Vince Cable: Brexit must not undermine industrial strategy

vince-cableWriting exclusively for The Engineer, the former business secretary comments on the industrial challenges facing Theresa May’s government

It is greatly reassuring that Mrs May’s government has rediscovered Industrial Strategy. But there is little sign, yet, that it understands the engineering underpinnings required for a strong manufacturing sector and communications infrastructure. And at a time when it is crucial to tackle the long-term underlying fundamentals of the economy, the government will now spend several years immersed in the details of Brexit negotiation.

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Government must understand the underpinnings of a successful manufacturing sector

The longstanding failure of government and the educational establishment to understand the importance of engineering has left the country with major gaps in the chain of skills. All the evidence we have is that there are potentially very large gaps between supply and demand at most levels.

The use of European talent to plug the gaps in recruitment will now become more difficult given the overriding preoccupation of the Prime Minister with reducing immigration numbers

At the graduate level, many of our engineering schools are being kept afloat by overseas students. Yet the Home Office obsession with curbing net immigration numbers has meant that there is little encouragement and much discouragement for overseas students to stay behind after graduation and progress into British industry.

Brexit threatens to make this problem worse since the use of European talent to plug the gaps in recruitment will now become more difficult given the overriding preoccupation of the Prime Minister with reducing immigration numbers regardless of the economic cost.

It is, of course, desirable to produce home-grown talent but that requires years if not decades of preparation. The level of maths performance in British schools remains very poor as has been painfully demonstrated in the annual OECD Pisa rankings which has the UK at 27th, a decline of one place since last year and way behind Germany and Japan and most members of the EU.

The scope for boosting the supply of high quality engineering students is limited

Despite more education spending per head than most comparable economies, the UK demonstrates both low levels of attainment and high inequality; and we seriously underperform relative to countries with similar cultural traditions like Canada. Until we get a pipeline of mathematically literate school leavers, the scope for boosting the supply of high-quality engineering students is limited.

Then there is the strange gender bias which results in the UK having the worst record in Europe for recruiting women to study engineering. As Secretary of State, I used the bully pulpit to draw attention to this anomaly. There has been a lot of effort put in to change perceptions. And there are some impressive female role-models emerging. But the image of engineering as being all about dirty, smelly, noisy factories and macho men persists and is a major impediment to recruitment.

Project Manager Nisrine Chartouny with some of the women constructing the new Crossrail Farringdon Station
Despite the emergence of some impressive female role models, engineering still struggles to attract women. Image: Crossrail

And when engineering graduates do emerge there is the temptation – to which almost half succumb – to move across to jobs which offer more lucrative short-term rewards. I am not in a strong position to preach here having abandoned the science Tripos at Cambridge for economics but I understand the problem. Our very strong finance sector offers tempting short-term rewards, though that may be a waning influence as the banking industry hits up against tougher regulation and post-Brexit barriers if the City is unable to negotiate a satisfactory Single Market arrangement.

There is also the deeper problem of engineering not having the status and respect it is accorded in continental Europe, especially in Germany (but also in emerging economies like China, India and Iran). Government ministers can try, as I did, to stress the value and importance of this set of disciplines and must do so, consistently and with conviction.

The problems of recruitment and supply are arguably even greater at technician than graduate level. Industrialists would point out to me on factory visits the preponderance of 50+ engineering workers on the shop floor. Professor Alison Wolf in particular has charted and analysed the hollowing out of the skill base with the near disappearance of HNC/HND level training and qualifications. Lord Sainsbury has also done admirable work rebuilding technician level standards and certification.

Increasing the number of apprenticeships must be a priority. Image: BAE Systems

I endeavoured as Secretary of State to reinstate apprenticeship as an attractive career route and we achieved over five years a big increase in numbers, quality and higher level progression (Skill level 3 and above). But there is a long, long way to go and the lack of clarity over the apprenticeship levy is not helping.

It is easy to be negative but there are some encouraging signs of a change in attitude. The impressive Baker/Dearing UTC’s are expanding rapidly even though they constitute only a small proportion, as yet, of secondary schooling (48 out of over 2000 schools). The combination of rigorous teaching of basic disciplines, vocational education – especially engineering – and close links with local employers has an appeal to many far-sighted young people. So far, the Department of Education has offered only tepid support but there are signs that Justine Greening is more supportive.

Industry will need to keep the government’s feet to the fire

Having re-launched Industrial Strategy five years ago I am gratified that the present government has realised the importance of taking a long-term approach to those sectors of the economy –infrastructure; advanced manufacturing such as motor vehicles, trains and aerospace; information and communications technology – which cannot progress on the basis of opportunistic and random intervention.

Yet, unless the government is careful, the Brexit process could undermine the industrial strategy. Advanced manufacturing exporters must have access to the complex supply chain networks which have been built up over the last couple of decades by inward investors in industries like cars and aerospace. It would be crippling if they were subject to variable tariffs and rules of origin bureaucracy as could follow an exit from the customs union. No less important are the common technical standards which have been built up as part of the Single Market.

Private government assurances persuaded Nissan to commit to continued UK investment

It appears that engineering industries have been given assurances in private – as with Nissan – that these priorities will be respected. The Engineering Employers Federation (EEF) is an impressively effective lobby. But there is a worrying level of uncertainty and industry will need to keep the government’s feet to the fire.

Vince Cable Secretary of State for Business, Innovation and Skills 2010-2015