Manufacturing

HC Deb 11 February 2004 vol 417 cc397-419WH

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Jim Murphy.]

9.30 am

Mrs. Claire Curtis-Thomas (Crosby) (Lab)

It is a great pleasure to be here this morning to talk about a subject that I thoroughly love and enjoy. It is a particular delight to see my hon. Friend the Minister for Small Business and Enterprise sitting next to me. I was at a dinner last night at which his face was beamed in—it was 12 ft wide; it was fantastic. The forelocks of his face radiated over the fantastic event organised by the Electrical Contractors Association. The general comments made were, "Great guy", "A huge enthusiast for the construction industry", and, "It's marvellous to have Ministers who are on side." I thought that I would start by saying that because it is the truth of it.

Mr. Henry Bellingham (North-West Norfolk) (Con)

I agree.

Mrs. Curtis-Thomas

Oh, excellent; there is agreement all round—super.

Let us talk about manufacturing, which has endured a hard few years. I wish that I had a lifetime to talk to hon. Members about that marvellous industry and the people who work in it. It is a roller-coaster of a sector, and I think that manufacturing is the industrial equivalent of the chameleon because it must adapt continuously to survive. Manufacturing today is nothing like it was 100 or 10 years ago—or even, some would say, last week. Many innovative technologies wash over the immensely diverse sector daily. What it took 100 men—unfortunately, it was only men—to produce at the start of my lifetime in engineering takes only one man or woman today, and why not? If we do not lead in the area of process efficiency, other countries will take our business over. The greatest trick that we must realise, and the greatest challenge faced by my colleagues in manufacturing, is finding new lucrative ways to utilise and employ the hugely creative potential of people in the manufacturing world.

Given that I have only a few moments rather than a lifetime in which to talk, I shall concentrate my efforts on four areas of concern: economic policy and investment in the manufacturing sector; the involvement of women in manufacturing and the promotion of science engineering and technology to the public at large; skills and education levels; and the changing nature of the manufacturing sector. My hon. Friend the Member for Norwich, North (Dr. Gibson), the Chairman of the Select Committee on Science and Technology is in the Chamber, and I hope that he will have the opportunity to talk to us about nanotechnology, a subject close to his heart.

I begin by setting my remarks in the context of my experiences. I hope that hon. Members are aware that I am a chartered engineer—I am proud to be so. I am a fellow of the Institution of Mechanical Engineers, the Institution of Electrical Engineers and the City and Guilds of London Institute. Last year, much to my delight, I was made president of the Institution of Engineering Designers. However, I started as an apprentice on the docks down in Portsmouth in a machine tool company that made expensive products for the industry. It offered a limited number of apprenticeships, and I was the only woman whom it had ever employed. Two women started apprenticeships after me, but they both left after a short time. It was an exceptionally hard place in which to work. I was sent to Coventry for a long time after being assaulted by someone at work, who was subsequently suspended. Having no one to talk to for a long time at work at least focuses one's observational skills, and the only time I got to speak to people was when I went to night school.

I learned a great deal at night school and realised that what was happening at work was a long way from where technology stood at that time. It was totally obvious that the managers at my factory simply had no idea about the innovations that were taking place in their industry, and the company went into terminal decline because they failed to adopt those innovations, as did many thousands of other companies in the United Kingdom at the time. It was a desperately sad time for the shipping, steel, textile and coal industries. Thousands of gifted and highly skilled men and women walked out of work into wretched unemployment. The then Government's position was, "Let the market prevail"—well, it did. Within 10 years, the country had lost product intelligence that took millions of man hours to achieve.

No one in government at that time troubled themselves to discover the value of the skills and experience that walked away from thousands of factory gates year after year during the 1970s and 1980s. Everyone knew the cost of everything, but the value of nothing. There was no assistance available at all—it was every man for himself. On reflection, four areas of systemic weakness were evident at the time. Factories failed to implement process and product improvement, so processes were outdated and products did not match market need. Poor management was endemic—from where I stood, the problem was not all about the unions but poor management. The variable economic climate and associated fiscal policy militated against any long-term investment in British industry. Welfare and employment measures were punitive and existed in an environment in which unemployment was considered to be an unavoidable fate. Anyone over the age of 50 was considered to be absolutely obsolete. I was told that women should be at home tied to the kitchen sink and that although families naturally existed, they should have no impact on a man's ability to go to work.

In the 20 intervening years, I regret to say that every measure brought before the House to address the problems faced by British industry and ordinary working people was routinely objected to by the Conservative party. The Conservatives never wavered from their market-led position, and if they were in charge today, unemployment would continue to blight our society and families for generations. The people who are capable of taking us to the leading edge of highly profitable industries would lack the means to do so.

I know that many hon. Members will talk about the collapse of the number of people employed in manufacturing, but judging the success of the sector by the total number of people in work is immensely misleading. We cannot ignore the fact that we live in a global village and that we are one of the richest countries in the world. We could employ more people in manufacturing, but only if we matched the low wages on offer elsewhere in the world, which would be totally unacceptable. Our efforts must be channelled into finding and developing manufacturing activity that reaps substantial rewards for shareholders and employees alike.

What are the Government doing to help those who want to survive and grow in the incredibly diverse and creative world of manufacturing, and what else needs to be done now? Are we doing all that we can to reach out and talk to companies, large and small alike, and not only those that want to get on that come looking for help, but those in a heads-down, struggling-to-survive mode? What are we doing for that group? Last year, in my capacity as chair of the registrants' panel, which is the engineers' panel within the Engineering and Technology Board, I visited the manufacturing advisory service in Manchester with other members of the panel. It is led by a dynamic and enthusiastic woman, and I was utterly impressed. The Government have invested £15 million in the service, which has been match funded by regional development agencies. When people ask what is happening to their taxes, we can tell them that they are going into regional advisory services for manufacturing. We have put £15 million into that service and got back £28 million so far. Whatever way one looks at it, that means jobs for a sector that underpins a vast amount of our economy.

I am sure that hon. Members have heard of the Engineering Employers Federation, which is led by Martin Temple. It campaigns and works hard for the tens of thousands of companies that it represents. When I looked for a user's guide to the manufacturing advisory service, I looked to Martin, because if it was not working, he would say so loud and clear. However, he says: The true measure of any successful programme is for good practical advice to quickly translate into tangible benefits. MAS is delivering on this, and EEF, through a number of our regional Associations, is delighted to be playing a part in its success. The service did not exist before 1997, although there were other services that I used. The quality of advice was poor, and one was never sure whether one was getting value for money. The manufacturing advisory service is quality controlled, led, and has an ethos of excellence.

