Save Our Manufacturing Industries - and Help Our Region Become Britain’s Green Manufacturing Capital
We write to ask for a major programme to save our manufacturing industries and put in place the foundations to help the West Midlands become the green manufacturing capital of Britain.
Sadly, neither the Prime Minister’s recent infrastructure announcement nor your Budget began to start addressing the challenges we face as a region and enable us to bounce back. The Mayor asked for £3.2 billion to support a plan. This did not go nearly far enough, yet, even this ask has not been met by the Government. In fact, the Government has said no to 98% of the request with just £74.1 million infrastructure investment being awarded across the entire region: equating to just 50p per person per week. We urge you to bring forward credible, at scale support so we can trade our way to recovery and offer a future for our region and its people.
We know the response during the last financial crisis, established by the the Labour Government, set in motion important support for industry such as the Automotive Council and a vehicle scrappage scheme. The support helped the automotive industry bounce back from the financial crisis to become a world leading sector and a key export industry.
We need the same ambition now. Such a package is an absolute imperative as today we face a tsunami of job losses in the manufacturing industry.
Nationwide nearly 8,000 manufacturing job losses have already been announced by Rolls-Royce, McLaren, Bentley, Aston-Martin, Jaguar Land Rover and Arlington Automotive. Across the manufacturing industry, firms now expect a recovery to take 12-24 months, while 70% are experiencing delayed or late payments, and the majority are not in a position to take up Government loans. Market demand is the number one worry.
We stand on a precipice. We need action now to save and reposition our manufacturing industry for the years to come and give a future for our region and our young people.
Three key urgent steps to deliver real help now to save our manufacturing industry
1. Support for wages to protect jobs. Industry groups and unions are unanimous that we need a furlough scheme that goes further with, for example, a jobs guarantee scheme, flexible short-time working support to enable gradual restart and ramp-up of manufacturing and greater flexibility plus clarity on the future Coronavirus Job Retention Scheme, lessening the 3-week minimum furlough period to less than one week, adopting a phased approach as customers and suppliers will have delayed impacts, considering full employment cost coverage, and considering in reality whether or not all employers can contribute more to furlough payments.
2. Emergency measures to stimulate market demand with subsidies for purchase of new vehicles. The German plan includes a 6,000 Euro subsidy for electric vehicles, alongside a reduction in VAT from 19% to 16%. We need something similar plus 12 month capital write-down allowances to incentivise fleet purchases and flexibility to support good reductions in transport emissions as we move to increase the capacity of full EV production. This should be allied with using public procurement to replace public sector fleets and stimulate demand.
3. Flexible access to finance and support to firms attempting to restructure and reshape themselves to adapt to the new economic environment. The Government has taken a series of radical steps to support business - but there are gaps in the announced package of support for larger firms. We must be brave, investing now, using equity stakes and public procurement as strategic tools bring forward public projects to meet our wider social policy objectives and protect the key manufacturing sector. We also need a series of targeted projects aimed at securing the innovation and skills capability of firms through the short term crisis in demand.
A plan to help us trade our way back to health
Going forward, we need action to reshape manufacturing for the years to come and put the West Midlands centre-stage in the re-shoring revolution.
1. A fiscal stimulus commensurate with the scale of the impact and jobs estimated losses. We assess this stimulus to be at least £3.1bn of new capital investment as part of an overall larger plan.
2. The establishment of a National Council for Recovery and a Regional Development Council for the West Midlands as well as for other regions to work collaboratively with government, industry and unions in our efforts to both rebuild from COVID-19 and repurpose for climate change, but also prepare our economy for the opportunities from Brexit.
3. Use of public procurement to build local/buy UK strategy and supporting the acceleration of the transition to the green economy when planning and supplying public projects, including; infrastructure and housebuilding programmes, vehicle fleets, public transport networks; railway, bus, tube and tram renewal and expansion, as well as fulfilling our military capabilities. The UK spends some £292 billion each year of taxpayers’ money procuring goods and services and this must be harnessed, but further investment and bringing forward programmes is needed. In the defence sector, government can act immediately to extend existing commitments on Tempest alongside naval and land fleet renewal, including the three FSS naval supply ships.
3. Build new infrastructure – this includes new renewable energy capacity and the installation of an in-home national high speed, fibre optic broadband network, owned as a public asset and supporting UK cable manufacture. Desperately needed rail, light-rail and final mile infrastructure investment must be brought forward as well as greening bus fleets. This includes improvement to rail freight in the West Midlands area to enable the region to become the heart of green logistics and complement its role as the green manufacturing capital.
