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What next for UK Manufacturing Industrial Strategy?

If only we were as good at implementing report recommendations as writing them, the UK would be a world class manufacturing economy. The R&D Society has long argued for stability in industrial policy instead of continually discarding and reinventing common themes in which most other major industrial countries (China, US, Germany) have a long-term planned industrial strategy. Greg Clark’s Modern Industrial Strategy was abandoned by the then Chancellor, Rishi Sunak. It was therefore a surprise to see the announcement in the FT in September that UK business secretary, Kemi Badenoch, is urging the Treasury to provide financial firepower for a new “advanced manufacturing plan” that will set out how Britain intends to compete in the cut-throat fight for global investment. The present Chancellor, Jeremy Hunt, said in March that he would use his Autumn Statement to respond to the challenges created by the US Inflation Reduction Act (IRA) and he has identified advanced manufacturing as one of the key growth sectors that the government wants to support. We do not know what is in this plan but the government would be well advised to build on significant prior reports in this area rather than starting from scratch. The first was the 2013 Foresight report into The Future of Manufacturing. The project aim was to take a long term and strategic look at manufacturing out to 2050. Ten years on, not much appears to have been done although the analysis and recommendations are still highly relevant to a UK manufacturing strategy, namely:

Government needs to act in three systemic areas to:           

  • exploit new forms of intelligence to gain sharper insights into the sector and wherevalue is being created;
  • take a more targeted approach to supporting manufacturers, based on a system-wide understanding of science, technology, innovation and industrial policies; and
  • adapt and build innovative new institutional capability for the future.

Policies and measures also need to be developed to support manufacturing as it becomes:                             

  • faster, more responsive and closer to customers;
  • exposed to new market opportunities;
  • more sustainable; and
  • increasingly dependent on highly skilled workers.

Then there was the Made Smarter Review 2017. This 231 page report was created following an industry-led review of how UK manufacturing industries can prosper through digital tools and innovation. This independent review was commissioned by UK Government and led by Professor Juergen Maier CBE, Co-Chair of Made Smarter. The Review made 4 key recommendations:

  • Leadership - More ambitious, informed, and focused leadership for digitalisation.
  • Adoption - More widespread adoption of technology across supply chains, especially amongst SME makers.
  • Innovation - Faster innovation and creation of new tech, new companies and value-streams.
  • Skills - Upskilling workforces and identifying future skills.       

A year later, in September 2018, the Made Smarter Commission (a group of industry business managers and academics) was created to oversee implementation of the Review recommendations and establish a pilot programme. The R&D Society commented in May
2018 that, “considering the size of the challenge facing industry in the near term this does not seem like a strong enough response to Juergen Maier’s Review.” Today the MadeSmarter organisation offers advice, training and conferences but has yet to publish details of the impact these initiatives are having. What a quick boost to UK economy could be had if instead of re-inventing ‘new’ plans, this Government invested in this area to proactively engage with industry to build on the work already started.

All this is a backdrop to continual confusion over a lack of any industrial strategy. A government minister claimed last week that the proposal to invest £500 million in Tata’s South Wales steel plant was a strategy!

Meanwhile, industry calls for a Royal Commission on Industrial Strategy in a major report and survey published in May 2023 by Make UK, The Manufacturers organisation. The report, ‘Industrial Strategy – A Manufacturing Ambition.’ on Make UK’s website says,

The UK manufacturing sector is an essential contributor to the country’s economy generating £206bn gross valued added in 2022 a fifth higher than a decade ago. It accounts for around half our exports, two thirds of spending on research and development and accounts for a significant level of business investment. The sector employs around 2.6m highly skilled people across the UK, many of them in areas that need levelling up. In short manufacturing matters to the prosperity and security of the UK. The sector is now at a critical juncture. Ten years ago Make UK (then EEF) set out its case for an industrial strategy. Since then we have had six plans for growth but now find ourselves without one. There is broad agreement among stakeholders about what the UK needs for a successful industrial strategy. These can be broadly categorised into five themes, skills; infrastructure; finance; innovation and the business environment. To these can now be added significant shifts in the policy landscape from the post Brexit and pandemic landscape, the transition to net zero, rapidly accelerating technologies spinning out from the fourth industrial revolution and the political imperative to spread growth more evenly across the UK. Internationally the UK risks being squeezed between the US Inflation Reduction Act which is already having a significant impact on drawing in green investment. Similar measures are also being proposed by the EU. In the face of these the UK is the only developed nation without an industrial strategy. Yet, never has the case been clearer to adopt one. We now have the opportunity to harness the undoubted strengths the UK possess in its academic and research base working with manufacturing companies who are highly innovative. They are clear that an industrial strategy would bring the benefits of a long term vision and a stable environment in which they can plan, invest and grow.” Key findings of their survey:

  • Majority of companies believe there has never been a long term Government vision formanufacturing
  • As a result, companies say lack of an industrial strategy hinders their ability to accessskills and puts them at a competitive disadvantage compared to other Nations
  • Manufacturers believe an industrial strategy would provide long term vision, a stableenvironment and accountability
  • US Inflation Reduction Act worth 1.5% of US GDP, UK equivalent would be £33bn
  • Most companies believe an industrial strategy should be monitored by a non-Govern-ment body and reviewed every three to five years
  • Manufacturers believe technical and management skills should be the core priority ofan industrial strategy, followed by innovation, green transition and digitalisation

This would be backed by a new Industry Strategy Council to ensure the strategy is monitored by an independent body, while the Cabinet Office should be given responsibility for policy co-ordination across Government (The same recommendation made in the Foresight Report ten years ago).

Just released, we now also have the Government’s so-called Digital Strategy. Let’s see if it joins up and has the real potential for impacting the UK economy over the next few years ....



Dr David Hughes FREng, CDirSeptember 2023