For years people have been writing off our UK manufacturing industry and underplaying the part it plays in boosting the economy. In my view there has been too much emphasis on the service sector and not enough on manufacturing. I am therefore delighted about the announcement in the Autumn Statement on Capital Allowances. It is something that many people in industry have been calling for for years. By raising the allowance tenfold from £25,000 to £250,000, the government is encouraging investment in new plant and machinery, and providing an incentive for profitable manufacturers to invest in new capacity. This is a government decision that will create new long term jobs.
The newly formed Liberal Democrat Campaign for Manufacturing put this at the top of their agenda and indeed it was a question that was raised at the inaugural meeting with Danny Alexander. I would like to congratulate both Danny and Gordon Birtwistle on this success. It will certainly help manufacturing businesses.
In the West Midlands region which I represented for twelve and a half years as its MEP, we have had mixed results over the last decade. We can, of course, point to considerable success in the automotive sector. Jaguar Land Rover, for instance, is planning to invest two billion pounds in new products in the 2012/13 fiscal year which will include a new engine plant in the West Midlands. The investment programme has already generated 8,000 new jobs at its five sites over the last two years including an additional 1,100 jobs in Castle Bromwich.
The company is also to spend another £1 billion pounds with UK suppliers in addition to the £2 billion pounds of UK contracts it awarded in 2011.
Global automotive investors have put around £5.5 billion of new investment into the UK over the last eighteen months. The UK made 1.4 million cars in 2011 and is forecast to make 2 million by 2015. It employs 700,000 people and accounts for 9% of our exports. It is now so important that we make sure that the UK automotive supply chain is able to take advantage of the increase in production.
The Automotive Council’s report called ‘Growing the UK Automotive Supply Chain – The Road Forward 2012 update‘ sets out the size and scale of this opportunity and is well worth reading. The Automotive Council brings together the government and the automotive sector and is co-chaired by Vince Cable.
Across the West Midlands region, the EEFs’ Business Trends Survey said that in the 4th quarter of 2012 a balance of 18% of manufacturers reported a fall in output over the last three months. However, over the next three months I understand that companies are not expecting any further deterioration in output or orders.
The Autumn Statement successes for the Liberal Democrats have laid some of the foundations of a strategy to ensure manufacturing businesses will choose to invest, innovate and grow in the UK.
Going forward, we need to make sure we get legislation right at UK and EU level so that manufacturers are not at a disadvantage in the global market place. European legislation on the Working Time Directive, Electromagnetic Fields Directive and the Musculoskeletal Directive could have a severe impact on our competiveness as it could add to costs for our manufacturing businesses with no real benefit to employees. We have to ensure that whatever legislation we pass is not only proportionate but necessary.
* Liz Lynne is former MEP for the West Midlands and is a board member of EEF - the Manufacturers’ Organisation.