A strategy for manufacturing?

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Yesterday I attended the National Manufacturing Debate at Cranfield University. The topic of this year's debate was whether or not we need a national strategy for manufacturing.

Professor Rajkumar Roy started the day by suggesting that an important part of such a strategy would be to have an ambitious target. He suggested the goal that manufacturing would account for 20% of UK GDP by 2020.

While attendees quickly pointed out that it was unlikely manufacturing would reach this level – either we'd need unprecedented growth, or something close-to cataclysmic would have to happen to the service industries – the idea of a target as a way to focus policy resonated with the audience.

In EEF's report, The Route to Growth, we outlined four ambitions for the economy that we think would focus efforts on achieving sustainable growth. These are:

  • More businesses bringing more products and services to market
  • More globally-focused companies chosing to locate in the UK
  • A lower cost of doing business
  • A more productive and more flexible labour force

So how do we achieve these ambitions?

A growth strategy has to be part of achieving our ambitions. Looking at the existing policy framework, the government's growth partnerships and resultant sector strategies are an important component in addressing some of the long-term challenges faced by UK industries. But how do we get the most out of these strategies?

To ensure value for money: there needs to be greater clarity around the challenges the strategies are designed to address. This is particularly relevant given the squeeze felt by most areas of public spending.To ensure longevity: A much fuller body of evidence is required to demonstrate why certain sectors have been prioritised. This will aid a widespread understanding across government and a long-term commitment to the sectors identified. As one panellist pointed out yesterday, a solid evidence base is one way to ensure sector strategies aren't held hostage to political cycles.

The sectors that have been identified as priorities have published, or will publish, strategies that lay out their priorities for investment in the coming ten years. This is a step towards building the evidence base necessary to understand which areas require investment. However, some sector strategies have already been released and funding committed in the absence of details on the requirements of other sectors that are yet to release strategies. A budget of £1.6bn has been set aside for sector strategies, but, after the release of only four out of eleven strategies, most of this has already been committed. This leaves very little for the remaining strategies.

Unless it is prepared to increase the funds available to sector strategies post 2015/16, the government should wait until all strategies have been produced to understand which proposals will garner the highest return for the economy and make some tough prioritisation decisions.

These recommendations form part of our Spending Review submission, which we will publish in full of the 3rd June.

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