As a member of MAKE UK’s National Economic Policy Committee (ECPOL) Hallam has been invited to comment on the Governments October 2024 Industrial Strategy green paper “Invest 2035: The UK’s Modern Industrial Strategy” as part of MAKE’s formal response on behalf of the manufacturing sector. ECPOL is meeting Department of Business and Trade officials in London on 9th January to discuss the green paper proposals.
Hallam MD Rob Pickersgill comments:
“The 2022 Cambridge University Innovation report echoes the contention in other authoritative papers that high productivity sectors like manufacturing should be funded and expanded in order to achieve “spillover” improvement to productivity in the rest of the economy. This has not happened in the past: the Cambridge report states that
“Between 1998 and 2019, the manufacturing sector had one of the highest productivity growth rates in the UK economy, but it was also the sector whose share in the economy decreased the most (from 16.1% to 9.7%) during this period.”
This is mainly because manufacturers have been starved of external investment funds. A Canon Institute paper refers to collateral (security) in bank lending criteria as overriding; lending to manufacturers, although a high productivity sector, is simply less attractive than lending to collateral-rich sectors like landholding and real estate.
The Government must recognize and redress this failure of the funding marketplace. Contraction of the manufacturing sector has led to the loss of spillover benefits for the whole economy. In terms of sector support, the Cast Metals Federation correctly stipulates that:
“There should be particular emphasis in the industrial strategy on subsectors that support multiple supply chains with the same capability, in the way the castings sector supplies defence, clean energy, advanced manufacturing, and digital sectors.”
I don’t hold out much hope for this: I think we will find support only for the “glamour” high profile sectors, reflecting so-called “moonshot” thinking, but ECPOL will do its best to try and persuade the Government to adopt a more imaginative approach to its growth mission.”
