In a speech at the EEF National Conference, Dick Olver, chairman of BAE Systems, talked about the importance of having the “right skills in the right place at the right time” to ensure UK growth and said the government must place a ‘growth test’ on any industry initiatives.
Manufacturing is fundamental for the recovery of the country, Mr Olver said. Quoting figures from EngineeringUK, he said “Our industry – the manufacturing industry – alone needs an additional 587,000 engineers and technicians by 2017, just to stand still. That’s equivalent to the population of Sheffield!”
Mr Olver proposed that the government apply a ‘growth test’ to every existing or new policy initiative and major procurement decision.
He said: “This test would mean asking: ‘In what way does this policy or decision contribute to national wealth creation and growth?’ If its effect is not to further these goals, then the government should review its position, with a view to changing it to one that does foster growth.”
Defining the potential of UK manufacturing to achieve economic recovery for the UK in a shorter timeframe than other industries, Mr Olver pin-pointed the high average productivity of the sector. “BAE Systems’ [productivity] is 34 per cent higher than the average for the UK manufacturing sector, and 85 per cent above the UK economy as a whole. So manufacturing doesn’t just make things, it generates more value.”
Olver added: “Pessimism has become addictive and dangerously endemic. It’s misplaced, as in a fast changing world the UK has many key avantages, including our language, London as a financial hub and our time zone. We are at the right place, in right time and with right language.”
Talking about the measure government can take, he focused on the idea of a growth test on its policies and decisions, to better understand precisely how new initiatives would increase UK prosperity and growth. “Planning policy in particular has been spotlighted as a barrier to economic development and here I welcome the government’s work on the new National Planning Policy Framework as a real step forward.”
In the question session, one delegate asked whether the MoD’s defence equipment procurement White Paper, which favours an off-the-shelf procurement for some equipment, suggests that the UK government is not supporting British industry?
Mr Olver said: “Support for Barrow [BAE Systems Submarines] is palpable – there is more employment there because of the support for the submarine programme, and also in cyber security. This is less so in some other divisions.
If you going to support the defence industry you need to spend on R&D, create the intellectual property yourself, and you need the MoD and Armed Services to use the equipment itself. We need everything aligned from the Foreign Office right through to the R&D end.”
The BBC’s Declan Curry, the event compere, asked if off-the-shelf procurement is favoured by the UK government to save money, and we look overseas for more equipment, does this suggest that BAE is bad value?
Olver responded: “If you benchmark much of our equipment against any equivalent in the world, it would surprise you. Pound for pound, our submarines are better value for money than US submarines, for example.”
