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Levelling Up: manufacturing remains sceptical

Author: ICAEW Insights

Published: 26 Apr 2022

A recent Make UK report shows that the government has an uphill struggle to convince manufacturers in the north of England and in devolved nations to engage with Levelling Up.

Mark Telford, Managing Director of engineering company Forth, feels that from a business and economic perspective the north west, particularly Cumbria, has been ignored by central government. Since the government has been focused on its Levelling Up agenda, this has been felt more acutely.

Telford expresses some frustration that Cumbria is thought of purely as a holiday destination: “There is much more to the area than just hospitality. There is a lot of world-class and amazing work carried out by engineering and manufacturing companies here.

“We have proved time and again we can produce work that has a positive impact on industry across the globe. With more investment from the government, we could do this on a much larger scale. This in turn would lead to the creation of more jobs and a huge boost to the economy, so it would be an easy win for the government, in my opinion.”

Telford’s sentiments are largely reflected in the manufacturing sector across the UK. In the north particularly, there’s a distinct dissatisfaction in the government’s progress with Levelling Up. The majority (37%) of respondents have a neutral view of the agenda, reflecting a ‘wait and see’ attitude within the sector. 

The government and prime minister have made a number of speeches and announcements shedding more light on the agenda and proposed plans, which has helped to shift sentiment somewhat. 

But despite the numerous messages, there remains a significant amount of scepticism among manufacturers as to how beneficial any action will be. Troublingly for the government, the manufacturers that are most positive about Levelling Up are based in the already ‘Levelled Up’ regions such as London and the south east. 

Businesses in the north east, Yorkshire and the Humber, East Anglia, and the north west – the regions most targeted by Levelling Up – are those most dissatisfied with the government’s current progress. There is a clear issue in effectively engaging and communicating with manufacturers in these regions to convince them that the agenda can be of benefit.

“Unsurprisingly, 30% of manufacturers – the largest share – said they are yet to see any benefits of Levelling Up for their businesses,” states the Make UK report. “We have long argued that until manufacturers can see real, tangible change on the doorstep of their business, the feeling will be that Levelling Up is not taking place. This becomes even more challenging the more that the term ‘Levelling Up’ is used across national government, but no change is seen at a local government level.”

The report found there was a risk that overuse of the phrase ‘Levelling Up’ will result in northern businesses feeling more disengaged as they cannot see any quantifiable benefit. 

“Key to delivering this is for the government to give us a much-needed National Manufacturing Plan to concentrate growth in those areas that need investment the most, and where there are the people ready and waiting to take up the new jobs the manufacturing sector could provide,” says Ben Fletcher, COO of Make UK.

This matters a lot, he says; by boosting manufacturing from 8% of GDP to 15%, an additional £142bn could be added to the UK’s economic output. This in turn “would support the creation of thousands of new jobs where they are most needed”, Fletcher says. “Boosts to infrastructure and skills are clearly needed and a dramatic improvement of digital connectivity will allow companies from the whole of the UK to compete successfully on the global stage and deliver true Levelling Up for all.”

Manufacturers across the board want to see better support for skills training and the creation of job opportunities. The government has introduced a number of skills initiatives including the National Skills Fund and IoT (Internet of Things) programmes, but they are probably not adequately plugging the gap, according to the report. 

Programme design may not be the issue; it could be more a lack of awareness. Almost a third (29%) of manufacturers had not even heard of the National Skills Fund and just over a fifth had actually engaged with it. Only 10% of manufacturers had heard of IoTs.

“The manufacturing sector has a great potential to create jobs outside London and the south east, as well as supporting our transition to net zero, if government strategies can speak to the priorities of businesses and harness their innovation,” says George Dibb, Head of the Institute for Public Policy Research Centre for Economic Justice. “If we’re going to create a high-investment, high-productivity, innovative economy with job creation across the country, manufacturers and government need to work hand in hand to help make Levelling Up work.”

Overall, these issues point to a uniquely British oversight that dates back 40 years, says Adam Hawksbee, Deputy Director and Head of Levelling Up at Onward.

“In almost every developed economy, manufacturing productivity growth has outpaced other sectors over the last two decades,” he says. “In the UK, where our economic story since the 1980s has too often revolved around services, productivity in manufacturing has had almost double the quarterly growth rate of the economy as a whole. Ultimately, this productivity growth feeds through into higher wages and living standards. It is right that manufacturers in this report ask the government to go further and faster with their agenda to Level Up the country.”

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