United Kingdom
Six Priorities for Government to Help Manufacturing - Tom Lawton
Over the past two years we have experienced the deepest recession the country and the developed world economies have seen since the 1930s.
There is little doubt that this recession and its impact on developed economies will have speeded up the transfer of economic power from West to East. It has also had a fundamental and massively detrimental impact on the UK economy—one that is likely to be felt for several years.
But hopefully it might also change the way manufacturing is perceived within the economy of the UK and provide a stronger basis for the idea that helping and supporting a strong and vibrant manufacturing base is fundamental to the health of the British economy.
Business Secretary Lord Mandelson has admitted that the Government had allowed the country to become “over dependent on the city” and that it needed a “renewed politics of production”.
In the New Year the Government released its latest strategy, Going for Growth, which outlines a vision of a future with industry and enterprise at the heart of Britain’s recovery.
We believe that a growing and vibrant manufacturing sector is fundamental to the UK economy and although manufacturers can do most of what is needed to be successful, a little more coherent and connected help from government would be useful.
With this in mind, we have identified the following six priorities to help UK manufacturing:
- Deal with the deficit: we believe that the first priority is to announce a realistic and believable plan to deal with the ever expanding deficit and help safeguard the UK’s credit rating. Manufacturers and the economy need a stable and consistent platform in which to operate and some level of comfort on foreign exchange rates and longer-term interest rates.
- Establish an environment that allows business to be competitive: manufacturers need a more supportive business environment. A good start would be to ensure that the promised dismantling of some of the red tape, estimated by the British Chambers of Commerce to be a cumulative £77bn since 1998, actually happens. The government should not forget that its wider strategies have a huge impact on business and manufacturing.
- Set a clear strategy with defined and measurable targets: whilst we support the overall vision and renewed emphasis on what makes a strong economy and the importance of manufacturing within that economy, we are concerned that the flurry of activities and initiatives. There needs to be a clear overarching strategy that leads into a small number of initiatives that work and can be accessed by manufacturers. Government needs to set clear measurable goals and report back at regular intervals to its shareholders-the taxpayers.
- Provide support to the mid market: mid-tier manufacturers (companies in the £30m to £300m turnover bracket) believe there is an interest/funding gap as government initiatives tend to focus on the small or large companies in the UK. Government-financed R&D is biased in favour of large firms, with those having under 250 employees receiving the lowest share of government-financed R&D in the OECD. However, we believe that these companies are fundamental to the future of UK manufacturing and more emphasis and support needs to be given to the needs of the mid tier.
- Create and support investment in emerging technologies: we agree that the government needs to encourage and support investment in pre-commercial stage R&D in strategic high-tech industries where the country and the manufacturing base have existing strengths. We also like and support the focus on the emerging environmental technologies as one area where the UK can marry its traditional strengths in innovative manufacturing to a sector with huge potential. However, new technologies are expensive to develop and the environmental technologies market is also in its development phase so they will require a framework for investment and support that is available for the longer term.
- Do not forget the traditional manufacturer: it’s not all about high-tech innovation. Mid-tier manufacturers think that the recent government strategies do not recognise the innovation that occurs within our traditional industrial base. Ongoing investment is needed to improve machinery, equipment, brands and processes of established manufacturing companies so that they can grow.
For more information on the Government Strategy for Manufacturing and industry views on this topic, please read our full report ‘The Changing Face of UK Manufacturing’.