Kemi Badenoch wants cash to fund UK’s ‘advanced Manufacturing Plan’

Kemi Badenoch, UK Business Secretary Kemi Badenoch, is asking the Treasury to provide the financial firepower needed for a “new advanced manufacturing plan”, which will outline how Britain plans to compete for global investment into green technology.

Government insiders say that Badenoch and Treasury are working together on the plan in advance of Chancellor Jeremy Hunt’s Autumn Statement. Negotiations over the amount of money to be allocated for the initiative have begun.

The plan for advanced manufacturing, which focuses on the automotive industry and the aerospace industry, is part of the US president Joe Biden’s Act to Reduce Inflation, which offers a $369bn package in clean energy subsidies.

One person who was briefed about the UK government’s discussions said, “There aren’t any level playing fields in this area. The US IRA is a huge state intervention.”

“This is not only about our national security and resilience, but also about making sure we can compete in the global market.” We need to ensure that we get the best investors to invest in our country.

Rishi Sunak, then chancellor of the United States in 2021, was responsible for the decision to scrap the industrial strategy. However, elements of the plan have been revived after business criticism.

Stephen Phipson said, in May, that the UK’s Achilles’ heel is a lack of an industrial strategy. “Every other major economy from Germany to China to the US has a long-term manufacturing plan.”

The fierce competition that exists for these projects was brought home by the recent battle between ministers and Tata Motors (parent of Jaguar Land Rover) to convince them to build their new battery factory in Britain rather than Spain.

Tata received a subsidy of approximately £500mn  in July to help secure the gigafactory that will supply JLR’s electric vehicles. Toyota and Nissan have been evaluating whether or not to build new models here in the UK.

Badenoch hopes the advanced manufacturing plan will bring together all the government’s efforts to support clean technologies. This includes subsidies, research and development support, skills, power supplies, and essential minerals.

Badenoch’s supporters said that “new money” was required to be added to existing government schemes such as the £850mn Automotive Transformation Fund, which supported the Tata Factory.

There are also schemes that help businesses bring their innovations to the market. These include £1.4bn in joint funding between government and industry to develop new vehicle technologies. £685mn is allocated to aerospace R&D.

Hunt’s allies stated that discussions regarding additional money and the exact form of the advanced Manufacturing Plan would not take place until after the summer.

The chancellor said previously that Britain could not compete with the US on subsidies. Hunt announced reforms to pensions, which he hopes can free up private capital for new technology investment.

Hunt stated in his spring budget that he will use his autumn statement to “complete our responses to the challenges created the US Inflation Reduction Act”.

The government has identified digital, creative industries, green energies, financial services, and life sciences as key growth sectors.

Badenoch wrote that in July the government wouldn’t make “unaffordable commitments to spending” but also added, “we do recognize the UK automotive industry needs certainty and targeted assistance”.

Lord Richard Harrington is a former Tory Business Minister who has written a report on how to increase inward investment for Hunt. Last month, it was reported that Biden’s subsidies to entice clean technology investments to the US posed a “big threat” to the UK.

Harrington, who reports to Hunt in September admits that Britain cannot compete “pound-for-dollar” with the US. “But do I believe we can improve our offer of investment in this country?” “I absolutely do.”

Greg Clark, former Tory Business Secretary whose “modern Industrial Strategy” was scrapped by the government in 2021 has welcomed the new approach.

He said that the government’s policy should be easily visible to business.

He said, “They haven’t abolished content of the Industrial Strategy.” If you look closely, you’ll see that many different aspects are being worked on or continued. But it is more fragmented.

Verity Davidge is the director of policy for Make UK. She said: “We’ve called for an industrial strategy that is modern, robust and not subject to political whims or changes.

I think the government should take action before the Autumn Statement to deal with the US IRA.

The Department of Business and Trade refused to comment.