LEVELLING UP
We can’t ‘Level Up’ without a manufacturing revival. In my constituency, the steelworks employs far fewer people than it once did, but these jobs are still some of the most well paid and highly skilled in the area. This report shows why reversing the manufacturing decline in some of our most deprived regions is so important to restore productivity – and pride – to our industrial heartlands.
The UK has deindustrialised more than any other G7 country. In 1970 the UK had the sixth largest share of manufacturing in the economy in the G20. Today it is second from bottom. Many other rich countries have deindustrialised far less: manufacturing is about 10% GDP in the UK but about 23% in Germany.
In 1981, manufacturing accounted for 23.4% of employment. This fell to just 8.1% in 2018. The decline in manufacturing jobs hit some places much harder than others – especially the Tees Valley, Lancashire and the Black Country, but also Barking and Slough in the South.
While manufacturing is a bigger share of the economy in lagging areas, it also provides an outsized share of the better paid, high productivity jobs in those places:
Outside London, wages in manufacturing are higher than the wider economy, with a consistent wage premium of over £1 an hour for the UK as a whole and an even higher wage premium in some regions.
In 2018, median earners in manufacturing earned 22% more in the North East, and 19% more in the North West, a premium of over £2 an hour.
In addition to boosting wages for poorer regions, manufacturing also has higher wages for less qualified workers. The largest manufacturing wage premium is seen for those with mid-level qualifications and those in the low-to-middle part of the earnings distribution. Those with only A-level equivalent qualifications see a 20% hourly earning premium.
Manufacturing is also more important to red wall seats. The report’s analysis reveals that 12.2% of workers in seats gained by the Conservatives in 2019 work in manufacturing, compared to 9.3% in seats they held from the 2017 election and 7.8% among Labour seats. The SNP’s seats have on average only 7.8% of people working in manufacturing.
The UK has deindustrialised faster and further than other advanced economies, which impacted communities across the country.
Deindustrialisation played a contributing factor in
exacerbating regional disparities in the long-term, in some ways
helping to create left-behind places.
Investment in manufacturing in the UK lags behind our competitor economies elsewhere in the world, which limits the growth of the sector. Our tax system favours sectors which are light on capital investment over manufacturing
The Government should set out a bold ambition to increase manufacturing as a share of the economy, within a National Manufacturing Plan to reverse the decline of manufacturing. This Plan should:
Maintain the current Super-Deduction capital allowance beyond its current end date of 2023 for plant and machinery.
The Government should reform content and procurement rules to boost supply chain firms in the UK.
The UK has deindustrialised faster and further than other advanced economies, which impacted communities across the country.
Deindustrialisation played a contributing factor in
exacerbating regional disparities in the long-term, in some ways
helping to create left-behind places.
Investment in manufacturing in the UK lags behind our competitor economies elsewhere in the world, which limits the growth of the sector. Our tax system favours sectors which are light on capital investment over manufacturing
The Government should set out a bold ambition to increase manufacturing as a share of the economy, within a National Manufacturing Plan to reverse the decline of manufacturing. This Plan should:
Maintain the current Super-Deduction capital allowance beyond its current end date of 2023 for plant and machinery.
The Government should reform content and procurement rules to boost supply chain firms in the UK.
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