4. Sector skills councils, overseen by a National Skills Task Group with emphasis on skills, knowledge retention and apprenticeships are needed to support our young and the upskilling of those already in work. The current apprenticeship scheme (trailblazer and levy) is not fit for purpose. We are in desperate need of a review of the apprenticeship levy, so that it meets the needs of our key sectors. A sectoral approach must be introduced with the introduction of sector-wide skills councils and a new National Skills Task Group to support new entrants, apprentices and the upskilling of the existing workforce to ensure a ‘just transition’ of our industrial base.
A ‘right to train and retrain’ needs to be established which includes waiving the employer contribution to the furlough scheme for the upskilling of part-time eligible employees as long as the employee joins an approved retraining programme in the non-working periods; and fund participation in an approved retraining programme for the unemployed and relax restrictions like the 16-hour rule, so unemployed people can upskill for a new future. The furlough subsidy of 60% for six months should be extended to an employer creating a new job in the green economy. A new one stop careers centre bringing together Department for Work and Pensions the Department for Education, councils and colleges, is needed to connect people to employment.
Funding currently disconnected needs to be brought together for the region to spend - the ‘shared prosperity fund’ which replaces the European Union structural funding worth £2.1 billion p.a.; the £100 million National Retraining Scheme held by the Department for Education; the National Skills Fund supposed to be £600 million a year; recycling the budgets for apprenticeship starts which have dropped by half; and the £100+ million Adult Education Budget already held by the West Midlands.
5. This Regional Development Council in the West Midlands, should help oversee a series of sector deals
a. AUTOMOTIVE SECTOR TRANSITION – including direct government sector and company level support and intervention in joint venture investment in at least two giga-factories plus support to repurpose supply for the electric vehicle (EV) market and public investment in infrastructure, including a publicly owned national, standardised charging network for both rapid charge batteries and hydrogen at existing forecourt and public locations, including local energy generation and supply. Today, the London borough of Westminster has more electric vehicle charging points than the whole of the West Midlands.
b. ENERGY GENERATION AND SUPPLY – The UK has the largest off-shore wind power generation network in Europe plus extensive land-based networks, yet we fail to manufacture wind turbines here in the UK. So, we need support for the UK manufacture of photovoltaic panels, and battery energy storage capabilities. Alongside a procurement programme for public sector and voluntary sector buildings can help build demand.
c. DOMESTIC HOUSING RETROFIT AND BUILDING ZERO ENERGY HOMES – a major programme of manufacturing and retrofit for domestic housing including social housing to create zero energy bill homes including through; insulation, double glazing, photovoltaic panels, heat pumps and battery energy storage capability will help to green our housing, reduce bills and keep homes warm in winter and create thousands of jobs across our nations. The Government’s announcement makes a start but is insufficient and has little focus on social homes. Alongside an at scale programme is needed to build zero energy bill homes which will cut emissions, save energy, create jobs and help scale the green modular industry based in the West Midlands. It will also give our young people a chance to have a home.
d. HYDROGEN GENERATION, STORAGE AND USE – bring forward an investment pipeline and co-ordinated approach to support the development of a hydrogen economy in the West Midlands and use to power buses, trains and lorries, clean up heavy energy use industries, and as a first step to replacing gas in domestic/commercial energy supply and fossil fuels. Procurement must be accelerated to enable public transport to benefit from clean hydrogen.
e. AEROSPACE SUPPORT – emergency financial package to support the aviation sector must lead to support for aerospace and an aircraft scrappage scheme to replace existing older fleets with greener, quieter, more fuel-efficient aircraft plus government support is needed for research, development, engineering and the UK manufacture of projects like the ‘wing of the future’
6. A step change in R&D for Made in the Midlands manufacturing. The government is already committed to increasing the share of GDP spent on R&D to 2.4% and more than doubling the UK research budget to £22 billion by 2024/25. But today, while private sector levels of R&D are high in our region, they are not matched by high levels of public R&D. It’s time for our fair share.
7. Targeted support is needed to encourage long-term investment, with time-limited tax breaks, R&D tax relief and co-investment projects and support for export growth.
8, A programme to turn derelict brownfield sites in the West Midlands into new green industrial zones would support green manufacturing with green energy and green freight systems underpinning these zones
Our region was the home of the Industrial Revolution. We are ambitious to now lead Britain’s zero-carbon revolution. But that requires action now, to save our manufacturing industry today - and put us on a new course for the future.
Yours the undersigned