‘We are lucky that we have a very very good financial sector in the City which earns us a great deal of money. We are lucky that manufacturing industry is coming up. We are lucky we are getting more small businesses and more self-employed, because that is where the new jobs are going to come from. We are lucky that there have been created a million new jobs in the last three years. That is going in the right direction.’
This statement is complacent. Her government seemed not to notice that the shift from a manufacturing industry to a ‘very very good’ financial sector would leave thousands without access to the growing part of the economy with no employment and little hope. Between 1978 and 1997, manufacturing output fell from over a quarter of GDP to about one fifth. It never did recover. And that had a huge impact on British towns and cities that had built their wealth and pride on their ability to make and sell things.
Yet, from her comments above, it seems Margaret Thatcher did want economic success. It’s just not clear that she realised how fine-grained economic policy needed to be to reach all parts of the UK.
Today – as I mentioned in my recent debate in parliament on the role and status of manufacturing – less than three per cent of people in London work in manufacturing. In the northwest and northeast, it’s about one in 10. There are different parts of the country with different economic clusters. So the policy has to fit the economy and the circumstances of place and time.
Labour in 1997 understood this, and regional development agencies (alongside the Scottish, Welsh and London devolved institutions) were charged with analysing and delivering economic policy fit for the businesses that clustered within the UK. We knew that one-size did not fit all. And we made sure government action reached further than the end of Whitehall. RDAs led the fight for both inward investment and all-important exports.
But sterling was riding high, access to markets with cheap labour increased, and while manufacturing productivity increased alongside real funding for skills and apprenticeships, times were hard for manufacturers. This is not to say we did not see success. Britain’s manufacturers might be a smaller part of our economy, but we still make large volumes of goods sold around the world. In my patch GM Vauxhall has seen success thanks to the work of the last government. My colleague Pat McFadden has written about the work we did to encourage investment in technology, which also saw an impact when the economy needed it most.
So, we should all be concerned that, not only are RDAs and investment incentives now gone, but also, that the Government’s latest strategy for UK Trade and Investment won’t necessarily play the role we need it to in helping back manufacturing. UKTI is the Whitehall body charged with promoting trade and investment for the whole of Britain – so its plans are crucial.
There are two problems. Firstly, will risk-averse Whitehall civil servants back export sectors that are perceived to be successful like parts of the service economy (financial, or legal services) rather than taking a risk on high-tech manufacturing? If they do, we could miss out on supplying the future green economy. Or we could fail to make the most of high transport costs that should incentivise producers to build up their manufacturing suppliers in the UK. I fear the criteria for UKTI aren’t clear enough to guide them in this choice, so we’ll end up backing existing ‘sucess’ rather than looking to the future.
Secondly, without the expertise, presence and contacts of the RDA, will Whitehall civil servants have the capacity to understand and meet the economic challenges in all parts of the UK? This matters: those parts of the UK that do not have well built-up lobbying capacity in Westminster could find that export promotion leaves them behind. Will southwest manufacturers be heard be listened to with the same concentration as UKTI’s well-established business contacts in London? I’m not hopeful.
The problem for Labour is this: If the Conservatives leave manufacturing (and the wider UK economy) in a more unbalanced shape than they found it, they’ll have also taken apart some of the economic tools we used to change regional fortunes after 1997. We have to put pressure on the government now to learn the lessons of their past and take a different approach. They have the power to ask UKTI to work for all of the UK, and all parts of the economy. They should do so. And Labour can’t afford to let them off the hook.
& if Cameron spent a million quid on “facelift” who is he really (whole new meaning to KITCHEN CABINET eh)
Alison, The very idea that UKTI is holding such a singularly prominant role in the promotion and development of commercial development sends shivers down my spine. I do not think that there is much to celebrate with this area by the last administration or indeed the ones before it. I would not bother worrying abour placating the egos of previous Ministers as the situation in the Uk is fairly dire. We do not have the luxory to be worrying about stepping heavily on toes and this is a real Global challenge and a race. There is no room for any body that hampers development in new technologies (especially environmental) and there is no room to be relying on thre Global economy to come to our rescue. In the end when push comes to shove each and every borough, county and the Country in on their own as you validate with reference to the importance of lobbying and the potential inequalities of representation that occur as a result. A whole new approach is required with reference to determining risk with investment in future developments, an alternative is blatently required in terms understanding the resource and carrying capacity potential of various locations and their geography. More importantly a serious amount of work needs to be done in evaluating the needs, potential future needs of manufacturing and development for the future with a very serious amount of attention given to addressing how we ensure the skills base in the Uk is increased and improved. Then we have to assess how we retain people with the skills we give them. Yes we live in a Global envionment with cheaper labour (with appaling standards in most countries) elsewhere and a resultant employment gap here. But we have to evaluate how to move forwards in growing the higher quality workforce to compete with countries like France and Germany. There is after all no benefit to being the elected rep of a location that is deteriorating economically and the social and political consequences of doing so are such that the European, Global context means very little to those people failed by the consequences. Which again brings us back to the basic role of democracy and representation does it not? For me I would be looking at how we try and undoe what has been done and make the Uk a place for people to want to invest again and the first step as always relies on investment not austerity. It relies upon the development of the most priceless commodity any country has…..its people. Maybe when the Labour Party and Progress finally get around to actually understanding the true depths and varied implications of the terms they use such as “aspiration” they will finally reach the same conclusion i have. That for people to aspire they need to understand precisely what they are aspiring for and why and how, how being the most important question because that is where we come in with our traditions and values that are second to noen as a party of the people for the people.