Speech

British manufacturing: supporting a world leader

Sajid Javid tells the EEF National Manufacturing Conference why he’s personally committed to supporting British industry.

The Rt Hon Sajid Javid MP

It’s great to be here this morning.

And it’s great to see so many of the sector’s leading lights coming together to answer the big questions of our time.

What does the future hold for British manufacturing?

Can we compete in the face of cheap imports from emerging economies?

And are there any factories in the UK that haven’t been visited by George Osborne?

Apparently there’s a whole website devoted to photos of the Chancellor wearing hard hats and high-vis jackets…

We’re British.

And, as you have just heard from the Prime Minister, that means we make things.

We always have.

We always will.

We invented modern industry, and we’ve played a role in countless technological leaps forward since.

We can be proud of our manufacturing heritage.

And we should be equally positive about Britain’s manufacturing future.

Sadly that doesn’t seem to be a fashionable thing for politicians and commentators to say right now.

Sometimes I turn on the radio or open the newspaper and all I get is negativity, people talking you down.

“Manufacturing is in terminal decline,” they say.

“We don’t build anything anymore.”

“We’re just a service economy.”

Nonsense.

When I look at manufacturing, when I look at the people in this hall, I don’t see malaise.

I don’t see failure.

I see people who are creating jobs, creating growth.

I see the people who are building what Britain needs and what the world wants.

Yes, the first decade of this century was one of industrial decline in Britain.

But over the past 6 years, manufacturing output is up.

Jobs are up.

Exports are up.

Britain’s manufacturing base spans almost 90,000 employers and provides work for millions of people.

Just this morning, we’ve heard that Aston Martin is creating 750 skilled manufacturing jobs in Wales.

Foreign direct investment is up more than 60% since 2010.

You represent the most innovative and intensive R&D sector in the UK, accounting for £13 billion of investment each year.

And over the past decade manufacturing productivity has increased 3 times faster than the economy as a whole, something reflected in today’s EEF report.

2015 was the most successful year ever for our £23 billion aircraft industry, with delivery numbers up 44% since 2010.

A new car rolls off a British production line every 20 seconds, with 80% destined for export.

The world flies in British-built planes and drives British-built cars.

And as I never get bored of pointing out, the Australians are throwing British-made boomerangs.

I know that not all British manufacturers are part of this boom.

Unprecedented conditions in the international steel market have had a devastating effect on too many British communities.

And the recent announcement by Bombardier was absolutely crushing for hundreds of skilled, hardworking people in Belfast.

As we have repeatedly shown, when such challenges arise this government will do everything within its power to support the companies and people affected.

And that includes not talking down the rest of the sector.

Not losing sight of the fact that British manufacturing can boast success after success.

It’s a sector we should all be proud of.

And in the EEF it has a very worthy champion.

The challenge is to maintain that success in a period of rapid technological change.

Whether you call it ‘Industry 4.0’ or the ‘fourth industrial revolution’, it’s impossible to deny that the way in which we live and work is undergoing a seismic shift.

While that can bring incredible benefits for the consumer, we have to acknowledge that change is also going to disrupt the workplace.

As long ago as 2013, Oxford academics warned that half of all jobs could be computerised within the next 2 decades.

Last year, McKinsey said that 45% of current jobs could be adequately performed by technology that already exists.

The University of Massachusetts has even created a computer programme that can write and deliver speeches for politicians!

If you see a machine being lined up to take your job, it’s little consolation to know that the resulting rise in productivity will help the overall economy.

But again and again through the history of manufacturing, we have seen how new inventions, new ideas and new technologies actually create new opportunities for workers.

We just can’t always see what they are until they arrive.

After all, the job descriptions of the future have yet to be written.

The role of government is not to stand on the beach and attempt to turn back the tide of change.

It’s to do all we can to help you ride the wave it creates.

Minimising the negatives while making the most of the limitless opportunities on offer.

But I’m not going to stand here and tell you how you should respond to this change.

There are a lot of important and influential individuals speaking here today.

A lot of very clever people.

But no politician or journalist or think-tank wonk knows manufacturing like you do.

Only you can decide the right way forward for your business.

Only you can make the most of the opportunities brought by new technology and new insights.

And only you can navigate the risks.

That doesn’t mean you’re entirely on your own.

For one thing you have the EEF supporting you.

And you also have a Business Secretary who is on your side.

Manufacturing matters to Britain.

It matters to this government.

And it matters to me personally.

Manufacturing is in my blood.

Fifty-five years ago, in 1961, my father Abdul landed in this country for the first time.

He headed north to Lancashire, then the home of countless cotton mills.

And every morning he got up, and he queued outside one of those mills.

And eventually the foreman invited him in and offered him his first job.

Fast forward a decade, and the soundtrack of my childhood was the clattering of my mother’s Singer sewing machine.

She was making the clothes to be sold on my dad’s market stall.

So I grew up in a home where manufacturing was the bedrock of success.

A home where we had what we had because my parents made things.

And I will never forget the lessons I learned there.

That’s why I know how vital your work is.

That’s why I’m absolutely passionate about what you do.

