Lord Bilimoria: If the government is serious about supporting manufacturing, the industrial strategy must be implemented at a local level
Living and working in an area and understanding the nuances and intricacies of that place makes you best positioned to decide what should happen, writes Lord Bilimoria
UK manufacturing has undergone something of a renaissance in recent years. However, clouds loom on the horizon with Brexit threatening just-in-time supply chains, and technological change heightening uncertainty for workers. This is precisely why a well-crafted industrial strategy that reaches all parts of the UK is essential for future prosperity.
Since the financial crisis, Britain’s productivity levels have stagnated. While we have come a long way since our nadir as the ‘sick man of Europe’ in the 1960s, we need effective action to reinvigorate the economy and drive productivity forward. Low take-up of readily available technologies and management best practices is driving the UK’s productivity problem. While the UK’s best performing firms are highly innovative, best practice must reach a greater range of businesses, improving productivity through the adoption of proven technologies and ideas. This would help to close the productivity gap between the ‘best’ and the ‘rest’ of UK businesses, and also potentially reduce the difference between the highest and lowest earners.
In the last few years we have seen moves by government to address this deficit by creating an industrial strategy to drive productivity forward. As a believer in the power of business to overcome challenges, I have long been sceptical about the ability of government to take an active role in the affairs of industry. However, following a conversation I had recently with Andy Haldane, Chair of the Industrial Strategy Council and Chief Economist at the Bank of England, at an event I chaired for the All-Party Parliamentary Manufacturing Group, I can see the benefits of an effective strategy that seeks to – as Andy put it – “support not supplant industry”.
Interestingly, Andy put strong emphasis on the importance of ‘place’ – one of the five foundations of productivity – to the success of the industrial strategy as a whole. This rung true for me because as a businessman, having spent the last 20 years immersed in my business, I am best positioned to make decisions about it and when it comes to places it is no different. Living and working in an area and understanding the nuances and intricacies of that place makes you best positioned to decide what should happen and, most importantly, what will work for your particular locality. Whitehall blueprints won’t do that, and I believe that has been recognised by the government in initiating the local industrial strategies.
In order to galvanise thinking about manufacturing in each locality, the Manufacturing Commission –which I chair – is holding a series of events around the country. Our objective is to trigger debate and ensure decisions around manufacturing and the local industrial strategies are suitable for the areas they affect. It is crucial to the long-term success of the industrial strategy that all parts of the UK benefit, with cross-party support. We have assembled a Commission with representatives from business, academia and the third sector to carry out that locality-based analysis of manufacturing potential and understand what support is needed at the local level.
The first of these events was held in Leicestershire earlier this month, hosted by Norton Motorcycles, and the second will be held in September, hosted at Cummins Turbo Technologies in Huddersfield. We are hearing from Local Enterprise Partnerships about their plans for their localities, and most importantly, we are listening to the concerns and plans of local manufacturers to ensure that what is offered meets the needs of those in the area.
If this government is serious about the industrial strategy making a real difference, it must close the productivity gap we have with our nearest neighbours; to do this it will have to deliver for business at the local level. If the local industrial strategies are to help achieve that, the government must empower places to build on local strengths while also increasing appeal to inward investment. This will only be possible if government listens to and works in partnership with local leaders, allowing a true understanding of the complexities and differences of different localities.
Lord Bilimoria of Chelsea is a crossbench peer, vice-president of the CBI and chair of the Manufacturing Commission