Reindustrialisation – what will it mean for us in the West Midlands?

It effectively says that when musical tastes shift, take the decision to try something very different.

Politics has always been prone to this tendency, but now it happens at a rate approaching hyper-speed.

Which brings us to Andy Burnham who, barring a change in the leadership race to succeed Keir Starmer, will become the latest inhabitant to occupy 10 Downing Street as PM, the seventh in just over ten years.

The last decade is significant because we’ve just passed the anniversary when David Cameron, having led ‘Remain’ in the referendum on continued membership of the EU on June 23rd, 2016, promptly resigned, setting off what history will judge to be a decade of continual change in leadership and PMs.

Crucially, the fact we even had a referendum can be rationalised, at least partly, because of 'de-industrialisation', which had commenced in the mid-1970s but, given gusto under Margaret Thatcher’s Tory government after she was elected in May 1979, resulted in between 1.5 and 2 million jobs being lost.

Burnham, in a wide-ranging speech recently, made a number of generalised policy announcements purposely meant to stake his claim as willing to be radical but may be perceived as based in a belief that in the past we were less divided and that relatively, the gap between the rich and poor was less pronounced.

In promising to ensure we’ll collectively enjoy enhanced living standards as well as restore our faith in politics in what would be "the biggest rebalancing of power our country has ever seen", he explained what he calls “Manchesterism”.

A key to this, Burnham claimed, would be ‘reindustrialisation’.

For those of us here in the West Midlands, this is really significant.

It’s worth remembering that half a century ago, when we were enjoying the long hot summer of 1976, manufacturing accounted for almost a quarter of jobs in this country, some 7.1 million, as opposed to 7% now, approximately 2.6 million jobs.

Here in the West Midlands, it’s estimated we lost 335,000 manufacturing jobs in that decade.

This shift has hugely transformed this region.

Factories closed down, leaving land which, depending on the location, became valuable to developers.

If there was sufficient demand, housing gobbled up land.

If demand didn’t exist, we would end up with wide swathes of land upon which traditional metal-bashing and what was once seen as dirty industry once stood, which I regularly saw out of the window on the train to Manchester where I was at university.

To provide two examples of where factories have disappeared to be replaced by housing, I cite the Newey Goodman and Lucas factories located, respectively, on Robin Hood Road and Shaftsmoor Lane in Hall Green, where I live.

The former, a company producing significant amounts of pins, safety pins, and hairgrips and which could trace its lineage back to 1798, built the factory in the 1930s and, in the 1970s, employed over a 1000 local people in a range of roles, including sales, purchasing, marketing and pioneering development of computer parts.

Following a buyout by William Prym, a German manufacturing company, in 1978 and the sell-off of the haircare division in 1982, production ceased in 1983, resulting in all employees being made redundant.

Lucas’s, in Shaftsmoor Lane, where my mother worked from the mid-70s until retirement in 1998, and part of the larger Lucas Group, originally founded in Birmingham by Joseph Lucas in the 1870s, was a 20-acre site acquired in 1925 and expanded over subsequent decades to produce dynamos and starter motors for local car manufacturers, employing in its heyday well around 1,500 people.

However, Lucas’s production facility at Shaftsmoor, similar to all other suppliers to the car industry, was subject to increasingly becoming globalised and, following purchase by Magnetti Marelli, part of Fiat, followed by then Denso, a Japanese manufacturer, gradually declined until it was closed in 2008.

There are, of course, many hundreds, if not thousands of instances of such closures across the West Midland.

The loss of regular and well-paid employment has had long-term consequences.

According to those who worked in the two factories I cite and have posted their memories on Facebook, as well as the benefits offered, which included regular social events, including trips to the seaside, there was a deep sense of camaraderie.

Employment, unsurprisingly, is absolutely essential in supporting our social and psychological wellbeing.

Notably, jobs lost in manufacturing have largely not been replaced, and employment in retail parks and distribution is usually on very different terms and conditions.

However, Margaret Thatcher passionately argued that increased competitiveness and vastly reduced inflation would make the UK economically stronger.

It’s accepted that the economy did improve for some.

What’s emerged is a lopsided economy in which certain regions, most particularly London and the South-East, dominate.

Areas in which manufacturing declined, such as here in the West Midlands, have struggled to recover, and there remain hotspots of unemployment and deprivation which blight the lives of all, most especially the young who can no longer look forward to being better off than their parents.

Such disillusionment among those considering themselves to be forgotten or overlooked – the ‘left behind' – created the environment in which we collectively voted to leave the EU, albeit by a small majority of 17,410,742 votes (51.9%) as opposed to 16,141,241 (48.1%) out of an electorate of 46,501,241.

Add in the belief by some that those coming from elsewhere, whether from the EU or beyond, are taking away employment and therefore depriving indigenous people of opportunity, and it’s perfectly possible to see why UK politics has become increasingly turbulent as well as toxic.

That our PMs are changing so regularly means we’re compared to Italy.

Some speculate the UK is now ungovernable.

What is certain is that the UK is seen very different by the rest of the world in the way inconceivable a generation ago.

The gilt rate we pay to international lenders is higher than in other countries to compensate for the risk of lending to a country seen as increasingly unstable.

This matters as we currently have to pay over £100 billion to service the debt on the £3 trillion we owe.

Bear in mind the announcement made on Tuesday by the Office for Budget Responsibility (OBR), a non-departmental public body funded by the UK Treasury providing independent economic forecasts and independent analysis of the public finances, that unless the next PM raises and very urgently deals with such debt, which, because of the rising cost of an ageing population and declining workforces, our situation will become unsustainable.

