The British manufacturing sector needs a “supply side revolution” in order to occupy a competitive position on the world state, according to a new report published by the Centre of Policy Studies today.
The report – UK Manufacturing: How to Fuel the Engine – states that there is a continuing need for UK manufacturing, particularly in boosting the nation’s productivity and exports, but there is a vital need for new ideas to promote growth.
Employing some 2.7 million people and currently the ninth largest industrial nation, UK manufacturing is crucial to future economic success, the report highlights. However, with the prospect of a possible Brexit on the horizon, there have been calls for a renewed Industrial Strategy to boost the sector.
Yet, a government report from the former Department of Business, Innovation & Skills (now Department for Business, Energy & Industrial Strategy) suggested that aggressive industrial strategies have not been helpful.
The Centre of Policy Studies (CPS) paper sets out several proposals to improve the competitiveness of the UK’s manufacturing sector, including:
- Bring in new manufacturing: the UK already performs competitively, but there is scope to re-shore more manufacturing to the UK, closing the productivity gap and boosting exports.
- Avoid a government-led Industrial Strategy: there is evidence to suggest significant expansion of government support and intervention will not equate to a successful strategy. Intervention should be limited to specific circumstances, such as where government purchasing is important or in the promotion of better skills.
- Boost skills, especially in young people: the government and industry should assess the success of University Technical Colleges (UTCs) – which combine academic, technical, and practical learning – and consider expanding the programme. The government should work with businesses in different manufacturing sectors.
- Connect the NHS and the Pharmaceutical Sector: slow up take of innovative medicines is a major problem for the UK healthcare system, threatening the future of the pharmaceutical sector, as well as patients. Connecting the pharma sector and the NHS would spur the adoption of innovation.
- Review electricity policy: high electricity costs have an impact on manufacturing firms, especially for the UK’s energy intensive firms. It is important UK manufacturers are not penalised compared to their EU counterparts.
- Give certainty on airports: manufacturing firms, and other businesses, need certainty on Heathrow expansion and airport capacity in the South-East of England.
- Create Free Ports: these will help promote growth in areas of high socio-economic deprivation. Post-Brexit, Free Ports could provide a massive boost in jobs to coastal industries.
- Open up the banking sector: greater competition could encourage banks to more accurately meet the needs of SMEs.
- Improve bankruptcy law: unincorporated SMEs are left vulnerable to high management fees and high interest rates if they run into difficulty. A new Enterprise Bill could be introduced to remedy this.
- Secure international trade deals: a bi-lateral trade deal with the US should be a top priority. The new administration is likely to be more accommodating to the UK and other developed nations relative to lower wage economies.
