Andy Burnham, the incoming Prime Minister, has set his sights on a bold vision for Britain: reindustrialization. This ambitious plan aims to reverse decades of economic decline and restore the country’s manufacturing prowess. However, the path to achieving this goal is fraught with challenges, and Burnham must navigate them carefully to avoid the pitfalls that have plagued previous attempts.
The economic landscape of Britain has undergone a dramatic transformation over the past 40 years. The dominance of the City of London has led to a shrinking manufacturing sector, resulting in a permanent trade deficit. Living standards have stagnated, and the country has become increasingly reliant on gig-economy workers and rentier capitalists. Burnham’s analysis of these issues is spot on, and his plan to reindustrialize Britain is a recognition that the neoliberal policies of the past have failed.
Burnham’s Strategy for Reindustrialization
To succeed where others have not, Burnham’s strategy must focus on three key areas. First, he needs to recognize the limitations of the current approach, which relies on smarter regulation, fairer taxes, and better economic management. While these measures are important, they are not enough to address the root causes of Britain’s economic problems.
The country needs a state-led strategy of reindustrialization that goes beyond new planning laws and a wealth tax. Taking utility companies back into public ownership alone will not unleash economic dynamism. Instead, Burnham must commit to foundational industries such as steel, advanced engineering, automation, digital technology, and clean energy. This commitment is essential for achieving real economic sovereignty.
The Role of Public Investment
Second, serious public investment is needed to drive reindustrialization. This investment should be channeled through a properly funded national investment bank, which would provide long-term, patient capital for transport, energy, and industrial supply chains. A 10-year programme of investment, tied to public equity stakes, would ensure the steady rebuilding of public wealth.
The aim is to use state investment to encourage private investment. Burnham has shown what can be achieved on a small scale as the mayor of Greater Manchester, identifying specific cluster locations and backing them with infrastructure investment to attract high-value private employment. However, scaling up this approach will require overcoming significant obstacles, including the loss of technical knowhow and hands-on experience in manufacturing.
Addressing the Skills Gap
To address the skills gap, investment in technical training and education is crucial. Unions have a key role to play in this process, and a break with neoliberal dogma means seeing organized labor as part of the solution, not the problem. By investing in skills and technical training, Britain can rebuild its manufacturing base and create high-value jobs.
The Challenges Ahead
Burnham’s plan for reindustrialization will face significant challenges, not least from the financial markets. Even before taking office, there are signs of pressure being brought to bear on the new administration. Starmer has left it to his successor to find the full amount to pay for the government’s defence investment plan, prompting speculation that the new administration will be forced into raising taxes to avoid breaking its own fiscal rules.
If Burnham bows to this pressure, he will perpetuate the dreary cycle of weak growth, budget deficits, and austerity measures that have locked the economy into a doom loop. To break out of this cycle, the mandate of the Bank of England could be broadened to provide a flow of low-cost, patient capital needed to fund the reindustrialization strategy. The Netherlands has shown that it is possible to borrow to finance public corporations without alarming the bond markets, provided the borrowing is against a reliable revenue stream.
Ultimately, the government may need to use targeted controls to prevent the manufacturing sector from being at the mercy of footloose capital. This will require a bold and strategic approach, but the alternative is the continuation of managed decline. Or, to be more precise, mismanaged decline.
