James Ashton: Industry needs government to think in decades

James Ashton
BAE Systems is planning to cut almost 2,000 jobs in its military, maritime and intelligence services: PA

Staff cuts at BAE Systems always strike like a hammer blow. The defence contractor which said last week it would lose 2000 jobs is typically the largest private-sector employer in each town where it has a presence so streamlining hits the local community hard.

As Britain’s largest manufacturer it is one of the makers that is meant to be marching to rebalance our economy over time. Trade is another prong of our future success and BAE has built a strong position in the US, the UK’s largest export market. No matter what you think of the product it turns out, signs of tougher times at this flagship firm project badly across the industrial landscape.

The new chief executive, Charles Woodburn, is under pressure to make BAE more competitive, a common theme for UK companies operating on a global stage post-Brexit. He would be helped if the Government mapped out its combat aircraft programme beyond 2019 so that engineers idling after the latest Eurofighter Typhoon orders have been satisfied can busy themselves on something else.

To have a roadmap provided by its largest customer, the Ministry of Defence, is exactly the sort of thing an industrial strategy is meant to help with.

We might get said strategy by Christmas, as long as ministers are not waylaid by spats over Brexit. Broadly, it will set out how Britain can make more of the industries in which it already excels.

But its priorities need clarifying. Sticking with defence as an example, the MoD is adopting more transparent procurement practices aimed at getting a better deal for the taxpayer that also level the playing field for foreign suppliers such as Boeing. The Bombardier row shows all this is happening as the world becomes more protectionist. For the sake of the homegrown industry that sustains thousands of high-tech jobs it will not always pay to order cheaper equipment from overseas.

How other countries set out their stall in this area is instructive. China is navigating a shift from being the factory of the world to a consumer economy but is looking further out and snapping up British intellectual property where it can.

In a recent report, Goldman Sachs forecast that China’s transition to an “intelligent economy” will see it generate as much as a quarter of the world’s digital information by 2020. In July, a national development plan for artificial intelligence stretching to 2030 was published that detailed Chinese policies and spending plans beginning with a consistent focus on fundamental research to transform numerous industries.

Similarly, UK manufacturing is an industry obsessed with the long-term. It represents 10% of the economy but accounts for more than two-thirds of research and development spending.

To serve British industry best, an industrial strategy must emerge that is bold, consistent and, like our world-beating companies, thinks in decades not parliamentary terms or shorter.

Creativity is key to future of UK jobs

The benefit of guiding which industries the UK will major in is that it might help to prepare the workforce of the future. If the World Economic Forum is to be believed, nearly 65% of today’s primary schoolchildren will fill jobs that don’t exist yet.

A more recent study, by education group Pearson and Nesta, considered factors including automation, urbanisation and an ageing population to conclude that one tenth of workers are in occupations that are likely to grow as a percentage of the workforce by 2030 and one fifth are in occupations that are likely to shrink. As for the other 70%, “we simply cannot know for certain what will happen”, the experts said. Who would be a careers adviser?

Without being complacent, it is clear the job market will not transform overnight. The Growth Boroughs that surround the Queen Elizabeth Olympic Park are concerned with creating an Olympic legacy of better jobs that was a focus for the Evening Standard’s Leading London conference last week. They say the sector offering the highest growth for work in their patch of East London over the coming years will not be anything so futuristic as artificial intelligence, but administrative and support services, with 29,600 new roles predicted.

In addition, there will be three times as many job openings to meet replacement needs in London by 2022 than from new jobs created.

Tech leaders including Microsoft’s Satya Nadella believe AI will spawn unthought-of jobs that capitalise on the most human traits.

Through industrialisation and deindustrialisation Britons continued to have an unerring knack of finding work, so intelligent computers are just another hurdle to clear. Pearson and Nesta had a stab at what the work of the future would look like. In the US, the existing occupations closest to where hypothetical heavy demand, and therefore new roles, will develop are pet sitters and massage therapists. In the UK, they picked out artists, window dressers and florists. Creativity is the key.

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