Ideal Queen's Speech: Put manufacturing at the heart of industrial policy

“My Government will introduce a Bill to place growth in manufacturing at the heart of economic and industrial policy”

Much of the recent decline in manufacturing has been in the Energy Intensive Industries (EIIs) of which the pulp and paper sector is one. Between 2000 and 2010, production fell by one third as half of the UK’s paper mills closed. The result is that the UK now imports two-thirds of the paper that it consumes. Thousands of well paid jobs were lost – mainly in areas of high unemployment. This decline has, though, had one benefit. It has helped the UK to claim success in reducing carbon emissions - whilst at the same time overlooking the fact that we have ‘exported’ this carbon, only to ‘import’ it again embedded in products now made abroad!! This is the industrial policy of the madhouse. Success in tackling climate change should be measured in terms of carbon consumption and not emissions.

It is not, however, just our fixation with climate change that has led to this decline in manufacturing; it is the total burden of legislation and regulation, combined with a failure to fully integrate and liberalise Europe’s energy markets. The cumulative impact has left many industries unable to compete in the global market place in which they now all have to operate.

We need to ensure that manufacturing policy is put at the heart of EU and UK government thinking. We can no longer allow it to be an afterthought once environmental, climate change and social policy measures have been agreed; by then it is too late. Legislation and regulation needs to be appropriate, affordable, consistent and backed up by rigorous impact assessments. Manufacturing cannot expect to remain internationally competitive if it is subject to the micro-management of excessive and often highly complex regulation, and the legislation, high energy costs, and taxes and levies not applied in other parts of the world.

A sense of realism needs to pervade government. It is simply not living in the real world if it expects industry to achieve targets which are physically impossible to meet, or which need investment on which there is no discernable return. The 2050 target to reduce carbon emissions by 80% is a classic example. For the Paper Industry, this is less than two investment cycles away and to achieve it will require the development of breakthrough technologies. Some potential solutions are at the very early stages of development but will need time and money to bring to market. Government has a huge role to play here by allocating resource to this type of innovative research and development – something that so far it has manifestly failed to provide.

In short what we need, if we are to grow manufacturing in the UK and in Europe, is a new and far reaching approach to policy which significantly reduces ‘stick’ as a motivational tool and replaces it with much more ‘carrot’.

David Workman is the Director General at the Confederation of Paper Industries