Rebuild British Manfacturing
Rebuild Britain Meeting Report
by Kelvin Hopkins
Kelvin Hopkins was a guest speaker at the ‘Rebuild Britain’ fringe meeting held at the 2022 TUC annual conference in Brighton on 19th October.
His speech addressed the fundamental need to rebuild British manufacturing
‘There has been a devastating decline in British manufacturing in the post-war decades. Just since 1970 manufacturing as a proportion of the economy, of national output, has fallen from 32% to less than 10% now. This serious long-term damage to our national economy will become irreparable unless government acts soon to reverse the process.
Industrialisation is fundamental to building strong, prosperous modern economies and virtually all major developed economies have been built on manufacturing. Britain was the first nation to industrialise, followed by the US, Germany, Japan and most of Europe in the 19th century. They were followed in the 20th century by the Soviet Union, and after World War 2 by China, Korea, Malaysia, Taiwan and others.
Tragically, Britain has been going in the opposite direction, in deindustrialising. We used to be the largest shipbuilder in the world. We built railways across the world and more recently were major manufacturers of aircraft, motor vehicles and much more. Much, indeed most, of this industry has all but disappeared and Britain has become a substantial net importer of manufactures, not a producer. We now cannot even produce sufficient for our own domestic needs let alone for export.
Britain’s motor manufacturing is a fraction of its former size and the Society of Motor Manufacturers and Traders has described our trade deficit in motor products as a ‘chasm’. 50 years ago the motor industry in Luton/Dunstable, where I myself live, employed 38,000 workers. Now, Bedford Trucks, A.C.Delco and most of Vauxhall have gone, with just a few hundred employees left assembling vans at the last remaining Vauxhall plant. Production at Electrolux and dozens of other local factories has also gone.
The Legacy from Thatcher and Howe
The process of decline has been continuous but the worst damage to our industries was inflicted immediately after the 1979 election by the Thatcher Conservative government with Geoffrey Howe, an obsessive free market neo-liberal ideologue, as Chancellor of the Exchequer.
Howe immediately abolished currency exchange controls leading to a massive outflow from the Britain of billions of pounds of precious investment capital.
Howe also raised interest rates sharply which forced up the Sterling exchange rate. This made imports cheaper and exports expensive such that within two years one fifth of British industry disappeared and unemployment surged up to 3 million.
The impact on Britain’s trade was dramatic. From a manufacturing trade surplus of over £2 billion in 1980 it fell into a deficit annual chasm of minus £21 billion during the 10 years of Thatcher government. As to UK manufacturing employment, this fell by 42% between 1960 and 1986. At the other extreme manufacturing jobs in Japan increased by 53% in the same period an astonishing contrast.
Then there is Britain’s extraordinary investment failure. Even in 1960, total investment as a proportion of national output was 30% in Japan, 25% in West Germany and just 16% In the UK. Average annual investment levels between 1997 and 2017 were 30% in South Korea, 20% in Germany and 16% in the UK, the lowest level of all 34 OECD developed nations.
These stark statistics demonstrate the utter failure of successive British governments to sustain and promote Britain’s manufacturing industries. The Country now desperately needs a determined, dynamic and strong industrial strategy which has to be driven by government, by the state. The market left to itself will just bring further decline. The wrecking-ball of neo-liberal economics has had tragic consequences for Britain. This disastrous ideology has to be abandoned and consigned to history.
‘Rebuild Britain’ has proposed a series of necessary steps to rebuilding a strong manufacturing sector as a vital component of a viable economy for the future in which to sustain the jobs, skills and the living standards of working class people.
Firstly, the Sterling exchange rate has to be managed to make British exports competitive and to constrain imports. Exchange controls on international capital flows must be reimposed to achieve this and to ensure national capital investment levels are sustained. On-shoring of production must be promoted.
Secondly, government must use public purchasing power, public procurement at every level, to buy British, both to sustain what remains of Britain’s industry and to promote its rebuilding for the future. National government, the public services, local government and the public utilities must be required by new legislation to buy from British producers wherever possible.
Thirdly, there must be a strong programme of government aid to industry across the regions and nations of Britain. Targeted regional industrial aid established by the Wilson Labour governments worked well and should be used again. State aids to industry must be permitted and supported.
Fourthly, measures of public ownership and public investment must be used to sustain vital industries with steel as a first priority. Privatised public utilities should be brought back into public ownership. Energy, water, transport and postal services should all be in public, democratically accountable hands and we should look to what other counties do. EDF is 100% owned by the French government and there are French government stakes in Peugeot and Renault.
German, French and many other national railways are state owned. The water sector across the world is over 90% publicly owned. Britain has been alone in selling off its precious water industry to privateers with desperate and inevitable consequences.
Fifthly, in Rebuild Britain we say there must be a new national drive in education and training to expand and improve skills across the board. We propose too that there should be established a new National Commission for Industry to monitor and drive the renaissance of manufacturing, with government, trade unions and employers all represented.
Action on all these fronts is now urgent if Britain’s manufacturing is to recover and build for the future. The lives and living standards of working people now and in the future depend on sustaining a strong and vibrant manufacturing sector as a core component of Britain’s economy.
Most of Britain’s lost manufacturing has been in older more traditional sectors and there must now of course be a strong focus on new industries with a guaranteed future especially in ‘green’ production.