The quiet cancellation of projects and services relating to engineering as part of the Spending Review is a worrying development
It was somewhat to our surprise recently that we found that the Manufacturing Advisory Service had been abolished. A quango under the aegis of the Department of Business, Industry and Skills, MAS had in fact been subsumed some time ago into another organisation called the Business Growth Service, but both had the same remit: to help smaller companies (with fewer than 250 employees and annual turnover below £40million) to grow. The previous change had merely extended the service to non-manufacturing organisations.
The abolishment of MAS was part of the recent Spending Review that coincided with George Osborne’s autumn statement, and like the cancellation of the funding fort the government’s Carbon Capture and Storage competition, it was not mentioned in Osborne’s speech to Parliament. Now of course spending reviews are large and often unwieldy undertakings and nobody should expect every single aspect of the to be mentioned in the Chancellor’s speech. The speech is more about presentation than anything else: the speech is an exercise in making sure that Parliament and the nation knows what the government’s priorities – and just as importantly, the Chancellor’s personal priorities – are.
It’s sometimes forgotten but worth remembering that both of these policies belonged to the previous government, which was of course a Coalition. But Osborne and Cameron were both keen to claim them as Conservative policies, talking about them at Party conferences. So now, as we’re settling in to the first year of a solely Conservative administration, should we see these measures as evidence of a change in direction or at least a change of emphasis?
Much political coverage prior to the Autumn Statement concerned the depth of expected cuts that government sources had indicated were needed to meet strict spending targets to help reduce the government deficit; the Treasury had asked each department to cut its expenditure by some 20 per cent. In the event, Osborne announced fewer cuts than were anticipated; but now, as we’re seeing, word of some of those cuts that he didn’t talk about are seeping out. We’ve paid particular attention to CCS and MAS because they’re related to The Engineer’s remit, but it’s a fair bet that other departments are making similar quiet announcements.
In BIS’s case, these cuts are presumably part of the settlement that secretary of state Sajid Javid reached with his Treasury colleagues. And they are worth remarking upon: MAS was a well-regarded service, particularly in the automotive and aerospace spheres, where smaller component manufacturers historically found it quite difficult to forge new relationships with the very large Tier One suppliers that dominate their sectors and also often needed help accessing funding to introduce new technologies (at a recent round table hosted by The Engineer, one aerospace SME director said it was difficult to become involved in new technology trials because ‘our name’s not Rolls-Royce’.). The functions of MAS are supposed to be taken over by local Growth Hubs, but the funding available has been slashed severely, and as Prof David Bailey of the Aston Business School pointed out in a recent article in the Birmingham Post, some Growth Hubs might simply not prioritise manufacturing and might not be ready or capable of providing the kind of fund-matching or mentoring support that MAS provided. The BGS certainly had a measurable effect, helping create 110,000 jobs and add some £4.8billion to GDP: figures we’d say are worth shouting about. Prof Bailey called the abolition of MAS and the BGS ‘a retrograde step’, and we think many of our readers will agree.
The CCS competition is a more complex matter. Removing the funding certainly seems to spell the end for the Peterhead and White Rose projects to develop CCS technologies, but there were always reservations; as some readers had pointed out, it was open to question whether they could ever have produced a cost-effective technology; the development of CCS itself was opposed by some, as it would extend the lifetime of fossil-fuel burning rather than switching to developing lower-carbon technologies; and the terms of the competition, concentrating on post-combustion CO2 removal for retrofitting rather than including pre-combustion technologies for new build, was undoubtedly limiting. But now we’ll never know; and while our tendency is to see the end of any new technology development process as a shame, it certainly closes the door on the prospect of CCS as a technology for export. India is currently opening a new coal mine every month to fuel its power stations that supply its growing middle-class, and could have been a potential market for UK CCS technology.
We’ve commented before on the apparent invisibility of Mr Javid compared with his predecessor, Dr Vince Cable, who made a point of attending manufacturing-related events. In the seven months since he’s been in-post, we’ve not seen Javid once; he’s not even due to make his first speech to a manufacturers’ organisation until next February, when he’ll address the National Manufacturing Conference. For a sector that had previously been told it was at the very centre of the efforts to rebalance the economy, this lack of visibility has caused some nervousness (although we understand Javid has attended the Automotive Council, to name one manufacturing industry body). Has the government gone off the ‘makers’? Does it simply think that it should deal with its own affairs without too much interference? The signs are murky, and that surely can’t be good.