Mr. Barry Sheerman (Huddersfield) (Lab/Co-op)

What my hon. Friend has said so far is music to my ears. However, has not the engineering industry failed over a long period as an employer to make the necessary investment in skills? We now have a more stable situation, and 1.7 million people are still working in the sector, but mainly for small and medium-sized enterprises. If the manufacturing advisory service is to work, it must reach not just big companies but down to SMEs.

Mrs. Curtis-Thomas

My hon. Friend is absolutely right. Good companies will go looking for help; there is no problem. They will come knocking on the door. The manufacturing advisory service, particularly up in Manchester—I cannot speak for elsewhere—has had hundreds of companies knocking at the door. Nevertheless, my hon. Friend's point is valid. A company of five people that is trying to work with six and seven people has to grab them and ask for help. There are a number of vehicles that would allow that. There is the business community, trade associations and all sorts of people who have to impress on companies that assistance and advice is available. I know that it is a huge struggle; I visit companies all the time and ask whether they have heard about such vehicles. They have not done so—not because enough effort is not being made, but because they are too busy to lift their heads out of work and relate to the services available. We must keep knocking on that door.

I turn to the measures that the Government have introduced that help companies generate more profit and encourage investment in new capital equipment and research and development. That touches on my hon. Friend's point about lack of investment. When companies are making enough money to cover only salaries, where do they find funds to invest in new product? Where do they find that huge capital up front and at reasonable rates that do not cripple the business? That is a problem for companies whose turnovers range from £100,000 to £100 million.

I want to refer particularly to, and applaud, the practical but easy measure that reduced corporation tax from 10 per cent. to zero in 2002. It seemed easy, but we had to pay for it—it came out of tax revenue. It made a huge difference and mattered to shareholders, whom we want to keep on board. What about companies that want to invest? I mentioned that, in Liverpool, we have had the benefit of regional venture capital funds, which give easy access to finance and are vital to business. We are not talking about pigeon feed: we are talking about £235 million going into our region—a fantastic amount of money.

I have had people coming to my surgeries such as an entrepreneur who wanted to set up a small catering company. He is now the largest producer of crispy duck on the planet. He is right in the middle of Sefton and we are delighted to have him. He got started with funding. Another man who wanted to invent and develop games on his own needed the money, technology and production capacity to do so, and he got it from such funds or from a venture capital trust. Venture capital trusts are an excellent innovation and are designed to ratchet in money from big public insurance companies, and it has worked. The trusts have delivered just over £1 billion. There have been gaps in the market, especially for very small companies that do not have the portfolio to attract venture capital funds regionally. So, the development of the small companies fund is excellent. I ask all my colleagues in the engineering world to take advantage of it.

Hon. Members may not remember the Chancellor announcing in his Budget—I think in 2000—the R and D tax credit. I think that I was the only person who cheered at the time. Most people said, "What's that?" but it was absolutely huge; for little companies, it was a heaven-sent message. Little companies have no problem getting support for R—they can get support for research in universities; huge money is going to R—but what about D? There was no investment in D or money from the Government for it. We all know that to make money in business, one needs to go from R to D to manufacturing. When the Chancellor said, "We'll give it to you for R and D", that made a huge difference to many companies.

Mr. Sheerman

So much of what my hon. Friend is saying is good, but is she aware that a clause in last year's Finance Bill that was intended to address creative accounting inadvertently completely stopped small innovative partnerships in universities? There have been no joint projects between universities and companies for the past six months. Something serious has happened. In my capacity as Chairman of the Education and Skills Committee, I talked in the House last night to vice-chancellors, who are deeply worried. If something is not done, nothing on university campuses will move on joint partnership and research and development.

Mrs. Curtis-Thomas

Gosh, if the totality of that is true, that is bad news. I was also speaking last night to some colleagues who work in the business. I will turn later specifically to the construction industry; I cannot resist it with the construction Minister present. If what my hon. Friend says is true, the problem is serious.

I applaud the initiative that the Government have taken. We have a Government and a Chancellor who say, "We recognise the barriers to development and want to try to do something about them." Fantastic! I firmly believe that, if there is a problem, the Government are determined to do well by manufacturing, as it matters profoundly to this country's economy. I see my hon. Friend the Member for Norwich, North in his place, and I know that universities always want more money. We must examine the extent of the problem.

Dr. Ian Gibson (Norwich, North) (Lab)

What about top-up fees?

Mrs. Curtis-Thomas

I will not talk about top-up fees today.

I want to address the fantastically massive investment that the Government have made in our science base, which is supported by the Wellcome Trust. That has provided £1.75 billion-worth of investment in science infrastructure. We have brilliant engineers working in universities, and want to keep more of them there. I know what an engineering department was like under the previous Administration because I was the dean of one. It was a desperately sad place. There was no talk about expanding the department; it was all about collapse. We talked about how many jobs the department would lose that year because there was no investment in the public sector and no pull on further education and other colleges to produce apprentices or engineers. What was the point of taking an engineering degree when there was no work at the end of it?

There has been a transformation since 1997. In order to conduct blue-sky research in universities, we needed massive investment. In walked the Wellcome Trust, and the Government grabbed it by the hand and said, "We'll join you." It has been a fantastic achievement that we in the UK have been able to retain the support of the Wellcome Trust, which could have gone to any other country or to our major competitors, but instead chose to come here where we still have some of the finest educational engineering facilities in the world.

Although researchers have benefited enormously from huge injections of funds, they do not get paid very much. My right hon. Friend the Secretary of State for Education and Skills announced not so long ago that researchers' salaries would be bumped up to £13,000. Frankly, that does not keep body and soul together. Research in engineering is done for the love of it, but we must find some way of recognising the enormous contribution that such people make down the line. They may not get into the manufacturing world, but they provide the products that engineers turn into fantastically fund-generating products.

Prior to Charles Clarke's intervention, research salaries haven't changed since the invention of the quill pen". That is a direct quotation from one of my engineering colleagues who feels that he has been working in universities for that long and has struggled in very difficult times.

I turn to an issue that is specific to the construction industry, about which I know my hon. Friend the Minister will talk. Construction is not manufacturing, but the manufacturing industry underpins the products used in construction. The transfer of responsibility for construction from the former Department for Environment, Transport and the Regions to the Department of Trade and Industry may have a serious effect on the research and training community. The innovation review is focusing on major companies and technology departments at British universities. That is appropriate, as we want to work with the players and universities that are eager to set the agenda. However, that approach means that small process-driven companies and the fragmented sectors of the construction industry will have great difficulty in finding the industry muscle to compete for the available funds. My hon. Friend the Minister is aware of the problem, and he will know that it will result in a substantial loss of the funding that underpins much work that translates blue-sky research into usable codes and standards for a large part of the construction industry.

