Renewed calls for UK industrial strategy to bring in investment and fix Brexit damage

UK manufacturers have renewed calls on the government to urgently draft an industrial strategy that will bring in investment and fix the “terrible” damage caused by the Brexit deal.

The trade body Make UK is reiterating its demands for Labour to come up with a joined-up industrial vision , or else risk losing billions of pounds in investment abroad.

They say that while the country cannot compete with the financial incentives in the Inflation Reduction Act in the US or the green deal in the EU, Britain can compete on innovation, as long as there is a joined-up strategy on tech, robotisation, renewable energies and training to make it happen.

“I have lots of chief executives from international companies coming into my office and telling me they have billions to invest and that the UK is a candidate but they are not investing anything unless they know what the plan is,” said the head of Make UK, Stephen Phipson, speaking before a meeting on Wednesday with the chancellor, Rachel Reeves.

“Industrial strategy is so urgent, we need this tomorrow,” he added.

Phipson, whose body represents industry players ranging from Rolls-Royce and Siemens to Airbus and Tata in Wales, as well as Jaguar Land Rover in Coventry, also intends to press Reeves on the need to fix the “terrible” damage done by Lord Frost’s trade and cooperation agreement with the EU.

“The trade deal was the worst possible deal we could get as an industrial country. It is a disaster and continues to be a disaster,” Phipson said, blaming the previous Tory government for “fundamental errors” in the trade deal it sealed.

He argued that the UK had not had an ambitious industrial plan since 2010, when the Catapult Networks were unveiled involving a nationwide series of research and development centres to provide the technological support and specialists for manufacturing innovation.

The network was then expanded in 2017 by the then business secretary, Greg Clark, but Phipson said that when Kwasi Kwarteng held that post in 2022 he replaced the scheme with “a short advanced manufacturing plan” that did “not give anyone certainty”.

Phipson said this had left the UK with one foot firmly in the past, with the lowest use of robots in Europe and just one battery plant despite now long-standing climate policies to remove to sustainable energy sources.

“If you go back to 2010 when we created the catapults, we created the biggest commercial aerospace component provider in the world,” he said, referring to Airbus in Broughton, north Wales. “We are now the world’s leader in advanced materials and all because the industrial strategy was brilliantly successful at putting us at the top 10 in the world.”

He said industry was going through an “enormous transition” to meet climate targets but the government was not doing enough to help them deliver.

“We have to transition 26m boilers in the UK, where are the engineers for that? Where is the skills programme? The Department for Education is asleep at the wheel. We need a skills agenda all over. We’re upgrading the national grid. We’ve just decided to invest £54bn, but we haven’t got cable makers, transformer makers, they disappeared 25 years ago.

“We need one big plan, and if we don’t have that plan, these big companies won’t come here.”

Other big changes were needed to address Brexit, which had been a “disaster” for manufacturing, Phipson said. Normally EU trade deals use “diagonal cumulation” clauses that allow components processed in a third country such as Japan that are then exported to the bloc to still be considered to have originated in the EU.

The failure to include such an arrangement in the Brexit deal he said was killing cross-border production industries.

“I think the problem we had with the Boris Johnson lot was they completely didn’t understand that most of our trade is intermediary products and not finished products. That is a fundamental error. Rules of origin are critical to UK manufacturing. So we’re completely and utterly ignored in terms of where we are,” Phipson said.

Under the Brexit trade deal, goods that are majority-made in the EU or the UK can be exported without tariffs to the bloc, but those that rely heavily on components from elsewhere are excluded.

“Data since Brexit shows volumes are up but the real key data point is the number of products we export has fallen by 80% which implies that it is the small and medium enterprises that have stopped exporting to the EU,” Phipson said.

He suggested “the right thing would be a return to the EU’s customs union”, but Labour had ruled out that option .

Make UK will tell Reeves that industry also need other fixes such a deal on mutual recognition of professional qualifications including service engineers, regulatory alignment and customs simplification.

A government spokesperson said its new industrial strategy would be “a vital part of our mission for economic growth, delivering long-term, sustainable and inclusive growth right across the UK by driving investment into our economy”.

They said the government would also bring businesses and industry and education together through the creation of Skills England.

“We will also establish an independent Industrial Strategy Council to partner with businesses, supporting us in delivering, monitoring and implementing the strategy over the long-term,” the spokesperson added.