March 2002

Westminster Report, IEE Review

As our economic situation looks ever more uncertain, inevitably Parliamentarians are expressing deep concern for the prospects of manufacturing and engineering.

Recent statistics show that manufacturing has had the sharpest fall in output in over ten years. Profits are falling and investment in new machinery and training has been squeezed. The Engineering Employers Federation and the CBI argue that much of the problem is due to the climate change levy, which is forcing industry to lay off workers in order to pay the energy tax required.

Reflecting this concern, during a Westminster Hall debate on manufacturing, Shadow Trade and Industry Minister Phillip Hammond reported that between 1998 and 2001, nearly 500,000 manufacturing jobs were lost. In addition, order books in the engineering industries were 12% lower in the last quarter of 2001 than in the preceding quarter of 2000. Mr Hammond argued that much of this was due to the increased burden of regulations, currently costing industry £15 billion. He reminded MPs that last year alone, there were 4,642 new regulations, a 50% increase from 1997.

The Shadow Minister suggested an immediate moratorium on the introduction of new and costly environmental and employment regulations. He argued it is vital that the manufacturing industry is given a breathing space to regroup and recover so that profits, and therefore investments in plants and training, can resume in order to underpin the long-term health of the manufacturing economy.

Responding, Trade and Industry Minister Brian Wilson reminded MPs that manufacturing accounts for more than one fifth of our national income, and almost £150 billion of output each year. It employs £4 million people directly, with millions more depending on manufacturing for their livelihood including 2.5 million jobs in the service sector. The Minister said that international comparisons show that manufacturing output has not fallen as far in Britain as it has in other countries. For example, manufacturing output fell by 5% in Germany, 6% in America and 14% in Japan. He added that turning new science and technology into business, products and jobs would protect the manufacturing industry. Finally Mr Wilson urged people to remember that “there are many successes in manufacturing industries and the worst thing would be to talk them down or ignore them”.

Despite our problems at home, it is worth noting that we are actively promoting engineering interests in developing countries. Providing “Know How” and expertise represents the best form of aid as it makes a long-term difference.

This point was highlighted by Labour backbench MP Claire Curtis Thomas. In a question to the International Development Secretary Clare Short, she asked for a Statement on the International Development programme to develop the technical competence of engineers in Bangladesh. In answer, Clare Short said that a five-year project to strengthen the Bangladesh Institute of Engineers has just been completed. She added that an Engineers Registration Board has been established to enable Bangladeshi engineers to be internationally recognised within the various branches of the engineering profession.

I found myself agreeing with Clare Short when she answered a question from Labour backbencher Gareth Thomas MP about improving the access to electricity of isolated communities in Africa. He felt that renewable energy options such as small-scale windpower plant and solar power offer an "environmentally friendly, affordable and reliable means of generating power for the schools, health clinics, irrigation systems and other vital services on which those communities rely?" He asked what further action she will take "to promote the roll-out and easy accessibility of such power options?" But Clare Short answered "I do not particularly agree with my hon. Friend. I am in favour of the deployment of modern technology and as many renewables as possible, but Africa needs basic electricity supply, telecommunications, water systems and sanitation. Let us use the best possible technology, but Africa needs the basics". I then said Ms Short is right "because the cost of photovoltaic cells and of windmills is prohibitive, particularly in the developing world as a short term solution" I mentioned the work of British companies "providing not only networks for electricity but self-contained electrical generating units in portakabins" as providing a short-term answer for those countries that so desperately need electricity in their rural areas. In a 'love-in' rarely seen in the House of Commons, Clare Short replied that she enjoyed agreeing with me saying "I see that he is wearing his red tie today, so perhaps that explains it." Oh well, c'est la vie…….

Meanwhile, in the Upper House, the Government presented the draft Industrial Training Levy (Engineering Construction Board) Order 2002. The Order seeks authority for the ECB to impose a levy on employers in the industry. As readers may be aware, the ECB is a non-departmental public body, set up under the 1982 Industrial Training Act. The ECB’s rôle is to ensure that the quantity and quality of training are adequate and meet the needs of the industries for which they are established. It provides a range of services, including setting occupational standards and developing vocational qualifications. Given that the ECB provides services that could probably not be offered by individual companies, this levy seems to be a fair one. However, as Conservative Spokesman Baroness Miller noted, only businesses employing seven or fewer people would be exempt from the Levy. She suggested that this definition should be widened: “If we are serious about helping small businesses, it is important to consider the burden on them when agreeing the levy”.

Parliamentarians continue to be worried about engineering skills - or the lack of them. In the Lords, Lord Trefgarne pressed the Government on whether provisions are being made available to ensure that there will be an adequate supply of skilled personnel – especially engineers for manufacturing – now and in the future. In reply, Science Minister Lord Sainsbury - acknowledging that the supply of skilled engineers is extremely important - conceded that there were some gaps in key areas. The Minister said that the Department of Trade and Industry is taking action to restructure the Engineering Council to turn it into the Engineering and Technology Board, so that more can be done to increase the supply of engineers throughout the country.