Levelling Up is a phrase you will probably have heard politicians using more and more over the last two years. But what does it mean, and what relevance does it have to ENL Group and other UK manufacturing businesses?
What Is Levelling Up?
The truth is that, until now, Levelling Up has been a relatively broad term that has been used as a catch-all for any activity focused on closing the productivity gap between London and the rest of the UK.
Although policy detail has been lacking, Levelling Up is of huge political importance. It has been a particular area of government focus since the 2019 General Election when the Conservatives won a swathe of formerly Labour seats in the Midlands and the North. This provided political impetus to develop plans which were explicitly addressing the challenge of rebalancing regional economies.
However, it would be wrong to see this as simply being about north and south. The UK economy is much more accurately described as ‘London and the rest’. This is a uniquely British problem. A distinctive feature of the UK economy is the economic dominance of London and the wider Southeast. The IPPR has described the UK as “a uniquely centralised country”, a situation that has led to uneven economic growth and the development of a productivity gap that stubbornly refuses to close.
This concentration of political and financial power in a single place is damaging for regional economies, but it is bad for those of us based in the Southeast too – for instance, helping to fuel the housing affordability crisis in London and the Greater Southeast. Finding ways to rebalance the economy, by investing in creating new, sustainable, high-value jobs in regional cities will create a more robust, sustainable, and successful UK as a whole.
The Levelling Up White Paper
Although the term has been used generally since 2019, it was only at the start of February 2022 that we saw the actual detail of how the government intends to achieve this economic rebalancing. This was through the publication of the Levelling Up White Paper.
The White Paper sets out 12 ‘National Missions’ that will be achieved by 2030. These cover a range of areas including the rollout of 5G, improving transport and housing, and addressing education and skills. Each of these national missions has a clear target attached. A new Levelling Up Advisory Council will track and measure the progress being made.
What it Means for Manufacturers
At first glance, it may seem that there is little in the White Paper that is directly relevant to UK manufacturers. However, if you dig deeper, there are several areas that UK manufacturers like ENL Group will be affected by.
The first is the national mission around “Productivity, Pay, and Jobs”. This mission is focused on raising pay and productivity in every area of the UK. We already know that over the last decade the UK has fallen behind on productivity compared to international competitors. This has not happened by chance. Manufacturing businesses in competitor economies such as the US, China, and Germany have achieved increased productivity by embracing new technologies and automating processes. This has been underpinned by much higher levels of investment, from both government and businesses in research and development.
Increasing the money available for investment in new technology is, therefore, key to increasing UK productivity, both through direct investment and via incentives in the tax system.
As part of the White Paper, the Government has committed to increasing public investment in R&D outside of London and the wider Southeast by at least 40% over the period. This will potentially unlock additional private sector investment, driving innovation and productivity growth. On the surface, for a company like ENL Group that is based in the Southeast, this might not appear to be an entirely good thing. However, the fact is that increased innovation and investment will support the emergence of new UK-based sectors which will allow us to continue to onshore our supply chains and to develop new customers in emerging new industries.
This is particularly true of the sort of high-tech, high-growth sectors that the Levelling Up White Paper will be seeking to support – such as new low carbon technologies, automotive, and aerospace. All of these industries will require high-quality plastic components from a reliable UK supplier such as ENL Group. We see this as an opportunity that will support our own future business growth.
The critical role that manufacturing must play is also explicitly referenced in the White Paper. It says, “Government will engage with manufacturers to ensure that we are maximising existing spending and non-spending policy levers and strategic investments to attract, anchor and grow manufacturing and supply chains to support levelling up”.
This commitment provides a clear hook for businesses such as ours to engage with government about the vital role that UK manufacturing businesses can play in helping to achieve these new national missions and to help shape a more balanced economy.
We are clear that Levelling Up should not be about creating winners in one part of the UK at the expense of losers in other parts. Instead, we need to acknowledge that a stronger, more productive, higher skill, and higher pay economy will ultimately benefit all UK businesses.
About ENL Group
ENL Group is based in Portsmouth, UK and Veľké Kostoľany, Slovakia. Established in 1958, we have been servicing UK-based and European companies for decades. Working with a secure supply chain, ENL provides quality components for quality-driven customers – with full certification for all of our products and quality checking at every stage.
Operating 24/7, we design, manufacture and deliver critical components for our customers across the UK and Europe.
Contact Us for more information about ENL and how we can help your business.
