Not so long ago George Osborne rallied the nation with a ringing cry for a new industrial revival. He summonsed the march of the makers. It was a bold and enticing vision.
Yesterday David Cameron told the country it is engaged in a mammoth struggle to become more competitive and successful in world markets. The background to his remarks was a year of falling industrial output. The most recent figures for exports showed a £9.8bn deficit for August on trade in goods. The quarterly goods exports figures were 3.1% down on the previous quarter.
The government rightly points out that the Eurozone crisis is depressing EU markets more than official forecasters expected. The official forecasters as so often have been far too optimistic and too neglectful about the obvious tensions and problems with the Euro scheme throughout its life. However, the worrying feature of the recent export statistics is exports outside the EU have been falling more rapidly than exports within the EU. The UK in recent months has been going backwards when it comes to selling to fast growing markets, as well as understandably losing sales in the Euro area.
The government needs to revisit its policies for encouraging more manufacture. There are three areas above the rest that need immediate action.
The first is finance. There is still a shortage of bank finance for business, despite all the varied schemes. The government does have to create some new banks out of the embers of RBS and get them into the marketplace as soon as possible. We need more, better financed banks, with capacity to lend.
The second is energy. The UK along with the EU has opted for dear energy. The UK has gold plated the dear energy policies of the EU, and is busily shutting down its coal plants that currently supply substantial amounts of electricity. The US and the emerging market manufacturers have a huge competitive advantage from cheaper energy. The UK needs to wake up and make price central to its energy policy, allowing a new dash for gas.
The third is talent. It will take time for educational reforms to work. These may yield more science and engineering graduates. In the meantime the government as chief educator needs to look at ways at accelerating the retraining of people with scientific backgrounds who would be interested in a career in industry, and to look at shorter courses for talented people who may need some basic training in engineering to be able to operate well in a manufacturing environment.
The decisions taken on corporation tax are helpful, those on CGT and Income Tax are unhelpful. The government has promised to cut the costs of regulation. If done wisely this could be very helpful. We do not want unsafe factories or low quality goods, but we could do with faster planning decisions and less box ticking.