Both government and opposition say they are in favour of reindustrialisation or, as Peter Mandelson put it, more real engineering and less financial engineering.
So in the wake of the financial crash and a widespread desire to see an economy where we do more of making things, what is really happening?
Certainly, the UK car industry has provided some good economic news lately, particularly at the high end. Jaguar Land Rover goes from strength to strength. Its new Range Rover Evoque model has had great write-ups in the motoring press. It is taking on more workers and in a couple of years’ time will open a new engine plant in Wolverhampton.
Rolls-Royce Motors, now owned by BMW, has just reported record sales and Crewe-based Bentley have also reported rising sales.
In the higher volume market, Toyota has just announced a £100m investment to produce its new C segment range at its Derby plant, creating up to 1,500 jobs.
Three out of four cars made in the UK are exported. The success of the UK car industry reflects globalisation’s impact in developing a growing middle class in new markets who are keen to buy high-end vehicles. So demand in China is resulting in more jobs in Solihull, Crewe and other UK areas with auto plants and key suppliers.
What about other sectors? The UK remains strong in pharmaceuticals, enjoying a strong balance of trade surplus in this area. We are of course well placed in the creative industries. Our music industry punches way above its weight for a country of our size and our TV formats have been exported all over the world.
So there are certainly strengths in the UK economy and it is government’s job to support them and make the most of them.
But where are we falling short and where should we be doing more?
Talk to any manufacturing employer and they will tell you we need to do better on skills. If we’re serious about rebalancing, government, the education system and industry need to simplify and prioritise the kind of creative and engineering skills we need.
Infrastructure is also a bugbear with companies that want to move goods around and reach export markets easily. The government produced a national infrastructure plan but has so little faith in it that the OBR didn’t even take it into account when calculating its growth projections.
Government policy looks to be exacerbating rather than closing the north-south divide. London and the south-east will probably always be the key drivers of the national economy but impoverishing other areas will hardly help with rebalancing. HS2 could be important here, drawing other areas closer in travel time to the capital but the reductions in regional support are short-sighted and dogmatic. The new LEPs need resources if they are going to be able to deliver.
The decision to slap a £3 billion cut on the tax reliefs available to manufacturers who invest in new equipment was a triumph of headlines over policy. The chancellor wanted to talk up his cuts in corporation tax but didn’t have the money elsewhere so made manufacturing pay for it. Giving banks a corporation tax cut paid for by manufacturers is not reindustrialisation. It is its opposite.
And in the shift to low carbon, the government seems to have no coherent plan to make sure the UK maximises the benefits. There is huge potential employment and wealth creation in new nuclear and other low-carbon energy sources like wind and wave power. But how much of this will come to the UK? Where’s the plan to make sure our supply chain is in prime position to win the key orders?
I don’t take the view as some do that making things is nostalgia and further decline of manufacturing inevitable. We have strengths and we need to make more of them. And there are new opportunities where early movers will gain big advantages. But it will take government action, energy and drive to make it happen.
So far the prime minister seems more comfortable flitting from issue to issue rather than focusing on a really long-term plan the like of which is essential if rebalancing is to be more than words. Whether he is able to change his approach or not, a plan for rebalancing should be a big Labour priority in the coming years.
—————————————————————————————
Pat McFadden is MP for Wolverhampton South-East and former shadow secretary of state for business. He writes a regular column for Progress Pat’s Politics
—————————————————————————————