Drives & Controls July / August 2022

TIME TO SET A GROWTHTARGET? The UK’s manufacturing sector currently accounts for around 10% of the nation’s GDP. The country is still one of the world’s ten largest manufacturing nations (just), coming in at ninth place with around 1.8% of global manufacturing output. China dominates the league (according to United Nations figures for 2019) with 28.7% of global output, followed by the US on 16.8%, Japan and 7.5% and Germany on 5.3%. The UK lags behind Italy in seventh position (with a 2.1% global share) and France in eighth (on 1.9%). So, is there any prospect of the UK climbing higher up this league? Yes, according to a survey of 127 UK manufacturers conducted recently by their organisation, Make UK. On the basis of this survey, the trade body suggests that the manufacturing sector could realistically expand from 10% to 15% of GDP – but will need help from the Government to do so. For a start, Make UK wants the Government to reinvigorate its industrial strategy and set the 15% figure as a target. This, it calculates, could result in a £142bn boost for the UK economy. The survey reveals that nine out of ten manufacturers believe that a national target of this type is needed. The manufacturers say they are ready to grow, but they cannot do so alone – they need support from Government to create the right environment for them to thrive. For example, they would like the “super deduction”tax to be extended to help kick-start investment until a generous long-term capital allowance scheme is introduced. To give manufacturers the confidence to make bigger, bolder decisions, Make UK suggests that the Government should make the Annual Investment Allowance increase permanent. It would also like the r&d tax relief scheme to be expanded to include capital spending. Some manufacturers say that help for them to invest in digital technologies such as AI would speed up their growth plans. These technologies are already transforming the sector, with some manufacturers already seeing benefits such as higher productivity, and lower costs and carbon emissions. But companies say they need help to invest further in more efficient equipment. When Make UK asked its members to pick initiatives that would help them to expand their businesses, top of the list was greater incentives for investment, being cited by almost half (46%) of those quizzed. More than a quarter (28%) think that bigger investments in apprenticeships would make a big difference to their ability to grow, and want the Apprenticeship Levy to be reformed to make it work better for business. Some 23% of manufacturers feel that infrastructure improvements would help to kick-start growth, while 22% believe that local industrial strategies with greater power for local leaders to make decisions is a key. The manufacturers also want a business rates scheme that helps, rather than hinders, business investment decisions. Make UK’s survey reveals that 75% of UK manufacturers have not heard of the Government’s“Plan for Growth”, launched earlier this year as the replacement for the long-awaited industrial strategy. “Government has already identified manufacturing as a growth sector and has done much to support it, firstly through the incredibly challenging environment of the pandemic and with a series of measures to help the sector bounce back as trade started to normalise,”comments Make UK CEO, Stephen Phipson.“However, to further tap into the growth, agility and resilience Britain’s manufacturers have shown over the last two years, imaginative solutions are needed to make sure the full potential is reached. “It is not an overly ambitious target to say that manufacturing can grow to deliver 15% share of UK GDP,”he adds,“but Government does need to help companies be confident enough to make big investment decisions by helping with some key incentives such as making the Annual Investment Allowance increase permanent and expanding the r&d tax relief scheme to include capital expenditure.” Let’s hope that important decisions such as these do fall by the wayside as the Conservative Party is distracted by the election of its next leader and the nation’s next Prime Minister. Tony Sacks, Editor n COMMENT