New pledge

Scottish Labour ‘will build a manufacturing powerhouse’

Labour pledges to invest in manufacturing

Scottish Labour has pledged to make Scotland a “manufacturing powerhouse” after publishing figures showing productivity in the sector has plummeted to its lowest point since 2009.

This trend is not mirrored across the UK as a whole, where manufacturing productivity increased for two consecutive years, says Labour.

Daniel Johnson, Labour’s economy spokesman, says the party’s Industrial Strategy will use the power of government to support domestic manufacturing, including using procurement to ensure we “buy, make and sell more” in Scotland.

The party says its green investment plans will also ensure supply chain jobs in green industries come to Scotland, instead of going abroad.

Labour says it will improve pay and conditions for workers in its New Deal for Working People and reform the skills system to provide people with opportunities.

Mr Johnson said: “The SNP and the Tories have abandoned Scotland’s iconic manufacturing industry and its workers, and our entire economy is paying the price.

Daniel Johnson
Daniel Johnson: unlocking Scotland’s potential

“Labour will unlock Scotland’s potential as a manufacturing powerhouse and ensure that we buy, make and sell more here in Scotland.”

The SNP would point to initiatives such as the setting up of the National Manufacturing Institute Scotland in Renfrewshire as an example of its ambition to drive productivity and develop new technologies. It would also argue that it has no powers to influence interest rates, employment law or corporation taxes.

Last week the SNP accused Labour leader Sir Keir Starmer of a u-turn on his commitment to ban exploitative zero hour contracts, watering down his ‘right to switch off’ legislation to a code of conduct, and diluting plans for basic workers’ rights from day one of employment.

Chancellor Jeremy Hunt used his Budget speech to announce an extra £4.5bn for strategic manufacturing sectors over the next five years to bolster economic growth and support the industry. There has also been investment in tax-beneficial freeports and investment zones.

NMIS digital tech
NMIS, set up by the SNP, is using digital technology to advance manufacturing (pic: NMIS)

In 2022 the Royal Academy of Engineering estimated that the UK had 729,000 engineering businesses and some estimates claim that manufacturing accounts for 51% of the UK’s total exports.

Figures from trade body Scottish Engineering showed the manufacturing sector actually enjoyed two years of post-pandemic recovery which softened in the second half of 2023 as interest rates and inflation soared around the world.

The latest survey for the first quarter of 2024 revealed a return to positive overall order intake which has raised optimism for the coming three months.

However, despite inflation beginning to stabilise, the challenge of wage inflation and energy costs hangs over the sector and is reflected in forecasts for price increases which are affected by global rather than domestic pressures and policies.

A fall in inflation, expected to be confirmed this week, and the first of a series of cuts to interest rates, pencilled in for June, should help, says the group.

In a report last month, Paul Fisher of the National Institute of Economic and Social Research, said: “Investing to improve economic outcomes, whether public or private, requires us to recognise the structure of the economy today and its direction of travel, not hark back to the ‘glory days’ of British manufacturing, which are long behind us.

“We need to promote forward, rational, long-term thinking and be more activist in our investment strategy. That would require changes to many areas of policy from the fiscal framework to national and local planning.”

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