A single shocking truth stands out as the UK's voting public prepares to go the polls next month. The 1951 general election saw around 97% of voters back the two main parties – Conservative and Labour. That figure has plummeted to an estimated 60% for the forthcoming election. This creates a dangerously volatile situation for UK manufacturers.
While only the Conservatives or Labour could win enough seats to form the next government, a host of minority parties – among them the Liberal Democrats, UKIP, the Greens, the Scottish National Party, Northern Ireland's Democratic Unionist Party and Sinn Féin, and Wales' Plaid Cymru – could exert a powerful influence over vital decisions impacting on manufacturing after May 7.
The number of possible coalition permutations is so huge that even Alan Turing would struggle to compute them (www.bit.ly/1H5oCeA). The closest we can come to a precise forecast of the election result is through the widely respected political website Electoral Calculus (www.bit.ly/1zEk3o2) which estimates a 50% chance of a hung parliament in 2015.
The Tories and Labour are broadly aligned on manufacturing policy, but the big split between the two is over Europe. The Conservatives are committed to holding an in/out referendum on the UK's involvement in the European Union; Labour is strongly in favour of continued membership. And so, it seems, are most manufacturers. This creates a real dilemma for a sector which, on the one hand is true blue politically (see the box opposite), but, on the other, remains fearful of the Tories' stance on Europe.
The All Party Parliamentary Manufacturing Group (APMG) is a cross-party coalition of politicians and manufacturing organisations that develops new industrial policy ideas and helps manufacturers better engage with the policymaking process.
Speaking exclusively to Works Management, Barry Sheerman, APMG co-chair and Labour MP for Huddersfield, said: "I talk to the big manufacturers in my patch and around the country, and I haven't met one who isn't really worried about the instability that would be created by a referendum on Europe and possibly leaving it…
"They say the real worry is what is going on in the Conservative party – [if there is a referendum, which is favoured by the Tories], how do we know if we are going to win it? It will be a disaster for British manufacturing if we're not in the EU which is a massive market for us."
APMG co-chair Chris White, Conservative MP for Warwick and Leamington, profoundly disagrees. He told us: "I don't believe in this council of despair... We [the Conservatives] would trust the people to make that decision. I think Europe does need reform; I think we do need to renegotiate to the best of the PM's ability, and then I do believe we need a referendum, not least because Europe is a different place than it was 40 years ago. But I think whether we've had referendums on voting reform or Scottish independence, the general public usually comes to the right decision."
Despite the spat over Europe, a consensus on manufacturing policy has begun to emerge, at least among the major parties. Sheerman claims there is a remarkable degree of cross-party agreement about the direction of travel for the sector: "Any country like ours is going to have to believe in a mixture of innovation, enterprise and high skills. They are the triptych that we can all sign up to."
This chimes with the themes set out in business secretary Vince Cable's nascent industrial strategy, which also enjoys cross-party support. The strategy – which is expected to survive the upheaval caused by the general election – has five main strands: a focus on skills, investing in technologies like robotics, access to finance, government procurement and sector partnerships (www.bit.ly/1BEtHGa).
These strands reflect the priorities of manufacturing leaders. For Terry Scuoler, chief executive of the EEF, which represents around 20,000 UK manufacturers, we are at a defining moment for the sector: "While the last five years have been about rebuilding, the next five must be about delivering a better balanced economy and sustained growth. Some important groundwork has been laid and it's vital the next government hits the ground running and builds on what has worked to date."
Rebalancing the economy and boosting productivity – two critical steps for the next government – were never going to be achieved over one, or even two, parliaments. But, says Scuoler: "The next government, however it's made up, must commit to immediate policies which will build on and encourage growth, boost private sector investment and create jobs."
The EEF wants to see the government concentrate on four objectives over the next parliament. These are a more productive and flexible workforce "based on training, and investment in skills for industry"; improved road, air and rail links, and better broadband access; lower costs of doing business "from cutting energy costs to maintaining low business taxes and reducing red tape"; and better support for growing businesses that want to innovate, expand and export.
Political leaders have ferociously rubbished each other over recent weeks, but, post-election, they are clearly going to have to find a way to work together to consolidate and sustain the foundational work that has begun to rebuild the UK's manufacturing sector. ¦
X marks the spot – the fight for your vote
Where manufacturers look for certainty, all the politicians are offering is unpredictability. That makes an accurate reading of the sector's political leanings impossible. There are, however, clues to the way manufacturing will cast its vote on May 7.
Works Management's Outlook survey, conducted late last year, revealed the Conservatives as the clear political favourites among UK manufacturers. Asked which general election result would be best for the sector, two fifths (40%) of our 155 respondents were unequivocal – a Tory win. An unconvincing 2.6% plumped for Labour, with not a single one choosing the Liberal Democrats.
