The do-nothing government

With a government with little idea of how to steer UK  manufacturing, are we facing industry stagnation?

By Amanda Campbell, Editor, Unite magazine uniteWORKS

 It was a gloomy start to 2012 for the government – manufacturing figures for the last quarter of 2011 were the worst since 2009. Unite firmly slammed the government for its failure to support manufacturing and construction as Britain slides towards recession.

Figures from the Office for National Statistics (ONS) showed the economy shrank by more than expected,  a contraction of 0.2 per cent between October and December.

Unite general secretary, Len McCluskey is not impressed. He said, “Last year, Germany ordered hundreds of high speed trains which would be built in Germany. Instead our government awarded a massive train contract to Germany at the expense of Bombardier, the UK’s last train manufacturer. No wonder our growth figures are in freefall when this government slashes spending while doing nothing to support growth and jobs.”

We’ve also seen the Bank of England’s ‘credit trends’ report making grim reading for manufacturing companies, especially small and medium sized businesses. “These are the very companies who were supposed to be leading the way out of recession and help create work for the thousands of public sector workers who are losing their jobs,” says Unite assistant general secretary, Tony Burke.

The Bank’s report shows credit for companies is now becoming scarce and expensive. According to the quarterly credit trends report for the fourth quarter of 2011, banks are raising rates on loans they make to business and plan to toughen the covenants on new loans. This tougher lending environment will damage the UK’s manufacturing sector.

The report also undermines the government’s long promised policy of re-balancing of the economy. “The reality is that it has not got off the ground,” believes Tony. “David Cameron said recently, ‘In places there is a re-balancing taking place but it’s not going as far and  as fast as I would like it to and we need to do better on that front.’

“Do better? The problem is that the government just doesn’t get it.”

Unite believes for manufacturing to grow, businesses need access to loans and credit. And one way to do this is through a strategic investment bank to help UK manufacturing companies to access finance and support.

“The UK’s small and medium sized companies, which make up 80 per cent of manufacturing in the UK, are desperate for access for finance. How much worse does it have to get before the government acts?” Tony asks.

This report also follows poor figures for manufacturing output at the end of 2011. The Markit purchasing managers’ index survey, which asked manufacturers about their output and order books, showed a reading of 49.6 in December 2011. This is a tiny improvement on the 47.7 recorded in November 2011, but still below the 50 mark which signals the sector is expanding.

“With the UK’s influence in Europe marginalised, David Cameron has had to admit he did not achieve a ‘safeguard for the UK’. Stagnation and a double dip recession are looming and the government has no idea how to guide us through it,” said Tony.

 Len McCluskey agrees. He said, “George Osborne can’t blame the global economy, he just needs to look in the mirror to see who is responsible. The country faces the worst recession since the 1930s, but this government  has done to nothing to support manufacturing or construction.”

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