Conservative manifesto: things we like and things we need to talk about

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Today sees the launch of “FORWARD, TOGETHER. Our Plan for a Stronger Britain and a Prosperous Future” – the Conservative party’s proposed programme for the next government.

Inevitably those scouring the policy details will be looking for deviations from the 2015 output and anything additional to announcements made in the last Budget – which was a mere 10 weeks ago (though feels longer).  And the biggest element of new information that will be hunted for is around how strong and stable leadership will deliver a ‘smooth and orderly exit from the European Union’.

But looking at this through a manufacturing lens, we take nothing for granted. We’ll take a look at the package of industry focused measures old and new. And if you’ve been following our manifesto round-ups this week, you know the script – our overarching response and our five of the best and five policy ideas that need some (or even a lot of) work.

Kicking off, here is our overall perspective on the document from EEF’s CEO, Terry Scuoler.

 

 

“The Prime Minister rightly says that achieving a smooth and orderly Brexit is a priority, but she continues to say no deal is better than a bad deal. The two are incompatible as leaving the EU without a deal is a recipe for chaos. Anyone going into Brexit negotiations will of course need a clear mandate and a strong hand. By setting out how difficult it would be for the UK economy if Brexit is neither smooth, nor orderly, she is saying in effect that Britain must achieve a good deal on trade.

 

“To do that there will inevitably need to be compromise on all sides. It is business-critical for whoever is the Prime Minister to negotiate a deal that allows free and fair trade between the UK and our largest and most important market. Anything else will be failure.

 

“The Conservative Party’s manifesto gives business a clear and welcome commitment to a comprehensive industrial strategy, which we applaud. The Party’s commitment to tackling the vastly uncompetitive energy costs now faced by industry is just one example of the importance of this approach. If elected the Conservative government must work quickly to flesh out these detailed plans and implement them.

 

“Business will also welcome the intention to sticking with current business tax plans which offer stability and predictability for business. As ever, the small print will be important as government seeks to rebalance the fiscal deficit." 

 

Tory-manifesto-front-cover

 

Industrial strategy 4.0

First up, things we like (#1) is sticking with the proposed industrial strategy framework. If elected – as the polls suggest the Conservatives will be – we’ll hopefully be picking up the baton in shaping the industrial strategy green paper framework and details of the policy pillars from the summer – they are more or less all referenced in the manifesto; skills, sectors, energy costs, transport etc…, rather than returning to ground zero and making the case for one.

Indeed, much of what we like in the detail of the manifesto is unsurprisingly found in the chapter on industrial strategy. The transport priorities continue the improving trend of the UK getting its act together to tackle past underinvestment and vacillation on decisions – yes to Heathrow, Northern Powerhouse rail, strategic roads and addressing pinch points. And of course, what seems to be a must do for everyone, deliver world class digital infrastructure (things we like #2).

Another tick (things we like #3) goes to the promise to finally bring industrial energy costs in line with those in the rest of Europe, i.e. lower. A long-term frustration for manufacturers in the UK and one that is now being pitched by the Conservatives as integral to industrial strategy. A further positive development in this arena is an energy efficiency fund to support investments by energy intensive firms.  

However, an expanded element we’d need to talk about (#1) is the proposal that local enterprise partnerships and combined authority will be responsible for ‘co-ordinating their own local industrial strategy in alignment with our national industrial strategy.’ This would need to be managed with a clear national vision to ensure local action enhances the business environment and further boosts areas of excellence. We can’t afford lots of small uncoordinated investments that lack the scale to impact on productivity and growth.

Getting the right people

Again the industrial strategy includes a recap on current policy on teaching and apprentices. Which could mean (well we can hope) that we may have a couple of years without a major policy review in this area. But we would need to talk about the commitment to a right to request time off for training. The intent is perhaps a sound one, but the detail needs a bit of thinking over (things we need to talk about #2). For example paying for the wage costs for those who take time off to train from the apprenticeship levy pot is an idea too far only two weeks after the levy’s introduction.

And then of course there is migration. The main issue that manufacturers will want to talk about (#3) post-election is the immigration skills charge. We would definitely need to talk about the logic of doubling it together with tougher rules on students and new rules for EU workers.

Trade, tax and takeovers

Another, more unique feature of the Conservative’s manifesto is the emphasis on trade and some proposals on helping UK companies do more of it (things we like #4). This shouldn’t just be about Brexit, better balanced growth means we need to move the needle on our net trade performance. Whether the package, which includes creating a network for HM Trade commissioners to head nine new overseas posts to promote exports and reconvening the Board of Trade to increase exports, is enough I’m not sure, but it’s a good start.

Clearly some of these commitments will need more cash. Interesting that the authors missed the memo about providing a separate costings annex. But anyway, the next Conservative government is committing the government after it to eliminate the deficit. Things we like, though (#5) are promises to stick with the recent business tax road map, including the promised corporation tax reductions.

We do want to talk about (#4) another review of the business rates system. It’s time to stick or twist – either all options around fundamental reform need to be back on the table or the tinkering should end. If the review goes ahead it would be worth bringing other local taxes into the orbit – including council tax.  

Our final topic for discussion (#5) is getting down to detail on any new measures on foreign takeovers. A tricky issue, but with somewhat vague commitments on more scrutiny and enforcement of promises and undertakings, industry will want a say to ensure the UK remains open and secures critical investment in high-value activity and jobs.

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Chief Economist

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