Manufacturing must be at the heart of Labour’s new green economy

An incoming Labour government will face myriad of challenges in addressing a decade of Tory failure. From an urgent need to address a growing cost of living and housing crisis to investing in the rebuilding of our NHS and wider public services, fixing broken communities and rebalancing the economy to address the challenges of the climate emergency. A positive, ambitious Labour alternative must have at its core an interventionist view of the role of the state, a plan to recover, rebuild and champion UK manufacturing, positioning it at the centre of a new green economy. Actively supporting the transition of our traditional manufacturing base to produce the produces we need for the future, supporting well paid, secure jobs and tens of thousands of apprenticeships as we strategically intervene across the economy, revitalising our manufacturing heartlands and communities across our nations.

UK manufacturing demonstrates excellence in innovative research and development, design and engineering. Globally recognised, we lead the world in pioneering technologies from our pharmaceuticals and life sciences to chemicals, energy generation, automotive and aerospace sectors, that with support and the ability to generate investment will transition our economy and provide the framework for a better Britain in a fairer, greener, more equal world.

Government cannot be a silent partner in meeting this challenge. If we are to genuinely level up and end gross regional inequalities, we have to bring opportunity to all, empower communities and put the resources of government to work breathing life back into local and regional economies. With an ambition to reverse decades of government inertia towards UK manufacturing we now have an opportunity to develop a comprehensive, dynamic industrial policy alongside a clear strategy to deliver it. A strategy to rebalance our economy and put manufacturing and a renewal of national infrastructure centre stage. Nurturing and investing in new and emerging technologies while actively supporting core industrial sectors and promoting a ‘worker focused transition’ of operations and processes at risk given the rapidly changing technological environment.

Working collaboratively with business and unions to secure the capital investment in digital technologies, tooling and skills necessary to secure dramatic advances in productivity and competitiveness, Labours industrial strategy must commit to protecting working people. To ensure that we develop a modern, genuinely high wage, high productivity economy, we must match our commitment to business with the introduction of greater support for workers. Ending the gross inequalities in both pay and opportunity that holds back talent and discriminates against millions of women, Black and ethnic minority workers. We must make it easier for workers to organise into trade unions and introduce a body of new collective rights and freedoms as well as individual protections for all workers. We must take action to end the obscenity of excessive profiteering and boardroom pay with a progressive tax regime that redistributes the wealth we collectively create more equally across society.

• Labour’s commitment to bring forward legislation to enact the provisions of our ‘New Deal for Working People’ will provide a statutory framework to ensure genuine progress towards a fairer deal for working people. Addressing many of the issues raised above while creating a statutory framework for genuine industrial democracy and sectoral, as well as workplace level collective bargaining.
• Fair pay and conditions, shorter working time, shared work and earlier retirement are all possible in a fair economy in which government commits to a new ‘social contract’, ending poverty, including pensioner poverty, and ensuring dignity for all. Labour must commit in a genuine and meaningful way to leaving no family or community behind throughout our journey to rebuild UK Plc.
• Labour must be ambitious in our demand to ensure the redistribution of the benefits obtained from investment in new technologies, automation and the digitalisation of work – greater productivity and efficiency must benefit working people, families and communities alongside business innovators and corporate investors. We all deserve our fair share of the common wealth we create.

At the heart of an ambitious industrial strategy must be a willingness to intervene in the economy, taking the political initiative necessary to develop a cross departmental, integrated industrial policy that supports good jobs in core industries.

• A new post of ‘Minister for Manufacturing Strategy’ – A cross government champion of industrial policy and manufacturing strategy should be established to drive forward government action in an integrated and cohesive manner, supported by a UK level ‘Industrial Strategy and Just Transition Council’ with government (national, devolved and local), industry and union representatives, developing long-term solutions to decades of decline.

