By Karl Hick, CEO, The Larkfleet Group of Companies
The government has published a green paper – Building our Industrial Strategy – which sets out a plan for future economic growth and development in post-Brexit UK. The green paper is a ‘consultation document’ on which individuals, companies and other organisations have been invited to submit comments.
Karl Hick, CEO of The Larkfleet Group of Companies – a building, development and renewable energy group based in Bourne, Lincolnshire – has read the green paper and thinks there are many aspects which are either not given enough attention or are missing altogether.
I welcome the fact that the government is seeking to create a strategy for industry. As we head for Brexit it is important that we have a clear sense of direction and a plan for future economic growth.
I also welcome the fact that the government has asked for views from a wide range of people. I hope it will give due weight to the opinions of those actually working in industry – the entrepreneurs, managers and workers who are creating wealth for the UK.
There are several topics on which the green paper is either silent or less than compelling. I have listed seven of them below with my views on what needs to be done to address these issues.
1. Productivity and education
Productivity levels in this country are lower than in many of our major international competitors. Much of the problem, I believe, stems from poor education at the primary and secondary school level.
We should be ensuring throughout the UK that boys and girls concentrate on science and maths courses. While the arts should not be completely neglected they ought to take far less precedence in our education system.
That change needs to start now so that we can provide our future industry with engineers and practical people who can help to increase productivity. This cannot be done overnight. It needs a 10 to 15 year plan but we must begin now.
We should look overseas and see what works well elsewhere – the ‘German model’ for education, perhaps, where people taking ‘practical’ degrees are helped at university. Degree courses studying topics such as Harry Potter (seriously, there is one!) should be scrapped or people should be made to pay more if they want to do university courses that have no benefit for the UK economy.
We must start at primary and concentrate not just on the practical aspects but also how we turn out boys and girls who are streetwise, polite, hardworking and have good morals, etc. Our youngsters must be better than their counterparts in Germany, China, Japan, and the USA – but in my opinion we have a long way to go. However, if there is a focus from government, then it could be achieved. We could compete around the world and not be happy with just being part of the pack, which is where we are now.
We have done this with sport by enhancing children’s competitiveness, expectations and belief that winning is good, so why not education?
2. Skills development
It is imperative that our ‘star performers’ are looked after, not left to their own devices. Many of our top-performing young people now want to go to Europe, America or Australia as they do not necessarily agree with Brexit and see these overseas locations as being better from an economic perspective.
It beggars belief that I have a son studying at Harvard who has received no calls and no help from the UK government. Representatives of the governments of his contemporaries from Norway, Scandinavia, China, etc, keep in touch with their students overseas and will do their best to bring the brightest and best back to their own country.
The UK needs a special department so its brightest and best are supported financially. More importantly, they need to believe that they are valued by their country, especially at the moment when many of them seem to feel that the UK government has got its policies all wrong. Whatever they may think, without the youngest and brightest staying in the UK we can’t compete with those countries that look after their brightest.
I will reiterate what I said earlier – UK economic and industrial policy should concentrate on education and skills. There should be a focus on areas that can make the UK money.
I am a governor of a university technical college which I am very proud of because it concentrates on practical education and skills.
However, while the college and I are trying to push young people into careers in engineering, construction and sustainability – all areas where lots of jobs could be created – we can’t get the teachers. This is because too few people study chemistry, physics, biology and maths these days. This trend must be reversed.
People who study science, technology and maths subjects at GCSE, A level and university must be given material rewards to avoid them doing other courses which are probably a little easier but which don’t help the UK to compete in the real world.
The UK is one big ‘company’ and its students are its future workforce. They need to be studying subjects that add to GDP.
3. Immigration and the labour force
Of the 300,000 jobs created in the UK economy last year approximately 80 per cent were taken by people born outside the UK1. The majority of foreign workers in the UK are people from other EU countries.
If immigration is affected by Brexit, how will current and future jobs be filled as we are effectively at zero unemployment? The economy will be in trouble because numerous industries are desperate for immigrant labour. Sectors that would be massively affected include farming, care homes, the NHS, public transport, manufacturing – and, of course, my own industry, construction.