It was right to move responsibility for construction from the DETR to the DTI, but that must not be at the expense of organic and sustained improvement in the construction industry. Construction must not lose out as a result of that transfer. Construction is a major contributor of wealth creation in this country, and is said to produce up to 10 per cent. of our gross domestic product. However, we must recognise that innovation flows not just from university research and development, but from a plethora of small organisations. The DTI must examine the need to develop a package to support large numbers of small and medium-sized enterprises that have been disfranchised as a result of the focus of the innovation review. We want to ensure that small groups that have worked closely with small companies, which are difficult to reach, continue to do so and that that sector of the industry thrives.

The good news is that I have almost concluded my speech, but before I do so, I shall touch on something that is close to my heart—apprenticeships and the involvement of women in the marvellous world of engineering and manufacturing. Apprenticeships, as we know, virtually collapsed in the 1990s and it took the Government a couple of years to focus their energies on the role of apprenticeships and the reason why they were necessary. In the 1990s, there was little for apprentices to do, particularly in the manufacturing and construction sector. However, that has changed, and there are now a variety of two-year and four-year apprenticeship programmes, which is music to my ears. I did a four-year apprenticeship—two years on the tools before learning a variety of other skills. I now meet young apprentices, and I find it extraordinary that they manage to do in two years what I managed to do in four. We have not lost the quality of the old apprenticeships—the programme works differently and is tailored to today's needs.

Mr. Sheerman

I agree with my hon. Friend, but only 38 or 39 per cent. of young people finish their modern apprenticeships. Something must be done, not in engineering or the manufacturing sector but in other sectors, to improve those figures. I hope that, like me, she supports the introduction of foundation degrees, which will complement modern apprenticeships. Modern apprenticeships will lead on to foundation degrees and even to university or practical employment.

Mrs. Curtis-Thomas

I am delighted that my hon. Friend came to support me this morning. I agree with him—I was going to say that the biggest problem for young people who choose to do an apprenticeship is finding an employer. That does not prevent them from going to college to do their apprenticeships, but if they cannot find an employer and the clock is ticking, they will surely quit. They know that there may be serious problems when they finish—who wants to employ an apprentice plumber or fitter who has never worked on a job? We do not want people with textbook knowledge but no practical skills.

We need to consider the quality of the courses on offer. I cannot comment in depth, but in my previous role as dean of an engineering faculty, I know that it is damned difficult to come up with a training product overnight. It is a huge exercise—we have to work with people who will use apprentices, and create courses and skills that will underpin businesses so that there is a ready market for students. If there is no such market, why would students want to remain at college? If people drop out, they may then go and work as an assistant, but they will end up working with bodgers—the lowest of the low who give qualified, skilled people a bad name.

One way in which to solve the apprenticeship problem is to establish better dialogue with employers. However, to return to my earlier comments, it is exceptionally difficult to reach out to some small businesses and encourage them to expand. When they are running here, there and everywhere, how can they focus on their future? Perhaps we should consider incentivising them, although I do not know how we would do so. In my day, companies were prepared to take a hit on the bottom line. When I was an apprentice, I was not producing anything profitable, but the company recognised that eventually I would be a contributor. We need to acknowledge that and allow employers to discuss the issue. We must be supportive—employers need apprentices, and we need them to grow their businesses.

I shall conclude by discussing the role of women in manufacturing and engineering. It gives me immense pleasure that a woman is serving as Secretary of State for Trade and Industry. There has been not just one woman in that post but two, which is great news. There are not many women working in engineering. We try hard to attract women, as engineering is immensely creative and accommodates people with a wide range of skills. People who are brilliant with their hands can find rewarding work in engineering, as can people with marvellous minds and naturally gifted artists. However, it is immensely important to try to diversify the engineering world—I am afraid that is still appears to be men wall-to-wall. I went to the Electrical Contractors Association dinner last night. If I were a single woman, it would have been a joy to behold about 1,000 men, mostly business men, who were all unaccompanied. A fair percentage of them must have been single—it is a fantastic business to be in. I do not believe that my engineering colleagues or the institutions have alighted on this, but perhaps we should think about speed-dating. A speed-dating agency could be attached to the Institution of Mechanical Engineers, God bless it, in Birdcage walk—such a service would be very popular. The Government have not yet alighted on such a measure, but we are innovative, so who knows?

In the absence of speed-dating, what are we doing to try to get more women into the male-dominated world of engineering? We have great role models in Patricia Hewitt, who is great, Margaret Beckett, and numerous other women. The DTI, recognising the seriousness of the problem and the fact that we will not realise the potential of the manufacturing sector unless we attract women and people from different ethnic backgrounds, has set up a number of groups. The Department continues to support the Women into Science and Engineering programme, which does a great deal of work in schools. That is important, as we need to reach young women and others when they are thinking about which career to pursue. I was involved in the inception of the WISE programme, which has been under way for 30 years. Its results are not momentous, but they are consistent, and it is a resource for women who are interested in science and engineering, as well as their parents and others who influence them.

David Sainsbury—

Mr. Bellingham

A marvellous man.

Mrs. Curtis-Thomas

Indeed, David Sainsbury is marvellous.

Mr. Edward O'Hara (in the Chair)

Order. I hesitate to interrupt, but the hon. Lady has referred to Members of both Houses by name. She is well aware of the convention.

Mrs. Curtis-Thomas

Thank you, Mr. O'Hara. Then let me refer to Lord David Sainsbury as the Minister in charge of the Office of Science and Technology. He has done an enormous amount, in his own way, to try to further the involvement of young people in science and engineering. He funded, through the Engineering and Technology Board, the science and engineering ambassadors scheme, which goes into schools and involves hundreds of people who are interested in engineering and want to promote it. The scheme needs more work, but it is delivering results.

Recognising that other Members wish to speak, but craving their indulgence—

Mr. Bellingham

The hon. Lady could go on for another hour.

Mrs. Curtis-Thomas

I could go on all day—there is such a lot of good stuff to talk about.

I know that I shall probably hear criticism of the Government's approach to manufacturing and of the fact that the number of people who are engaged in it may still be falling. However, Members of both Houses need to understand that there is something in people's blood that makes them cleave to manufacturing. This is a wonderful nation because its people have involved themselves in the production of goods since it began, and they are marvellous at it. The trick is to harness the creative ability and drive of people working in manufacturing and to develop the policies that maximise those great abilities. That requires constant effort. I ask the Minister to explain what more he intends to do to help the people out there, because if they are not there, we will not have the money that they make to spend on the betterment of others.

Mr. Edward O'Hara (in the Chair)

Order. I remind Members that the wind-ups must start at 10.30.

