Concern: DS Smith boss Miles Roberts
As I am sure is the case for many readers in recent days, I have read the main parties’ manifestos with interest to see how their pledges are likely to shape the next five years.
I have done this on a personal level, but also as CEO of DS Smith, a FTSE 100 company with a proud UK heritage.
Of particular interest to me are plans for an industrial strategy and how this can generate much needed economic growth.
The success of big manufacturers like DS Smith is predicated on investing sustainably, for the long term.
When we decide what to spend on new facilities or technologies, we look 20-30 years ahead, so we need to know we can rely on policies that not only create the right conditions to invest, but are suitably far-sighted.
And it’s not just us. All British businesses are crying out for a long-term national industrial strategy that will support higher levels of investment and growth.
Due to the unparalleled challenges of the net zero transition, that strategy must be underpinned by an ambitious industrial decarbonisation plan.
Many of our competitors overseas have been implementing their plans for years, and that means the UK is behind the curve.
In this Parliament, whilst it was positive to see developments like the Energy Bill Relief Scheme in response to the magnitude of the energy challenge caused by the war in Ukraine, this was a short-term response.
UK energy costs for manufacturing have been and remain substantially higher than those in continental Europe.
This, plus the lack of a long-term industrial plan and uncertainties about the regulatory environment and divergence with Europe, have continued to put off firms from investing in the UK.
As we work our way through the macroeconomic effects of Covid-19 and the war in Ukraine, this has stymied much needed growth.
But why focus on manufacturing, in particular? The UK is often described as a ‘services economy’ and the merits of fintech are much vaunted, but the UK manufacturing sector accounts for about half of our exports, two-thirds of R&D spending and employs around 2.6 million highly skilled people across the country.
Everything you touch or consume, at home or at work, has its origins in manufacturing. It is therefore crucial that any new approach recognizes the fundamental importance of manufacturing for the British economy.
Certainly, advanced manufacturing in the past decade has received a lot of focus from government.
However, the next administration must acknowledge the benefit that manufacturing brings as a whole.
What’s more, I firmly believe that a new strategy must unashamedly set out to achieve a green reindustrialisation of Britain.
The combined challenges of the net zero transition, historic low growth, and increasing global competition, leave governments with a clear need to partner with businesses to find solutions that will work.
Whomever is in power by the end of next week, the idea for an industrial strategy partnership or council, to provide expert advice to government on a statutory footing, is without question a good one.
As a major employer and cog in the supply chain and producer of fibre-based packaging, our roots are in the UK, and we are passionate believers in sustainability.
But as it stands, the lack of clarity on energy sources is deeply problematic. We need to know where will the government place its bets – what will the new UK energy sources be?
For example, will it be nuclear, hydrogen, or biofuels? And where will this be generated, on what timescale, and with what connections and pipelines? That is what we need to make investment decisions.
None of this happens alone. Success will come from a strategy that is implemented between government and a range of industry players.
If the next government, in whatever guise, can give us clarity on where and with whom these partnerships will be, then investment across a range of relevant parties will follow, I am sure.
Without a forward-looking green industrial strategy in line with the landmark packages announced by US and EU lawmakers in recent years, along with long-term certainty about the direction of regulation and alignment with our European partners, the UK risks being left behind rapidly, particularly on green technology and energy security.
With guidance, companies can meaningfully assess what investment in the UK could look like.
For our part, DS Smith has already invested record amounts into lower-carbon facilities in Italy and Poland, and into greener technologies in Germany, France and Spain, because we have ambitious decarbonisation targets and the industrial and energy policy frameworks in those countries are made clear.
But right now, the UK cannot map out its route to Net Zero, nor underscore why it is an attractive place to invest.
Pace and agility are important. I am certain I am not alone in looking forward to finally seeing concrete proposals, and whilst we do not have the spending power of either the US or EU, we do have numerous strengths we can and should play up to.
The sooner the winning party on Thursday embraces this, the better it will be for the UK.