9/9/10 – UK Fears that Spending Cuts May Stifle Innovation and Manufacturing
9 September 2010
On 20 October, UK Chancellor George Osborne will reveal the full details of the coalition government’s comprehensive spending review. For manufacturing industry in the UK, business leaders and employee unions, are waiting for the cuts that will fall on the Department of Business, Innovation and Skills. This department has a wide portfolio and is responsible for business and enterprise support, running higher and further education, promoting scientific research and regional development.
With a current annual budget of £21.2 bn is has already been asked to save 25% of that annually spend adding up to £5.3bn with cuts of £836m already identified. Of this, £100m was to come from running costs, £200m from making higher education more efficient and by modernising it. A further £74m must come from lower profile budgets run by Regional Development Agencies and £233m from the UK centre for medical research. Controversially an £80m loan offered by Labour by the company, Sheffield Forgemasters, to allow the firm to build parts for nuclear power stations was withdrawn by the new government so stifling the growth potential of that company.
University vice-chancellors are preparing for 35% cuts over four years, according to the Times Higher Education Supplement. Universities minister David Willetts has vowed to protect "blue skies" academic research but has said some of it, including the UK’s network of 24 nanotech centres, could be centralised to save cash. More recently government ministers have been hinting that only research that has direct relevance to industry or ‘quality research ‘ will be spared the financial chop but academics argue that all research in the UK has to meet strict quality criteria. The debate rages on.
Today the BBC announced a survey that suggested that the public spending cuts will impact old industrial heartlands in the North East, North West and West Midlands the world. The GMB union has been swift to comment. Paul Kenny GMB General Secretary said “The economic recessions of the 80’s and 90’s, made far worse by the monetarist ideology the then Tory Government, ripped the heart out of the UK’s manufacturing industry. The destruction of jobs left a legacy of high unemployment and high levels of incapacity benefit claimants in the old industrial areas. This survey shows that this new Tory Lib Government public spending cuts will leave these areas reeling in terms of job cuts and yet again single them out as the main victims of public services cuts.”
Also, as the government has stated that it wants to return to a more mixed economy with more manufacturing and less dependent on the banking and services sectors, there is the worry that the cuts the may damage that ambition by stifling research in the short to medium term, compromising innovation and, ultimately, adversely affecting UK manufacturing competitivity.