Union gloom on industry is 'nonsense' - think-tank

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A forthcoming report from a leading think-tank is to dispute the claim made yesterday by the powerful Amicus union that Britain risks having no manufacturing base within 25 years unless policies are changed.

The left-leaning Institute for Public Policy Research said that this assertion - made by the new joint general secretary of Amicus, Derek Simpson, in his first major speech - was "nonsense". Mr Simpson claimed Britain was alone among major economies in letting its manufacturing industry disappear.

The IPPR, usually considered close to New Labour, said the headline-grabbing warning from the manufacturing union misread the facts and Britain's performance among industrialised countries. In August the think-tank will publish a major study into British manufacturing, which sees a significant industrial base for the country as far ahead as 2050.

Mr Simpson told his union's conference in Blackpool yesterday that manufacturing will "cease to exist" in the UK in the next quarter of a century if jobs continue to be lost at the current rate. He said 13,000 jobs in the sector are lost every month. "If jobs continue to be lost at this rate all four million manufacturing jobs will be gone by 2028," Mr Simpson said.

"We are literally staring into the abyss. If we compare manufacturing bases with other leading countries, within five parliamentary terms we face having a prime minister not fit to share a table with his or her G8 counterparts."

Amicus insisted British workers are much worse off than others in Europe because employment rights are much tighter there, making Continental workers harder to sack.

Peter Robinson, senior economist at the IPPR, said his study shows the UK is a "middling" country in terms of industrial decline. He said it was wrong to say Britain's manufacturing base had been eroded faster than that of other leading economies. All these advanced economies had seen decades of contraction in manufacturing, he said.

"In 2028, there will still be a manufacturing base. It will be a smaller proportion of the economy but that will be true for all advanced economies," Mr Robinson said.

He said the UK had a greater proportion of its workers in manufacturing than the US or France. The IPPR predicts that, in 2050, 10 per cent of the UK's annual output will still come from manufacturing, compared with some 17 per cent now. The sector will employ about 1.5 million workers by then, the IPPR forecasts.

Mr Robinson said it was true that British manufacturing had been going through a difficult period over the last three or four years but this was because of the high value of the pound. He said there was a short-term problem, which had now been resolved by the more recent fall in the value of sterling.

The IPPR study concludes that managing the exchange rate is the key to protecting industry and advocates clearer signals to the market on a target rate and market intervention to support that rate. The IPPR said industry would also benefit from fewer government schemes and initiatives in future.