Significantly, almost half of those polled (49%) said it would make no difference who wins, reflecting a cynicism that has become commonplace among the wider electorate.
A paltry 4.5% of respondents thought another Conservative/Lib Dem coalition was desirable even though just over a quarter (25.7%) assessed the Coalition's performance on industrial policy since 2010 as good to outstanding.
Meanwhile, a survey by the Institution of Mechanical Engineers and consultant BDO conducted this time last year confirms that manufacturers trust the Conservatives more than their opponents to introduce initiaitives that support British manufacturing.
Asked which political party has the best manufacturing policies, the Tories gained 40% of responses compared with 5% for Labour and 3% for the Lib Dems. Depressingly. however, 28% felt no political parties had the right answers (www.bit.ly/19wt8aM).
For the APMG's Barry Sheerman, there isnt a front-runner. "You usually get quite a substantial lead in the polls [for one or other of the parties] by this time coming up to an election, although we have never been in this situation. Usually, elections are short and sharp, run over four or five weeks; this time, we've been running an election campaign for a year."
New kid on the block UKIP, for example, is a concern for both major parties, although Labour MP Sheerman believes it is a particular worry to the right flank of the Conservative party: "The usual old safety valve of voting Liberal if you don't like the other two parties is gone. On the right of British politics, in some places, people (and I don't think it will be that big) will be attracted to UKIP. On the left, I think, in university towns, a substantial number of young people might well vote Green. I don't think that is absolutely threatening to most seats, but it could change who wins in marginals."
Who will win your vote?
Any post-election power sharing arrangement with the minority parties could result in messy compromise and fudged policies. However, all the main national political parties do offer initiaitives that relate to manufacturing. WM asked them what they would do for the sector if elected. Here are edited versions of what they said.
Conservatives
A light touch is at the heart of Conservative plans for manufacturing. The party's Matthew Hancock, currently minister of state at the Department for Business, Innovation and Skills, told WM: "We want to make it easier to do business with less taxing and less regulating."
He claimed his party would save companies £10 billion in regulatory costs in the next parliament and deliver a budget surplus by 2018.
The Conservatives also want to double annual UK exports to £1 trillion by 2020, partly by boosting the number of exporting SMEs from one in five to one in four. A worthy ambition; the question is how?
Exploiting shale gas – presumable through the controversial practice of fracking (drilling and directing a high-pressure water mixture at rock to release the gas inside) – is "an opportunity we can't afford to miss with the potential to bolster our energy security, provide jobs and help with carbon emissions", said Hancock.
On skills, he promised to deliver three million apprenticeships (are there three million jobs to support this ambition?) and open more university technical colleges. He added: "We will ensure apprenticeships are on a par with university in terms of prestige and outcomes." There is an implication in this statement that graduates don't go into manufacturing. In fact, many do.
On research and development, Hancock wants Britain to become the best place, not just for research, but also for bringing ideas from the laboratory to the marketplace.
To this end, the current government set up seven 'catapults' (technology and innovation centres where UK businesses, scientists and engineers work together on R&D). Each centre – including high value manufacturing, cell therapy, offshore renewable energy, satellite applications, digital technology, transport, and future cities – focuses on an area identified by Whitehall as globally important.
Hancock concluded: "We want the best support for SMEs so will continue to improve Innovate UK (the new name for the Technology Strategy Board) to accelerate sustainable economic growth."
Labour
Unlike the Conservatives, who have promised a referendum on whether to remain in Europe if they are re-elected, Labour emphasises the need for Britain to remain in a reformed EU. Iain Wright, Labour's Shadow Minister for Industry, told WM: "Our membership of the EU means access to product markets in growing economies around the world." He also said Labour would help businesses to export through better access to finance, improving skills and supporting access to markets.
On top of this, Wright said: "We will cut and then freeze business rates for small business properties while committing to the most competitive corporation tax regime in the G7 and create a British investment bank to ensure businesses can access the finance they need to grow."
Labour also has plans to strengthen local enterprise partnerships and devolve £30 billion of funding to city and county regions to enable them to make decisions that best help growing businesses in their regions.
On top of this, a "revolution in vocational education and apprenticeships" would see gold standard vocational qualifications at 18 and new technical degrees. "We will give employers more control over the funding and design of apprenticeships in exchange for creating more high quality apprenticeship places in their sectors and supply chains," promised Wright.
In a controversial populist move, Labour has also promised to freeze energy bills until 2017. Wright said this would save 2.4 million businesses £1.5 billion: "We will reform the energy market with new powers for the watchdog to force energy companies to cut bills when wholesale prices fall. And we will make Britain a world leader in low carbon technology and create one million new green jobs by setting a legal target to decarbonise our electricity sector by 2030 and strengthening the Green Investment Bank."
Finally, Labour plans to implement a long-term innovation strategy in science and research "to help create new products and improve the UK's record of underinvestment in R&D".
