Opinion: It is vital that the Government deliver a sustainable Industrial Strategy

Tom Lawton, Partner & Head of Manufacturing at accountancy firm BDO shares his thoughts on why it is vital that the Government delivers a sustainable industrial strategy which focuses on skills and education.

The march of the makers was a term coined in 2011 by the then Chancellor, George Osborne and since then the term has all but vanished. However, manufacturers’ are still a force to be reckoned with and even with all the economic and political uncertainty we have seen a strong performance over the last 12 months and this continues in our latest EEF/BDO Manufacturing Outlook Q3 survey results. Manufacturers have not only strapped on their boots but are marching ahead making the most of the opportunities available in both the UK and abroad.

However, for UK manufacturers’ to continue to thrive in a post-Brexit world, we need a trained, highly skilled and diverse workforce which can flex with the needs of the changing economy and the priorities of business. People and skills are at the heart of the ‘new economy’. The ongoing skills shortages in the manufacturing sector are likely to be enhanced by the move towards Industry 4.0. A new way of thinking is required centred around an industrial strategy and the Government and manufacturers’ need to work together to design something that works now and for the future.

Encouragingly, one of the ten pillars of the Governments ‘Modern Industrial Strategy’ is ‘developing skills’- but with the long running skills shortages in the manufacturing sector, we need to start seeing more rapid implementation and results. In a recent survey of 288 UK manufacturers by BDO, 75% said it’s very/extremely important for an education overhaul to deliver future employees/skills for the sector and this is one reason why it’s so important that the Government develops a long-term, sustainable industrial strategy, avoiding the disruptions of the political cycle.

 

The progress to 4IR (in UK and the rest of the world) will be one of the most significant changes to impact UK industry and we need to consider how we respond to these challenges and opportunities. In particular the skills we need and how we develop these skills – including retraining throughout a working life and designing an education system that will support the needs of the employer now and in the future. As UK manufacturers automate and digitise, implementing 4IR processes, it is likely to mean in the longer term manufacturers will require fewer un-skilled/semi-skilled workers with new types of roles being introduced to deliver work in the 4IR manufacturing environment.

To create a truly sustainable and balanced ‘new economy’ we believe policymakers must focus on fuelling the growth of sector powerhouses like manufacturing, and our New Economy report suggests some detailed policies with a particular focus on helping the manufacturing sector grow.

At the centre of our policies for the building of a new economy is harnessing the potential of high-quality apprenticeships to bridge the skills gap, particularly in the manufacturing sector. The Government has a very clear vision to deliver three million apprenticeships by 2020. With employers in charge, this target can be achieved as long as apprenticeships are synonymous with quality and deliver the skills that employers are calling for. In 2017, a new independent body – the Institute for Apprenticeships – will act as the ‘guarantor’ of quality and it will be an employer-led body that will also advise on the new Standards.

 

However, our policy identifies some additional steps we would like to see taken so that apprenticeships in the UK are improved, which include:

• Reforming the Ofsted assessment system for schools to give some weight to the number and quality of apprenticeship places secured by schools
• Focusing government targets on apprenticeship outcomes/qualifications rather than the numbers starting
• Clarity that the detail of the new apprenticeship standards are comparable nationwide.

If properly supported, Britain’s historic strengths in manufacturing, engineering, innovation, design and service – as well as the significant potential that the move to more automated/digitised manufacturing offers – provides the fundamental foundations for a successful and well-balanced UK economy.

For more information on BDO’s New Economy report go to www.neweconomy.bdo.co.uk.