Manufacturers call for a new NEDDY and a bank

Publishing its manifesto for manufacturing today (1 July), the manufacturers' organisation EEF set out its ideas for putting manufacturing at the centre of what it called a more diverse and durable UK economy and put forward recommendations resonant of the post war era. They included a National Economic Council, much like the Harold Wilson government's NEDDY (National Economic Development Council) and an Industrial Bank like that set up by the Bank of England in 1945 when the needs of manufacturing were systematically ignored by the banks and the financial system after World War II. EEF said there were glimmers of recognition from across the political spectrum that action was needed to put the economy on a more sustainable path. It called on government to give some clear signals to financiers about the economic direction in which it intended to take Britain in order to encourage them to back key industries. And it asked that government itself to become a more 'collaborative' customer in using its £175 billion purchasing power. The growth of sectors such as aerospace; medical equipment and energy would be vital if the UK is to provide the solutions to climate change, demographic shifts and future security needs with domestic manufacturing capacity. EEF chief executive, Gilbert Toppin, said manufacturing had to play a bigger role in the economy, but would not be drawn on setting out a target percentage of GDP for the sector. "We will only deliver the type of economy we need and one that will be well placed to benefit from a world economy that will double in size in the next 20 years with a clear framework for action," he went on. The report, 'Manufacturing. Our future' spelled out a four part framework on which a more balanced economy might be built: 1. Send signals: Companies entering new and developing markets need a clear signal about the government's long term priorities. Only then will manufacturers' have the confidence to invest. Government must signal the importance that government attached to specific technologies, markets or investments and the steps it will take to help them succeed 2. Overcome obstacles: government must work with business to identify and overcome obstacles to the growth of new and developing markets, for example skills shortages, infrastructure requirements or bottlenecks in the planning system. 3. Collaborative customer: Government is a major customer for business. Its £175 billion budget offers significant purchasing power in new and emerging markets if deployed effectively. But government must engage more closely with industry to convey its needs and support innovation in these areas. This will require significant culture change if the public sector is to focus on long-term value for the economy rather than short-term cost savings. 4. Target investment: Government invests in markets directly and also in areas such as skills and innovation that support these markets. With the squeeze on public spending set to tighten, the government must be bold and strategic in its investment decisions. This approach will require government to become better at balancing risk and outlining its decisions against a set of clearly understood criteria. This had to be backed with tangible policies and resources, EEF said, including: - A re-established Industrial Bank tasked with investing in the future. - An £1billion innovation 'X prize' for the commercialisation of low carbon technologies. - More strategic use of procurement in new and emerging industries. - Progress on improving the business environment, specifically on the tax system, regulatory burden and skills infrastructure. - A more coordinated approach to expert guidance on economic challenges and responses through the National Economic Council. The new bank, capable of financing medium and long-term industrial investments and providing venture capital financing to the tune of £5 billion could be financed through the profits the UK makes as the government sells off its stakes in bailed-out banks, the report says. The National Economic Council would be a mini-cabinet of government ministers, probably chaired by the prime Minister, focusing on industrial priorities. The full report is available at www.eef.org.uk