10.1 am

Mr. John Randall (Uxbridge) (Con)

Thank you, Mr. O'Hara. I shall try to keep my comments as brief as possible to try to ensure that other Members can catch your eye.

I thank the hon. Member for Crosby (Mrs. Curtis-Thomas) for introducing a debate on a subject to which she brings an undoubted expertise and enthusiasm that we all enjoyed. She talked about role models, but she is herself a good role model for many people.

I declare an interest—not a direct interest, Mr. O'Hara—in that since leaving university and before coming to this place, I worked in a retail outlet, a family business, which had close alliances with manufacturers, particularly furniture manufacturers. That is the nearest that I will ever get to Cabinet status.

When I came to this House nearly seven years ago, one could more or less stock a furniture department, both cabinet and upholstery, from British manufacturers. Sadly, that is no longer the case. I recently went to the national furniture exhibition at the national exhibition centre in Birmingham, had a look round and saw some people whom I had not seen for a few years to try to find out what was going on. I spoke to Roger Mason of British Furniture Manufacturers, a trade association with 7,000 members. Interestingly—I had not realised this—80 per cent. of its members have fewer than 10 employees. However, although we are talking about very small businesses, about 166,000 people work in the industry.

One of the reasons why British furniture manufacturing has been in decline is consumer driven. As with many other industries producing goods that we used to sell, such as cutlery from Sheffield or ceramics from the potteries in Stoke-on-Trent, British furniture has become too expensive for the average consumer now that people have other spending priorities. There is an influx of imported products, which, if we are honest, may not be nearly as good but are much more affordable. I am pleased that some manufacturers of furniture and other goods are being proactive by running advertising campaigns and trying to establish niche markets, with some success. However, as the hon. Member for Crosby outlined in relation to engineering, businesses sometimes find that they do not have the money to do what they want to do. We can all have lots of good ideas, but it is not always easy to carry them out. Some companies have been successful; others not so, but not necessarily because they are bad companies.

It is interesting that the decline has occurred pretty much equally all over the country. My great-grandfather started his furniture manufacturing business in High Wycombe, where there was a traditional industry, which has since declined, based on the beech woods of the Chilterns. According to the regional development agencies, the situation is more or less the same in every area. When the steel industry was in decline, many companies in south Wales started to manufacture furniture, and I remember that when I started in the furniture retail sector, we were a bit rude about their stuff, which was not of the highest quality because it was produced by steelworkers who had suddenly turned their hand to upholstery. That soon changed, as those skilled workers put their minds to new tasks and produced some very good things. Sadly, some of those jobs are now going.

What can the Government do about the problem? In fact, I do not think that Governments can do a great deal in a free market. I heard what the hon. Member for Crosby said about the previous Conservative Government. However, people often blame the Government without necessarily having a party political viewpoint. Many of my local manufacturers and small engineering companies in Uxbridge blame the Government for their problems—whatever the party, it is the Government who get it in the neck.

Manufacturers face many hurdles: that is by no means exclusive to the furniture sector. People often mention employers liability insurance, the compulsory nature of which means that it is impossible to negotiate with insurance brokers to get the price down. I am sure that many Members have heard complaints from business about the significant increase in insurance costs. Businesses face increasing amounts of legislation. No doubt, much of it is very worthy—only yesterday, I spoke in the debate on the environment, so I cannot knock environmental legislation other than to say that, proportionately, it affects smaller businesses more, because they cannot employ a person specifically to deal with health and safety or environmental issues, as can a large company.

There is a feeling—some say that it is an urban myth, but I think that it is true—that businesses in this country do not have the level playing field that they want because other countries do not enforce legislation that comes from elsewhere as strictly as we do. When I was in business, the flammability of upholstery was a big issue, and Britain was at the forefront in addressing it. In fact, our flammability regulations were dumbed down when EU regulations were introduced, because they were not as good as ours. I have heard of cases, although I have no evidence, in which Customs and Excise, having received a tip-off, checked some goods that had come in from China—it could also be true of other EU countries—and found them to be sub-standard. It is simple to stick a label on a consignment of sofas or chairs without testing every one. Many British manufacturers feel that they are sticking firmly by the book while others are coming in round the side.

Many companies, particularly in my part of the country, find that when their lease comes up for renewal, the price has gone up considerably. In terms of property prices, location is everything. We have a tradition of small engineering companies in Uxbridge—I grew up with them. They are having to move out and their employees cannot find suitable employment without moving away from the area.

Mrs. Curtis-Thomas

Come to Liverpool.

Mr. Randall

However wonderful Liverpool is, the charms of rural Middlesex are also pretty good.

Brunel university's engineering department was famous for innovation. Although it remains famous, it is in decline and has problems, despite what the hon. Lady said. We have a science park where many interesting products are developed, but once a company reaches a specific size and is doing well, it cannot find another location.

I have outlined some of the problems and I hope that, through raising them today, we will manage to consider what to do about them.

10.10 am

Dr. Ian Gibson (Norwich, North) (Lab)

I congratulate my hon. Friend the Member for Crosby (Mrs. Curtis-Thomas) on instigating the debate. The word "manufacturing" appears to be rapidly disappearing from the dictionary. A few days ago, I heard the bad news that the last big manufacturing company in Norwich, Laurence, Scott and Electromotors Ltd. was to close. It once employed 2,000 people, but no longer. However, I guess that there are other jobs for 55-year-olds in a boom city.

At the same time as I heard the news, a document from the East of England Development Agency came through my letterbox and gave me hope when I first saw it. It is called "Sharing The Challenge—playing your part in reviewing the regional economic strategy". It purported to give us a vision of making the East of England a world-class economy, renowned for its knowledge base, the creativity and enterprise of its people and the quality of life of all who live and work here. That is fine.

The document recognises that the east of England has good research and development arenas, high-profile headquarters and research establishments—for example, in Cambridge, Norwich and Ipswich—in advanced manufacturing, pharmaceuticals, biotechnology, information communications technology and so on. However, advanced "manufacturing" provides the only instance of the word in the main document. I went through it with a fine toothcomb and found that it also appears in appendix II, which points out the decline in manufacturing, including a 35 per cent. decline in employees working in manufacturing since 1985 while the percentage of employees working in services has increased 30 per cent. over the same period. Indeed, as other speakers have pointed out, the world is changing.

Britain could take a lead, however, and build up its manufacturing base in some arenas. For example, it is doing something but could do much more in nanotechnology, which is the big hope for the developing world in creating new jobs. I do not want to define nanotechnology or I shall end by fighting with His Royal Highness again about grey goo. It involves small particles, but has the potential for significant advances in health care, medicine, security, electronics, communications, computing and so on.

