UK manufacturers call for government action on boosting productivity

The EEF said that the Council is needed to get on with “the urgent task of setting clear goals that will focus on solutions to boost manufacturing productivity growth”.

The government promised to create a new Industrial Strategy Council when it set out its industrial strategy in November 2017. The strategy’s aim is to transform productivity and earning power across the UK by 2030 so that the country is “the world’s most innovative economy and the best place to start and grow a business, with upgraded infrastructure and prosperous communities across the country”.

The Industrial Strategy Council is to be responsible for assessing the government’s progress toward achieving the strategy’s goals and for making recommendations to the government, according to the strategy. However, the Council has still not been established more than five months after the strategy’s publication.

The EEF’s call for action comes with growth figures for the UK’s manufacturing sector at less than 1% for each year since 2008, albeit with “divergent” performances across sub-sectors such as automotive, pharmaceuticals, and food and drink.

Lee Hopley, chief economist at EEF, said: “We’ve known about the productivity problem for some time with various attempts made to try and fix it across the whole economy. Productivity growth matters for wages and international competitiveness yet ten years on from the start of the financial crisis these attempts have not delivered a major shift and we need to tackle the challenge in a different way. Manufacturing offers a good area to get gains on productivity growth.”

“The Industrial Strategy Council should now be created urgently and put to task to identify how the overall strategy can improve productivity in those industrial sectors where it has lagged,” she said.

The EEF also called on the government to “provide clarity on the purpose of sector deals and better project management of those in train” before the UK parliament breaks for summer. So-called ‘sector deals’ are at the heart of the government’s published industrial strategy.

Since November 2017, sector deals have been concluded with the artificial intelligence (AI) industry, the automotive, construction, life sciences and creative industries sectors.

In each case, the sector deals have comprised a package of measures designed to boost productivity, such as funding commitments from government and industry for research and development initiatives, to steps to attract and retain talent and improve collaboration between industry, government and academia.

The EEF also said that “the foundation of formal governance arrangements” is also needed to assist in the delivery of “effective local industrial strategies”. It said: “We need a devolution framework setting out what is on offer, and what governance is needed to unlock it.”

It further called for the government to outline how it plans to help UK manufacturers export overseas, and tackle “the UK’s long tail of less productive firms”.

The EEF said the focus should be on supporting large manufacturers to help them outperform international rivals, but said the solutions needed could not be delivered simply by boosting capital investment.

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