Press Story

  • Britain is already world-leading in making one in three products vital to green transition, contrary to popular belief, says new report
  • Groundbreaking analysis identifies key green products for UK to focus on, and towns and cities across the country that would benefit
  • UK business organisations back key role for green manufacturing industry to boost growth, help reach net zero, make economy more resilient and level up with new jobs right across the country
  • UK suffered 'exceptional decline' compared to international peers, losing a third of manufacturing strengths in 30 years, IPPR finds
  • Building our own wind turbines, heat pumps and electric vehicles would lift UK from decades of decline

The UK already has a clear competitive edge in making one in three key products needed for a future green economy, a new report has found – and it urges the government to use this ‘comparative advantage’ to reverse years of manufacturing decline.

The report identifies which growth industries the UK should focus on as part of a “pathfinding strategy” to build new economic and manufacturing strength in a net zero world. Its call has been backed by leading employers’ organisations MakeUK and the CBI.

Researchers used new analysis to determine specific areas of existing UK manufacturing expertise that they say should be used as a launchpad for green industrial growth – and also those that the UK is well-placed to exploit in future.

Among the green products most needed for a net zero economy, it focusses on those for which there is not enough domestic or global supply; those where the UK already has manufacturing advantages; and those to which the UK could most readily pivot, adapting from existing industries and building on existing skills.

Contrary to popular belief, the report finds that the UK has a current competitive edge in making a third of the 143 products needed in technologies to deliver net zero. These include products for monitoring, measuring and analysing, all crucial for the electricity grid, renewable energy generation and decarbonising industry. The UK is also strong at making electric trains and their parts, heat pump components, and turbines for geothermal or hydro electricity generation.

It uses a novel approach to identify further green industries in which the UK is best suited to specialise in future. These strategic priorities include manufacturing wind turbines, all kinds of green transport (including electric vehicles and the zero-emissions planes of the future), and heat pumps.

The strengths identified by IPPR are spread widely across Great Britain. The North and the Midlands are particularly well-placed to develop all three of these, while other areas including some coastal districts, the South East and part of Scotland and Wales have potential strengths in one or two (see maps in Notes below for detailed areas)

The report says the right ‘pathfinding’ approach to developing new industries will deliver on three key objectives for the UK: a more dynamic and competitive economy, more economic opportunities in industrial areas, and less exposure to the risk of disruption in international trade and supply chains.

It reveals a series of metrics on which the UK has fallen behind key global competitors, but which could be reversed, including:

  • Over the past 30 years the UK has lost over a third of its manufacturing strengths, an “exceptional decline” even compared to other advanced economies that have deindustrialised, like the USA or France, leaving its industries less diverse and less technologically advanced
  • The UK’s share of the world’s green product exports has halved since the 1990s
  • While the number of different goods the UK has a competitive edge in exporting has shrunk by a third since the mid-1990s, the average G7 country has added 6 per cent more to theirs.

IPPR also urges policymakers to consider how to retain and rebuild some of the heavy ‘foundational’ industries – including steel – that are essential for the resilience of the UK economy, and are strategically crucial in an increasingly volatile world. It says that over-concentration of manufacturing in China, notably solar panels, puts the UK and the world’s green transition at risk.

The report points out that jobs in the net zero economy tend to be significantly more productive, paying on average £10,000 more per year than the national average salary.

Dr George Dibb, head of IPPR’s Centre for Economic Justice, said:

“The UK faces three generational challenges: to deliver net zero, to level up and reinvigorate our economy, and to become more resilient to future shocks. These challenges have a common solution - seizing the growth opportunities of green manufacturing.

“Over the past 30 years we have slipped sharply behind our global competitors in the quantity and kinds of things we actually make. That’s bad for jobs, for living standards, for our security – and for our long-term economic strength as a country.

“Yet UK manufacturers still have a competitive edge in making some of the products vital for a net zero economy, and with the right government support we have the potential to be world-leading in many more. Our report has identified what we should target to develop in the near future; now we need government to adopt a long-term strategy that will lead us along this path.”