Let us consider one of the regional development agencies in the north, where my hon. Friend the Member for Crosby lives. The Office for National Statistics report on regional gross value added—GVA—points out: The manufacturing sector is the largest contributor to GVA in the NE region, but its fractional contribution is reducing. However, it continues by stating that manufacturing remains much more important as a sector in the NE than for the UK as a whole, but it is now declining in line with the national average for the sector". The challenge is therefore to take up the new technologies, push them into the industries and thereby keep the industries expanding in a modern way.

According to the document, the best way in which to increase the GVA in the large manufacturing sector is by using nanotechnology. There is therefore great hope for developing nanotechnology to help with an industry's problems. However, it is being commercialised mainly through small and medium-sized businesses. Large companies currently regard it as peripheral to the core technology. They expect it to have an impact on their future product performance, but have yet to formulate any nanotechnology research and development strategy. That is true of the East of England Development Agency.

That Government have put £90 million into nanotechnology in this country, but the document that fell through my letterbox—"Sharing The Challenge"—does not mention it. I have made that point in other places to try to make the East of England Development Agency move and use the new technologies. What more can a Government do but give money and ask the regional development agencies to get on with it? There are brilliant people in the region, but they have to take action and develop the technology in the industries.

Germany is fourth biggest funder of nanotechnology after Japan, the United States of America and the European Union as whole. It intends to place its nanotechnology in the motor industry, pharmaceuticals, chemicals and optics. It is concentrating hard on that and it is currently ahead of the game. We have the potential but are being beaten back through lack of drive. I know that because the Select Committee on Science and Technology has considered nanotechnology and visited Germany. The chairman of the Development Agencies Network Collaboration for UK Micro and Nanotechnology told the Committee that recognising nanotechnology is vital to the future competitiveness of the industrial base of the UK and other regions…so there was a developing awareness of the importance of this field. The professor who is director of the Cambridge Nanotechnology Interdisciplinary Research Unit, which is again well funded by Government, stated: I can only speak from my personal experience of the Eastern Regional Development Agency, clearly they have a lot of things which they have to work on within the RDA and in some cases the nano network is not high on their agenda and in some cases it is quite clear that they do not really understand the issue. I rest my case that the technologies are there to develop, but we simply do not exploit and use them enough.

In our brave new world, we, like my hon. Friend the Member for Crosby, should be positive about product development and manufacture in the key areas of health care, pharmaceuticals, communications, environmental sensing, safety systems and so on. The world is opening up. An ink-jet printer has been developed in this country, creating a market of billions of pounds, as well as a blood analyser and other products that keep people in work and benefit the health and wealth of the nation.

We need an integrated approach and I ask the Minister to consider asking the development agencies what they have done with the money because, without the injection of cash into manufacturing industry, it will disappear and the word "manufacturing" will no longer be in the English dictionary.

10.17 am

Richard Burden (Birmingham, Northfield) (Lab)

I congratulate my hon. Friend the Member for Crosby (Mrs. Curtis-Thomas) on securing the debate and on the passion with which she presented her case. She was right to remind us of the dangers of turning the clock back to the dark days of the 1980s. In the west midlands, we know only too well the devastation that Government policies caused then. That is not to say that manufacturing does not continue to face a tough time and the hon. Member for Uxbridge (Mr. Randall) was right to mention employer's liability and insurance, which are a problem for many companies.

Manufacturing remains significant. In my region, it accounts for 20 per cent. of employment. My hon. Friend the Member for Crosby was right that we need to move up the value chain to become world class and fulfil the skills agenda. I have a specific interest in the automotive sector, where great work is going on, such as the creation of the automotive academy, which boosts skills and processes. I congratulate everyone who has been involved—in the Government, the learning and skills councils and the private sector.

We need to examine our development of the catalytic parts of engineering that can build and boost industry beyond its immediate area. My hon. Friend the Member for Norwich, North (Dr. Gibson) was right to mention nanotechnology in that context, and I draw attention to the high performance engineering and motor sports sector, the value of which the Government rightly recognise.

We should also emphasise the importance of Government influence in procurement and I am glad that that is being re-examined. I feel that acutely coming from Birmingham, where we are witnessing the end of 150 years of train manufacturing at Alstom. That should not happen, and we should exercise greater influence to prevent such occurrences in future.

I want to get something off my chest. When we consider manufacturing, there is sometimes a tendency to draw false distinctions. In the automotive industry, no manufacturing sector means no retail, car mechanics, repairs or sales sectors. When the Longbridge plant in my constituency was threatened in 2000, it was not simply a problem for those who worked there. For every job lost there, three or four others would be lost, including in the supply sector and even in the corner shop across the road. A link therefore exists all the way through.

The reason that I mention the point now is that over the last few days MG Rover has been in the news again, and I want to comment on that briefly. Once again, special investigations are appearing in the newspapers, which at first sight seem to be drawing the same conclusions as the special investigations undertaken about six months ago. There are whispers of at best corporate greed, and at worst asset-stripping at that plant. I have some criticisms of some of the decisions taken by the directors of Phoenix Venture Holdings, and I have told them to their face and put them on the public record. If there are serious questions to be asked, the company must be comprehensive and transparent in answering them. It may feel that it has answered those questions previously, and in many cases it has. It owes that to the people who helped it to save Longbridge back in 2000, however, and it owes it because without giving those answers, even if it has done so previously, the speculation will continue.

I also want to send a message to the newspapers arid the "experts" who often make such allegations. My constituents just wish that when national newspapers publish these stories, they would show as much interest in the future of the company, the future of the people employed there and the future of car making at Longbridge as they appear to show in getting a good headline. Hardly an article is written without Rover being referred to as "the stricken car company" or "the troubled car maker", irrespective of whether sales are up or down, irrespective of whether new models are being brought out or not, and irrespective of whether those models have attracted praise or criticism. All those things hit confidence.

There may be some who are only too happy about that. There may be people who have an axe to grind, who wrote off Longbridge back in 2000 and who never forgave the employees there for rewriting the script and proving them wrong. They were told that they would be out of business in six months, a year, and then two years. Four years on, however, they are still there. What is the future? I do not know. There have been setbacks, and the company faces big challenges. Nothing is guaranteed. The business is very different from what it was in 2000, however. New models have been brought in over the past three years, and new models are on the way. Their success will be critical to the future of the company.

The analysts and the press should ask what questions they want, and the company should give open and transparent answers to those questions. I do not believe that it has anything to hide, and it needs to demonstrate that. However, the analysts and newspapers should not impose on this company and its employees expectations that they would not apply to other businesses of this size. They should give the employees of Longbridge the chance to do what they want to do—to let their cars do the talking.