Without these people in the economy productivity would be far worse than it is now. An industrial strategy that ignores the topic of immigration is not going to work.
It is worth noting that where immigration is the greatest, ie in London, productivity is at its highest2.
4. Research and development
There needs to be more support for innovations that can provide economic prosperity. Larkfleet has developed ideas for (among other things) providing energy to third world villages that can’t be connected to the grid and a house that could be built in areas at risk of flooding. None of these are being helped from the public sector and yet they could be big economic winners for the UK.
There needs to be a central ‘R & D office’ that vets economic best practice and supports ideas that can generate jobs – but it needs to have commercially-minded individuals in charge.
5. Business support and taxation
We need to really help small businesses to get started.
The Enterprise Investment Scheme (EIS) is designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies. There needs to be more EIS type schemes to allow the banks and investors to get a tax write-off if the investment fails. We should try to avoid burdening investors and entrepreneurs with guarantees and the like.
Entrepreneurs should be helped to expand their businesses more quickly. Tax benefits for entrepreneurs should be reinforced so that people can see the sense of risking things because the rewards can be good.
We need to look at finance which is more medium to long term because all the funders seem to look at short term results. That doesn’t lead to good strategy decisions. Entrepreneurs need time to make their ideas work and the present system doesn’t allow this.
With regard to public procurement, it seems ridiculous that so many government and government-related organisations apparently place contracts with large companies irrespective of whether they are best for the role. Somehow that needs to be changed to give SMEs a chance to bid for this work.
There needs to be more help for businesses selling overseas. The government should help in establishing mechanisms to check out overseas customers to ensure they are willing and able to pay, prior to the goods being supplied.
The government really has no energy policy. The renewable energy industry has been reduced by approximately 75 per cent because of the government’s failure to set and maintain clear policies. It has now reduced to a level which is not sustainable if or when the government wants to change tack.
The drive toward nuclear and away from renewables is disappointing. Any industrial strategy that has no renewable energy policy is not sustainable. The government needs to change the emphasis and support renewables.
The level of solar radiation in the UK – we are not the sunniest country in the world! – means that solar power still needs some subsidy support. That shouldn’t mean we cannot deliver sustainable energy. The cost of this should be taken out of the government’s purse and (as in the USA) companies should get tax relief on the amount they invest in renewables. This takes the ‘politics’ out of renewable subsidies being added to household energy bills.
Something similar should be done for waste-to-energy. We need policies that allow these very complicated projects to go ahead.
7. Regional equality
There are areas of deprivation in London and the South East and there are areas of prosperity in other parts of the country. Generally, however, the UK outside London and the South East is poorer than those two places. Why should this be the case?
There needs to be an acceptance that while the political leaders are all based in London, the rest of the country has to find niches so its companies can drive increases in GDP.
I would like the government to give more publicity to the statistics it collects which show how much GDP different areas are creating3 so that everyone knows who makes the money and who loses it. There should be a policy of ‘name and shame’ so those who don’t deliver growth and the education and skills needed to get that growth are held accountable.
Each area should have a local champion who is accountable for those results. If or when that part of the country does not perform, that person should be put on notice that there is a period of time to ‘get it sorted’ or he/she is replaced. Every person who lives/ works in the country should be aware of what, in their area, these people have done.
Hopefully, people will eventually strive to be more productive, so we don’t have just one area producing growth because people there work harder. We need to avoid people in some areas apparently just feeling hard done by and sorry for themselves. They must be made to realise that if they became more productive they would be more proud of it.
Investment should be linked to productivity and those who continue to feel sorry for themselves shouldn’t get very much at all until they start performing better!
- Office for National Statistics – https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/feb2017#employment-by-nationality-and-country-of-birth-not-seasonally-adjusted
- Office for National Statistics – https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/articles/regionalandsubregionalproductivityintheuk/jan2017
- Office for National Statistics – https://www.ons.gov.uk/economy/regionalaccounts