Business Secretary Peter Mandelson announced £150m in grants for advanced manufacturing this week as he launched a “UK Innovation Investment Fund”. Much of the money will go to aero-engine heavyweight Rolls-Royce.
The firm will receive £45m towards its £300m investment in four new plants to make aerospace plants and nuclear power-station components. It will also lead an £85m research and development programme into aircraft engines.
What the commentators said
Manufacturing has taken “one hell of a beating”, said Sean O’ Grady in The Independent. It has seen the worst drop in output since the 1930s and employment in the sector has fallen to a record low of 2.7 million people.
Yet it’s still crucial to the economy. It accounts for 15% of GDP and over half our exports, and its productivity growth – 50% over the past 12 years – outstrips the rest of the economy. Sector output is increasingly high-tech and it creates high-skilled jobs all over the country.
It’s certainly “good news that ministers have finally recognised that a healthy economy cannot survive on the City alone”, said Ian King in The Times. But this handout looks “tokenistic” – note that Rolls-Royce spends around £45m on research and development in a single month.
The way the government has been throwing “short-term bungs around” and dithering over whether to support Jaguar Land Rover and Vauxhall, along with its failure to stem the ongoing closure of university science departments, also suggests it isn’t “really serious” about manufacturing.
Still, breaking with “three decades of reflexive scepticism” about the importance of manufacturing should help young people recognise that “science and industry aren’t dead subjects”, said the FT. But while handouts are all very well, they are no substitute for an environment in which enterprise can flourish.
That means better regulation and education. Mandelson “is right” to opt for “a more balanced approach to manufacturing”, but he should keep in mind what he preached in Brussels: “in the end, markets, not governments, make us rich”.