Liberal Democrats
The Liberal Democrats are keen that the UK remains a full and committed member of the EU, "so we can play a key role in shaping the rules of the single market and so we can work to boost our global trade, tackle cross border crime and address environmental threat".
However, in response to WM's questions, many of the party's aspirations were presented as unsupported assertions. For example, to encourage and support manufacturing sector growth, the Lib Dems would "invest to make the UK a world leader in low carbon cars, energy efficiency and high tech manufacturing". Where would this investment come from and at what level?
They would also develop a skilled workforce needed to support this growth with major expansion of high-quality and advanced apprenticeships, offering vocational education on a par with academic qualifications backed up with new sector-led National Colleges. The unanswered question is 'how?'
And they would support innovation through greater public funding (raised though higher taxes?) on a longer timescale (how long?), with a ring-fenced science budget (how much?), more 'catapult' innovation and technology centres and a green innovation arm within the new Business Bank.
The Lib Dems are also keen to continue to develop the industrial strategy put together by current business secretary Vince Cable and continue to allow high skill immigration to support key sectors of the economy, and ensure that work, tourist and family visit visas are processed quickly and efficiently.
Asked how they would help manufacturing industry cope with rising energy bills, the response was: "We will build on the Green Deal with a national programme to raise the energy efficiency standards of all Britain's households and eradicate fuel poverty – cutting people's council tax bills if they take part. All new homes will be zero carbon by 2016, and we will help tenants afford to stay warm, with new energy efficiency standards for private rented homes."
Great for families, no doubt, but where's the benefit to manufacturers?
UKIP
Leave Europe, cut energy prices, abandon climate change initiatives and end feed in tariffs on renewable projects – that sums up the response from UKIP when asked what it would do to support manufacturing growth.
UKIP spokesman on energy and industry, Roger Helmer MEP, told WM: "The UK needs to concentrate on trade with the growing economies of the world rather than being hamstrung by hyper-regulation within the ossifying EU Custom's Union.
"We need to increase our global reach in free markets which are the future, ie., India and Brazil, rather than beating our head against a brick wall in an out-of-date and over-bureaucratic EU culture which produces little except low economic growth and high unemployment," Helmer said.
As for energy, UKIP supports a diverse energy market based primarily on coal, nuclear and gas (including shale gas). "We will accept renewables only when (and if) they become economically competitive," Helmer added.
The party would repeal the Climate Change Act 2008 which, it said, cost the economy £18bn a year and created a huge misallocation of resources. It would also scrap the Large Combustion Plant Directive (which requires EU member states to limit emissions from power stations), and encourage investment in British power stations.
On skills, UKIP would drop the "arbitrary" 50% target for university students, but expand vocational education and apprenticeships. Helmer said: "Let's look at the German model and mirror that. In Germany, lots of small manufacturing companies help develop students in the skills areas which are needed. This helps lead students into jobs."
As for a developing a dedicated manufacturing strategy, Helmer was unequivocal: "Industry doesn't need a fancy new industrial strategy. It just needs us to dismantle the costs and cobwebs of over-regulation and energy policy. We will set industry free to grow and invest, and to compete with the best in the world. We can do it, but right now, EU regulations and policies bar the way."
Greens
The Greens want a manufacturing sector that is "positive for communities, for people and for the planet," with the emphasis on the development of a sustainable zero carbon industrial infrastructure.
Unsurprisingly, they would prioritise investment in sustainable industries that aid the move towards a zero waste, zero carbon economy. They would also prioritise the local economy, introducing "policies which enable local needs to be met by local work using local resources." Under the Greens, the creation of community banks would give local firms and co-operatives access to funds managed locally and supplied at preferential rates. "This would favour activities identified by the local government local development plan."
Community scale investment, meanwhile, could be supported by creating community currencies supported by local councils.
The Greens, under leader Natalie Bennett in England and Wales, are keen to stay in the EU, but would campaign against the Transatlantic Trade and Investment Partnership, which "would undermine UK manufacturers by introducing favourable trading conditions for American companies".
The party wants more self-sufficiency for the UK, advocating fewer imports and more emphasis on domestic food production and manufacturing. And, the energy system would be largely on electricity from renewable sources and reorganised to ensure local communities generate and supply their own energy needs. The Greens told WM: "Local councils and communities will have a key role in planning efficiency programmes, and organising local energy supply and distribution."
Innovation in energy efficiency, renewable energy and energy storage would "significantly boost employment" and investment in energy efficiency and renewable energy would, according to the party, generate market value in products and innovations worth hundreds of billions of pounds.
An energy efficiency fund would be supported by an improved system of carbon taxes and a new body, the Zero Carbon Sustainability Research Council, would to be established to link different technologies, behaviour change and our existing built environment.
