From the think tank “Rebuilding Britain”
Labour Affairs has carried from the beginning the link to “Rebuilding Britain” (See “Links”, top right of home page). This month we reproduce the Preface and conclusion of their pamphlet “Rebuild British Manufacturing”
Rebuild British Manufacturing
A Strategy for Revival
The pamphlet is available at:
Preface
Britain’s greatly diminished manufacturing sector has recently become the focus of much serious attention, and not before time. A range of agencies and institutions, Unite the Union (“A plan For Jobs In UK Manufacturing”), GMB (“Making It”), The Institute For Prosperity, the Manufacturing Commission, The Advisory Board to Campaign for a UK Manufacturing Led Economy, Make UK and others have all argued powerfully for a manufacturing revival, for a substantial re-shoring of production and for import substitution. This pamphlet adds a new voice to that campaign, with radical proposals for change and specifically for a revival and expansion of the role of the state in promoting and expanding British manufacturing.
When looking at what has happened to Britain’s manufacturing industries it is easy to become lost in detail, to be misled by short term trends and to fail to recognise the total and tragic picture of our manufacturing decline. Statistics on long term trends in output, trade, investment and employment, and international comparisons are however stark and show Britain’s manufacturing decline to have been extraordinary, exceptional, and alarming.
Successive governments of all colours have focused on the financial sector and the City of London to the severe detriment of manufacturing such that by 2019 e-commerce had become the country’s largest industry with an annual product of £586 billion. This pamphlet seeks to show how British manufacturing has declined and points to major causes of that decline. It highlights in particular the persistent and significant overvaluation of Sterling, especially relative to the Euro in recent decades, making our exports expensive and imports too cheap. It concludes by proposing essential steps to reversing that decline and to rebuilding a substantial and strongly based industrial sector of the economy to secure jobs, living standards and essential national economic viability for the long term.
Conclusion
To reverse the decades of devastation of so much of British manufacturing will require a powerful a new industrial strategy, driven by the state and involving direct democratic representation of the population both through parliament and through the labour movement. Such a strategy is now a matter of the greatest urgency.
A lower and managed parity for the Sterling exchange rate, especially in relation to the Euro, will be a vital first step without which British manufacturing will continue to struggle. The re-introduction of exchange controls on flows of finance capital across Britain’s borders should become part of a new currency regime, a proposal even suggested as a possibility by former Bank of England governor Mervyn King during the 2008 crisis. His predecessor Eddie George was also conscious of the critical role of currencies in economic performance and was wholly opposed to Britain joining the Euro.
A second measure in the rebuilding process should be the energetic use of state economic purchasing power at every level to order products from domestic British manufacturers. Thirdly, government must use its new freedoms from EU constraints and the return of EU Budget contributions to the British Exchequer to boost support for industry. A new and substantial regime of industrial aids to industry with a strong regional bias should replace feeble and inadequate EU structural funding and be determined according to domestic economic needs, not EU formulae and the direction of the EU Commission.
Fourthly, where essential industries are under threat, public ownership should be considered and used where necessary to sustain them, steel being a prime example at the time of writing.
Government should also look to acquire some public stakes in key major companies, as is commonplace in other industrial nations, especially in the public utilities.
Energy, water, transport and postal services should be brought back into public ownership with re-established public stakes in other utilities. Much of the UK public utility sector is actually foreign owned, a high proportion being in the ownership of foreign state-owned organisations following from so called “privatisation”.
Secure public procurement of British goods
Rebuilding a strong and much larger public sector of the economy will facilitate public procurement strategies, to the great benefit of Britain’s manufacturing as well as to the Exchequer and directly to the millions of ordinary working people who depend on all the utilities provide. A larger re-established public sector will also facilitate stronger macroeconomic management by government.
Fifthly, education and training need to be substantially upgraded to develop the skills needed for a new industrial age. Sixthly, a new national body, a manufacturing commission with representation of government, employers and trade unions, should be established to monitor and advise on the performance of our manufacturing industries.
In all these measures the role of the state must in future be central. Britain needs to rebuild a strong and extensive manufacturing sector for its future prosperity, to ensure well-paid jobs and full employment and to sustain long term viability of the economy and prosperity for working people.
Neoliberal dogma weakening
The hold of misguided neoliberal dogma is gradually weakening, and this is becoming clear even to former believers. As Oliver Sharp, millionaire Tory party donor, put it (Sunday Times May 16th, 2021) “There is no doubt that a purely free market economy does not work”. This was in an article entitled “Hedge fund tycoon who’s betting big on the return of the state”.
The reality is that the post-war world after 1945 saw substantially more socialist economic strategies driven by nation state governments in most Western countries, especially in Europe. They had become nervous of the appeal of Communism to millions of working-class people and the growth of support for left wing parties across the sub-continent.
Full employment, the establishment of comprehensive welfare states, widespread public ownership – especially of the utilities, the building by the state of millions of decent homes for working people, with living standards rising at an historically unprecedented rate became the norm. In the UK real weekly earnings of manual workers doubled between 1945 and 1974.
That democratic socialist advance was halted in the 1970s and a reversal of much of what had been achieved began, most notably in Britain under Conservative governments after 1979. In subsequent decades, unemployment rose and persisted, and economic growth was slower, erratic, and sometimes negative, with repeated economic crises.
In Britain, manufacturing suffered, inequality grew, and homelessness surged. All of this followed directly from the reactionary neo-liberal ideology adopted by governments and institutions across the world. Britain was among the most radical in its commitment to that right-wing dogma with widespread privatisation and the throwing open of its borders to unconstrained free trade and the inevitable flood of imported manufactures
Now is the time to begin to recreate what has been lost and to move on to a more intelligent and socially just future, with full employment, secure and well-paid jobs and a renaissance of manufacturing.
Labour Affairs 