What this means is that unless growth can be achieved with phenomenal speed, taxes will have to rise dramatically or cuts will be made to budgets, most especially welfare.

It’s salutary to remember that of a total working population of 33 million people, some 9 million are ‘economically inactive', and that 3 million of those not employed receive sickness benefits, which swallows up a huge chunk of the £333 welfare bill.

In the 1980s, when the demographics of this country were very different, high levels of unemployment were effectively paid for by the revenue produced from North Sea oil.

This is the economic backdrop the next PM will be aware of.

So, critically, can Andy Burnham, should he become PM on 17th July, reverse the industrial, social and economic transformation that’s been wrought across this region?

In his speech Burnham stressed the need to “safeguard sovereign manufacturing and production capability across the country in critical sectors like steel, defence, energy, food and farming".

If you’ve never been into a high-tech production facility, you will not have witnessed the fact that robotics and automation have been in operation for many years already.

Workers are often notable by their low numbers.

This trend is not going to change, especially given the impending AI (artificial intelligence) revolution we’re undergoing.

Reindustrialisation, vital as it certainly is, will not be achieved easily or cheaply and, to be judged successful, will take at least a decade.

Undoubtedly, greater devolution and increased powers given to ‘Metro Mayors’, such as Richard Parker here in the West Midlands, will greatly assist, particularly should they be allowed to raise revenue that is spent on local projects.

However, the magnitude of the task is Herculean.

There’s the critical question of how reindustrialisation can be paid for.

Vastly increased borrowing risks a ‘Truss’ situation in which gilts increase.

More taxation is politically unpalatable and won’t be welcomed by voters already feeling squeezed by rising bills.

Considering what occurred in Germany after reunification following the fall of Communism in 1989 and is ongoing is helpful.

Equalisation of the former East with the West is estimated to have cost €2 trillion (£1.49 trillion) and was based on very active support by citizens in the latter to willingly allow transfer of wealth.

Burnham’s desire to rebalance the UK through the transfer of wealth from London and the South-East would be similar, though there would be less passionate support than was apparent in the reunification of Germany.

Burnham will have no shortage of advice on what should be done to achieve reindustrialisation.

Coincidentally, a new book to be published by Polity next month sets out a strategy.

Reindustrialise Britain: A Strategy for Wealth Creation, co-authored by Costas Lapavitsas, former Guardian business editor Larry Elliott and Doug Nicholls, will most definitely be worth consulting.

In their book, Lapavitsas, Elliott and Nicholls propose the creation of “real wealth rather than recycling financial gains" to be based on “sovereignty to plan and invest and democratic power to mobilise the necessary workers, skills and institutions”.

This chimes with Burnham’s ideology.

However, as the authors point out, implementing a programme to achieve economic renewal based on reindustrialisation that would radically improve productivity through skilled workers would require public investment of £1.41 trillion, of which £850 billion would be public money and the rest through private investment.

As we’ve seen in the last ten years, every new PM has stated, with varying degrees of self-belief, their intention to radically change the economic and social outlook of Britain.

Boris Johnson claimed that ‘levelling up’ would redress imbalance between regions.

However, according to anti-poverty group The Resolution Foundation, inequality remains broadly similar to what was being experienced in 1996.

Significantly, a report just published by that organisation, Regional economic inequalities, challenges and opportunities, authored by Ruth Curtice, Charlie McCurdy and Parth Pandya, presents data showing that regional economic inequalities in the UK are still very real.

Notably, Manchester, of which Burnham was in control as mayor until very recently, recorded the largest decline in living standards of any major city in England, as the ‘spending power’ of residents reduced by 7% between 2021 and 2023 (the average across the country was 4.7%).

Andy Burnham will know that the role of PM comes with utterly intense levels of scrutiny and, of course, criticism of any inability to produce change sufficiently quickly to keep voters happy.

That he is likely to become PM is precisely because his immediate predecessor, Keir Starmer, despite enjoying a massive majority in the last general election just over two years ago, did not have widespread support and wasn’t able to convince voters he could deliver change that would make people feel better off.

Burnham has a unique opportunity to be radically creative in his policies and the way in which he will govern.

Indeed, research by Electoral Calculus suggests there’s already been something of a recovery for Labour because of the change in leadership, using Multiple Regression Polling, considered very accurate, predicting Labour would win 217 seats, Tories 151, Reform 127, Lib Dems 72, Greens 30 and SNP 28 in a general election.

This would mean that there’s likely to be a coalition in which Burnham would be PM as leader of the largest party.

However, what Burnham will undoubtedly want is that, assuming the next general election is not held until 2029, probably in May, people believe that change under him leads to discernible change and makes them believe they are becoming more prosperous and that regional inequality, compared to London, is diminishing.

For those of us here in the West Midlands who’ve experienced a massive decline in employment in manufacturing that’s not been replaced by opportunities in other sectors, we must sincerely hope Burnham’s policy of reindustrialisation succeeds.

Ensuring the West Midlands becomes the place where we make everything we need and creates new employment and prosperity for all is incredibly appealing.

Dr Steve McCabe

Steve is Professor and Pro Vice Chancellor, DoctorateHub.

Previously, having worked for Birmingham City Council, he spent the last 35 years as an academic at Birmingham City University teaching and researching economics, management and business. Additionally, he has written extensively for edited texts examining economics and politics.

He regularly writes and comments regularly in the national and international media on politics and the economy and has published texts on quality management, benchmarking, ‘Brexit’ and its economic and social impact, the green economy and manufacturing, house prices and India’s progress since independence. 

To read Dr McCabe’s work visit Amazon to find English Regions After Brexit: Examining Potential Change Through Devolved Power.