10.22 am

Brian Cotter (Weston-super-Mare) (LD)

First, I congratulate the hon. Member for Crosby (Mrs. Curtis-Thomas) on securing this debate. She clearly has great experience, and one might say that she is something of a fellow in many ways, certainly judging by her experiences with her many fellowships. She made a great double act with the hon. Member for Huddersfield (Mr. Sheerman), who has just left. I am sure that theirs, like many other double acts, will continue, as they related to each other very well and raised some serious issues.

It is important that we again debate manufacturing. The topic is relevant today because, once again, we have disappointing figures from the Office for National Statistics, which show a fall in manufacturing output in December. I shall refer briefly to an issue on which the hon. Member for Uxbridge (Mr. Randall) touched: insurance costs. I hope that the Minister will take account of the great burden that manufacturing has had to bear because of the increased costs of employer's liability. Despite warm words about those costs being brought under control, I know from having spoken to the industry that although the increases are being reduced, many concerns remain, for example, about notice of rates from insurance companies and other issues. I therefore thank the hon. Member for Uxbridge for his contribution.

Despite hopes that the sector is beginning to recover and evidence that manufacturers are confident about boosts to the volume of orders and business activity, recent figures make it clear that the sector is far from being out of the woods. December's output figures should be of great importance to us because of the vital role that manufacturing plays in our economy. Although the contribution of manufacturing to the economy has been diminishing for a long time, it still accounts for around 17 per cent. of gross domestic product.

While house prices boom and consumer spending spirals, manufacturing remains stagnant, and the economy continues to be fundamentally out of balance. December's fall in manufacturing output means that economic recovery could end up being based on consumer borrowing alone. British consumers are expected to have accumulated debts of £1 trillion by this summer, and it is clear that that is unsustainable in the long run. In addition, yesterday's announcement of the record quarterly trade deficit from the Office for National Statistics further undermines the Government's bravado about the strength of the UK economy.

Last night I attended the Engineering Employers Federation—the manufacturers organization—dinner at which the Chancellor spoke. He did not exactly tell us what was in the Budget, but we heard lots of warm and encouraging words. Let us hope that they are translated into action. The decline in manufacturing is weakening our ability to export, and it is becoming increasingly clear that the services sector will no longer be able to cover the import-export gap.

We have a two-speed economy, with runaway consumer spending and a weak manufacturing sector. The Bank of England alone cannot resolve that. I therefore ask the Minister what action he is taking to rein in irresponsible lending to consumers and to ensure that we do not return to the old days of boom and bust. I imagine that the unkind references to the Tory Government made by the hon. Member for Crosby related to boom and bust. I give the current Government credit for having brought stability to the economy—although, modestly, I point to the fact that they adopted the long-standing Liberal Democrat policy of having an independent central bank. None the less, I congratulate them at least on stability, and generally on jobs, although, unfortunately, we are not keeping up in manufacturing.

The Department of Trade and Industry has given subsidies to various larger manufacturing companies in the form of regional selective assistance, yet many of those larger companies are beginning to outsource their operations abroad. Although we must accept that that is a natural phenomenon under a free trade system, we should not allow such companies to accept huge Government subsidies on the premise that they intend to bolster jobs in the local community when, in reality, they end up moving their operations abroad. Only last month, despite the fact that in 1994 an £86-million public aid package was used to attract Samsung to invest in Teesside, the company announced that it was quitting its Teesside site to take advantage of lower production costs in eastern Europe and China. Samsung received, I think, £10.5 million of that regional selective assistance.

A Financial Times survey conducted last summer also found that half the £750 million in grants offered to regional aid projects over the last decade went to 16 companies that have since closed or fallen well short of job creation targets. Although it is not wrong to try to attract foreign investment, it is imperative that the Government measure properly the way in which taxpayer's money is spent to ensure that it achieves the maximum benefit for local communities and the economy. Increasingly, we need to direct money to our manufacturing businesses. The message must be conveyed that the DTI cannot—must not—go on digging into the taxpayer's pocket to bail out flagging companies such as British Energy. A large amount has gone to that company, and even larger sums may go to it in future, perhaps largely to benefit its shareholders.

I know the Government are thinking of allocating regional selective assistance according to the need to boost productivity, rather than just for jobs. That is a welcome departure, but the way in which public money is distributed to private companies should be scrutinised more closely, perhaps by the National Audit Office.

We need to boost innovation by encouraging more private investment in firms, so that money is available for research and development. The hon. Member for Crosby rightly emphasised the importance of development. Much more must be done to inform manufacturing firms of where they can go to obtain finance. Although the Government have introduced a research and development tax credit, a recent KPMG survey found that only 9 per cent. of firms are taking advantage of it, and many are unaware of its existence or do not know how to claim it. The Government should promote plain speaking not only in regulation, but in explaining to people what is available to them. It is imperative that we help small and medium-sized manufacturers by encouraging private investment, cutting bureaucracy, and encouraging research and development.

More support for training and initiatives are needed. Modern apprenticeships must be flexible, so that apprentices will feel that they will have a good job at the end of them. There has perhaps been too much training and not enough hands-on work. More in-house training is needed, especially in the case of small companies, which cannot easily allow people to leave the workplace.

There is still a skills gap. According to a recent survey by the Forum of Private Business, skills training is the second most important issue for small firms. Skills must be relevant to business, and there should be links not only with universities but with schools. I have encountered great concern about the lack of careers advice to attract people into manufacturing. Lately, I have talked to many people about training, and I have been told that careers advice in schools is often not good enough—indeed, young people are sometimes actively discouraged from going into manufacturing. That must change. We must also get rid of the idea that vocational courses are second best. The days when apprenticeships meant no more than learning to screw things into machines are long gone. Nowadays, people need complex skills to run machinery. It must be made clear to those at school that manufacturing has a great deal to offer them.

I strongly support the concept of the Manufacturing Advisory Service, but I urge the Minister to ensure that it is monitored. It does very well in some areas, but in others it needs to be reassessed. I applaud the Government's regional approach to the service, but I want them to go further. Liberal Democrats believe that the DTI must be slimmed down considerably and that service must be delivered at local level.

We need to raise the profile of manufacturing. Manufacturing is exciting, it is essential to the country's future, and it can provide a great future for our young people.

10.35 am

Mr. Henry Bellingham (North-West Norfolk) (Con)

I congratulate the hon. Member for Crosby (Mrs. Curtis-Thomas) on her ebullient speech, which showed her enthusiasm and experience. I shall make it my business to attend more trade association dinners if I know that she will be at all of them.

