MP Speaks Out on

West Midlands Manufacturing Concerns

Adrian Bailey today spoke out on the current state of the manufacturing industry in the Black Country in a House of Commons debate scheduled to examine the effects on the industry during the economic slowdown.

Speaking in the chamber, the MP for West Bromwich West, commended Government investment in and its overarching policy but expressed concerns over certain policy areas.

Speaking in the Chamber Adrian said:

I represent a traditional manufacturing constituency; even today, well over 20 per cent. of the work force are employed in manufacturing and construction—the two sectors that have been hit hardest by the recession.

In my regular conversations with the managers of small and medium-sized companies in my constituency, the Government’s general approach is recognised as being appropriate. When I speak to those people, the first thing they tell me is that the important thing is to sustain demand. Without that demand for the good and products that they produce, all the schemes are not worth much. The Government’s commitment to bringing forward public spending and to sustaining demand is
therefore crucial in terms of the thrust of the policies that are necessary to sustain manufacturing and make for a recovery. These people are not instinctively supportive of Government intervention and Government spending, but they argue, time and again, that if we do not have the general policies in place to sustain our manufacturing base, when the tide turns and the economy grows we will not have the industrial capacity to secure the jobs and the profits to pay into taxes to pay off the public spending that we are incurring now.

The overarching policy is right, but some pillars are working well and others are not. First on the balance sheet, I will mention those that are working well. After a slow start, the enterprise finance guarantee scheme is undoubtedly playing an important part in the survival of manufacturing SMEs. The flexibility on tax offered by Her Majesty’s Revenue and Customs is an enormous help to a large number of small companies. The scrappage scheme, which was mentioned by my hon. Friend the Member for Birmingham, Northfield (Richard Burden), appears to be playing its part in sustaining demand in the motor industry and, in turn, the steel industry. The prompt payment initiative is also very welcome.

However, other pillars are not working so well. I want to concentrate particularly on credit insurance. My hon. Friend the Member for Birmingham, Northfield went on at some length about risk. That is nowhere better reflected than in the support that the credit insurance industry gives to the construction and automotive supply chain, which in general does not get much support. Rachel Eades, a representative of Accelerate, the motor industry supply body, says:

“The majority of our clients have all been hit with either or both a reduction in cover and in many cases—and it seems to be growing—the complete withdrawal of insurance cover for vehicle manufacturers and tier one suppliers.”

That is hitting companies in my constituency, and in the rest of the black country, particularly hard. They know that there are opportunities to promote and sustain their sales but cannot get the credit insurance necessary to do so. It does not help that even when they can get it, the premiums have gone up and their overheads are that much greater. In many areas of the motor supply industry, credit insurance has been withdrawn altogether. The Government initiative announced in April to top it up is therefore irrelevant, because one cannot top up something that does not exist. This is a big issue that is hampering the ability of small companies in the black country to sustain their viability. I hope that the Government will look at it again.

The other big handicap in the Government proposals is that they relate only to domestic companies. Our Government representatives are internationally promoting a global fiscal stimulus, with construction in European countries designed to stimulate the European and wider world economy, but companies in my constituency that would be capable of using the competitive pound to sell and to enhance their profitability and potential work force in those markets cannot do so because no export credit guarantee insurance is available.

I know that the Government are consulting on that, and I hope that the Minister will ensure that that consultation reaches a speedy and productive conclusion. Otherwise, there will be companies in the black country that are unable to support the Government’s overall initiatives to promote world growth, and particularly
the element of that growth that will help much-needed small and medium-sized enterprises in areas such as the black country.

ENDS