Tom Moore reviews the relationship between industry and government at the second Manufacturing Summit held by the Department for Business, Innovation and Skills.
“Zero eleven year-olds want to work in manufacturing and that must change,” declared the deputy prime minister Nick Clegg addressing an audience of CEOs from manufacturing companies and supporting organisations at this year’s Manufacturing Summit at the Bristol and Bath Science Park. Mr Clegg and Business Secretary Vince Cable painted themselves as champions of industry at the event after announcing the start of the third round of the Regional Growth Fund (RGF) half an hour earlier at aerospace firm GKN.
A hefty £1bn was added to this fund on the day of the summit and Clegg asserted that grants from rounds one and two of regional growth funding – which had £1.4bn earmarked against them – was also matched with £7bn of private funding. £420m went to manufacturing firms in the first two rounds of RGF and the closing date for benefiting from round three is in June 2012.
Steve Radley, director of policy at EEF, praised the government for “delivering a simplified and more transparent bidding system which should help ensure that funding flows through to projects far more quickly” after complaints about delays. On a more general note, Clegg, Cable and Minister for Buisness and Enterprise Mark Prisk were congratulated by the founder and chairman of precision machining firm Renishaw, Sir David McMurtry, who said that “the Government has renewed its focus on manufacturing.”
But it wasn’t all pats on the back. Consistency in government strategy to support industry was severely questioned and the issue of skills was the central concern for many. The following points were fielded from the floor:
- Stop the devaluation of engineering across the curriculum
- Improve the standard of science labs in schools
- Careers advice must start sooner
- Parents are key to raising the image of manufacturing among young people
Referring to the recent CIPD Labour Market Outlook that reported levels of unemployment could reach 2.85 million by the end of 2012, Unite the union’s assistant general secretary Tony Burke called for an interventionist long term industrial policy. He said that “unemployment is leading to a loss of vital skills and the government’s strategy of turning back the clock to the 1980s with rehashed youth employment schemes and enterprise zones will not work.”
Tom Moore talks exclusively to Vince Cable and Mark Prisk at the Manufacturing Summit.
TM: Following another £1bn investment in the RGF, has the emphasis now shifted from the financial to the manufacturing sector within government?
Vince Cable: We need to help businesses create jobs and this isn’t going to happen spontaneously, so it needs government support. The RGF is the mechanism we’ve adopted as it combines with private investment, making it the best way of using taxpayer’s money. Parts of the country are highly dependent on the public sector and these are the regions most affected by the economic downturn. The North East is one of these and companies based there have benefitted massively from RGF, being awarded 66 out of the 176 national projects.
TM: Is it feasible to have 100% capital allowances for manufacturers?
VC: The government is looking at how the capital allowance system operates. Our initial approach, set out by the chancellor, was to create a tax friendly regime based on cutting the rate of corporation tax on a systematic basis. This was instead of a capital allowance approach but we are looking at how to reconcile this to get investment moving.
TM: Will the number of applicants taking up apprenticeships suffer after the recent devaluation of the Engineering Diploma?
VC: We are putting a lot more effort and resources into apprentices but I admit there is concern among manufacturers that the engineering diploma’s they crafted are being devalued because of the way it is measured in government league tables. I have written a letter to Education Secretary Michael Gove communicating the concerns of the engineering industry because we shouldn’t let good vocational diplomas be disbanded or devalued. We are very conscious that the message about manufacturing needs to get down into the schools not simply post-school.
TM: Will there be changes to the way the government hands out contracts so the British firms are prioritised?
VC: We can’t be crudely nationalistic and protectionist. After the controversy surrounding Bombardier [missing out on a significant railway contract] it is clear that government contracts have been too mechanical in the past. They have been based on short-term price considerations and haven’t taken into account the strategic benefits to industry. We have made a decision to change that so that it is taken into account for future bids.
TM: What are you taking away from this year’s summit?
Mark Prisk: The key actions I will take from this are to broaden the involvement of other government departments, accelerate the uptake of apprenticeships and boost exports. Apprenticeships, although not a new idea, work. We need to widen communication and involve more people; people who don’t realise what we are already doing in terms of apprenticeship initiatives. There are quite a few areas where the relationship between industry and government needs to improve, the feedback on how we can build up small and medium-sized enterprises (SMEs) to export more was very useful. I am particularly pleased by the number of manufacturers exporting, and attempting to further export. Looking at access to finance is a good route forward. With the squeeze on credit, the Chancellor [George Osborne] announced a £20bn national loan guarantee scheme which will start on March 31, and more details will arrive soon.
TM: In a recent survey, over half of manufacturers didn’t realise that they were eligible for government grants. Communication is a major problem, what exactly will you do?
MP: We need to use the trade bodies more effectively. A lot of people assume grants are not available because we have been cutting government spending. We need to ensure that information is disseminated more effectively.
TM: There are 340 MPs yet to nominate a manufacturer for the Made by Britain Challenge. Do you think that this response matches up with what BIS are saying about manufacturing? MP: In some areas MPs may not have a strong connection with local manufacturers. I hope this figure improves.
TM: Manufacturers commented at the summit that science needs to improve in schools, do you agree with that?
MP: Budget-wise we are not able to match the sort of facilities available elsewhere, but nevertheless, there is a huge gap between the best and the worst schools. There is a substantial budget for school building but the problem is that science is so varied that it is difficult to cover all the angles.
TM: With companies struggling to make the investments they need, is there going to be any policy change on capital allowances?
MP: We have already doubled the capital asset regime from four to eight years. We are keeping a close eye on the challenges of how to reform corporation tax and how businesses make long term investments.
TM: Not in this budget then?
MP: If I’ve learned one thing in life it is to not predict the budget!