Some of the headline figures for employment and economic growth—and, indeed, the latest CBI survey, which revealed stronger output growth in manufacturing—may lead Ministers, including the one present here today, to believe that everything is a great deal better. However, as the hon. Member for Weston-super-Mare (Brian Cotter) pointed out, the December manufacturing output figures showed a fall of 0.1 per cent. and output still 4 per cent. below the 2000 level. We heard another announcement of Liberal Democrat policy today when the hon. Gentleman said that he wants the DTI to be slimmed down, but the other day his boss said he wanted to get rid of the Department. It would be useful to know exactly what the policy is. In any event, it is not Conservative policy to get rid of the DTI. We think it is doing a good job, especially with the Manufacturing Advisory Service.

There are other storm clouds: for example, figures show that Britain is no longer the number one place in Europe for inward investment—we have fallen to about number four, behind France and Germany—and recent World Economic Forum figures on competitiveness show that we have fallen from fourth to 14th in the ranking. Moreover, as the hon. Member for Crosby pointed out, manufacturing investment is at an alarmingly low level—the lowest for about 20 years. The wretched trade figures have also been mentioned.

Let me say something about the overall tax and regulatory burden. The hon. Member for Crosby referred to the Engineering Employers Federation and the indomitable Martin Temple. The EEF has been very complimentary about the Manufacturing Advisory Service and several other Government initiatives. Conservative Members give credit where it is due, as the Minister knows—I often compliment him personally on his enthusiasm and energy. However, he might have missed a comment made by Martin Temple the other day. He said Businesses in this country may well be able to cope with individual burdens and regulations, but the cumulative weight of the regulatory burden is now destroying wealth creation, especially among SMEs. The CBI, the Institute of Directors and the British Chambers of Commerce have made similar comments.

One consequence of the growing burden on businesses is the increasing trend towards "offshoring". Not only low value-added manufacturing concerns, but sophisticated call centres and other financial service back-up operations are now moving to the subcontinent and the far east. The companies involved include BT. HSBC, National Rail Enquiries and, as the hon. Member for Norwich, North (Dr. Gibson) will know only too well, Norwich Union. It has not caused huge pain in Norwich, but Norwich Union has "offshored" a significant part of its operation in recent months.

The skills gap is narrowing. The other day I spoke to the chief executive of a financial services company who said that the brutal truth was that the decision is a no- brainer. If people in this country cost at least £25,000 a year per employee—that is not a great deal to pay someone, but it is the overall cost of each job in the call centre—and they can be replaced by people in Bangalore who have degrees, speak good English and are highly motivated, literate and numerate for perhaps £2,500 a year per employee, it is understandable that businesses take such a step.

It is worrying that the skills gap is narrowing rapidly, particularly in China—a giant that is stirring and making extraordinary progress in building its own technical know-how and ability. That is why it is evermore vital that the DTI and other Government Departments focus on creating a thoroughly proactive and dynamic skills agenda, as the hon. Member for Crosby rightly pointed out.

We must also have an across-the-board SME policy that has the desired impact on such businesses. The Government have introduced various initiatives, made improvements to some of the schemes, including the small firms loan guarantee scheme, which the Minister and I have debated on a number of occasions, and introduced other schemes, such as the regional venture capital funds and the phoenix fund. However, as my hon. Friend the Member for Uxbridge (Mr. Randall) pointed out in a succinct and all too brief contribution, there is a crisis in public and employer liability insurance. Many companies simply cannot get insurance. According to the Federation of Small Businesses, about 10,000 companies are continuing to trade without proper public and employer liability insurance. We have had a Department for Work and Pensions report on that, but I would like the Minister to comment on what the DTI is doing to alleviate that crisis.

My hon. Friend mentioned EU regulations and the Government's tendency, arising from our different culture, to gold-plate regulations, and he mentioned the regulations on inflammability. I looked at the ceramics directive the other day. There was a perfectly good inspection regime in the ceramics industry in this country. Perhaps only 20 or so businesses in the west midlands are affected, but by implementing the ceramics directive with added fervour, we have created an inspection regime that exceeds that in every other country in Europe—countries that apparently were content to leave their existing inspection regimes in place.

That is not an example of malice on the part of the DTI; it is symptomatic of the attitude in this country. We insist on implementing directives to the letter, and we have a culture of ensuring that the law is obeyed. It is an honourable and sensible culture, but the Minister must tell us that companies in this country and in Europe will be receive equal treatment.

My hon. Friend mentioned the stamp duty land tax. The Minister may talk proudly about the number of tax reductions that have been introduced, but what is the benefit to firms of relieving them of one burden but then imposing another on them in the form of stamp duty land tax?

We are seeing an erosion of flexibility in our economy on the supply side. In his winding-up speech, for which I will leave him plenty of time, I would like the Minister to focus on the working time directive. I am sorry that the EEF dinner that I went to clashed with the Institution of Mechanical Engineers dinner, which I would have liked to attend as well. At the EEF dinner, the Chancellor made it clear that, as far as he was concerned, the working time directive and the UK's individual opt-out was a red-line issue. He said that it was absolutely vital for British business that we kept the individual opt-out, because we have a different employment framework from other European countries and it is vital to our competitive position. I support what the Chancellor said.

The Commission is to publish its report on the future of the UK individual opt-out and indeed the future of the opt-out generally—other countries in Europe have an individual opt-out. The least the Chancellor should be entitled to expect is the enthusiastic backing of his fellow socialists, the socialist Members of the European Parliament, but, unfortunately, they have not even been neutral. Far from staying out of the way and perhaps helping the issue to go away, under a Spanish MEP, Cercas Alonso, they have published the so-called "own initiative" report. Mr. Stephen Hughes, secretary of the Socialist Group, said last week that the group want speedy and specific action from the Commission to remove the individual opt-out and overall, the Socialist Group takes the view that an opt-out from the health and safety directive is a dangerous nonsense. Can the Minister comment on that? When the Chancellor and other Ministers are doing all they can to ensure that the UK's competitive position is maintained, it is a pity that their colleagues in the European Parliament do not sing from the same hymn sheet. The Minister may comment on the fact that, when my good friend the Under-Secretary of State for Trade and Industry, the hon. Member for Bradford, South (Mr. Sutcliffe), whom I shadow two days a week in the Standing Committee scrutinising the Employment Relations Bill, went to Europe the other day, the great Mr. Hughes refused to see him to discuss the future of the UK individual opt-out. That is important.

It is easy to quote statistics selectively, and all of us, including the Opposition, are guilty of that. The Minister might say that I only dig out pictures that are disturbing to the Government; equally, we could say that the Minister paints pictures that are over-rosy. However, as the hon. Member for Norwich, North will know only too well, many constituencies in Norfolk contain small engineering and manufacturing companies that are finding life very difficult.

