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The Guardian - UK
The Guardian - UK
Business
Richard Partington Economics correspondent

UK must renew industrial strategy and stop ‘flip flopping’, say manufacturers

Bentley staff work on a Bentayga SUV in its factory in Crewe.
Bentley staff work on a Bentayga SUV in its factory in Crewe. Its chief executive said other countries are offering much bigger incentives thank the UK. Photograph: Phil Noble/Reuters

Britain needs to relaunch an industrial strategy and stop “flip flopping” on initiatives if it is to avoid falling behind on the global stage, manufacturing bosses have warned.

Make UK, which represents 20,000 manufacturers across the country, warned British businesses risked losing out to companies elsewhere around the world because of the government’s lack of a long-term plan for industry, while Joe Biden’s $369bn (£292bn) Inflation Reduction Act sucks up investment.

In a stinging attack on successive Conservative governments for “flip flopping from one initiative to another,” it called for the creation of a royal commission to develop a long-term, modern industrial strategy to support companies across the UK.

Under Theresa May the government launched an industrial strategy in 2017, with a focus on increasing jobs and investment outside London and the south-east after the Brexit vote. However, the strategy was ditched under Boris Johnson, along with a powerful council of business leaders and advisers tasked with monitoring investment in Britain’s hard-pressed regions.

Stephen Phipson, the chief executive of Make UK, said the UK was the only leading nation in the world without a comprehensive, long-term industrial plan. “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,” he added.

“A lack of a proper, planned, industrial strategy is the UK’s achilles heel. Every other major economy, from Germany, to China, to the US, has a long-term national manufacturing plan, underlying the importance of an industrial base to the success of its wider economy.”

Car industry bosses fear the UK is being left behind thanks to its failure to secure investment in a large-scale battery factory for electric cars.

Adrian Hallmark, the chief executive of the luxury carmaker Bentley, told the Financial Times that other countries are offering incentives that are “an order of magnitude more attractive than the UK”.

The Crewe-based carmaker is owned by Germany’s Volkswagen. Hallmark said big car companies have been tempted by incentives in “Canada, Spain, Poland, Belgium, even Germany – one of the highest-cost markets in Europe”, to build battery factories.

“It’s surprising, if not a bit concerning that no [electric vehicle] manufacturer or battery manufacturer has chosen the UK over any other location as an investment destination,” he said.

Underscoring the push for a renewed industrial strategy, Make UK said about 80% 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.

Almost 60% said they thought the government had never had a robust vision for manufacturing, while as many as a quarter said it was the main reason the sector had not grown more quickly over the past decade.

Make UK will launch its report on Tuesday at an event with Greg Clark, the business secretary in May’s government who launched its industrial strategy, and Andy Haldane, the former Bank of England chief economist who was chair of the Industrial Strategy Council tasked with monitoring its progress.

The report comes as Britain’s manufacturers risk being squeezed amid a race by other governments across advanced economies to boost investment in low-carbon and hi-tech industries. In the US, Biden’s package of investments is being rolled out to support green projects, while France and Germany have launched far-reaching industrial strategies.

Make UK said the IRA alone was worth 1.5% of US GDP, which, if the equivalent sum were to be invested in the UK, would be worth £33bn. The lobby group said if Britain’s manufacturing base was increased from the current level of about 10% of national output to 15%, this would bring an extra £142bn for the economy and create high-skilled, high-paid jobs across the country.

Phipson said: “There is now widespread consensus on the need for such a strategy and the specific policy areas it would address. 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.”

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