Government announces £170m industry boost

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Indy Politics

The Government has announced a £170 million package aimed at "sharpening" the UK's competitive edge and promoting careers in industry.

Business Secretary Vince Cable gave details of a manufacturing technology and innovation centre, formed from seven research facilities across the UK, which will receive more than £140 million over the next six years.

Competitions will also be run to fund new products using advanced materials, biosciences and nanoscale technologies, while investment will be made into developing low-carbon vehicles.

The Government also launched See Inside Manufacturing, an initiative being piloted by automotive firms, which will open their factories and offices to students and young people to encourage them to consider careers in industry.

Dr Cable, visiting the Vauxhall plant in Luton today, said: "Manufacturing has a key role to play in economic growth and rebalancing the economy, in particular driving exports and productivity.

"The Government is supporting manufacturing through a modern industrial strategy fit for the 21st century. We are assisting manufacturing companies and their supply chains directly through the Regional Growth Fund and other schemes and supporting them to build strong businesses via our commitments to apprenticeships and fostering technology.

"We are also challenging the perceptions of what it is like to work in manufacturing and seeking to raise the status and profile of engineering.

Iain Gray, chief executive of the Technology Strategy Board, said: "Manufacturing is a priority sector for the Technology Strategy Board to support with a technology and innovation centre.

"The UK has some of the world's best manufacturing businesses and the industry accounts for 12% of GDP, around half of exports and in 2010 employed 2.5 million people in the UK.

"The new centre will help UK businesses stay at the leading edge of manufacturing technology and create and protect jobs long into the future."

Steve Radley, director of policy at the Engineering Employers Federation, said: "Today's announcements are welcome in providing further information on how the Government will be working with industry to encourage innovation.

"But with economic headwinds increasing, manufacturers will need to hear more from Government soon if they are to make the investment we need to drive our economy forward."

The figures come amid deepening fears over the health of countries and banks in the eurozone - the UK's biggest export market.

Elsewhere, weak data for the powerhouse services sector and softer trade data have damaged prospects for overall economic growth in the third quarter of the year, which will be revealed on November 1.

Meanwhile, Bank governor Sir Mervyn King last week warned the UK could be facing its worst financial crisis since the depression of the 1930s.

Samuel Tombs, UK economist at Capital Economics, said: "August's industrial production figures provide yet more evidence that recent turmoil in financial markets and slowdown in the global economic recovery has taken its toll on the manufacturing sector."

There was some cheer within the manufacturing figures as food, beverage and tobacco industries saw 1% growth in August.

The rise was driven by a 2.9% increase in alcohol production as evidence suggested Asian markets were buying more exports, especially spirits, the ONS said.

Within the wider index of production, mining and quarrying increased by 2.1% month on month, with oil and gas rising 2.3%. Energy supply also rose by 1.9% between August and July.

But David Kern, chief economist at the British Chambers of Commerce, said the Bank's move to increase its quantitative easing was not enough to stimulate growth.

Mr Kern called on the Government to speed up plans revealed by Chancellor George Osborne to buy corporate bonds from companies to stimulate credit supply - a move known as credit easing.

He said: "The recent move to increase the QE programme is helpful, but not sufficient. The Government must urgently implement its plans for credit easing, with a particular focus on small and medium-sized businesses.

"The Government for its part must be more proactive in pursuing growth-enhancing policies, and look to reallocate priorities within the overall spending envelope."