Five thoughts on John McDonnell’s promise to revive Britain’s manufacturing sector

The AirBus factory in Broughton, north Wales, 2013. Image: Getty.

“We want to rebalance our economy. We need to make sure we invest in our infrastructure. That means making sure we have regional investment right around the country as well. And that means we rebuild our manufacturing base so we balance out our finance sector and our manufacturing sector.”

The shadow chancellor John McDonnell set out his view of what economic policy should aim to do on the Today Programme last July. There’s a lot to unpack in those four sentences and the Labour Party’s ‘Build it in Britain campaign’ – much of which has popular appeal, but would actually do little to support growth across the country.

Here are five issues arising from McDonnell’s comments which are worth reflecting on.

1. We do still make things in the UK, contrary to popular belief

Firstly, despite concerns about the decline of the UK’s manufacturing sector, we do still make a great deal. As Jonathan Portes of King’s College London points out, UK manufacturing output has been fairly stable over the last four decades.

But two things have happened over that period that alter people’s perception. The first is that other parts of the economy have emerged and grown over that period, so we’re not as reliant on manufacturing as we once were – the industry now accounts for 10 per cent of GDP today compared to 31 per cent in 1970.

The second is that the number of people working in manufacturing has fallen sharply, so it is not the source of jobs that it once was (as it has done in other developed economies). Moreover, if it is to remain competitive on the global stage, it will be productivity driven and jobs light.

2. We don’t just export goods

A trap people from across the political spectrum often fall into is assuming that we only export goods. The reality is that services account for 46 per cent of UK exports, and play an even larger role in some cities – in Milton Keynes they account for half of all exports, and in Edinburgh it’s four-fifths.

A focus on exporting industries is important, particularly from a productivity perspective – it is these businesses that drive productivity and wage growth. But it’s wrong to mistake this for being goods producers only, which misleads us into false trade-offs around financial services and manufacturing.

3. London isn’t just finance, and finance isn’t just London

Much is made of the concentration of financial services in London. But it plays an important role in other cities across the UK: for example, it accounts for 58 per cent of exports in Edinburgh, 12 per cent of private sector jobs in Ipswich and is the most productive sector in Cardiff’s economy.

And while finance plays an important role in London’s economy,  it isn’t the capital’s only economic driver. Instead, its success is built off the back of strengths in other areas such as law, media and advertising. These strengths should both be celebrated and understood better – the benefits that London offers to such businesses explains why they have chosen the capital as their location, and other places need to address the barriers which do not make them as attractive.

4. The future for northern cities isn’t manufacturing alone

The big challenge for most cities outside the Greater South East is their ability to attract, retain and grow high-skilled exporting businesses, both in manufacturing and services. Crucially, it is the distinct lack of these businesses in these cities has contributed to the widening divide in terms of wages across the country.

Despite this, term ‘rebalancing the economy’ has been used by Nick Clegg, George Osborne and the current Labour leadership as shorthand for boosting manufacturing in the North as a counterweight to London’s financial specialism. But in the same way that London isn’t about finance alone, the idea that northern cities are where manufacturing happens is an outmoded view based on the politics of nostalgia. The focus needs to be on attracting in higher-skilled work in a number of sectors.

In some instances this may even require an explicit rebalancing away from manufacturing, not towards it, if the fortunes of these cities are to improve. Burnley currently has the highest share of jobs in manufacturing of any British city, with one in five being in this sector. Despite this, it performs poorly on a range of economic indicators, principally because its manufacturing base is relatively low skilled and it has a lack of higher-skilled service exporters. Both issues will need to change if the economic opportunities available to the residents of Burnley are to be greater in the next four decades than they have been in the previous four.

5. Public procurement strategies don’t offer the answer for struggling economies

One of the proposals offered by the shadow chancellor to support manufacturing is for local public bodies to preference local businesses. As I’ve written before, this is a form of protectionism in the same way that tariffs are a form of protectionism. And it raises a number of troubling questions.

For example, if Blackburn or Burnley adopts this approach, how exactly do they distinguish which businesses qualify for a contract? Will a firm respond to having competition restricted by upping its prices, costing the taxpayer? And what will the reaction from places elsewhere in the country – will they start a trade war?

