This week George Osborne has failed two important tests: the first being his own benchmark for economic stability, Britain’s credit rating; the second, my preferred benchmark for economic success, Britain’s industrial strength. Because not only has the UK lost its AAA credit status but we have also seen the historic carpet manufacturer, Axminster Carpets, call in the administrators. This is a business that not only employs over 250 people but is at the heart of its town’s economy and heritage. Our manufacturing industry suffers another blow because Osborne was too busy focusing on austerity in the hope of protecting our credit rating … and he couldn’t even do that properly.
We know too well that the economy is flatlining due to lack of investment and a complete failure to implement spending on infrastructure. We have a government that is so obsessed with reducing the deficit that it seems to have forgotten all about creating economic growth.
Community has long championed the need for the development of a comprehensive and active industrial policy. Governments in competitor countries understand that as well as investment in infrastructure targeted procurement can also support your own industry. The UK government spends over £230bn in goods and services each year. Why is this money not being put to better use to support Britain’s manufacturers? Problems in public procurement within the UK are a perennial issue and there is a long list of publicly funded projects that have used non-UK manufacturers. Too many contracts are weighted heavily in favour of the financial cost as opposed to recognising the social effects of a project. But if a factory closes after losing a tender to a foreign competitor, it’s UK taxpayers who still end up footing the bill.
UK industry needs public authorities to include and extend community benefit clauses in tendered contracts, which can allow specification of the development of local skills, local recruitment, and reinvestment in local communities as part of procurement spending. It’s a lack of political will which means this doesn’t happen.
Active industrial policy also needs to be joined up across government. To give one damaging example, when the Thamesteel company on the Isle of Sheppey went into administration, there was hope that Danish renewables company Vestas might open up a facility in the area. Sadly, Vestas pulled out, citing uncertainty over UK government policy. Continuing government confusion over renewable energy has destroyed the confidence of investors, hollowed out UK supply chains and means the UK cannot compete effectively for wind energy construction contracts – more missed opportunities.
Countries such as Germany and Japan have had a long history of active industrial policy, mainly attributed to cross-party agreement on the role government plays in shaping industry. This long term stability in policymaking has created an environment in which businesses feel confident in making long term investment decisions.
We cannot allow our manufacturing industry to wither further and we need to work towards creating a long-term consensus on active industrial policy in the UK.
Creating this consensus is a big project, where I am sure Labour can lead the way. In the meantime, you can play your part in supporting our industry by signing Community’s petition to save Axminster Carpets and give a proud tradition of carpet making the chance to be part of a brighter industrial future.
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Michael Leahy is general secretary of Community the union
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