Some of the government’s green policies are severely undermining the competitiveness of UK companies by making energy even more expensive relative to their foreign rivals. In sectors like steel, glass, paper and chemicals, energy can make up 70 per cent of operational costs. And by 2020, the average energy-intensive company could find itself paying £20m extra in costs as a result. This does not reduce world carbon emissions – it relocates them outside of the UK, along with jobs and tax contributions. Another reason Britain has lost – and struggles to regain – competitiveness in certain industries is high labour costs. In many cases, we simply cannot compete with the likes of China without implementing unattractive protectionist policies like tariffs. Our answer should be to focus on high-value manufacturing, in which case UK competitiveness comes down to education. But we do not currently have enough people with the know-how for jobs in highly-skilled manufacturing. Joe Wright is research fellow for the think tank Civitas.
The UK remains a world-renowned manufacturer, celebrated for high-end innovation and product quality. Look at the hugely successful automotive sector, where 140,888 cars were built in September alone. We’re world leaders in aerospace – which exported £20bn in 2011, and supports 230,000 jobs – pharmaceuticals, chemicals, green technology and the creative industries. The government’s business tax policy, and investment incentives like the research and development tax credit and patent box, have helped keep the UK competitive. There’s even a growing trend for manufacturers like Amtico, the Midlands-based flooring company, to re-shore production from Asia back to the UK. But in an interconnected world, competition is tougher than ever. To successfully rebalance our economy towards exports and business investment, we must strengthen supply chains, make sure our young people have the right skills, and secure an affordable energy supply and good quality infrastructure. John Cridland is director-general of the Confederation of British Industry.