, as there will be always be people changing jobs. We must look at the bigger picture.

Conservative Members of Parliament do not often quote Bill Morris of the TGWU, but he said: Every sector is affected yet our politicians say 'crisis in manufacturing, what crisis?' Members of Parliament should be pressing the Department of Trade and Industry to take the state of our manufacturing industry seriously and not stand by. We must look to the DTI to come up with initiatives. An early-day motion was suggested and I have tabled such a motion, recognising the importance of manufacturing. I hope that I have phrased it in such a way that all hon. Members of all parties will feel able to support it. It states that this House recognises the problems faced by the manufacturing industry in Wales; and urges the Government to do more to help the manufacturing sector in Wales which has lost thousands of jobs over recent years. I hope that all hon. Members agree with that and will feel able to sign it.

Mark Tami

The hon. Gentleman seems keen to quote trade union leaders; I recall that he quoted my own union's general secretary on manufacturing at Welsh questions. Could he tell us whether he has signed up for the whole trade union agenda?

Mr. Evans

The hon. Gentleman should not hold his breath, but it is important that trade union members recognise that there are real and severe problems. At the last general election we were told that manufacturing throughout the United Kingdom was suffering job losses. Some of us foolishly thought that when the Labour party became the Government, it would do something about that. Instead, the Government have exacerbated the problem. That is what is so staggering. In 2000, there were 205,000 manufacturing jobs in Wales. In 2001, the figure had fallen to 191,000; at the end of 2002, it was down to 179,000. The change in manufacturing output is nothing to shout about. In October 2001, there was a reduction of 3.2 per cent. from the year before. In March 2002, it was 8.3 per cent. lower than the year before and in March 2003, the figure was down 3 per cent. There is nothing to shout about there.

To quote the other side of the industrial coin, the CBI points to a number of significant problems that should be addressed. The hon. Member for Wrexham explained what we he thought we should be doing. I shall refer to Amicus again because Derek Simpson, joint general secretary of Amicus, was right when he said that if we do nothing, all manufacturing jobs in this country could be lost within five parliamentary terms. We must sit up and work out what we must do.

Mark Tami

Will the hon. Gentleman give way?

Mr. Evans

I shall not give way to the hon. Gentleman because I have only four minutes left.

I am delighted that the hon. Member for Wrexham referred to the climate change levy and I agree that we should have a review. After two years, let us see where the climate change levy is hurting. Let us see if it is resulting in job losses and whether there is something that we can do about it. Let us see what the competition is doing. It is not just Europe but the rest of the world with which we have to trade. What are other countries doing? I am not saying that we should lower our standards to those of the poorest countries, but let us at least ensure that we are not suffering from unfair competition

Ian Lucas

Does the hon. Gentleman, like me, favour a harmonised environmental tax across the European Union?

Mr. Evans

It is important that we see what impact the rest of Europe is having on us. It would be stupid if something in Britain gave an unfair advantage to the rest of Europe. [Horn. MEMBERS: "Answer the question."' We have to trade with the rest of the world as well. We cannot assume that fortress Europe can survive on its own, ignoring the rest of the world. We must consider all the rules, regulations and directives that impact on Britain, and we have to get that right, too.

We know from the CBI that the amount of extra rules, directives and red tape with which businesses have to deal is absolutely enormous. Last year, 4,642 new regulations were introduced in the United Kingdom; one every 26 minutes of the working day, and an increase of 50 per cent. on 1997. The British Chambers of Commerce estimates that the cost to business of regulation has climbed by£20 billion since then. I thought that the Government believed in deregulation.

Let us be sensible and have regulations if they are necessary, but not the insanity with which businesses have to deal. There are all sorts of regulations; packaging and waste directives, the landfill tax, the national insurance contribution increases that came through in April, business rates, the climate change levy, increases in fuel taxes—from which many businesses have suffered—and the cost to firms of administering parts of the benefits system through their payroll.

Let us consider how British manufacturing is affected and what we can do strategically to support those industries. Let us not see them as an embarrassment or something that belongs to yesteryear. Let us not be keen on increasing jobs in the service sector only, but give some support to our manufacturers, which are vitally important.

