Our manufacturing sector holds the key to ‘levelling up’ Britain
Government must invest in manufacturing to raise productivity levels and unleash the potential of the regions, writes Lord Bilimoria
In recent months the Government has begun explicitly referring to “levelling up” the regions of the UK, with a focus on devolving power and raising the productivity of the whole country. This commitment is hugely important as the Government looks to address productivity and close the gap between the regions, and London and the south-east.
Manufacturing plays a key role in our economy, accounting for around 10% of GDP or up to 23% if you include its induced spending in support and services. The sector also remains a core component of the economy in the regions of the country. If the Government is serious about levelling up the regions of England, then manufacturing must have a key role to play.
The Manufacturing Commission – which I chair – is the research arm of the All-Party Parliamentary Manufacturing Group (APMG) and has spent the last 12 months looking at how manufacturing in the regions can be driven forward to level up both regional productivity and output.
The inquiry began by looking at how the Local Industrial Strategies could be shaped to best support the sector but, over its course, has developed a wider set of recommendations to drive manufacturing productivity across the country.
“If our recommendations are implemented, they have the potential to shift the landscape of manufacturing as we know it”
The report looks at five areas in which the Government must act if it is to realise the potential of manufacturing, and with it, the potential of the regions.
First, to give business certainty to invest in the long term, Government must create a strong national policy framework that ensures we address the challenges of today, but also of the future. This will require oversight at a national level.
Second, we must build on the experiences of the Northern Powerhouse and Midlands Engine to create uprated networks of cooperation at the regional level.
The third area the report considers is the importance of innovation to the success of manufacturing. Industry is highly innovative, but as the Government increases the R&D spend to 2.4% of GDP and beyond, targeting of this spend will be paramount. This will require the Government to take a new approach to R&D investment by looking at how regional strengths and opportunities can be maximised by looking beyond the usual lower-risk recipients.
However, without investment in technology and skills, none of this will be possible. The fourth section of the report considers how the uptake of industrial digital technologies, particularly into SME businesses, will increase productivity and grow the sector. It then looks at how skills networks can be developed to ensure that industry demand is met by local provision.
The final section of the report looks at the importance of business funding. As we leave the European Union, the opportunity to further reform business funding is too great to miss. The Government needs to use the incoming UK Shared Prosperity Fund to enable local leaders to spend money in line with their targets and long-term goals.
This opportunity cannot be overstated. If the Government enacts the recommendations we set out in the report, it will level up the regions by creating a stable context for investment, uprating regional manufacturing by connecting it to the innovation support it needs, addressing the productivity gap and providing more high-quality jobs.
If our recommendations are taken on board and implemented by the Government, the impact has the potential to shift the landscape of manufacturing as we know it, serving as a catalyst for change within the Government and industry. I look forward to our manufacturing renaissance.
Level Up Industry will launch in the Jubilee Room on Wednesday 26 February between 11am and 1pm.
Lord Bilimoria of Chelsea is a crossbench peer and chair of the Manufacturing Commission
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