Political intervention can take many forms; from taking equity or a controlling stake in corporations seeking government support and assistance, to full public ownership of national infrastructure, foundation industries, public transport and utilities such as water and energy. Introducing changes to the tax regime that address the impact of rising energy costs, broken business rates, the need for long-term investment credits and a fair rate of corporation tax. New regulation to end endemic short-termism and protecting UK business from predatory acquisitions and asset stripping. Labours industrial strategy must aim to bring about better corporate governance, promote new models of ownership and importantly, introduce an ambitious procurement policy to support good jobs here in UK.

• A Labour strategy must act to address a chronic skills crisis in core areas of expertise, the desperate need for support and proper funding for STEM subjects in our schools, universities and further education collages, high quality apprenticeships and lifelong opportunities for re-skilling and continuous learning.

It also means ensuring public funding supporting research and development, innovation and investment in major infrastructure is tied to the provision of long-term secure jobs here in the UK. We have to make more of what we need here in the UK and any industrial strategy must work towards ensuring that this happens.

• The failure of successive governments to gain binding contractual commitments from those seeking public funds and/or tendering for publicly funded work to minimum UK content by value, skilled jobs and apprenticeships must end. Tax-payers money is too often seen to be supporting jobs, communities, innovation and investment overseas.
• Scotland and the North East of England have seen some of the largest off-shore wind farm developments in the world and for this not to have been seen by government as an opportunity to promote UK business innovation, design, engineering and manufacturing is unforgiveable.

Such failures to support UK businesses, jobs and local communities create anger and genuine scepticism over promises of a ‘just transition’. This plays out negatively in discussions across our nations about government being ‘on our side’, even a belief that there is any will on the part of government to put people at the core of our industrial renewal.

• Labours minimum standards on procurement are a good start but a nationally driven procurement strategy must see publicly funded contracts supporting the development of new, and diversification of existing, UK businesses and support for good jobs in local communities as part of a public policy to Build Local/Buy UK.
• An industrial strategy that delivers for the UK must see us investing in innovative new technologies such as tidal and wave energy generation as well as wind and solar power, nuclear and the manufacture of synthetic fuels, SAF, hydrogen and bio-mas. We lead the world in a host of technologies but have shamefully failed to support their introduction at scale here in the UK.
• A National Investment Bank and Regional Investment Vehicles must be established to facilitate lines of affordable credit, capital investment and start-up financing, grants and monies for the taking into public ownership of assets in the national interest.
• Labours industrial strategy must see the introduction of a UK version of the hugely successful German Kurzarbeit and Mittelstand schemes. Enabling a transition with support for workers as well as businesses, offering short-time working protections, paid re-training opportunities and job protection while new innovations are brought to market, plant is repurposed, tooling and equipment installed or during periods of business volatility.

Targets for a net zero 2030/50 will only be met via a multi-facetted approach that must include a government led plan to decarbonise energy generation, support our foundation industries and transition core industrial processes while investing in major new national infrastructure projects such as the provision of high-speed broadband to every home and a national charging infrastructure to support the roll out of electric vehicles.

While generating the green electricity to meet future needs requires a clear and balanced energy policy, we also have to remove natural gas from our pipelines, fossil fuels from our roads, sea and air and support the manufacture at scale of hydrogen, SAF, synthetic fuels and bio-mas as workable technologies to make this happen.

• Our aircraft can already fly using sustainable aviation fuels (SAF) and our tug boats operate on recycled cooking oils, but the manufacture and processing of both is too slow to meet even our 2030 targets.
• Manufacturing hydrogen and ammonia from excess overnight wind energy generation is a far more effective utilisation of capacity than attempting to ‘store’ excess supply in batteries. The hydrogen can then be used for multiple purposes including electricity generation as a natural gas substitute and the ammonia to decarbonise marine transport.
• Our oil and gas platforms alongside refineries continue to supply the fossil fuels we need but without a plan to transition their operation and capacity to manufacture the future products we demand. Without such a plan that protects workers and local communities there will be no buy in from unions or those reliant on the jobs and incomes they provide.

Oil is refined for use in the manufacture of a range of everyday materials from chemicals to plastics and millions of cars will remain on our roads post 2030, reliant on an on-going supply of petroleum products. This will remain the case for decades to come without a positive tax incentive to renew and a reversal of the governments ending of the plug-in grant scheme.

