UK urged to stop ‘flip-flopping’ on industrial strategy

The lack of a long-term industrial strategy puts the UK's manufacturing business at risk, the latest report from trade body Make UK has warned.

Make UK, which represents 20,000 manufacturers across the country, has called on the UK government to stop "flip flopping from one initiative to another" if it is to avoid falling behind international competitors.

The appeal highlights the growing frustration across the sector due to changing political priorities, which have led to the development of six different plans for growth under five different business secretaries since 2012. Yet, the sector currently finds itself without an industrial strategy, as the last one was dropped by ministers in March 2021.

"A lack of a proper, planned, industrial strategy is the UK's Achilles heel," said Stephen Phipson, the trade body's chief executive. "If we are to not only tackle our regional inequality but also compete on a global stage, we need a national industrial strategy as a matter of urgency ... We cannot keep flip-flopping from one initiative to another without setting these in the context of a long-term, wider plan which has consensus and is independently monitored."

The Make UK report found that about 80 per cent of companies in a survey of 312 manufacturers believed the lack of a plan put their firm at a competitive disadvantage to businesses in other countries. Moreover, almost 60 per cent of companies surveyed said they thought the government had never had a robust vision for manufacturing, while 25 per cent stated that the lack of a plan was the main reason the sector had not grown quicker over the past ten years.

In addition to the uncertainty created by the lack of a long-term government plan, the Make UK report also highlighted the industry's worries that firms would prefer to do business in other countries that do have strategies, and take advantage of benefits such as US President Joe Biden's $369bn (£292bn) Inflation Reduction Act.

To avoid this, manufacturers requested that the government sets up an independent inquiry, or royal commission, that would develop a long-term, modern industrial strategy to support companies across the country. In addition, they also called for the re-establishment of the Industrial Strategy Council, which was also axed in 2021, to monitor said strategy.

The UK manufacturing sector generated £206bn gross valued added in 2022, a fifth higher than a decade ago, Make UK said. It accounts for around half of the country's exports, two-thirds of spending on research and development, and "a significant level of business investment".

The sector accounted for about 9 per cent of total economic output last year, but the report said it wanted to watch it grow to 15 per cent of GDP, which it said would add an extra £142bn to output annually, creating high-skill, high-value jobs.

"In short, manufacturing matters to the prosperity and security of the UK," the report states.

The last industrial strategy was drafted in 2017 by Theresa May's Cabinet. The strategy outlined a plan for the UK manufacturing industry to grow under the new Brexit conditions. However, it was dropped under Boris Johnson's leadership.

The government said it had "shown a clear strategy for UK manufacturing with a variety of schemes that ensure sectors from auto, to aerospace, to low-carbon technologies have access to the funding, talent and infrastructure they need".

Laimonas Noreika, co-founder and CEO of fintech platform HeavyFinance, said: "Manufacturing plays a vital role in job creation, and it is critical to have a detailed industrial strategy in place to spread investment and enable businesses to expand. With businesses feeling more confident, despite high interest rates and surging inflation, having a clear blueprint for empowering the manufacturing sector will be key for driving economic growth."

Khalid Talukder, co-founder, DKK Partners, added: "It's mind boggling that the UK is falling behind in such a crucial area, especially when so many of our international competitors are launching detailed action plans to woo investors and turbocharge their manufacturing base. Heavy industry is a dynamic part of our economy, so supporting these companies to trade internationally, hire new staff and upskill the nation should be a top priority for the government."

The Make UK report was launched today at an event with former business secretary Greg Clark and former Bank of England chief economist Andy Haldane, who were both involved in the development of the UK's last industrial strategy.