We are, as the hon. Member for Weston-super-Mare pointed out, enjoying something of a consumer boom at the moment, but that may be largely dependent on, or at least fuelled by, people taking equity out of their homes. The Minister is very good at getting out and talking to people on the ground—every organisation that I speak to, including the EEF, the FSB and the Forum of Private Business testifies that he talks to businesses—but it is vital not only that he stands firm on the UK individual opt-out on the working time directive, but that he listens to people on the ground, so that we have in place policies that are proactive, totally relevant and above all go a long way to ensuring that the small firms sector and the smaller end of the manufacturing sector are able to retain their position and, I hope, grow to provide jobs to substitute for the jobs lost to offshoring, in which many larger businesses are engaged. I look forward to hearing what the Minister has to say.

10.48 am

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths)

I congratulate my hon. Friend the Member for Crosby (Mrs. Curtis-Thomas) on securing the debate. She takes a keen interest in this crucial subject and has on several occasions brought influential constituents to brief me at the DTI, for which I am grateful. As a qualified chartered engineer actively engaged with major industry stakeholders, she speaks with great authority. I am also grateful to other colleagues for the interest that they take in manufacturing and for the generally non-partisan approach to manufacturing, which is a sign of its great significance.

Yesterday, I returned from a DTI trade mission in Malaysia, where I met representatives of some great UK manufacturers and exporters such as Rolls-Royce and Shell. They there are fighting for orders for their world-beating products and technologies—technologies such as the Trent 600/900 engine, which was developed in the UK through a great partnership between the DTI and Rolls-Royce, involving £250 million of Government money. It is now capturing more than a third of the world civil aero-engine market, and is an example of the Government backing the best in manufacturing. Indeed, I am delighted that the day before yesterday Bangkok Airlines announced that, having cancelled an order for two Boeing aircraft, it is now to order two Airbus 320s in contracts worth more than $100 million. Last year, for the first time, Airbus delivered more planes than Boeing—indeed, I understand that 305 were sold worldwide. These are good news stories, and there are a lot of them.

As Members know, I care passionately about manufacturing. I try to get out of the DTI to business one day a week, and when I do so I always visit a manufacturer. Manufacturing accounts for one sixth of our GDP and contributes in excess of £150 billion to our economy every year. There are some 3.5 million jobs in manufacturing, most of which are highly skilled, high-quality jobs, and of course there are millions of other jobs in the supply chain. When I visited the Swindon factory last year to see the 1 millionth Honda and the 1.5 millionth engine come off the production line, the head of Honda in this sector, Harada San, told me that 113 British manufacturers are in the supply chain for that factory. I am sure that a similar tale can be told in respect of the Cowley factory in Oxford, which I visited at about the same time in order to see the Mini.

I am aware of the importance of manufacturing, and so are the Government, which is why we held the first major review of manufacturing in 30 years, and set up the Manufacturing Advisory Service, which has been greatly praised here this morning. It is making a real difference to the quality of manufacturers in the regions by bringing the best together and by ensuring that everyone has a benchmark and the necessary mentoring. That is why, in the less than two years that the service has been running, manufacturers have made more than 20,000 inquiries, why 1,200 in-depth consultancy projects have been undertaken by MAS experts in the region—people who are themselves involved in manufacturing and industry—and why the average improvement in the productivity of companies assisted by in-depth consultancies has been an estimated 38 per cent. That amounts to £38 million of added value to those companies since the 2002 launch, which has had a great impact on the bottom line.

Some serious issues have been raised and I shall address them in no specific order. One issue that affects us all is the failure of companies that get regional selective assistance from regional development agencies, and how we should treat them. I take a very serious and sober view of this issue, but I do not believe that a company such as Samsung set itself up to take £10 million from the Government and then walk away from an investment worth 10 times that amount. Collapses can occur in high-technology markets—a situation not helped by the general global downturn that we have experienced. I have met representatives of companies such as Corning, and I know that for personal reasons—they are not completely selfish, ruthless individuals—it is as difficult for chief executives to lay off workers in this country as it would be for us to face such difficult decisions.

I therefore urge a word of caution to Members. I want Samsung back here—I do not want it to go away with a bad taste in its mouth—but that does not detract from the comments that have been made about necessary accounting for the money, why it was spent, or whether the Government are getting a return for their investment. It is of course proper that the National Audit Office and others examine whether Ministers and their advisers are taking sound business decisions in allocating the money, but it is equally important to point out that companies that get regional selective assistance are not generally in it for the money. They want their product or service to be developed by a highly skilled local work force, and they are as sorry as anyone else when that does not work out. We should be very reluctant to make them feel worse than they already feel by making groundless allegations about what they may have done with that money or by making irresponsible demands for them to pay it back.

I agree that the facts on training are clear. In 1979 we were training some 180,000 apprentices, but by 1997 that figure had fallen to fewer than 90,000 people—indeed, it may have fallen to fewer than 70,000. Now, more than 230,000 people are undertaking modern apprenticeships. Last Monday, I visited a fantastic further education college in north Wales. Members will share my gratitude for the fact that, even though the skills do not relate directly to manufacturing, it has doubled the number of people undertaking plumbing and allied skills training. Notwithstanding the drive to provide more people with the opportunity to go to university, which I and perhaps the majority of Members present enjoyed, it is vital that further education courses and other courses get their share of the necessary resources and praise. We all know of constituents who are undertaking modern apprenticeships and training that, although not higher education, are of equal value to it.

The Government take offshoring very seriously. Earlier this month, the Secretary of State called together the CBI, trade unions and others to examine companies such as Great Universal Stores, which has brought back its outsourced Indian facilities to the United Kingdom because it can guarantee quality and productivity here. I know from that meeting that not all the parties involved feel that protectionism offers any long-term solution, but we will do what we can to ensure that companies that are repatriating jobs to this country are regarded as exemplars, and that the lessons they have learned are communicated to companies that are thinking of outsourcing. Of course, the number of people working in call centres in this country—although not generally linked to manufacturing, call centres can play a role in the sale and servicing of manufacturing products—is at record levels and has been increasing, so the net gains to Britain have been good, which is in marked contrast to certain other countries that might be considered the protectionist model, not least the United States.

I shall not trade statistics on manufacturing, and I regret that there has been a dip in manufacturing output. However, we have enjoyed good increases in output, and Members will realise that although there has been a steady fall in the number of manufacturing jobs in all the advanced industrial countries, our output is at almost record levels—indeed, it is more than 25 per cent. higher than it was some seven to 10 years ago. In that respect, we are enjoying the results of a more productive work force.

I am grateful to my hon. Friend the Member for Crosby for giving me the opportunity to respond to this debate on the Government's behalf. If there are any points that Members would like me to elaborate on, I shall be more than happy to write to them.