Industrial Strategy must be bold and become foundation of future government policy, says the EEF

EEF, the manufacturers’ organisation

The government’s industrial strategy must systematically tackle the UK’s long-term structural weaknesses with a bold, focused and specific set of policy measures, but manufacturers in the North West believe it can only be achieved if government sets itself measurable goals and ensures a policy framework which forms the basis of future fiscal statements.

The call was made by EEF, the manufacturers’ organisation in its submission to the government’s consultation on Industrial Strategy which closed today, Tuesday 18 April.

According to EEF, the challenges of unbalanced growth and weak productivity are longstanding and undisputed. As such, government strategy should be bolder in its ambition to tackle three priority outcomes – reducing the productivity gap with G7 competitors, increasing the contribution to GDP growth from net trade and, raising the UK’s innovation performance from follower to leader.

Commenting, Richard Halstead, Interim Region Director for EEF in the North West, said:
“Successive governments have identified the UK’s weak productivity performance and set plans to tackle it, arguably with little success. This time it can be different, however, and we have a real opportunity to make a step change in the UK’s economic performance.

“The green paper is a positive first step in what will be an evolutionary process. A successful strategy must however be more than a list of policy action points. It has to be a framework for ensuring that all policy decisions take the UK economy closer to its goal of higher productivity, increased exports and greater investment in innovation.

“Manufacturers in search of both a competitive and predictable business environment will need to be confident that future government policy decisions will influence their decision to invest and, grow employment in the UK, are anchored in the ambitions of industrial strategy and that Whitehall departments are not allowed to ignore them.

“In the longer-term, the ten pillars which have been correctly identified must become the foundation around which future economic policies are created and implemented. Critically this must also include those decisions that determine the UK’s future relationship with the European Union.”

According to EEF, the ten pillars identified in the green paper are the right areas for government on which to focus its policy, potentially enabling more investment and productive activity to take place in the UK. The most important of these for manufacturers are support for a more skilled workforce, investment in more reliable infrastructure, and world class support for companies planning to innovate and export.

EEF believes that a number of recent policy decisions have been a good first step in addressing these issues, including support for new technical colleges, measures on science and innovation such as the Industrial Strategy Challenge Fund and commitments to major infrastructure projects such as Heathrow Airport Expansion and Hinkley point.

However, there should be more emphasis on the cost of doing business in the UK where recent policy decisions, especially on energy, have added to the cost burden for manufacturers. As industrial strategy aims to secure more investment in productive assets across the economy, committing to minimising costs to business will be an important signal to the private sector.

In its submission, EEF has identified the following as priority areas for bolder intervention where government can build on policies within the ten pillars:

• Address the role of more flexible higher education provision and its relationship to industrial strategy
• Extend devolution deals more widely so that decisions on transport and infrastructure link up with national and local investment priorities
• Examine how the tax system can play a much stronger role in accelerating investment in new technology
• Set out a clear role for embassies and commercial posts in supporting new market access, along with a greater commitment to promote the export support available from the Department for International Trade
• Ensure the shift to a low carbon economy is clearly integrated with an industrial strategy
• Provide more detail on the sign off process, governance and timescales on sector deals to ensure these arrangements add value to the ‘cross-cutting’ industrial strategy pillars and drive local growth