In the meantime, Labour must support innovation that works alongside transitional technologies that will have an immediate impact on carbon reduction but have been ignored by a Tory government fixated on single solutions. It is already possible to retrofit conversion kits to combustion engines, enabling the use of bio and synthetic fuels and hydrogen-ICE technology is already under development for heavy vehicles such as lorries and construction equipment.

Our automotive and aerospace sectors are the jewel in the crown of our manufacturing economy and billions of pounds of investment has been made in technological solutions to decarbonisation such as SAF, synthetic fuels, hydrogen and bio-mass. All provide affordable transitional options to convert and decarbonise existing technologies in both sectors and an industrial strategy must bring together government and industry to develop such ideas, rather than simply dictate its direction. Such an approach will allow innovative engineering and technological solutions to develop that will power change here in the UK and provide solutions and export opportunities across the world.

• It’s ironic that today, a battery electric vehicle could be responsible for more carbon emissions over its lifespan than the internal combustion engine it’s replacing – not in its onroad operation, but in its component manufacture and charging cycle.

Our automotive sector employs some 800,000 workers in direct manufacturing, its supply chains, sales and garage network. Hundreds of thousands however are employed manufacturing, maintaining and replacing parts that, beyond initial ‘after-sales’ requirements, won’t be required following our transition to electric vehicles. Electric Vehicles (EV’s) don’t require engines, fuel pumps and injection systems, gearboxes, exhausts or fan belts amongst many other components. How we transition a whole sector, repurpose plant and equipment and re-skill a workforce will be a measure of our success in supporting a true ‘workers transition’.

• Regional economies across the Midlands and the North of England will be devastated without a centrally driven industrial plan and strategy to transition current manufacturing capacity from a hundred-year legacy of the combustion engine to the manufacture of the electric drive units, digital control systems, motors, inverters and batteries required in electric vehicles.
• We must demand more! We don’t want to simply assemble vehicles or batteries from imported components, we want to manufacture the high value components here in a resilient UK supply chain.
• We can now take ownership of the entire process of battery construction from cathodes and anodes to cell construction as rapidly developing UK technologies mean we’re less reliant on the overseas mining and refining of materials such as lithium and cobalt. While developments in future Solid State battery technology are being pioneered here in the UK and must lead to UK jobs not overseas licencing of manufacture.

Labour has an opportunity to demonstrate its ability to build local alliances with industry, unions, universities and local government to support this transition. Labour must develop an energy policy that ensures both energy security into the future and that the cost of energy is competitive with our overseas competition. We have to attract the investment necessary to meet our ambitions and aspiration. Labour must support our foundation industries such as steel, building on the nationalisation of Sheffield Forgemasters if necessary, and invest as a partner in those high energy users such as those manufacturing paper and packaging, ceramics and construction materials.

• Labours industrial strategy must work to protect our national interests in our trading relationships with both the EU and nations across the globe. Trade deals, alongside our post Brexit relationship with the EU, must be based on the principles of ‘fair trade not free trade’. Protections against social and product dumping, unfair tariffs and quotas must be part of any core agreement and the voice of working people must be at the table to ensure that our interests are secured and that global rights impacting both workers and trade unions are enhanced.

Generating green electricity and providing our nation with energy security as well as cheaper domestic supply and a more competitive industrial offer is a priority if we’re to meet our carbon targets, but government plans to fund this transformation via private finance, the consumer ‘green levy’ or ‘the market’ won’t do this. Energy security is the responsibility of the state and a balanced energy policy including investment in new nuclear, wave, hydro and tidal generation, alongside existing renewables, is key to our long-term objectives. With interest rates at an historic low a decade has been wasted by government ideological opposition to public borrowing.

• Establishing a National Investment Bank to raising finance both directly and via new issue ‘green bonds’ could fund a new publicly owned Domestic Energy Company to secure the long-term investment necessary to ensure supply and diversify our grid network, investing in local ‘community energy hubs’, as well as major infrastructure projects.

