Less than a fortnight apart, the government‘s recent announcements on two vital sectors of the economy would suggest that it is showing disproportionate favour to neither of them. Could this be a bit of hedging to make everyone feel a little better at a difficult point in the economic cycle? Possibly, but the ‘vital sectors’ in question - the UK service economy and UK manufacturing - seem unlikely bed fellows in a new campaign to get UK PLC back on track, particularly when the signs are that UK manufacturing is in almost terminal decline.
Published at the end of August, the government-sponsored ‘Innovation in Services' report outlined measures to improve the capacity of businesses to innovate across a range of industries covering retail, construction, logistics, internet services and environmental services. According to business minister Shriti Vadera, the UK service economy is now worth a hefty £1 trillion, thanks to our “world leadership” in service sectors such as design engineering, architecture and environmental consultancy.
Innovation minister, Ian Pearson goes further and adds that it is important to support innovation by British businesses and make the UK the best place in the world to run an innovative business, public service or ‘third-sector’ (meaning somewhere between private and public) organisation. He claims that the government is helping to create the conditions for innovation to flourish throughout the economy, including the services sector. Many would differ, pointing to arcane tax legislation and the tangle of bureaucratic red tape as very real and present dangers that are countering the entrepreneurial efforts of individuals and organisations.
So, what’s in it for manufacturing? Last Monday, Business secretary John Hutton launched the government’s new framework for UK manufacturers*, which purports to help UK firms “take advantage of changing global trends in manufacturing”. In what can only be described as a road-to-Damascus revelation, Mr Hutton concedes that: “manufacturing is central to the success of the UK economy and [that] it is vital the sector has the right foundations to endure the current economic slowdown and emerge stronger and fitter than ever.”
The ‘right foundations’, Mr Hutton? Grants and financial concessions to foreign automotive giants, aside, there is little evidence of recent foundation building for UK manufacturers. Indeed, a succession of governments has overseen the destruction of our manufacturing foundations – and I’m not talking metaphorically. All this smacks of too little, too late, rather like the hurried organisation of engineering and manufacturing specific courses for pupils in secondary education and the sudden realisation that apprenticeships are a good thing after all.
Responding to the framework announcement, CBI chief economic adviser, Ian McCafferty thought it contained some fresh thinking, and welcomed the emphasis the government is now intending to place on improving manufacturing skills and the public image of manufacturing. But the government must now deliver on its plans, he says. “To achieve success, the government will also need to put in place a coherent procurement strategy that enables industry to invest with confidence for the long term.”
So Mr Hutton, how about getting into bed with the Treasury and create some real incentives for manufacturers, incentives that give generous capital allowances and tax breaks for investment in automation and modern manufacturing infrastructure? Only well-equipped and well-supported manufacturers will deliver the environmental performance and internationally competitive edge that the government is so desperately seeking.
Les Hunt
Editor
* Manufacturing: New Challenges, New Opportunities was jointly produced by the Department for Innovation, Universities and Skills and the Department for Business, Enterprise and Regulatory Reform. It is available from www.berr.gov.uk
Do you have any comments to make on this or any other subject covered in these newsletters? We are always pleased to receive feedback from readers; simply email les.hunt@imlgroup.co.uk.
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