Pranesh Narayanan, IPPR research fellow, said:

“Net zero is an economic transformation like no other, moving from a system built on fossil fuel over centuries to one built on clean energy in decades. We know what products will make this a reality – solar panels, building insulation and electric buses and trains among them. The challenge is to make and deploy these at scale, but there’s a global shortage of the right manufacturing capacity.

“Britain’s manufacturing strengths have declined significantly over the past 30 years even compared to other services-led economies like the USA and France, but the UK now has a historic opportunity to buck this trend. We can rebuild and strengthen our economic foundations, by building capacity in green manufacturing.”

Rain Newton-Smith, CEO of the CBI, said:

“Green truly is the economic growth opportunity of the 21st century, with our research showing it could deliver as much as £57bn to the UK economy. That’s something we can’t afford to miss out on, and our manufacturing sector is fundamental to helping us secure that prize.

“From electric vehicles to sustainable aviation fuel, turbines to onshore heat pumps, UK companies are already making and innovating for the future, with products and services that will drive the net zero transition at home and around the world.

“The race is now on to build on our expertise in advanced manufacturing and leverage our established supply chains to make the most of the green opportunities on offer. That’s why we need stable regulatory and financial frameworks that support our manufacturers to invest in and grow their operations, with investment incentives and policy certainty at their core.”

Stephen Phipson, CEO of MakeUK said:

“Manufacturing has always been a strategically important sector for UK economy and, never more so than now, given the immense societal, political and economic challenges that we face.

“Just as the first industrial revolution provided a step change, the accelerating pace of technological change of the fourth industrial revolution, in particular the drive to net zero, gives us a generational opportunity to do the same now. This valuable report highlights to those in power, now and in the future, how manufacturing can play a central role in the greener industries of the future.”

Rachel Solomon Williams, executive director of Aldersgate Group, said:

“Businesses and investors need long-term certainty to invest confidently in decarbonising the industrial sectors that will drive future economic growth and innovation. This IPPR report provides an excellent view of the technologies where the UK could secure a real competitive advantage, and we support its call for a pathfinding economic strategy from government to achieve this.

“It also emphasises the importance of decarbonising while retaining Britain’s existing heavy industry, an approach that will strengthen the economy, drive down regional inequality, and minimise exposure to geopolitical shocks. We need a cross-sectoral industrial strategy that sets out a strategic and long-term vision and places decarbonisation and shared prosperity at its heart.”

ENDS

Dr George Dibb and Pranesh Narayanan, the report’s authors, are available for interview

CONTACT

David Wastell, Director of News and Communications: 07921 403651 d.wastell@ippr.org

Liam Evans, Senior Digital and Media Officer: 07419 365334 l.evans@ippr.org

NOTES TO EDITORS

  1. The IPPR paper, Manufacturing matters: the cornerstone of a competitive green economy, by Pranesh Narayanan, George Dibb, Enrico Vanino and Simone Gasperin, will be published at 0001 on Wednesday May 15. It will be available for download at: https://www.ippr.org/articles/manufacturing-matters
  2. FIGURE 6.2: Regions of England Scotland and Wales with greatest potential to develop new green manufacturing industries, broken down by ‘travel to work area’.
  3. Researchers measured a region’s potential to develop green industries by looking at the level of employment in manufacturing sectors that are similar to, but not yet involved in, green supply chains. Their similarity is calculated through a 'relatedness’ measure, which assesses the extent to which sectors cluster together in the same location. Economic geography research has found that sectors that cluster together more often are more likely to share production processes. A region’s potential to develop green sub-sectors, such as wind, is calculated in a similar way. More details on the methodology is included within the paper.
  4. IPPR (the Institute for Public Policy Research) is an independent charity working towards a fairer, greener, and more prosperous society. We are researchers, communicators, and policy experts creating tangible progressive change, and turning bold ideas into common sense realities. Working across the UK, IPPR, IPPR North, and IPPR Scotland are deeply connected to the people of our nations and regions, and the issues our communities face. We have helped shape national conversations and progressive policy change for more than 30 years. From making the early case for the minimum wage and tackling regional inequality, to proposing a windfall tax on energy companies, IPPR’s research and policy work has put forward practical solutions for the crises facing society. www.ippr.org