This article was first published on the New Statesman on 17 July 2012.
Across the rest of the economy, UK firms are sitting on a £720bn pile of cash, uncertain about the future and unwilling to invest. But in the automotive sector, barely a month goes by without another announcement of new investment.
In the past 18 months, £5.5bn has been committed. As a result, the Society of Motor Manufacturers and Traders, the industry body, expects UK car production to reach two million by 2015, beating the national record set in 1972. This would bring us level with Spain and put us within touching distance of France. Only Germany would lie ahead, though still by a very large margin.
How did this transformation happen? Success has many authors. Take the £125m investment from Vauxhall in Ellesmere Port, agreed in May. Unite, which displayed the modern face of engaged and flexible trade unionism, and the management and the secretary of state all deserve credit for the deal. But it was ministerial attention over a much longer period of time, working with the industry, that has put the succession of deals such as this one on the table: Nissan building the new electric Leaf in Sunderland; Honda creating 500 more jobs in Swindon; and McLaren’s new facilities in Woking.
At the heart of this ongoing strategic collaboration between the government and industry has been the Automotive Council. A simple Labour innovation, it has allowed the industry to develop a shared sense of destination, an understanding of the challenges in getting there and a shared commitment to overcoming them. It has set the UK industry on the path to global success – competitive, greener and technologically advanced. There is more computer code in a Jaguar XJ than in a jumbo jet. Competition between UK-based manufacturers in the domestic and global marketplaces must remain as fierce as ever. But all share an interest in making the UK a great place to make cars. The industry is on the verge of a revolution as it seeks a low-carbon future. Jaguar Land Rover aims to make an electric vehicle that, if charged using renewable energy sources, would emit less CO2 when driven than comes from the food intake required to walk. Rather than sit back passively, the Automotive Council identified critical areas of technology where the UK could lead the world, from energy storage to electric motors to lightweight structures. The council has focused attention on how we can become as good at making car parts as we are at assembling them. The advantages of many lower-cost producers are diminishing. We can seize this opportunity by creating stronger domestic supply chains – our version of the German Mittelstand – and generating new, high-quality jobs.
Yet this is not inevitable; it is made more difficult in the context of a recession made in Downing Street. The government must rebuild the knowledgeable infrastructure it destroyed whenit scrapped regional development agencies. And it must address the problem of finance: if the government can’t get the banks to lend, it should consider the case for a British investment bank, as Labour is doing. The growth that we need is private-sector growth. But the success in the automotive sector shows how an active government, working intelligently with industry, can make this more likely. In too many areas, this government has scorched the earth, causing unnecessary disruption and destroying valuable know-how. So it deserves credit for continuing with the Automotive Council. Business needs certainty. The more we can put the interests of industry beyond party politics, the more we can support and sustain success. Yet the government could do so much more. We need a united and compelling vision for the economy, to pay our way in the world and ensure fairness at home. We need a government with real ambition for Britain, prepared to apply the lessons from the success of the automotive sector – consistently, systematically and appropriately – across our economy.