Manufacturing sector keeps innovating and it can decarbonise

WITH business costs and prices rising, geopolitical instability adding to supply chain issues, and skills in short supply, it’s a tough time for business.

Yet I am confident UK industry has all the tools it needs to thrive in the years ahead – and that the manufacturing sector will be, as it always has been, at the heart of that future success.

From the Industrial Revolution to the modern day, manufacturing has been key to the economic health of UK plc. Its innovation and endeavour continue to drive vital advances and create opportunities and prosperity.

Take levelling up, for example. Manufacturing already boasts a regional footprint few industries can match, with factories across the UK and our region making vital contributions to the communities where they operate.

Manufacturing is constantly pushing boundaries as the sector is behind two thirds of all UK R&D spending and is vital to the country’s competitiveness as a science superpower.

This refusal to stand still gives manufacturing an agility few sectors can match, giving me confidence that it can rise to arguably its biggest challenge: decarbonisation.

According to the Climate Change Committee, manufacturing and construction is the UK’s third most polluting industry and in 2020, it was responsible for more than a sixth of the country’s total emissions. Hitting net-zero by 2050 will be impossible without help from manufacturing.

The sector is constantly evolving greener processes, while engaging with carbon removal activities, developing new technologies for capture and storage, and progressing gamechanging outputs such as electric vehicle battery production.

Yet even the strongest industries can need help in the face of mounting obstacles. That is why the CBI has urged the Government to ease current headaches and further incentivise the investment and innovation which has made UK manufacturers famous.

That should mean urgent measures to help manufacturers mitigate uncertainty and navigate cost challenges. Expanding access to the Recovery Loan Scheme would help. Reducing bills for energy-intensive industries, hit hardest by rising prices, by providing larger exemptions for policy costs could also have a significant impact.

In the longer-term, business needs to Government to create a successor to the super deduction. CBI research shows a permanent investment incentive could boost business investment by £40billion a year by 2026 – we cannot afford the scheme to end next year without a long-term successor in place.

Bold action to address skills and labour shortages is also needed to future-proof the sector. Replacing the Apprenticeship Levy with a Skills Challenge Fund and creating a new independent Council for Future Skills to channel policy towards avoiding shortages in the future would be important steps in the right direction.

Policies such as these would empower UK manufacturing to increase technological uptake, increase productivity and deliver on net zero targets – vital ambitions for cementing a green and equitable future for the UK as a high skill, high wage economy.