And that’s why I’m proud to say that I respect the EEF, I listen to what you have to say and I act on it.

Earlier this month an EEF survey found that half of companies say their internet connectivity, while fine for now, will not be suitable for their future needs.

Off the back of that survey, the EEF called for a government review of business broadband.

Today, I can announce that that’s exactly what will happen.

Working alongside the Department for Culture, Media and Sport, we will look at the broadband speeds that businesses need now and in the future.

We will look at the barriers that exist for businesses to get the affordable, high speed broadband they need.

And we will look at the whole issue of leased lines and the role they play in the market.

In doing so, we will take in to account Ofcom’s review of digital communications, which will be published tomorrow, and its review of leased lines, to be published next month.

We recognise that leased lines need to be competitively priced.

We want to see charge controls on leased lines where appropriate, and, of course, we want to see more competition in the provision of broadband services and products.

Of course, that’s not all we’re doing for manufacturing.

We’re also investing in your future success.

We’ve had to make a lot of tough decisions over the past 6 years, to get the economy back on track.

But I’m not afraid to invest where it can really make a difference.

I know that the inspired ideas of today are the profitable businesses of tomorrow.

So at last year’s Spending Review I was proud to secure an investment of almost £7 billion as part of the national science capital commitment. The highest ever. And I also won protection for the annual £4.7 billion government funding for science, research and development.

We also fund a third of the High Value Manufacturing Catapult, which has seen £300 million invested in just 5 years.

The Catapult helps manufacturers turn innovative research into real-world success.

And when you achieve that success, when your new product starts making money, I don’t believe you should be penalised for it.

Your profits should go to you – not the government.

So we have the lowest corporation tax of any G7 nation.

We’re reviewing business rates.

And we’re using the tax system to encourage and support the kind of cutting-edge thinking that makes British manufacturing a world leader.

Since last month the annual investment allowance has been set at its highest-ever permanent level, £200,000.

The Research and Development Tax Credits scheme underpins work worth more than £14 billion at more than 18,000 companies.

It’s backed up with the Patent Box, offering a significantly reduced corporation tax rate for companies that invest in new ideas.

One thing I’m never going to let the state do is strangle innovative manufacturers with red tape.

Never mind the fourth industrial revolution…

Sometimes feels like there are corners of Whitehall where they’re still getting to grips with first one!

And if government regulators attempt to keep up with the pace of change in manufacturing and industry, only one thing will happen.

A blizzard of directives, outdated before they’re even published, will stop innovative manufacturers in their tracks.

You can’t write a rule book for ideas that haven’t been thought up yet.

But that doesn’t have to mean a free-for-all that puts workers and consumers at risk.

Look at our approach to driverless cars.

They clearly have a major role to play in the future of global transport, and I want Britain to be right at the forefront of their development.

So rather than imposing a complex web of regulations for developers and manufacturers, we’ve created a simple code of conduct that ensures basic safety standards are met.

There’s no doubt that manufacturing is moving forwards, and that the government is doing all it can to support that.

But for too long the way we look at and measure what you do has been stuck in the past.

Looking at the raw output figures and concluding that manufacturing represents 10% of our economy is far too simplistic.

In a complex, intertwined global economy we have to recognise the whole of the manufacturing value chain.

That is, all those activities that take place upstream and downstream of production.

So I welcome the independent metrics report undertaken by Professor Sir Mike Gregory and his expert team, and published today on GOV.UK.

Mike and his team looked at opportunities for improving our understanding and measurement of modern manufacturing activity and they’ve developed a number of interesting proposals.

These include a representation of the manufacturing value chain that suggests it provides employment to more than 5 million people; pilot exercises testing the potential of data analytics to supplement national data and provide new insights on modern manufacturing activity; and, for the first time, a detailed looked at digital-era business models and their interaction with the value chain.

When we underestimate the contribution manufacturers make to the economy, we are doing you all a disservice.

Sir Mike’s review isn’t an attempt to move the goalposts or fiddle the figures.

It’s about giving you the credit you so richly deserve.

The mill my father worked in has, like many others, long since closed its doors.

But that doesn’t mean Britain no longer manufactures textiles.

Today, we have companies like Unmade.

Run by a trio of Royal College of Art graduates, Unmade uses the latest technology to let shoppers customise and manufacture their own unique knitwear.

Everything is bespoke, with zero waste and a minimum commercial order of one.

Yes, it’s still a small, niche business.

But as I always say, even the biggest company started out as one or two people with an idea and the get-up-and-go to make it happen.

And Unmade is an important example.

Because the future of British manufacturing is not a race to the bottom against emerging economies with standards as low as their prices.

The future lies in quality and innovation.

In doing things other countries simply haven’t figured out how to do yet.

You can’t undercut ideas.

The industry in which you work is changing.

But we cannot allow British manufacturing to be left behind.

And I will not allow British manufacturing to be left behind.

You led the world before.

In many areas you lead the world today.

And, as Business Secretary, it is my personal mission to see that you continue to lead the world for many years to come.

Thank you.

Published 24 February 2016