While large scale nuclear reactors are a central part of our energy mix and the sites at Hinkley and Sizewell will generate a huge amount of power, giving the green light to the small modular reactors designed, engineered and manufactured here in the UK will not only create some 40,000 jobs in communities across the UK, but each (the size of two football pitches), will generate electricity to power a million homes. SMR’s could also localise the generation of power for new community grids, supporting local ‘energy from waste’ plants to manufacture green hydrogen and capture carbon directly from the atmosphere via Direct Air Capture technologies. The green hydrogen and carbon captured and stored via nuclear can replace natural gas in our homes, remove coal from our steel industry, decarbonise SAF manufacture and power heavy construction equipment, buses and lorries via Hydrogen ICE technologies or developing fuel cells. Ammonia from hydrogen can be utilised to decarbonise marine vessels as well as for the UK manufacture of fertilisers.

• To think that we can generate enough electricity to meet expanding demand, estimated to be three times greater than today by 2050, without nuclear capabilities is naive. To manufacture SAF alone to the level of demand estimated at 2050, would require the combined output of some 4000 SMR’s across the globe, covering a footprint the size of Bristol, to do so with wind energy however, would require wind farms twice the size of France.
• The question is do we want to support an integrated, balance energy policy that decarbonises generation while creating thousands of UK jobs in manufacturing as well as construction and operation, attracts huge inward investments and develops exportable technologies supporting our economy, or do we continue to import technologies from overseas.

Labour can and must develop our plans to green our towns and cities with the next generation of electric buses, trams and light rail networks. An opportunity wasted by the Tories this is possible with a plan for up-front investment and government support for a ‘national build and leasing scheme’ to renew our aging, polluting, fleets.

With the government walking away from both the Zero Carbon Homes and Green Deal initiatives, thousands of jobs and genuine apprenticeships can be created across the UK with a national plan to insulate and retrofit our housing stock, reducing energy use and warming our homes, as well as connecting communities into new high speed digital highways and installing a national charging infrastructure for electric vehicles. The UK, for historical reasons, has some of the oldest housing in Europe and a programme to address energy waste via ill-fitting single-pane windows, loft and underfloor voids and poor legacy cavity insulation is key to reducing our energy needs, as is the provision of affordable heat pumps, domestic solar/wind electricity generation and battery storage capacity. All of this is possible with an ambitious vision and funding options that make it affordable.

• Materials for use in a retrofit programme, just as with digital connectivity, can and should be procured from UK suppliers, promoting manufacturing capacity and legacy jobs across the UK alongside the thousands of new jobs in installation.

The above can form the basis of a comprehensive Labour industrial strategy that protects and creates skilled jobs while safeguarding UK national interests in a globalised world. Much of it is regulatory, addressing long-standing issues in the UK economy such as short-termism, poor corporate governance, vulnerability to a hostile takeover and asset stripping and an absence of genuine industrial democracy that work against our long-term interests.

It’s interventionist and deliberately so, it’s the role of government to pro-actively intervene and invest in support of its national interests. Structural mechanisms to support an industrial strategy must include the establishment of a national investment bank and regional investment vehicles to support strategic financial support via affordable lines of credit, capital investments and start up financing, equity and grants alongside capital allowance tax credits and other treasury measures to support long-term investment.

Local implementation of a national strategy will require the establishment of new regional development agencies to include industry, union and local political and community voices, new powers to devolved nations, combined authorities and local government bodies. The strategy must be driven however from the centre with a new ‘Minister for Manufacturing and Industrial Stategy’ in cabinet championing our industrial revitalisation and a UK wide ‘Industrial Strategy and Just Transition Council’.

It’s only Labour, with its roots in the industrial heart of our nations, that can bring such a strategy together, building the alliance between industry and unions, local government and state necessary to deliver a diverse economy and the millions of new jobs we need as we recover and rebuild while confronting head on the challenges of the climate emergency. With a clear vision and ambitious industrial strategy we can do this!