We pin down the Deputy Prime Minister, Nick Clegg, on core manufacturing issues such as how the Regional Growth Fund will work and what the UK’s relationship with the EU means for British business.
TM: You are going on a Regional Growth Fund tour, which has a particular remit to help manufacturers. How are you personally hoping to connect with UK industry?
Nick Clegg: My personal interest is partly as an MP for a great manufacturing city [Sheffield] and partly because we’ve got this huge rebalancing exercise to do with the British economy.
We are picking up the pieces from the spectacular crash that happened in 2008 and we can’t just put humpty dumpty back together again. We can’t just go back to the good old days of spending money we don’t have, borrowing money we shouldn’t, and allowing banks to get away with blue murder.
The old model was this… You had the goose laying all these golden eggs in the city of London and you had a succession of governments, which would take that money in terms of tax revenues, and hand it out as public subsidies in other parts of the country, particularly the north.
This gave everyone the impression that it was all ok. That merry-go-round has come to a halt and we can’t carry on relying on hand outs from Whitehall for the economic survival of the North and great cities like Sheffield, Bradford and Leeds.
We need to make sure we provide more support to manufacturing companies. That’s what the RGF does. It offers a pot of money, first it was £1.4bn, now it’s £2.4bn. We believe it will create or safeguard 500,000 jobs and many of those will be in manufacturing because there are lots of manufacturers that want to expand but they need a leg-up from the tax-payer.
TM: Can the Advanced Manufacturing Supply Chain Initiative – launched this week – really help to repatriate manufacturing jobs back to the UK?
Nick Clegg: It was shocking that manufacturing declined as sharply, or more sharply than it did under Margaret Thatcher during the good years under previous government. There was a real decimation of the supply chain.
Unless you create a healthy supply chain, an eco-system for companies, than the UK is less attractive to big manufacturers as they want to be close to their suppliers.
TM: The Shadow Business Secretary, Chuka Umunna, recently criticised the Regional Growth Fund for delays in handing over funding. It was confirmed that only a quarter of 50 successful bidders from round one has received its funds. What has been the hold-up?
Nick Clegg: It’s very revealing that Labour thinks the way the private sector works is that nothing happens until an official turns up with a cheque. It’s like the Soviet Union – this idea that you have to have some official that brandishes a quill and says ‘now your project can start.’ It doesn’t work like that. The way it works is that the government says ‘you will get the money’ and this allows the private sector to get on with the project because they know that they are going to get the money at some point.
The thing that Labour is wilfully ignoring – and I wish they’d stop talking down success in manufacturing – is that over 50% of all the RGF projects have already started, even if they haven’t necessarily got the cheque in their hands.
TM: But the problem is that companies have plans to invest in new equipment. They need to pay their own suppliers so they can’t commit spending if there are delays…
Nick Clegg: There’s not a hold up at all. We’ve been very open with all the recipients of our RGF funding. We’re not just going to suddenly start splashing it around without checking that it’s money well spent. Due diligence takes a bit of time.
We’ve said to people that the money will be received this Autumn/Winter, which is precisely what’s happening. Manufacturers know that they can bank on that money even though they haven’t physically got the cheque in their hand yet.
TM: British business will be watching the outcome of the Prime Minister’s talks in Brussels closely. Do you think the EU Treaty will come down to a referendum and do you think UK manufacturers will lose European contracts if Britain doesn’t offer enough to Germany and France?
Nick Clegg: It would be a disaster for Britain if there was a fragmentation of the single market. Three million jobs in the UK are dependent on our role in the single market.
I’ve been on the phone constantly to explain to our European partners that it is in our national interest that the eurozone is stable, because a strong eurozone is good for a strong Britain.
We don’t want to see anything which fragments our access to the single market and that’s very important for investors. They have invested heavily in Britain because we have untrammelled access into the single market.
TM: Are you worried by the large number of Conservative backbenchers that want out of Europe?
I will do what I judge to be in the national interest. The PM and I may have different views on Europe and in many other respects, but we’re working hand in glove to make sure that Britain’s leadership role in the single market is maintained.