- All services
- About InvestUK
At its peak in the early 20th century my family’s firm, Cooper’s of Ashbourne, made a third of the world’s whale bone corsets. Corsets have lived on in historical memory as torture devices, squashing the organs of the wearer and causing constant swooning. Perhaps unsurprisingly, fashions changed. The business tried to change with them, but to no avail. The Cooper’s factory is now a Tesco superstore – another sad metaphor for the decline of British manufacturing. But with new tax breaks for investment, resurgent foreign investment and shortening supply chains in the post-Brexit, post-Covid world, are we finally turning the tide on deindustrialisation?
The 1979 general election was a watershed moment for industrial Britain. It had become a largely zombie economy with GDP (adjusted for inflation to 2021 values) of just £1,481bn. Although 30% of the economy was based on manufacturing, industries were badly managed by complacent owners, badly served by truculent unions and desperately short of investment to improve woeful productivity. Pitted against emerging economies in a post-war world – particularly Germany and Japan with their own Schumpeterian gale of creative destruction through force of arms – the UK economy couldn’t compete. The solution was socially ruinous but effective. The Thatcher government instigated a radical programme of privatisation and deregulation, reform of the trade unions, tax cuts and the introduction of market mechanisms into health and education, aiming to reduce the role of government and increase individual autonomy.
Whole industries were quickly confronted with “the chill forces of the market”, leading to a contraction of 25% in the size of the manufacturing sector. Manufacturing employment halved from 4.5 million to 2.5 million. Towns that relied on factories and mines saw whole families out of work – a heavy social price to pay. Whilst some industries such as energy, pharmaceuticals and pefence hung on, others such as shipbuilding, mining and textiles were devastated, never to recover. My father, the last managing director of Cooper’s and known locally as “the Braharaja”, never worked again.
Several decades on, there are indications of revival – not back to the dusty mines, but towards green energy and forward-thinking solutions. The economics of manufacturing are compelling and finally reasserting themselves. The Office for National Statistics publishes a table of ‘multipliers’ i.e. how many jobs are created in supply chains. The multiplier for manufacturing is on average 2.5 whilst for services it is 1.25. This explains why, when Nissan set out its plans for a £1bn electric vehicle hub in Sunderland that will create 1,650 direct jobs, it could state that a further 4,000 would be created amongst its suppliers, safeguarding the future of Britain’s largest car factory as motoring moves away from petrol and diesel.
The Covid pandemic has taught us that it’s not just PPE that needs shorter supply chains and incentives for local production. Advanced manufacturing techniques and 3-D printing have taught us that ‘just in time’ production can be more efficient, reliable and less environmentally harmful than bringing goods half way across the world by sea and air.
The politics are also compelling. Manufacturing industries play a key role in levelling up the UK, distributing wealth and high quality employment in precisely those areas that have been overlooked in the past. I know this first hand through my company – we have completed nearly 400 foreign direct investment projects of which 20% are in manufacturing of one sort or another. TopHat, for example, creates beautiful and sustainable houses almost entirely built within a factory, then shipped to the building location, reducing cost and improving efficiency, and employing over 300 people in the process in their new Derby factory. E-mobility and propulsion specialists, Saietta Group, is another great example, a producer of the next generation of sustainable transportation – designed and built in Bicester. These companies encourage the sustainable, resilient and organic development of the UK economy but also create opportunities for global trade.
The Government senses this opportunity too, and is driving progress through tax incentives. From April this year, companies investing in qualifying new plant and machinery assets will be able to claim a 130% super-deduction capital allowance on those investments. The Government boasts that the super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, ensuring the UK capital allowances regime is among the world’s most competitive. This super-deduction will encourage firms to invest in productivity-enhancing plant and machinery assets that will help them grow, and to make those investments now.
Today the UK economy has grown to £2,829bn – double its 1979 value. Manufacturing now represents 18% of GDP so at £504bn its higher than 1979 but the difference is that it is transformed – bold, confident, clean, green and technology based. With UK GDP growth the fastest in Europe and the economics and the politics all pointing to an expansion of manufacturing, reindustrialisation is a reality. Britain may no longer be the workshop of the world, but it can at least stand tall. The Braharaja would be proud.
InvestUK is not regulated by the Financial Conduct Authority and the Financial Services Compensation Scheme established for the protection of investors does not apply.