Objective 1 was mentioned earlier, and the way in which that has been administered has been hugely bureaucratic as well. The hon. Member for Caernarfon (Hywel Williams) is absolutely right that we may have received our last tranche of objective 1 money because of the new entrants to the European Union. Let us at least spend it well and ensure that it supports our industries.

I am delighted with what is happening with Airbus in Broughton but, as the hon. Member for Alyn and Deeside said, other smaller manufacturers also need support. They are vitally important.

Finally, the hon. Member for Brecon and Radnorshire (Mr. Williams) said that the Conservatives at some stage had decided that they were not interested in manufacturing. We are interested in manufacturing and wish it to flourish. I would support anything that the Government did to support manufacturing industry throughout the whole of the United Kingdom, particularly in those areas that are so reliant on a strong manufacturing sector.

10.47 am
The Minister for Industry and the Regions (Jacqui Smith)

I join other hon. Members in congratulating my hon. Friend the Member for Wrexham (Ian Lucas) on securing this debate on a very serious issue. All hon. Members have highlighted the significance of manufacturing for their own constituencies. Perhaps I could begin by agreeing with the hon. Member for Ribble Valley (Mr. Evans) that manufacturing is vitally important for Wales and the UK as a whole. I assure him that it is very important to this Government.

Manufacturing makes up a sixth of the economy overall. It employs more than 3.5 million people and many more in associated services; it accounts for two thirds of our exports and 80 per cent. of our research and development; it is a crucial driver of innovation and technology uptake in the wider econ omy; it is absolutely central to our future as a high-teciimology, high-value successful economy.

In the relatively limited time available, I wish to talk about what the Government are doing in partnership, if necessary, with the Assembly and with other Ministers in order to ensure that manufacturing thrives.

I am very well aware that manufacturing is going through a tough time at present. The three largest economies in the world—the United States, Japan and Germany—are suffering from recession and very slow global growth. Furthermore, competition is increasing from lower-cost producers in other countries. The reduction of tariffs and other barriers to trade, with easier global transport and communications, although important, are expediting that change. They combine to bring huge pressure on our manufacturers. Increasingly, we see labour-intensive production shifting from advanced industrial economies to lower-cost economies.

Mr. Evans

I agree with what the Minister said about the importance of manufacturing. Why has the number of people in her Department dealing with engineering and materials gone down from 25 to nine, and why only one person now deals with the trade associations?

Jacqui Smith

A very important part of the Department deals with manufacturing, not least myself. I shall now continue to pursue my ministerial responsibilities.

My hon. Friend the Member for Wrexham highlighted the issue of Hoya lenses, and other hon. Members referred to particular difficulties, which I recognise. My hon. Friend spoke about the need for information and consultation. I refer him to the important announcement made yesterday by my right hon. Friend the Secretary of State about new plans for improved information and consultation provisions in the workplace. They are the result of considerable work and consultation between the TUC and the CBI, and they will promote the sort of high-quality sharing of information and consultation that is good for employees and for high-quality employers. I hope that my hon. Friend is reassured.

We should not run away with the idea that manufacturing is collapsing as a percentage of our GDP while holding up in other countries. It is an international challenge. To put things into context, manufacturing is 18 per cent. of GDP in the UK; as we heard, it is higher in Wales. It is 14 per cent. of GDP in the USA, and 19 per cent. in France. In Germany, the figure is higher, at 23 per cent., but not much. However, we have important successes.

My hon. Friend the Member for Alyn and Deeside (Mark Tami) and others rightly referred to Airbus. As my hon. Friend pointed out, the Prime Minister and the First Minister of the National Assembly for Wales were there last Friday. The wings produced by Airbus are transported from Wales to final assembly lines in Toulouse.

Chris Ruane

Will my hon. Friend give way?

Jacqui Smith

Preferably not, if my hon. Friend does not press me.

I was able, on my first day in this job, to attend the Paris air show, where three major new deals for the A380 programme were struck. My hon. Friend is right that Airbus is now outstripping its major competitor, Boeing, something we can all celebrate. However, we cannot hide from the realities of the pressures that manufacturers face, nor the pressures of global restructuring.

We cannot compete on the basis of low-cost, low-value added; nor should we wish to. Our response must he to have the best companies, the best products and the best workers. That is why, shortly after taking over as Secretary of State, my right hon. Friend brought the main stakeholders together for a manufacturing summit. Trade unions, trade associations, the regional development agencies and manufacturers were able to share views on the key challenges and to focus on practical steps for dealing with them.

