By Jonathan Davies

The economy could benefit from a £30bn boost by 2025 if the UK's industries had stronger supply chains, according to the CBI.

In a study, the business group found that better supply chains could also create more than half a million jobs by that point.

Pulling Together recommends ways to kick start the UK’s supply chains, and solutions to reinvigorate Britain’s industrial strategy. Based on new research carried out by A.T. Kearney, the global management consultancy firm, the report reveals underinvestment in research and development (R&D), a growing skills crisis and weakened foundation industries that are key to advanced manufacturing - such as plastics, metals and chemicals.

To tackle these issues, the CBI is urging the Government and business to act together to strengthen supply chains, focusing on innovation, better quality products, and excellent customer service. Among the measures the UK’s leading business group is calling for are:

- Setting a long-term target for public and private sector spending on R&D to rise to 3% of GDP
- Widening the R&D tax credit to support the later stages of the commercialisation and manufacture of innovative British products
- Doubling spending on the UK’s innovation agency, Innovate UK, over the course of the next parliament
- Financially incentivising science, technology, engineering and mathematics (STEM) degrees, and ensuring more graduates take up jobs in these sectors
- Creating a national materials strategy, as part of our industrial strategy, to protect and enhance critical supply chain sub-sectors.

Katja Hall, CBI Deputy Director-General, said:
“The molten metals of manufacturing have long coursed through the veins of our economy. Optimism within industry is now rising at a strong rate, and investment intentions are on the up.

"But it’s time for some fresh thinking. We need to see a bold strategy that breathes new life into our supply chains, and makes the UK the destination of choice for manufacturing high value products. This could provide a £30bn boost to the economy, and create half a million extra jobs.

“The scale of the challenge is sizeable - our competitors are powering ahead, with France outstripping our research & development (R&D) investment by 40%. At the same time, only 3% of our graduates end up in engineering or technology jobs.

“We need policies which focus on creating long-term value - from increasing R&D spending to establishing a UK-wide materials strategy - to enable industry to play to its strengths and compete effectively on the world stage.

“This renaissance in British manufacturing will make it a byword for innovation and quality.”

Charles Davis, Strategic Operations Partner at A.T. Kearney, said:

“After years of decline the UK industrial base has stabilised and, with the correct industrial strategy, we can and should look for growth. This will be vital to the long term health of the UK.

“As the challenges of global supply chains become better understood, companies are beginning to look beyond the headline cost to the true value. Winning will be through supply chains that drive revenue, not just striving to be the lowest cost. This report shows that the most important factor in supply chain location decisions was service/innovation scoring 36%, with total cost next at 30%. While innovation should be the catalyst, at the same time we also need to ensure the skilled resources and correct environment are in place.

“This is a challenge that A.T. Kearney is increasingly seeing beyond the UK — other countries and regions in Western Europe are looking at similar trends as they seek to reinvigorate their industrial bases. As the UK is starting from behind the OECD average for R&D spending, we need to move fast if we are to win.”

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