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The Rt. Hon. Stephen Timms MP, Minister for Digital Britain, also Financial Secretary to the Treasury
House of Commons, London, 17 October 2007
I am delighted to bid you a warm welcome to the House of Commons today. I am keen to learn more about the issues you are highlighting today. I welcome your determination to highlight them, and your obvious commitment to the future success of UK manufacturing.
And let me say this – one thing which has become very clear in my work since June as the Minister responsible for Manufacturing is the passion and commitment of the people involved. I welcome today’s demonstration of that.
Generating one sixth of our overall wealth, two thirds of our exports and 3 million jobs, manufacturing plays an absolutely vital role in the UK economy. The Government is determined – like you – that it should continue to do so.
And something else which has become clear to me over the past few months is that UK manufacturing is doing well. People look at me in astonishment when I tell them that Britain is the sixth largest manufacturing economy in the world. Some people don’t believe it when I tell them that we are making almost twice as many cars in Britain today as we did twenty five years ago; or that over a third of the car engines made in Europe are manufactured in Britain; or that – of over a million new Minis made at Cowley so far – and by the way BMW told me its their most cost efficient plant in Europe – almost 80% have been exported around the world. Or that our pharmaceutical industry produces 18% of the world's top 100 prescription medicines; or our bioscience industry is the 2nd biggest in the world, with over 40% of the world’s new biotechnology drugs in late stage clinical trials.
But all those things are true – and we need to point out to people that manufacturing in Britain is doing well – on passion and commitment, without question – but for growing success as well. And let’s be prepared to correct those who run down UK manufacturing – and in Government, and on the Manufacturing Forum which I chair with representatives of employers, trade unions, academics and others – we have been looking at how best we can do that over the period ahead, to help attract young people to contribute to future success.
After the floods in the summer, I visited one of the factories in Hull which had been affected. It was the factory of what is now called Reckitt & Benckeiser, on the site of the original factory opened by Isaac Reckitt in 1840. They make virtually all the Lem Sip in the world there. And they told me about a competition within the Group for the contract to supply Dettol to Australia. It came down to a contest between Hull and a plant in Indonesia – with its obvious advantages in labour costs and geography. But Hull won – because they were smarter. And that is exactly how British manufacturing can continue to do well around the world.
Of course the sector has been through very tough times. And let’s be frank – manufacturing employment has been hammered. Globalisation presents massive challenges. India and China have wage costs around 15% of European Union levels – and are expected to account for nearly half of all global growth over the next 15 years.
Intense challenges will continue. Globalisation, changes to trade barriers, rapid technology making it possible to transfer work to locations around the world. We can’t hold back global development and protectionism certainly isn’t the answer. But let nobody say that – despite all the challenges – we can’t continue to do well in UK manufacturing.
General Motors’ placing the next Astra at Vauxhall Ellesmere Port shows that global companies see the UK as a good location today. Leadership from Unite, with local conveners, ensured the plant could win the competition. And that commitment was matched by Government, working with the company to deliver the right result.
We introduced our Manufacturing Strategy in 2002, the first by any Government in over 30 years, to help companies to compete successfully in world markets. Its based on raising investment, on applying science and innovation, design, world class practice, and a high level of skills.
To help steer the Strategy we set up the Manufacturing Forum in 2004. Tim Page of the TUC and Peter Booth of the T&G section of Unite have been key, committed members from the outset.
With the Regional Development Agencies, we’ve set up the Manufacturing Advisory Service with a centre in every region. It has been a major success and we are expanding it next year. We will continue to support it strongly.
We launched the National Manufacturing Skills Academy in January this year to bring world class training to the sector. It is delivering courses designed by industry for industry, with the goal of training 40,000 students a year by 2012.
The R&D Tax Credit has provided £1.8 billion in support for business – over three-quarters of that to manufacturers - supporting £16.6 billion worth of R&D expenditure since 2000.
We’ve increased the Science & Research Budget from £1.3 billion in 1997/98 to £5.4 billion in 2007/08 billion. And, as announced in the Comprehensive Spending Review last week, to £6.3 billion by 2010.
We’ve put £355 million into the Technology Programme so that manufacturers can capitalise on key technologies. There are over 600 projects across 40 technology areas and business plus government investment in the projects will add up to almost a billion pounds.
And we are absolutely determined that, going forward, we should have the right strategy in place, and the right conditions for thriving, modern manufacturing in the UK.
The best way to protect manufacturing jobs is to compete, not on the basis of low wages, but of excellent products and services using high technology, drawing on design, innovation and our strong science base. And to strengthen our skills – working alongside trade unions.
The companies best placed to prosper in the knowledge economy are those that invest the most in R&D, that are most alive to the commercial opportunities of the ideas they generate; that most successfully bring their ideas to market. We will be working for more and more companies in Britain to be like that.
The lobby is focusing on public procurement – and the public sector spends £125 billion a year on goods and services. There is more we can do – within the constraints of EU rules – to help UK manufacturers win contracts. We are particularly focusing on giving smaller firms a level playing field on which to compete.
A good example is the Forward Commitment Procurement model, used to help deliver a zero waste prison mattress. It is simple but very powerful and can unlock investment in the innovative green products and services that will create and sustain tomorrow’s jobs. We want to replicate this approach across the public sector.
More broadly, Innovation Platforms represent a new way of working for Government and business, to focus on a particular challenge, integrate a range of technologies, and co-ordinate better policy, regulation and procurement.
So I am under no illusion about the scale of the challenges ahead. But I am convinced that we can succeed. And my request is that we work together to make sure that we do.
Thank you.
