Government departments and industrialists should combine to enable British industry to play a critical role in re-balancing the economy after the implosion of financial services.
The manufacturers’ organisation EEF proposes a National Economic Council, headed possibly by the Prime Minister to set priorities and a new taxpayer-funded Industrial Bank. “Manufacturing could have a major role in leading the UK out of the recession,” Steve Radley, the EEF’s chief economist, said. “Manufacturing should be the heart of the real economy.”
He called for a structure across Whitehall departments to ensure that the Government sends clear and effective signals about its medium- and long-term priorities so that industry can invest with confidence. “This is our manifesto for manufacturing,” he said. “It is not just about Government intervening. Companies must do it, too.”
The new bank should probably not provide soft loans and subsidies. It would provide finance for growing manufacturers with fewer than 250 employees and turnover of less than £10 million a year.
It would replace the venture capital market, which the EEF says has dried up for them and for start-ups – with equity stakes as well as medium-term loans.
A “green bond” would fund for loss-making companies developing low-carbon technologies. This would give them access to immediate cash funding rather than wait for future profits to benefit from their accumulated tax losses, Mr Radley said.