Monday 27 November 2023

The Advanced Manufacturing Plan - a blizzard of acronyms

Kemi Badenoch, the trade and business secretary, studied Computer Systems Engineering at Sussex University and worked as a software engineer at Logica - an IT and management consultancy business - for three years between 2003-2006. Whilst employed there she read Law at Birkbeck College part-time and then worked as a systems analyst at RBS, later she became an associate director at Coutts Bank. She became MP for Saffron Walden in the 2017 election.

I relay this to show her experience of trade and industry is, to say the least, limited. Some might say non-existent.

However, it hasn’t stopped her from publishing her Advanced Manufacturing Plan (on a Sunday no less!) and writing about it in The Sunday Times. She says: "Businesses drive economic growth, not government." Badenoch apparently sees her job as being “not to hike taxes and borrowing in a doomed effort to ‘force’ businesses to succeed by picking a few ‘winners’, but to create the conditions in which businesses can succeed. Because we know if we do this, the risk-takers, entrepreneurs, and innovators in the private sector will do the rest.”

She is talking like Harold Wilson, Tony Benn or even Ted Heath and Michael Heseltine but the £4.5 billion investment she announced in the Advanced Manufacturing Plan (AMP) doesn't actually come in until 2025, if it ever comes in at all.

Reading the AMP is like being repeatedly hit in the face with hardened acronyms. There's an Advanced  Propulsion Centre (APC), the Automotive Transformation Fund (ATF),  the Net Zero Blended Finance Project (NZBFP), a  Connected and Automated Mobility (CAM) scheme,  the Aerospace Technology Institute (ATI), the Made Smarter Adoption programme, an Industry Innovation Accelerator, a Manufacturing Observatory, the High-Value Manufacturing Catapult (HMVC), Net Zero Innovation Portfolio (NZIP) fund,  the Critical Minerals Intelligence Centre (CMIC), a  Long-term Investment for Technology and Science (LIFTS) initiative, a National Semiconductor Strategy, a British Energy Supercharger and not forgetting the Industrial Energy Transformation Fund (IETF).

And probably others that I haven't spotted. It isn't so much a plan as a cobbled-together price list of things the government or Badenoch thinks will look and sound impressive.  Will it do any good? I don't know, but you can be sure a lot of the money is smoke and mirrors anyway, much will never be spent by whoever comes in next year and a lot will simply be wasted.

Having skimmed through the AMP you would be forgiven for thinking we're already at the top of our game anyway. Indeed in her Times article, Badenoch says, "British manufacturing has been an unambiguous success story over the past decade and a half."   What?

We can't make a success of the industries of the past but seem to think we can power ahead with those of the future. It's as if we've decided we can't compete even in the industries we invented like the railways or building iron ships and are on the lookout for sectors where we don't need to compete at all. Good luck with that.

There is a lot of talk about the automotive sector and investment by Nissan (£2 bn), Stellantis and Ford but you can be sure they will not want any divergence from EU regulations that might mean tariffs on their exports. I would be pretty sure their investment was made on the understanding there would be no changes to automotive regulations. Brexit has undoubtedly made their lives more difficult and costly.

On chemicals, the AMP has this to say:

"Government has been exploring options to significantly reduce costs for businesses under the UK’s regulatory framework for chemicals (UK REACH), thus creating a better environment for businesses in the UK whilst establishing a more comprehensive picture of where and how chemicals are used in Great Britain."

The industry has been complaining bitterly about having to spend hundreds of millions on replicating the EU's REACH system so to hear ministers now talking about reducing costs significantly will ring hollow.

She wants to root out “whatever Whitehall or any part of the state is doing that is holding back the risk-takers who create the wealth, jobs, and tax revenue on which our society and country depends.”

Badenoch also supported Brexit, the shrinking of your home market by 85% being one of the conditions she thought would spur growth. As business secretary she has yet to spell out in any meaningful sense, what the state and EU regulations have been doing to hold back risk-takers.

In fact, far from holding us back, she says, “Our economy has grown the third-fastest since of all G7 countries since 2010. We have recovered more strongly from Covid than France, Germany, and much of Europe.” I’m not sure she’s right about Britain recovering more strongly than France, Germany, and much of Europe but for ten of the last 13 years, as we grew third fastest in the G7, we were a member of the EU.

Badenoch doesn’t seem to appreciate that regulation helps growth. It doesn’t hinder it.

Ben Habib

The former Brexit Party MEP Ben Habib tweeted something yesterday which is puzzling;

He says the 4% reduction in GDP forecast by the OBR is actually a 4% fall in productivity which he says is "quite different."  I'm not sure why he thinks so.  The OBR uses the 4% for both GDP and productivity because it is essentially the same.

If productivity (output per capita) falls by 4% then the total output (GDP) will also fall by 4%. Unless he believed people think by 2035 or so our GDP will be 4% smaller than it was in 2016.

It's that cognitive impairment again.

Mark Littlewood

The DG of the Institute of Economic Affairs Mark Littlewood has hailed the election of  the extreme right-winger  Javier Milei as president of Argentina: Argentina’s chainsaw-wielding president-elect is a libertarian’s dream

Littlewood is drooling at the prospect of watching Milei to see if any of the IEA's insane free-market, tax, and regulation-cutting policies could work. He writes:

"But what makes Milei so exciting and different is that he has gone far beyond merely acting as a repository of fury and disenchantment. He actually has an intellectually coherent programme. He references economists such as Milton Friedman and Ludwig von Mises in mainstream media interviews. He waxes lyrical about “internalising externalities” – and people listen. He eschews the easy road of simply blaming his opponents for incompetence and mismanagement, rather he explains how the present systems are unmanageable whoever is in charge."

I'll keep an eye on Mr Milei to see how it all works out, but I don't share Littlewood's enthusiasm.

Posted by at