On June 9, whoever enters the door of Downing Street to form the new government has a once in many generations opportunity to take bold, radical action to shape the UK economy, our future relationship with the European Union and our place on the global stage.
Manufacturing underpins each of these strategic priorities and is key to Britain’s future prosperity. This means industry has a high stake in getting the terms of the UK’s exit from the EU right.
The new Government’s first priority, therefore, should be to commit to a Brexit strategy that leads to a positive deal for both the UK and the EU. This must ensure that businesses in Britain can continue to trade seamlessly with our EU partners. Walking away with no deal simply to satisfy a hardline political ideology is not an option that business can afford.
Faced with delivering Brexit the new Government must also quickly prioritise the delivery of a comprehensive industrial strategy if it is to deliver the UK’s ambitions for growth when we leave the EU.
However, we need a reality check as to our starting point. British politicians like to look at the Eurozone with contempt at its tendency to stall any meaningful reforms. Countries such as Italy and France are seen as nations in terminal decline and in dire need of major reform by the UK’s political elite.
Much as it would be lovely therefore to highlight Britain’s productivity as a national strength, it is in fact the UK’s international weak spot. The US, Germany and France are far ahead of us in the productivity league table. Tackling this huge productivity challenge is at the essence of the strategy the Prime Minister laid out in the Government’s green paper, Building our Industrial Strategy. And it is at the heart of the manifesto that EEF has published today, Making the Future – Making Britain Great. It must demonstrate to business it is serious about delivering on this with radical action to invest in clear horizontal levers of economic and industrial policy, an area where the UK has consistently lagged.
This must begin with boosting the UK’s long standing low levels of investment through a more competitive business environment, including reform of the outdated capital allowances regime for new technologies and the removal of business rates on plant and machinery which represents a tax on investment.
The strategy must also deliver a world class workforce and talent pipeline by revolutionising our education system through recruiting and retaining the best maths and science teachers in underperforming schools to boost the study of STEM subjects, along with a national drive to ensure technical and vocational training is finally recognised as equal to academic qualifications.
It should also commit to internationally competitive energy prices, including an annual Government energy policy statement, as well as incentives to build infrastructure for the low carbon economy beyond low carbon electricity generation. There must be more effective transport links and infrastructure, including a third runway at Heathrow, the creation of a Roads Fund and, an extension of devolution deals right across England with a focus on improving local transport.
A new administration must also commit to spreading 4IR technology adoption by investing in research and development, both through an enhanced R&D tax credit to accelerate the take up of new manufacturing processes and, direct funding for ongoing innovation programmes. It should also expand the number of highly successful catapult centres.
Finally, there must also be a renewed drive on deregulation which has fallen off the political agenda. This must include a commitment to reduce year-on-year the cost and burden of all regulation on business and an enhanced role for the independent Regulatory Policy Committee which has done much to hold government departments to account.
Above all, the industrial strategy needs a clear vision, with specific and measurable outcomes, driven by Number 10 and accepted as a core cross Government commitment with recognition of the need for long termism which competitor nations such as Germany have clearly benefitted from. It is inconceivable there would be a change of direction if Angela Merkel were no longer German Chancellor.
By driving forward a comprehensive industrial strategy, the new Government can lay the foundations for generations to come. It can put Britain at the forefront of the industrial revolution, investing in digital technology and new innovation. We have a real opportunity to make a step change in the UK’s economic performance. Let us grasp it.