Osborne and Cameron’s promised rebalancing of the economy is long gone

Estimates show that the UK needs around 780,000 more engineers over the next five years to meet industry demands – this equates to 156,000 per year. Currently the UK is training less than half that.

Estimates show that the UK needs around 780,000 more engineers over the next five years to meet industry demands – this equates to 156,000 per year. Currently the UK is training less than half that

The coalition faced a triple whammy just two days into 2015 with bad news on three fronts – poor manufacturing growth figures, a low take-up of the government’s apprenticeships scheme and surging consumer spending floating on a bed of unsecured credit.

Osborne and Cameron’s promised rebalancing of the economy in favour of manufacturing has long disappeared in the rear view mirror.

The pound hit a 16 month low after the reliable Markit/CIPS UK Manufacturing Purchasing Managers’ Index, fell to a three month low at the end of 2014.

The manufacturing PMI fell to 52.5 from November’s 53.3, somewhat short of predictions of 53.7. For the fourth quarter, the PMI showed the weakest growth in eighteen months pointing to more bad news ahead when manufacturing data is collated for the end of 2014.

“The ‘March Of The Makers’ remains empty rhetoric”, said Professor of Industry at Aston University David Bailey.

James Knightley, economist at ING said: “The long hoped-for economic rebalancing story is not playing out as envisaged. With employment and real household disposable income set to rise robustly in 2015 consumer spending looks set to become the UK’s main growth engine once again.”

The government’s flagship apprenticeship scheme was also badly dented by the figures, which showed that the number of people starting government backed apprenticeships fell by 70,000 in 2014, the lowest number since the scheme was launched. Figures for new apprenticeship starts for 16 to 24-year-olds dropped by 6,000.

Unions and many employers have long been critical of the government scheme. It will not, in the long run, provide the decent Gold Standard apprenticeships and jobs that will be needed to fill the growing skills gap.

Estimates show that the UK needs around 780,000 more engineers over the next five years to meet industry demands – this equates to 156,000 per year. Currently the UK is training less than half that – leaving the country with a shortfall of more than 400,000 engineers by 2020.

Recently Ed Miliband committed Labour to “put the UK back at the forefront of invention, technology and engineering with a national mission to create an extra 400,000 engineers by 2020”.

Bank Of England figures showed lending to consumer spending surging at its fastest rate in nearly a decade from September to November last year, with consumer borrowing rising at an annualised 8.3 per cent – “a pace last seen in October 2005”, according to Reuters.

“We’ve seen little to boost capital expenditure or getting genuine lending to SMEs, or anything like real efforts to rebuild the UKs fractured manufacturing supply chains,” said Reuters journalist David Bailey.

“Instead, we have seen consumption buoyed by a run down in savings and more borrowing with George Osborne eager to pump up the housing market through wheezes such as ‘Help To Buy.”

This sense of déjà vu should be used by Labour to demolish the ‘smoke and mirrors’ campaign of deficit cutting and ‘record job creation’ (predominantly low paid, low skill, insecure jobs) being perpetrated by Tories, Lib Dems and the right-wing media.

Labour needs to be clear that it will introduce a robust, interventionist manufacturing strategy, based on decent jobs and with decent employment rights as the only viable option to a looming credit-fuelled economy that is bound to burst – again.

Tony Burke is assistant general secretary of Unite

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4 Responses to “Osborne and Cameron’s promised rebalancing of the economy is long gone”

  1. littleoddsandpieces

    The over 60s are unlikely to escape the working poor.

    TUC agree that over 60s disabled / chronic sick are unlikely to gain re-employment, after being early retired under the massive austerity job cuts on an average works pensions of merely 4 per cent lowest income.

    The denied state pension payout since 2013 within a ring fenced and full National Insurance Fund wrongly being called a surplus since 2013, that denies a couple 7 years payout from then, could have helped generate youth employment on the high street, as it is the over 60s who shop in town centres.

    So it would cost nothing for Labour to do a u-turn and bring into Labour’s 2015 manifesto repealing the Coalition’s Pension Bills 2010-2014 that will leave the over 60s working poor / unemployed to a 50 per cent rate with NIL STATE PENSION FOR LIFE and bulk of rest with LESS NOT MORE state pension,
    after paying an extra 7 years of 12 per cent per year off wages
    compulsory NI deductions, only to get less or nothing at all.


    Labour could not only win big in 2015 and be able to form a majority government without any need of any coalition partner, but be able to gain the 326 MP seats in mostly England and Wales, more than making up for all the Labour MPs being lost in Scotland.

    Labour could also win the Lib Dem seats in England and Wales, few that are left.

    Especially the Lib Dems Pensions Minister Steve Webb’s seat and Lib Dems’ Leader Nick Clegg’s seat.

  2. swat

    What matters is keepin people in gainful employment so that they have little time or interest to think about anything else. Labour must be committed to full employment, and be focused on industrial growth, and finding and creating the new markets to sell Britains goods.

  3. Guest

    So basically ever-more low-pay jobs in factories. Right.

  4. Leon Wolfeson

    Eh. It’s more likely that they see the City as the “Makers”, and people just misunderstood what they meant.

    It’s like “We (the Coalition) are all in to together (and stuff the 99%).”
    You have to look for the sub-text.

    Labour are using the same economics, though, so can’t credibly try and discredit the Tories on this. Moreover, manufacturing as-talked-about by successive governments means low-wage factory jobs, not the small to medium workshops which actually form the backbone of UK manufacturing – and where technologies like 3d printing have the chance to revolutionise things.

    (Not to mention we should also be focusing on other areas we have a comparative advantage like creative media – not only VFX, but films as a whole, games, etc.)

    Also, why the **** are you believing ING, no offence? Wages are still dropping, there’s no real growth seen in the economy outside the city, etc. – people are borrowing for food and rent; Consumer sales didn’t do that well this Christmas, and yet debt still rises..

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