Decaying infrastructure damaging growth prospects warn manufacturers

• The majority of manufacturers think regional and national infrastructure has got worse in the last decade, with more than two fifths of companies stating road and rail networks are in the worst state. 
• Almost half of companies say lack of good infrastructure is a barrier to accessing labour and skills and over a third of companies say it is slowing down decarbonisation. 
• More than two thirds of companies say an industrial strategy would lead to greater investment in labour and skills, and innovation.
• Priorities for investment are road, broadband and electricity networks but there is also strong support for nuclear and hydrogen plans. 

Following the latest blow to infrastructure investment axing HS2, a new report by leading audit, tax and consulting firm RSM UK and industry body Make UK shows that UK infrastructure has got worse in the last decade. This poor infrastructure is a barrier to labour and skills and is holding back key investment and growth for manufacturers.

The report, published ahead of the UK National Infrastructure Commission’s second assessment (on 18 October 2023), found that more than two thirds of manufacturing businesses (68%) said the UK’s national infrastructure had got worse over the last decade, with more than half (57%) having the same view of local networks. Manufacturers perceived rail (45%) and road (44%) networks to be the worst offenders, followed by broadband (29%). 

In addition, the Industrial strategy: building a competitive business environment for manufacturers report, found almost half (48%) of UK manufacturers think that poor infrastructure is preventing access to key labour and skills, with over a third (35%) stating it is slowing down decarbonisation and the transition to net zero. 

Over 60% of manufacturers want government to prioritise investment in 5G (65%) and road (60%) infrastructure, and more than half want responsibility for this investment to be held either locally (55%) or in partnership with industry (54%). 

The report also reveals that manufacturers want government to back their investment plans by giving responsibility to local authorities and councils for major improvements to Britain’s inadequate infrastructure, and in particular broadband, energy and the road system. 

The findings in the report support the view that an industrial strategy which encompasses infrastructure reform would lead to greater investment in labour and skills (67%), R&D (61%) and decarbonisation (45%).

Mike Thornton, national head of manufacturing at RSM UK, said: ‘An effective industrial strategy is necessary for manufacturers to thrive in the UK. A critical part of this plan must focus on infrastructure investment – incorporating both physical and digital networks. Only then will the business environment in the UK meet the needs of industry and employees; and effectively connect people and place together. By investing in infrastructure, this would show real commitment to levelling up and ensure that the manufacturing industry remains buoyant, on a local and national level.’  

He added: ‘Our transport systems, energy networks and digital connections are all enablers to growth. A focus on expanding the digital infrastructure and improving the quality of roads, electricity and even rail will support the engine of our economy. Manufacturers have made their needs clear and infrastructure must be a priority for a long-term industrial strategy, coupled with investment in all other areas, such as innovation, finance, tax and regulation and education.’ 

Verity Davidge, director of policy at Make UK, said: ‘Manufacturers are clear that the UK’s infrastructure is creaking at the seams and is getting worse with very real impacts on their business. For too long in the post war period there has been an acceptance in government that the economy will tick along without the need for long-term planning in our road, rail, energy and, now digital, networks. That complacency has now been well and truly shaken. 

‘The recent announcement on HS2 with no Plan B was indicative of short termism and giving up when the job is half finished. Right across our road, rail, energy and digital networks we need an infrastructure plan on a scale not seen since the Victorian era otherwise the economy will be condemned to life in the slow lane.’