What do manufacturer’s want from the new government’s industrial strategy?
Lee Collinson
Managing Director -National Head of Manufacturing,Transport & Logistics at Barclays
With the general election now behind us, we’ll begin to discover what a new government, and a new political landscape, might mean for the UK’s manufacturing sector.
Labour’s election manifesto promised an industrial strategy shaped by businesses – so the key question of course is just what exactly is on manufacturers’ ‘wishlists’ for this new government??
For starters, a well thought-out overarching industrial strategy is something business leaders definitely want – it gets prominent inclusion in the 10-point ‘manifesto’ launched recently by manufacturers' organisation Make UK.
Its research, shows that 87% of manufacturers believe they are at a disadvantage compared to our international competitors because of a lack of UK industrial strategy, which echoes what I’ve heard in many conversations with clients.
Skills training
Skills shortages in manufacturing is a topic I spotlighted in my 2024 outlook, as there’s general agreement in the sector that this is one of the most pressing challenges it faces. Make UK’s manifesto found that fewer than one in five firms believe that government support for skills training is adequate, and that the number of engineering and manufacturing apprenticeships in England is 38% lower than before the apprenticeship levy was introduced.
Pre-election, some of our manufacturing clients told us they were hopeful of more government support to help them tackle the skills gap – for example, by making the apprenticeship levy more flexible.
Labour has indeed promised reforms, including allowing employers to spend up to 50% of their apprenticeship levy on accredited non-apprenticeship training under a new growth and skills levy, giving them greater freedom in the way they spend their funds.
However, better retraining and upskilling for the current workforce is also something that needs addressing – with 61,000 unfilled vacancies in manufacturing, UK firms operating in the sector are losing approximately ￡6.5bn in potential output each year.
Support for technology
Technology seems to be ?transforming the manufacturing sector, with research from Make UK finding that 60% of manufacturers have seen automation improve their productivity and 50% have seen increases in labour efficiency.
I think support for and investment in artificial intelligence (AI) and robotics are most definitely vital agenda items for the new government with many manufacturers I speak with wanting initiatives that will help them promote technology, innovation and commercialisation, thereby accelerating digital adoption and automation.
Another key issue, many manufacturers tell me, is the length of time it takes for new developments, be it expansion of their own operations or local and national infrastructure projects, to get the go-ahead under the UK’s present planning laws.
They will no doubt be encouraged that Labour agrees the planning regime is a significant obstacle to economic growth and has again pledged reforms, as well as the creation of a 10-year infrastructure strategy, overseen by a new body, the National Infrastructure and Service Transformation Authority.
Better connectivity
Much of the UK’s manufacturing output is located in the Midlands and the North, yet many businesses I speak to are frustrated by the lack of investment in road and rail transport links, and port infrastructure, in these regions. ?
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I must admit, I was amazed to learn that a train journey coast to coast in the North can take longer than a journey from the North to Paris. This lack of connectivity is contributing? more than ￡16bn in lost productivity in major cities across the North, according to recent research.
Many manufacturers are hoping that the government’s promises to improve the UK’s railways, road networks and to devolve power to mayors to create better regional and local transport systems, are kept.
Connectivity in another form, for example permission for energy-generating projects to plug into the National Grid, is of huge concern to some businesses I talk to, with some connection dates not expected until the late 2030s, says energy regulator Ofgem.
Labour accepts such delays are a barrier to the electrification of UK industry and important business and infrastructure investment is being stalled or lost overseas as a result. Again, only time will tell if the new government will ?deliver on its promises to upgrade the National Grid.
Talking to our clients in manufacturing, I know there’s plenty more on their wishlist post-election, but whatever the future holds, Barclays is here to help our manufacturing clients ?see the big picture and respond to both the opportunities and challenges they might face.
For more industry insights, visit Barclays Corporate Banking
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Sources
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Partner at Grant Thornton UK LLP
7 个月Really neat summary, Lee. Addressing access to capital and the skills gap are both vital in accelerating technology/digital strategies and adoption of automation. Your point around grid connectivity as a barrier to Electrification is just an absolute fundamental. Looking forward to your follow ups!