Stephen Temple

In July the UK Department for Business, Innovation and Skills brought out a paper called “A Strategy for Sustainable Growth”. I took encouragement from the paper in that it represented a continuity of industrial policy, even through the UK has gone through a change of government. Continuity of policy is an absolute pre-condition for the re-building of the UK manufacturing base since it will not happen over-night or even over one Parliament.

This is a positive departure from the past. When I was at the DTI (over a period of 12 years) Ministers came and Ministers went… around every 18 months in fact. Over the whole of that period only one Secretary of State and a couple of Junior Ministers really understood the challenge and importance of manufacturing to the UK. The Secretary of State was Michael Heseltine. But his insightful reign was short lived. There followed the10 totally wasted Blair years from an industrial policy perspective.

The next man of stature who “got it” (well after I had left the Civil Service) was Peter Mandelson. Another short burst of enlightenment…then a general election…my expectation was of another long bout of industrial policy neglect during which our manufacturing base would continue to hollow-out. The pleasant surprise is that many of the thoughtful industrial policy initiatives of Peter Mandelson appear to have been picked up by Vince Cable. Of course it all has to be re-badged and called something else…in this case “a growth agenda” instead of “industrial activism”. But when common sense prevails who is going to argue over the label. It is what is in the tin that counts.

So what is in the tin? My reading of the BIS paper is that ticks many of the right boxes, is credible as far as it goes, is man enough to hold the line but it is simply not radical enough to significantly advance the manufacturing game for the UK.

My observation of the global industrial eco-system operating in very open markets is that there is space for many very small niche players and space for the mighty global giants but a relatively short life span for those trying to survive in the space between. All the raging competitive global forces are harnessed by the strong to get stronger and the weak are slowly ground down to become weaker. And the UK… as a manufacturing country… is weak. No amount of adjusting of currency exchange rates or de-regulation or new global trade deals or any of the other old mantras can power up a weak industrial base to become a strong industrial base. Market forces see to that. To redress these powerful gravitational forces requires a counter force that can only come from an uncompromising application of focussed political and financial energy behind an intelligent industrial strategy.

Now don’t get me wrong. The BIS paper does represent an intelligent industrial strategy but for a government whose Number One priority is elsewhere…namely cutting the public debt. Just look at the challenge that Vince Cable himself identified of transforming a UK economy reliant on debt, inflated house prices and a swollen financial sector…and it becomes clear the mighty forces that would have to be marshalled to arrive at the happy position of say where Germany finds itself today. When I first entered manufacturing industry the UK was stronger than Germany in many key areas…so it is not an impossible dream.

I just do not read into the BIS paper the political will, the vision, the radical ideas, or total commitment to radically transform the UK’s manufacturing fortunes to say catch up with Germany…but it could be that I am jumping the gun. Vince Cable promises us a cross Government White Paper later this year and perhaps he is keeping the best back to surprise us later. Let’s see.

Update April 2011 – The news on this front is encouraging and the really pleasant surprise is what is now coming out of  Treasury. The proposals for the enterprise zones and tax credits for R&D is starting to put in place some of the essential component parts of a industrial growth strategy. We may have for the first time in UK modern history a Chancellor who “gets it” in terms of the industrial policy challenge facing the country.

That said there remain some glaring gaps in a credible manufacturing strategy. The first is any sort of quantification of goals and time-scales. The second is an over-arching story-line to connect the disparate individual initiatives. One of the benefits of a good industrial strategy story line is the way it can galvanise additional private sector energy behind that strategy. The third is a clear exposition of the choices being made and scale of new resources being brought behind them to make a difference. Finally is what the government intends to do to change the culture of the stock market and banks that supports long term investment in manufacturing.