There’s a genuine sense of shock in parts of the business community that the Business Growth Service (BGS), which includes the Manufacturing Advisory Service (MAS) and the Growth Accelerator programme, is being scrapped.
BGS stats show that it has assisted more than 28,000 businesses, helped SMEs raise more than £155m in finance and that 9 in 10 firms would recommend it. Since 2012, the BGS has added £4.8bn of GVA and created 110,000 jobs.
The decision came out of the blue. Insiders at the Manufacturing Advisory Service (MAS) tell me that they had been prepared for a budget cut given the scale of Osborne’s cuts to non-protected government departments including BIS, but there had been no warning that MAS would be scrapped completely.
The timing is odd as well. A recent survey by the EEF, the manufacturers’ association, found that only automotive and chemical firms remained buoyant; the rest of the manufacturing sector expect output and employment to stagnate, no doubt on the back of a slowdown in China and a lack of orders from continental Europe.
Winding up MAS could actually exacerbate challenges for manufacturing firms. It may be that some professional service firms could offer some of the sort of guidance that MAS previously provided, but smaller manufacturers in particular may shy away from seeking help if they fear heavy costs (even if such fears are misplaced). On the other side, MAS also provided a very useful line of communication from the sector to government, one that will now be cut.
And MAS didn’t just help businesses to negotiate the bureaucracy of tax credits, the Regional Growth Fund or the Tooling Up Fund in automotive – it also gave many manufacturing SMEs access to critical experience and contacts.
BIS has tried to make out that MAS is being replaced by local Growth Hubs. But this is misleading. For a start, the £12m across 39 LEPs works out at just over £300,000 a LEP. Big deal.
Secondly, while LEPs here in the Midlands have prioritised manufacturing as a key sector in their strategic plans (European Structural & Investment Funds Strategies or ‘ESIFs’), what about those LEPs that, well, don’t prioritise manufacturing?
In such cases, local growth hubs are unlikely to offer much if any support to manufacturing firms (similar concerns apply to the ending of the Regional Growth Fund and its replacement with the Local Growth Fund under the control of LEPs). There is no longer a national drive to support manufacturing, it seems.
Thirdly, the Growth Hubs are simply unready in many cases to take on the mantle in time before MAS is scrapped.
All of this leaves a fundamental question of where manufacturing firms go for help to when MAS is scrapped. It also raises wider questions about the government’s commitment – or not – to using industrial policy to support manufacturing.
On this, there's effectively been radio silence from the BIS Secretary Sajid Javid since he came into office in May. While the last government didn’t have much of an industrial policy, what Vince Cable did in automotive and aerospace was pretty effective, for example through the Automotive Council which brought together key actors and identified opportunities and barriers to growth. That continued the work begun by Lord Mandelson at the back end of the last Labour government.
The Automotive Council is to continue. Critically, though, its work under Cable was underpinned up by a range of (modest) interventions to boost skills, rebuild supply chains, and encourage investment in the industry, such as through the Regional Growth Fund, the Advanced Manufacturing Supply Chain Initiative, MAS itself, and MAS’ Tooling up Fund to support investment in tools in the Supply Chain. All have now been scrapped.
This is a great shame as for years the UK didn’t ‘do’ industrial policy. It finally got things right in a few sectors on a modest scale and much of this now seems to be being scrapped through the twin pressures of the Chancellor’s austerity and the current BIS Secretary’s liberation instincts.
It’s the death of industrial policy by a thousand cuts. The government has said that it will continue to support automotive and aerospace. I’d like to see what that support will now actually look like.
Gone in six months: how the Conservatives slayed the industrial strategy
May 2015: David Cameron sweeps into power with an unexepected majority. Hopes are high that the Conservatives will expand on the pro-manufacturing industrial startegy pioneered under the Coalition. The framework led by Lib Dem Vince Cable set out structured support around skills, innovation and included MAS and marked the first time since the 1970s that a British government had publically comitted to a formal industrial startegy.
May 2015-November 2015: Radio silence. DBIS produces generalist business support including an apprenticeship levy and a comittment to cretae 3million schemes by 2020 (across all sectors). The last headline mention of manufacturing in the DBIS policy press releases dates back to March.
November 2015: The spending review cuts are announced at DBIS with no explicit reference to MAS. The announcement is published instead on the MAS website and cited a”winding down” of the service. DBIS later claimed support would be made available to manufacturers through growth hubs linked to LEPs. The chancellor reiterated his support for industrial strategy in his spending review annoucement to parliament. Manufacturers are left scratching their heads.
This is an article from the February edition of Works Management. To see if you qualify for a free subscription, or to look at prices for paid subscriptions, please follow this link.
