Comment: UK manufacturing needs a coherent and long-term industrial strategy

It's fair to say that the last few years and, the last twelve months in particular, have been some of the most momentous times we have ever experienced. Everywhere I look there are huge issues impacting on the economy and our sector from the Russian invasion of Ukraine which has helped drive the cost of energy to eye watering levels, the continued after shock of the pandemic which is continuing to disrupt supply chains across the globe, the race to attract and retain talent and the emerging subsidy arms race between the US and the EU sparked by the so-called Inflation Reduction Act.

All of these factors would have combined to present the UK economy and manufacturers with immense challenges even without the domestic political chaos of the last twelve months which has caused such damage to the reputation of the UK with our main trading partners.

Our Senior Executive Survey published at the start of the year showed that more than four in ten companies believe that the political situation in the UK has damaged the prospects for foreign direct investment while the survey we published recently with Infor on supply chains shows that almost half of suppliers in the EU are more cautious about dealing with the UK.

The political mismanagement of our economy and, damage to the reputation of the UK as a partner on such a grand scale, together with the disregard of the rule of law in our political system cannot continue. Too often what drives policy is the latest soundbite and the headlines the next day. You would never run your businesses like that and we can't run our economy like that.

However, I am an optimist by nature and I believe that the UK has immense strengths that we can capitalise on, as well as an outstanding manufacturing industry to build upon. So where do we start?

Firstly, we need a coherent industrial strategy that takes a long term view. Industrial Strategy is not just about tax incentives that last for eighteen months or so but it is about our overall national capability. It must safeguard our existing strengths while laying out how we are going to decarbonise key foundation industries such as steel.

At the same time, it must set out a national vision for the UK to be a science superpower.

We already have an advantage in cutting edge sectors including biotech, green technology and digital and I'm delighted that the Chancellor has recognised the importance of advanced manufacturing as one of the five strategic sectors if has chosen to help boost growth.

This vision should also include maintaining and extending the success of our world-class University system. This is a remarkable national asset with more institutions ranked in the top 100 globally than the rest of Europe combined. If we can marry the power of this scientific innovation with entrepreneurship and the unlocking of private sector investment I believe there is no limit to what we can achieve.

As well as this investment in science, technology and research we need all parts of Government commit to a world class system of technical and vocational education. This must start with a fundamental reform of the Apprentice Levy as well as a proper funding of Further Education to support the needs of employers. While funding must be provided at a national level skills should be devolved to the Regions who know best how to match the skills needs with the requirements of local employers.

Third, we need to double down on the transition to net zero and the tremendous opportunities that decarbonisation presents us with.

Finally, we need to reset our political and trading relationship with the EU which has been marked by such rancour. I want to applaud the positive approach taken by the Prime Minister which shows what can be achieved when you work pragmatically and collaboratively, rather than thumping the table or issuing threats.

The key now is to wrap all these priorities up in a national industrial strategy which crucially has all Government departments acknowledging it as a priority and, putting their shoulder to the wheel. Every policy should be measured against its impact on the economy and national vision of the UK as a science superpower whilst, ideally, the Government would also be held accountable in Parliament through an annual Statement as to how it is performing against key metrics.

Recently, Make UK's policy team discovered in our archives an industrial strategy paper written back in 2013 which set out four key ambitions: More companies bringing new products and services to market, more globally focused companies expanding in the UK; a lower cost of doing business and a more productive and flexible labour force.

I believe that those four overarching ambitions could still form the basis of a modern industrial strategy and we will be updating this through the summer before taking it to all the political parties at the Conference season in Autumn. We will be asking them how they intend to develop an industrial strategy as the centrepiece of the economy in the future.

Stephen Phipson is CEO of MakeUK. This article is an edited version of his opening address at Make UK’s 2023 National Manufacturing Conference, held in London on 7th March.