At the summit, it became clear that there are longstanding weaknesses in UK manufacturing—in skills, investment and innovation—many of which have been raised this morning. We must address those problems together, and there was clear agreement throughout industry on the way forward.

Our manufacturing strategy, which was published in May last year, was based on that consensus. I know that those themes are picked up in "A Winning Wales", the economic development strategy of the Welsh Assembly. Our themes were welcomed by industry and trade unions alike. Everyone agreed that the way to ensure global success was not to cut wages and compete on cost, but to invest for the future so that we could compete on quality. That is what our strategy sets out to do. However, I recognise the need to demonstrate progress and to show that we are putting those words into action.

We have made considerable progress against all seven pillars set out in the strategy, and those areas picked out in Wales. My hon. Friend the Member for Wrexham rightly highlighted the need for macro-economic stability. Due to the strong macro-economic policy framework that the Government have put into place, the UK has weathered the recent global economic slowdown better than many of its major competitors; with our low inflation, low interest rates, sound public finances and low unemployment, we are in a better position to gain from any global upturn.

My hon. Friend also mentioned the important issue of investment. Across the UK and in relation to Welsh-specific schemes, we support investment through regional selective assistance, the small firms loan guarantee scheme and regional venture capital funds. Through the Budget, we have introduced a range of measures to encourage investment. Corporation tax rates have been cut to their lowest ever; reforms to capital gains tax have substantially reduced the effective rate of tax, creating the right incentives for investment in business assets; and we have made permanent enhanced capital allowances for small and medium sized enterprises.

Several hon. Members rightly emphasised our need to compete on the basis of innovation and development. We are investing strongly in science because of its importance as a driver of new products and new processes in manufacturing. The UK science budget is increasing at 7 per cent. per annum in real terms arid, as a result of the 2002 spending review, it will increase at 10 per cent. per annum in real terms over the next three years.

We are undertaking a major review of business innovation. The Wales for Innovation strategy is also making clear the importance of innovation for improving business performance. Several hon. Members have mentioned the importance of research and development, and the research and development tax credit. We have further extended the tax credit to all companies, which will overwhelmingly benefit manufacturers. As a result, the UK is among the best in the G7 in terms of tax support for research and development as a percentage of GDP.

At the time of the Budget, 58 small and medium-sized enterprises in Wales were benefiting from the 150 per cent. tax deduction for qualifying research and development expenditure. The new improvements—in particular the reduction in the minimum expenditure threshold from£25,000 to £10,000—will also increase accessibility, especially for small companies.

We are already seeing the results in terms of support for science investment, with the number of spin-off businesses from UK universities up by 22 per cent. and the number of patents filed by higher education institutions up by 26 per cent. I hope to follow up the specific questions asked by the hon. Member for Caernarfon (Hywel Williams), but in general there is an important benefit from the investment in science and the relationship that can be built between business and those innovating in our academic institutions.

Many hon. Members have mentioned the important matter of skills. I agree that we need to invest in modern apprenticeships and, as they are doing in Wales, in a scheme covering all age groups—particularly the economically inactive—that will result in a modern skills diploma for adults, encouraging the over-25s to upskill to NVQ3 level and above. In Wales, as in the UK as a whole, competing on the basis of skills is crucial.

My hon. Friend the Member for Wrexham also mentioned infrastructure, in particular broadband. Under the heading Broadband Wales",—115 million is being spent on a broadband programme for Wales, launched by the Assembly last July and designed to improve broadband access across Wales. That is an area in which the Department of Trade and Industry plays an important role, along with the devolved Administrations. Yes, there is a regional centre for manufacturing excellence in Wales. The manufacturing advisory service—another important area of our manufacturing strategy—is also highly successful in Wales, with about 500 visits to companies made by highly qualified engineers with real experience of manufacturing.

Those are all practical steps that show the significance that the Government places on manufacturing. We have also set up a policy forum for senior policy makers, including Welsh Assembly officials, to help us to champion the needs of manufacturing with Whitehall colleagues and throughout Government. I assure hon. Members that we shall continue to take forward the work that we are doing in relation to manufacturing in partnership with colleagues in Wales, and in recognising the significance of the industry throughout the whole of the UK.

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