Small scale support for foundation industries could add billions to the economy and create tens of thousands of jobs a think tank has claimed - as the fate of thousands of Tata steelworkers hangs in the balance.
The Institute for Public Policy Research says the nation’s ‘small and struggling’ core materials sector would benefit from changes including a level playing field with Europe on trade and energy costs, switching the Regional Growth Fund to target supply chains and introducing a ‘right to buy’ for employees of stricken companies.
The report comes as the board of Tata steel were holding a meeting which could decide the fate of thousands of workers in Port Talbot and Scunthorpe.
The crisis-hit firm last year cut 550 jobs from its operations in South Yorkshire. Forgemasters cut 50 jobs earlier this month.
IPPR research shows Britain is under-performing compared to the 33 other OECD advanced economies.
Since 2000, the share of GDP contributed by such industries has shrunk by 43 per cent, compared to an average decline across the OECD of 21 per cent.
Employment in foundation industries is still 100,000 lower than before the recession.
Mat Lawrence, IPPR research fellow, said: “As the perilous situation in Port Talbot shows, the UK steel industry is in crisis – and we can’t put it all down to volatility in the global market.
“The sad fact is that Britain is doing worse than most of the rest of Europe and the OECD across industries such as metal and chemical production.
“Something is going badly wrong with the way we support our foundation industries.
“But there is a route out which could secure the sector’s future and potentially add billions to the economy and tens of thousands of jobs.
“For that to happen, we need to do more to increase both public and private investment in the sector to boost productivity, and improve the integration of steel and chemical firms into expanding industrial clusters such as aerospace and car manufacturing.”
Other recommendations include renewing the Advanced Manufacturing Supply Chain Initiative, he added.