The British Chamber of Commerce, the TUC and the North-West Business Leaders Team are among the UK’s leading business organisations which have joined with the think tank Green Alliance to urge the government to support more resource efficient manufacturing.
They say it is needed to close the UK’s regional productivity gap and ensure good jobs stay in the UK.
The government’s budget watchdog, the Office of Budgetary Responsibility, is expected to take a much more pessimistic view of productivity in future, as it is due to announce that its economic forecasts have been too optimistic over the past seven years.
This makes a focus on productivity and rebalancing the economy even more vital, the group says.
Green Alliance – “The UK’s industrial strategy must help British businesses keep up if they are to retain their competitive advantage post-Brexit.”
Manufacturing contributes 15-20% of the economy in UK regions experiencing low productivity. Although this includes some of the UK’s most productive firms there is a long tail of poor performers contributing to the problem.
Around half of manufacturers’ costs are on resource inputs. In the past ten years, the best manufacturers across the country have cut their energy use by 50%, but the majority have only managed a reduction of 10-15%.
Between 2003 and 2015 there was a 24-fold increase in institutional investors asking and acting on information about resource risks.
The government can help manufacturers via the industrial strategy by providing a long term view of these risks and an understanding of the role of technology in improving efficiency, through the use of alternative materials, optimised processes and recovered materials, the group says.
In a joint statement five leading business organisations and the think tank Green Alliance are calling on the government to use its forthcoming industrial strategy to raise the baseline performance of all UK manufacturers on resource efficiency.
This has the potential to add £10bn to the profits of the manufacturing sector, increase productivity, support growth in the North and Midlands, where manufacturing is more dominant, and keep good jobs in the UK.
A report by Green Alliance, Lean and clean: building manufacturing excellence in the UK, proposes a new manufacturing upgrade programme with procurement criteria, to encourage and reward more resource efficient production.
Angela Francis, senior economist at Green Alliance, said: “The German and Japanese governments support their manufacturers to raise resource efficiency. The UK’s industrial strategy must help British businesses keep up if they are to retain their competitive advantage post-Brexit.
“There are huge economic opportunities here which could help to reinvent manufacturing in the North.”