Britain under-performing across ‘foundation industries’, says IPPR
With Tata holding a board meeting in India tonight which could decide the fate of thousands of UK workers, IPPR is arguing that the problems facing the industry are part of a wider problem.
IPPR research has found that Britain is under-performing across the ‘foundation industries’ such as metals and chemicals. Since 2000, the share of GDP contributed by such industries has shrunk by 43%, compared to an average decline across the OECD of 21%.
Foundation industries have flat lined during the economic recovery, with employment still 100,000 lower compared with before the recession.
IPPR says that Britain is now unique as a major developed economy in having such a small and struggling core materials sector. As well as performing worse than most of the OECD, Britain is near the bottom of the EU league. Globalisation is partly responsible, but stronger performance in other developed countries shows that Britain can do better, according to the IPPR.
An IPPR reports, however, argues that the government could do more to boost the sector, and even small improvements in competitiveness could add billions to gross output and create tens of thousands of extra jobs.
The report makes a number of recommendations, such as:
- Action to ensure a level playing field on trade and energy costs with our European competitors;
- Boosting investment and improving productivity - we recommended repurposing the Regional Growth Fund to target investment in the supply chains that are supported by foundation industries, such as aerospace, automobiles and pharmaceuticals.
- Supporting industry clusters - we recommend renewing the Advanced Manufacturing Supply Chain Initiative and plugging foundation industries into the UK’s the Catapult innovation network
- And rather than allowing firms go bust that have a potentially viable future, the UK should introduce a ‘right to buy’ for employees, ensuring Britain’s industrial capacity isn’t permanently lost during a period of global economic turbulence and spreading ownership in the process.
Mat Lawrence, IPPR research fellow, said, “As the perilous situation in Port Talbot shows, the UK steel industry is in crisis – and we can’t put it all down to volatility in the global market. The sad fact is that Britain is doing worse than most of the rest of Europe and the OECD across industries such as metal and chemical production. Something is going badly wrong with the way we support our foundation industries.
“But there is a route out which could secure the sector’s future and potentially add billions to the economy and tens of thousands of jobs. For that to happen, we need to do more to increase both public and private investment in the sector to boost productivity, and improve the integration of steel and chemical firms into expanding industrial clusters such as aerospace and car manufacturing.”