As the economy slowly rebuilds, Vince Cable’s Industrial Strategy will play a key role in whether we will manufacture more in Britain. The challenge is to replace imports, export more and to be at the cutting edge of new technologies.
The case for government nurturing and supporting long term manufacturing growth in the UK is a compelling one. The challenge is to make this intervention work. This article is the first of four articles – brought together by the Lib Dem Campaign for Manufacturing – from around the country and from different industrial perspectives to inform this debate.
Government should have a different agenda from business. This needs to be said, because too often business’s agenda is self-serving. Shareholders want more profit and lower corporation tax, big business interests want favourable government legislation and employers want to lower the cost of employment. But nearly all these issues are valid for large numbers of businesses whether successful or struggling, whether exporting or not, whether investing or not.
In contrast, the Industrial Strategy is about manufacturing more in the UK, and exporting more. These are different priorities.
How do we manufacture more?
1. We invest in production machinery in new or extended factories that mean we can make product in the UK either currently imported, or in new technologies.
2. We organise our industries so that businesses talk to each other and work through effective new product development, by recognising industry clusters.
3. We back manufacturers wanting to export into new countries, and manufacturers (usually SMEs) who want to start to export.
Government priorities should be:
1. Growth in manufacturing capacity and incentives for investment.
The Lib Dem Campaign for Manufacturing campaigns for 100% capital allowances for a fixed 2 year period to provide a 2 year incentive for capacity building across UK manufacturing.
2. Local and national clusters, with government helping to bring clusters together.
Whether it’s the new Local Enterprise Partnerships, or the Department for Business, Innovation and Skills working directly with trade bodies like the Automotive Council, it is clusters of excellence that need to be nurtured. Examples are aerospace businesses in Derby and Burnley, or chemicals on Teeside and Widnes. It is by no means clear that the new LEPs will demonstrate focused leadership to help to deliver the Industrial Strategy.
3. UK Trade and Investment (UKTI) should provide as much support as possible to businesses wanting to export, and to bring companies together so that they get good long term advice. The UKTI effort should be judged on results over 3 – 5 years.
With Vince Cable’s Industrial Strategy and Michael Heseltine’s Growth Review into our ability to create wealth, the argument for government action is persuasive. This article sets out how government – which is generally very ignorant of manufacturing – can deliver results.
* William Hobhouse is on the board of Liberal Reform and is co-founder of the Lib Dem Campaign for Manufacturing.