We must invest in industry if we are to compete with China and US in the global green economy
Last month, Make UK, which supports Britain’s manufacturing, called on the Government to stop flip-flopping on industrial strategy and instead place British manufacturing at the heart of the plan to tackle regional inequality and Britain’s competitiveness.
“A lack of a proper, planned, industrial strategy is the UK’s Achilles heel,” said Stephen Phipson, Make UK’s CEO. “Every other major economy, from Germany, to China, to the US, has a long-term national manufacturing plan, underlying the importance of an industrial base to the success of its wider economy.”
His comments could not be more timely. After witnessing a decade of China enhancing its economic and political influence by exploiting the disunity and naivety of Western politicians, many of whom mistakenly expected the country to integrate with the liberal world order, Britain is now faced with the new reality of Joe Biden’s £292 billion Inflation Reduction Act.
Biden’s Act is a response steeped in the realpolitik that we are no longer in the kumbaya world of the 1990s. Most national governments now understand that a strong domestic manufacturing base is absolutely essential to building the resilience and sovereign independence that a country requires to survive in this new age of authoritarianism.
They know that manufacturing also provides an opportunity to deliver sustainable growth, good jobs and higher living standards in the face of the green transition.
Alarmingly for the people of Britain, Rishi Sunak is just about the only leader of any Western country who is failing to understand the importance of this quest for growth and resilience.
An industrial strategy is nowhere to be seen. The Prime Minister and his Chancellor seem trapped in a bygone era, blind to the reality of the world around them, with Sunak openly speaking out against the idea of subsidising British industry, having already scrubbed the words ‘industrial strategy’ out of the Business department.
Sunak and Chancellor Jeremy Hunt might tell themselves that they are walking a narrowing diplomatic tightrope as we enter the new world of major player competition.
Indeed, on deeper introspection, the pair’s indication that they are ideologically unwilling to respond to the actions of China, the US and the EU by investing and subsiding where necessary represents a grave threat to the economic future of dozens of British industries and our country’s broader economic resilience and independence.
This is because China’s state-backed companies, Biden’s new Act and the imminent EU equivalent are likely to hoover up huge swathes of green investment and lead to the offshoring of green growth, good jobs and our economic security. Yet Britain’s leadership is ideologically opposed to doing anything about it.
The Labour Party has, however, spent the last two years developing its plans to attract green investment and deliver the jobs that every region of the UK so desperately needs.
Rachel Reeves, the Shadow Chancellor, has been absolutely clear that Labour will help British manufacturers of all sizes to make, buy and sell more in Britain.
This will be done through commitments to change procurement rules, reforming business rates and delivering a National Wealth Fund to invest in projects nationwide.
And in her recent speech to the Peterson Institute in Washington DC, she spelt out in the clearest terms yet that industrial strategy will be at the heart of her plans for green growth and resilience.
‘Securonomics,’ as Labour’s Shadow Chancellor calls it, is based on her view that: “Globalisation as we know it is dead… We must care about where things are made and who owns them. [We need] a more active state, one that is willing to invest in building the capacity of the industries that will determine the nation’s success tomorrow.”
At the heart of the Labour Party’s mission to boost British industry sits our Green Prosperity Plan and the Industrial Strategy set out last year by shadow Business Secretary Jonathan Reynolds. A core pillar of that strategy is the quest for resilience, and this is illustrated by the commitment to a three billion pound Steel Renewal Fund.
Three billion pounds might feel like a bold commitment to support the transition to green steelmaking, but consider this: the Canadian, Spanish and German steelmakers are investing the equivalent of up to a billion pounds to decarbonise single plants. Their governments understand that they are in a global race, with steel demand rising and the future security of their nations depending on their ability to decarbonise.
Of course, the transition should happen as a partnership between government, unions and employers, to ensure that workers are developing the skills they need for the economy of tomorrow. Decarbonisation must not mean deindustrialisation. But the cost of doing nothing will be greater to workers and business owners alike.
Yet the Conservative Government appears completely uninterested in investing the level of funding required to keep British steel competitive.
Electricity prices for British steelmakers remain between 60 per cent and 80 percent higher than the costs faced by firms in other leading European nations, while the Government’s post-Brexit procurement strategy has failed to materialise, with not a single tonne of British steel being used in our wind farms.
We need action and we need it now. Britain needs its steel, and currently one thing is abundantly clear; Labour is the only party on the pitch when it comes to promising a serious industrial strategy.
Stephen Kinnock is the Labour Member of Parliament for Aberavon, home of Britain’s largest Steelworks.
A longer version of this article appears in Centre Write, the magazine of the Bright Blue think tank