Most cities outside of the Greater South East need to see an upturn in their fortunes if they are going to improve the opportunity available to their residents, make a larger contribution to the national economy and to address the UK’s poor productivity. The politics of populism and nostalgia will fail to deliver this.

Paul Swinney is head of policy & research at the Centre for Cities, on whose blog this article first appeared.

Want more of this stuff? Follow CityMetric on Twitter or Facebook.


CityMetric is now City Monitor! Come see us at our new home

City Monitor is now live in beta at

CityMetric is now City Monitor, a name that reflects both a ramping up of our ambitions as well as our membership in a network of like-minded publications from New Statesman Media Group. Our new site is now live in beta, so please visit us there going forward. Here’s what CityMetric readers should know about this exciting transition.  

Regular CityMetric readers may have already noticed a few changes around here since the spring. CityMetric’s beloved founding editor, Jonn Elledge, has moved on to some new adventures, and a new team has formed to take the site into the future. It’s led by yours truly – I’m Sommer Mathis, the editor-in-chief of City Monitor. Hello!

My background includes having served as the founding editor of CityLab, editor-in-chief of Atlas Obscura, and editor-in-chief of DCist, a local news publication in the District of Columbia. I’ve been reporting on and writing about cities in one way or another for the past 15 years. To me, there is no more important story in the world right now than how cities are changing and adapting to an increasingly challenging global landscape. The majority of the world’s population lives in cities, and if we’re ever going to be able to tackle the most pressing issues currently facing our planet – the climate emergency, rising inequality, the Covid-19 pandemic ­­­– cities are going to have to lead the way.

That’s why City Monitor is now a global publication dedicated to the future of cities everywhere – not just in the UK (nor for that matter just in the US, where I live). Our mission is to help our readers, many of whom are in leadership positions around the globe, navigate how cities are changing and discover what’s next in the world of urban policy. We’ll do that through original reporting, expert opinion and most crucially, a data-driven approach that emphasises evidence and rigorous analysis. We want to arm local decision-makers and those they work in concert with – whether that’s elected officials, bureaucratic leaders, policy advocates, neighbourhood activists, academics and researchers, entrepreneurs, or plain-old engaged citizens – with real insights and potential answers to tough problems. Subjects we cover include transportation, infrastructure, housing, urban design, public safety, the environment, the economy, and much more.

The City Monitor team is made up of some of the most experienced urban policy journalists in the world. Our managing editor is Adam Sneed, also a CityLab alum where he served as a senior associate editor. Before that he was a technology reporter at Politico. Allison Arieff is City Monitor’s senior editor. She was previously editorial director of the urban planning and policy think tank SPUR, as well as a contributing columnist for The New York Times. Staff writer Jake Blumgart most recently covered development, housing and politics for WHYY, the local public radio station in Philadelphia. And our data reporter is Alexandra Kanik, whose previous roles include data reporting for Louisville Public Media in Kentucky and PublicSource in Pittsburgh, Pennsylvania.

Our team will continue to grow in the coming weeks, and we’ll also be collaborating closely with our editorial colleagues across New Statesman Media Group. In fact, we’re launching a whole network of new publications, covering topics such as the clean energy transition, foreign direct investment, technology, banks and more. Many of these sectors will frequently overlap with our cities coverage, and a key part of our plan is make the most of the expertise that all of these newsrooms combined will bring to bear on our journalism.

Please visit going forward, where you can also sign up for our free email newsletter.

As for CityMetric, some of its archives have already been moved over to the new website, and the rest will follow not long after. If you’re looking for a favourite piece from CityMetric’s past, for a time you’ll still be able to find it here, but before long the whole archive will move over to City Monitor.

On behalf of the City Monitor team, I’m thrilled to invite you to come along for the ride at our new digs. You can follow City Monitor on LinkedIn and on Twitter. If you’re interested in learning more about the potential for a commercial partnership with City Monitor, please get in touch with our director of partnerships, Joe Maughan.

I want to thank and congratulate Jonn Elledge on a brilliant run. Everything we do from here on out will be building on the legacy of his work, and the community that he built here at CityMetric. Cheers, Jonn!

To our readers, on behalf of the City Monitor team, thank you from all of us for being such loyal CityMetric fans. We couldn’t have done any of this without you.

Sommer Mathis is editor-in-chief of City Monitor.