Britain must be cut loose from its “bonkers” manufacturing shackles if it wants to avoid the worst recession in 300 years, a new report says.
A think-tank launched by businessman John Mills urges the Government to restore the UK’s once-proud status as one of the world’s great producers.
The report says jobs must be restored in some of the hardest-hit regions to tackle inequality and avoid the double risk of low growth and a further fall in living standards.
It also claims that former manufacturing heartlands and coastal towns – where industries have long since disappeared – can be brought back to life.
Mr Mills, the majority shareholder of consumer goods company JML, said: “We’re looking at bringing back the
sort of industry we used to have that has now disappeared – some low-tech, some hi-tech.
“If you go to a DIY store or department store and have a look round at some of the merchandise in there, it’s made in China or Germany. That’s the sort of stuff we ought to be making.
“It’s ridiculous that we can’t make Christmas lights or pressure washers or toasters. It’s bonkers we can’t make a kettle. There’s nothing magic about making a kettle so why are we getting them from 5,000 miles away?”
British manufacturing has been in the doldrums for decades. It currently contributes less than 10 per cent to the UK economy.
But the report says investing in manufacturing – particularly the medium and low-tech form – will produce more growth and complement the country’s strong service sector.
It also argues that a small manufacturing base meant the UK was too slow to respond to the Covid-19 outbreak.
In contrast, countries with a larger manufacturing sector – such as China, Germany and South Korea – were able to produce personal protective equipment (PPE) and testing kits much quicker.
As a result, they were far less reliant on imported PPE, like Britain.
Mr Mills, a Labour donor who founded the Labour Leave campaign, added: “Switzerland is an interesting case, where the standard of living is very high.
“Twenty per cent of their GDP comes from manufacturing. Here, it’s less than 10 per cent.
“We’ve got about eight per cent of our labour force in manufacturing, whereas Switzerland’s got about 16 or 17 per cent.
“And these are really good high-paid jobs with satisfying, well trained occupations for everybody.
“This is back where we were, where
we ought to be.
“If you have lots more of these jobs, they wouldn’t be in London. They’d be in all these places that got left behind.”
The report says the Covid-19 outbreak had exposed flaws in the economy and shown the UK’s uncompetitive manufacturing base.
Mr Mills went on: “The problem we have is that the population of the country was originally built up around industrial development. That’s now evaporated to a large extent.
“It means these areas now have nothing much to sell to the rest of the world.
“It’s hardly surprising they’re dependent on handouts and subsidies from London.”
Mr Mills fears that if the economy is not changed quickly, the future will be bleak for the current generation and austerity will never end.
He said: “The danger that we’re really facing is the economy growing at only one per cent per annum.
“In 2030, we’re going to have people poorer. Most people in this country are going to be poorer than they are now, and poorer than they were in 2007.
“So you are going to have a whole generation basing poverty on austerity and cuts in public services and rising inequality, which is going to be politically damaging for these regional areas we’ve been talking about.”
In his report, Mr Mills says the Government must create a fairer playing field for UK manufacturers to allow them to compete globally.
This could include a new currency rate policy that brings down the exchange rate – vital to boosting global trade.
A fall in the value of the Pound would also see exports become cheaper and imports more expensive.
This would have wider benefits for the economy as growth increased.
Figures from the GMB union show the UK lost almost 500,000 manufacturing jobs in just 10 years.
It found that between 2008 and 2018, 476,500 jobs disappeared from the sector.
Jude Brimble, GMB national secretary, said UK manufacturing was at “a crossroads” and called for “decisive action” to be taken.
Caroline Flint, former MP for the Don Valley, also echoed Mr Mills’ call to kick-start the manufacturing industry in Britain.
She said: “We don’t always learn from a crisis in this country. This time, when we come out from the virus into an even greater recession, it’s going to be really tough. I think the public will want things to be different.
“We’ve been talking about rebalancing the economy for a long time, and the way to bridge the gap between the North and South is through manufacturing.
“If we make more, we trade more and we create the sort of jobs that mean if – God forbid – we ever hit a crisis again, we’re in a situation where it’s us who can make the PPE and the vaccines.138208672551
“Work, the quality of work and what people value in themselves – and their communities – is at the heart of this.”
Ms Flint’s plea to redress the North-South divide is timely.
In the last six weeks, the unemployment rate rose from 4.2 per cent to 6.7 per cent in Greater Manchester, compared to a rise from 2.2 per cent to 2.9 per cent in the South East.