EU must develop 'sense of realism' in industry targets

Europe's industrial policy must be 'appropriate, affordable, consistent and backed up by rigorous impact assessments', argues David Workman.

By David Workman

22 May 2014

The EU needs to develop a new strategy to support growth in manufacturing as a means of rebalancing its economy. Nowhere is this more urgently required than here in the UK, as manufacturing now accounts for only 11 per cent of GDP.

Much of the recent decline in manufacturing has been in the energy intensive industries, of which the pulp and paper sector is one. Between 2000 and 2010, production fell by one-third as half of the UK's paper mills closed.

The result is that the UK now imports two-thirds of the paper that it consumes. Thousands of well paid jobs were lost – mainly in areas of high unemployment. This decline has, though, had one benefit. It has helped the UK to claim success in reducing carbon emissions - whilst at the same time overlooking the fact that we have 'exported' this carbon only to 'import' it again, embedded in products now made abroad.

This is the industrial policy of the madhouse. Indeed, I believe that success in tackling climate change should be measured in terms of carbon consumption and not emissions.

It is not, however, just our fixation with climate change that has led to this decline in manufacturing; it is the total burden of legislation and regulation, combined with a failure to fully integrate and liberalise Europe's energy markets. The cumulative impact has left many industries unable to compete in the global marketplace in which they now all have to operate.

It is for this reason that I recently wrote to all candidates in May's parliamentary elections, in support of a campaign, launched in January by the confederation of European paper industries, titled 'Basta' – a Latin word meaning 'enough is enough'.

It calls for Europe to 'get back on track' by developing a meaningful manufacturing strategy. This will mean reversing many of the 2300 pieces of legislation and regulation that have emerged from Brussels over the last five years, significantly reducing the 100 or so environmental targets that our industry is expected to meet by 2050, and introducing measures to reduce industry's energy costs.

"Manufacturing cannot expect to remain internationally competitive if it is subject to the micro-management of excessive and often highly complex regulation"

I would suggest that manufacturing policy needs to be put at the heart of EU and UK government thinking. We can no longer allow it to be an afterthought once environmental, climate change and social policy measures have been agreed; by then it is too late.

Legislation and regulation needs to be appropriate, affordable, consistent and backed up by rigorous impact assessments. Manufacturing cannot expect to remain internationally competitive if it is subject to the micro-management of excessive and often highly complex regulation, and the legislation, high energy costs, and taxes and levies not applied in other parts of the world. 

A sense of realism needs to pervade government. It is simply not living in the real world if it expects industry to achieve targets which are physically impossible to meet, or which need investment on which there is no discernable return. The 2050 target to reduce carbon emissions by 80 per cent is a classic example.

For the paper industry, this is less than two investment cycles away and to achieve it will require the development of breakthrough technologies. Some potential solutions are at the very early stages of development, but will need time and money to bring to market. Government has a huge role to play here by allocating resources to this type of innovative research and development – something that so far it has manifestly failed to provide.

In short, what I believe that we need if we are to grow manufacturing in the UK and in Europe, is a new and far reaching approach to policy which significantly reduces 'stick' as a motivational tool and replaces it with much more 'carrot'.