This year’s Budget statement set out plans for much slower growth in public spending over the 2008/09-2010/11 period than had been seen in the previous six years. We welcome the decision to reduce the share of public spending in the economy. The emphasis on improving the efficiency of public services is also critical, though it is important that progress is scrutinised closely to ensure that real and lasting gains in efficiency are being achieved.
Overall, government should set out funding priorities that support the productivity and competitiveness of the UK economy. In particular, for manufacturing there are three key areas – skills, innovation and export support. However, we are conscious of how challenging it will be to meet these priorities in the coming spending round. Many of EEF’s proposals therefore focus on making existing programmes more effective and cutting out waste and duplication.
Skills
Our policies on education and skills identify manufacturing’s priorities for investment over the next three years and beyond, setting out the case for targeted increases in funding and making renewed efforts to make better use of current resources.
In particular, EEF sees three key areas for spending to increase skill levels. Firstly, improving levels of attainment at and, participation in, STEM (Science, Technology, Engineering and Mathematics) subjects.
Secondly, funding initiatives to improve the skills of those in the workforce and, thirdly, supporting work-based learning and apprenticeships in particular. Efforts to maximise participation, promotion and funding of STEM activities must go hand-in-hand with increasing the supply of qualified teachers.
Careers guidance is also vital and young people should benefit from having more focused and timely careers information and guidance right across Key Stage 3. Funding should be made available to support better coordinated information on science, engineering and technology related careers
Innovation
In recent years, the government has put increased effort into improving the environment for UK firms to innovate. This has included a substantial increase in science spending, the introduction and subsequent enhancement of Research and Development (R&D) tax credits and a refocusing of the government’s support for innovation. However, given the importance of innovation to the UK economy we believe the government can go further.
It is vital that the support for existing knowledge transfer programmes is preserved and, to encourage firms to make their own links with universities, we propose that the government introduces a ‘first engagement voucher’ scheme for business-university collaboration.
To establish its role as the leading early adopter of technology and innovation, the government should set up a dedicated body within government, responsible for driving the adoption of early stage technologies.
This body should have the remit to take on high-risk projects requiring radical innovation. It should also have a budget that would make its actions meaningful. In particular, the UK should aspire to matching the 20-25% of early stage development funding provided by the US federal government, by strengthening the Small Business Research Initiative scheme.
Procurement can also be strong driver of innovationThe enhanced Technology Strategy Board should be used to upgrade the skills of public procurers. Staff seconded to the Technology Strategy Board should use their skills and experience to train procurers within government departments in areas such as risk-management, commercial best practice, technical skills and how to recognise and understand long-term value.
Government policy and guidance to procurers should be kept simple with a focus on value for money, with a long-term procurement strategy set out that would enable procurers to understand and meet government demand over the long-run.
Export Support
Given growing world markets and the increasing dependence of many UK manufacturers on exports, trade support is vital if the UK economy and individual companies are to exploit the benefits.. EEF backs the changes made to UKTI’s strategy and its move towards becoming more market led.
However, at the same time, over the last three years funding for the organisation has been cut by one third. In the next spending round government must commit to an adequate level of funding for UKTI and, at the very least ensure there are no further cuts to its budget. This will ensure that companies are adequately supported to exploit the number of potential new and fast growing markets which are increasing all the time.