As part of a three-part series, Stephen Radley, EEF's Director of Policy and External Affairs, is assessing the future for UK manufacturing. The first installment looked at how UK manufacturers weathered the recession, the second piece looked at the prospects for growth and this third - which coincides with the launch of EEF's Manifesto for Manufacturing - sets out what the next government should do to rebalance the economy.
Steve Radley lobbying Teresa May MP at the recent Conservative Party Spring Forum
Earlier this week, we've looked at how the resilience of UK manufacturing should help it tackle the challenges and opportunities of the next ten years. But the shift to a better balanced economy will happen in fits and starts - and it's up to government to set out and implement a clear, coherent strategy for facilitating that shift.
Whoever forms the next government faces a daunting task. The decisions made in the first 100 days will have long-term implications: they will determine our ability to generate the growth and prosperity, to fund much needed infrastructure improvements and to create job opportunities across our society.
The next government must, therefore, put in place a strategy that ensures that we can pay our way in the world.
And a diverse and dynamic manufacturing base must be a part of that strategy.
It is clear the next government needs to develop a credible plan for reducing the large fiscal deficit it inherits. But how it goes about this will be critical. Its plan must be centred on reductions in public spending, driven by significant improvements in the effectiveness of the public sector, strict control over costs and a fundamental rethink of what government does.
The alternative approach of saddling Britain with significant tax rises, particularly on business, would be highly damaging. It would weaken our competitiveness, undermine businesses’ ability to invest in growth and jobs, and send out the wrong signal to international companies looking at where to put their next investment.
But the choice for the next government cannot be just a negative one - we will only overcome our problems if we know where we want to go.
In our Manifesto for Manufacturing we set out how the next government should refresh itself to become more focused and effective. We suggest reforms that will create an internationally competitive business environment that sends the right signals to would-be investors. And we set out a proactive agenda for growth.
It must send clear signals about its long-term priorities and the importance it attaches to specific technologies or markets and work more closely with business to identify and overcome the obstacles to growth in these markets. It also needs to engage much better with industry in conveying its long-term needs when it is buying goods and services from it. Finally, at a time when finances are extremely tight, a new government must prioritise spending in areas that will deliver sustainable economic growth.
We also need a business environment that encourages manufacturers to make their next investment here. For example, the tax system must reflect the true cost of modern machinery, while we need to maintain the advantages of a flexible labour market and address longstanding concerns over regulation by developing a new approach that costs and limits the amount of new and existing regulations and by strengthening the assessment it makes of the impact of new regulations.
More positively, the government can help manufacturers to take advantage of growing world markets by creating a single source of finance to support ambitious, growing companies that are making long-term and risky investments and by ensuring we have the world class export support that UK Trade that helps these companies to develop new markets abroad.
It must also ensure that the education system delivers the science, technology and engineering skills industry needs and that it is straightforward for companies to access the training that they need. Manufacturers must also feel confident that they won’t be facing an energy crunch, five years ahead.
It is vital that the government delivers on these priorities but ultimately it is down to manufacturers to take advantage of the opportunities that are out there.
In that respect we can take a lot of confidence that UK manufacturing is a very different animal from what it was even ten years ago - because the path to a more prosperous Britian will be built by a stronger manufacturing base.