Industry 
Government must back SME manufacturers if it is to deliver on its mission to kickstart growth
The Manufacturing Commission, has published its latest report today. This research has revealed a critical gap between the aspirations of the Government’s new Industrial Strategy and the reality facing Britain’s 250,000 manufacturing SMEs.
Small Means Essential: why Britain’s manufacturing SMEs are vital for growth, finds that despite representing over 99% of manufacturing businesses, SMEs face mounting barriers that threaten both their own survival and the success of the Government’s economic growth mission. The report identifies four critical areas where policy support is failing manufacturing SMEs, including: access to finance, crippling energy costs, threats to sovereign capability, and inadequate business support.
Key findings include:
- Following external shocks including Brexit, the COVID-19 pandemic, and energy price spikes associated with Russia’s invasion of Ukraine, the number of manufacturing SMEs, who describe themselves as ‘struggling’ is rising.
- High interest rates, geopolitical uncertainty, and the economic climate have all weakened investor confidence, leaving the UK with the lowest business investment rate of all G7 economies at 10% of GDP.
- UK industrial electricity prices present an existential threat to manufacturing SMEs. Average electricity prices for commercial users remain around 75% higher than in 2021, and UK businesses pay around four times more for electricity than their North American counterparts.
- Access to business support schemes remains limited, with many businesses unaware of the support that is available to them.
- Despite these challenges, most manufacturing SMEs aspire to grow into large businesses within the next decade and delivering on this ambition would add over £80 billion GVA to the economy.
The Manufacturing Commission’s report is co-chaired by Lord Bilimoria of Chelsea, CBE, DL and Bill Esterson MP, alongside vice-chairs, Antonia Bance MP, Baggy Shanker MP, Catherine Atkinson MP, Lord Harrington of Watford, Jo Platt MP, and Councillor Nadine Peatfield.
Lord Bilimoria of Cheslea, Inquiry co-chair
“As a company founder myself, I understand firsthand that it is the 250,000 SME manufacturers who form the backbone of the country’s industrial base: quietly inventing things, training apprentices, and forming the foundation of our supply chains. These businesses are absolutely vital to our economy, yet they are often overlooked when it comes to policymaking. This inquiry sought to understand how manufacturing SMEs can participate in and benefit from the Government’s new Industrial Strategy. The report’s seventeen recommendations are deliberately practical and aim to create a policy environment where our manufacturing SMEs can thrive.”
Bill Esterson MP, inquiry co-chair
“In my roles as chair of the Energy Security and Net Zero Committee and chair of the All-Party Parliamentary Group for Manufacturing, I regularly hear of the challenges that SMEs face associated with access to a skilled workforce, securing finance, high energy costs, and inadequate business support. The Government’s new Industrial Strategy is welcome, but it will only succeed if businesses can overcome these challenges. The recommendations within this report provide a framework for the SME manufacturing community to be an active partner in the Industrial Strategy – helping to deliver on the Government’s plan for growth.”
Rob Allen, report author
“I am incredibly proud of this inquiry, which has collected evidence from a wide range of manufacturing SMEs spanning aerospace, construction, consumer goods, and many other sectors. We have travelled beyond Westminster to hear from these businesses, holding an evidence session at the University of Derby Business School. Using this approach, we have developed a practical set of recommendations for Government that will help our manufacturing SMEs go from surviving to thriving.”
Andrew Everett, CEO, ERA Foundation
“For too long, policy has been designed around the needs and capabilities of large corporations, with SMEs expected to simply adapt. The ERA Foundation sponsored this inquiry to give manufacturing SMEs a platform to share their experience, through direct testimony about what works, what doesn’t, and what must change. Evidence-based policy requires listening to evidence from those at the coalface, and this report delivers exactly that.”
Notes to Editors
For more information, please contact Victoria.Zeybrandt@policyconnect.org.uk
The report is sponsored by the ERA Foundation
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About the Manufacturing Commission
The Manufacturing Commission is part of Policy Connect’s Industry, Technology, and Innovation team, and is the research arm of the All-Party Parliamentary Manufacturing Group. The Commission brings together Parliamentarians, leading figures from across the manufacturing sector, and academics to undertake high-level research into UK manufacturing policy making recommendations to government and industry.
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