Almost 13 years ago, at the dawn of the Conservative-Liberal Democrat coalition government, David Cameron chose Salt’s Mill as the venue for his first big economic speech.
With its 250ft chimney, the Mill was a towering reminder of how the Industrial Revolution shaped economy of West Yorkshire, and an indication of the new government’s ambition.
Cameron and his chancellor George Osborne had spent the 2010 general election campaign, fought in the shadow of the global financial crisis, promising a “long-term economic plan”.
With Lib Dem business secretary Vince Cable alongside him, Cameron arrived in the Conservative constituency of Shipley promising to use tax cuts and deregulation to unleash business investment – a long-term bugbear of the UK economy.
“Let’s make the next decade the most entrepreneurial and dynamic in our history – and let’s do it together. All of us, across Britain, sharing in our prosperity,” he exhorted his audience.
Yet with that decade now come and gone, Cameron’s aspiration remains a distant one: the UK continues to lag behind its peers when it comes to business investment.
Alpesh Paleja, lead economist at the CBI, says “there is a very clear picture of underperformance, particularly when we look at business investment in the UK relative to the G7, and that underperformance has persisted as far back as we have access to the data, which is the early 1980s”.
Cameron’s host in Salt’s Mill in 2010 was Pace, a homegrown electronics firm making and exporting TV set-top boxes – a technology that was largely killed off by internet streaming and now seems almost as archaic as the looms that wove reams of alpaca-cotton fabric here.
Like another much-vaunted UK tech champion, Arm Holdings, Pace floated on the London stock market, but was ultimately swallowed up by an overseas buyer: US tech firm Arris, itself then taken over by Commscope.
Commscope still has employees at the Salt’s Mill site, carrying out research and development, but the company’s headquarters is no longer in West Yorkshire – it is in North Carolina.
Foreign ownership can draw in investment and boost productivity but it also means key decisions are taken thousands of miles away.
Among business leaders and policy experts in West Yorkshire there is cautious optimism after a period of turmoil but it is tempered with frustration at longstanding constraints on investment.
“Disruption like we’ve seen does lead to silver linings,” says Mandy Ridyard, of aerospace engineering firm Produmax in nearby Baildon, which exports precision components. “We’ve managed to pivot our business into new customers, platforms and markets.”
But she laments the challenges of finding long-term investors in a difficult economic environment. “Growth requires finance. We need more patient capital.”
Ridyard also points to the lack of a coherent industrial strategy from government – with the phrase recently removed from the name of the rejigged business department. “We don’t have an industrial strategy now. We need to be more strategic about key sectors like steel and chips, and not just let the market take its course”.
The lack of secure, long-term funding in the UK economy is one reason often cited by economists for weak investment – and in turn, low productivity.
Ewen Gordon, managing director of nearby Saltaire Brewery, says it has expanded and evolved significantly since he arrived at the business in 2010 – installing a bottling line, and developing a lucrative sideline in supplying beer to food manufacturers – but with little access to outside financing.
“Nearly all of our growth has been privately funded by the business, mainly because there was just not a lot out there. Every kind of funding that we’ve had has only been attainable on relatively small projects,” he adds, citing several EU grants the business won in the past.
The firm has drawn up ambitious future expansion plans but for the moment investment is on hold, pending more clarity about the direction of the economy. “There’s a lot of uncertainty,” Gordon says.
He and fellow manufacturers will also be looking to Jeremy Hunt’s budget on Wednesday for signs the government is ready to support business by extending the energy support scheme, and with tax incentives.
The “superdeduction” tax break for investment introduced by Rishi Sunak is due to come to an end in April. Hunt is expected to replace it with a new scheme of capital allowances, allowing firms to write off investment projects against tax.
He is under pressure to be generous, in order to partially offset the sharp increase in the rate of corporation tax, from 19p to 25p, coming into force next month.
Stephen Phipson, chief executive of manufacturing trade body Make UK, says: “We’ve had some tax incentives, but it’s a bit half-hearted, to be honest. It’s not been a real push by the tax system to incentivise the latest technology, updating equipment, getting the latest capital in there, improving efficiency.”
Ambition was rarely in short supply among Victorian business leaders. Salt’s Mill was built by entrepreneur Titus Salt. The largest factory in Europe when completed in 1853, the vast Italianate barn of a building, now home to a David Hockney gallery and a smattering of smart shops, remains an imposing symbol of the confidence of Industrial Revolution Britain.
Salt built not only the mill but also an entire village for its workers – Saltaire, now a much-visited Unesco world heritage site.
Tom Forth, co-founder of Leeds-based tech firm Data City, and a close observer of the local economy, says that, far from stirring us to action, perhaps such awe-inspiring remnants of a former age have stifled ambition.
“As a country, we inherited a huge amount of prosperity from previous generations. Much of that prosperity was quite ill-gotten. It means we have this quite big stock of stuff that we can work with quite cheaply – and maybe, culturally, we got a bit lazy.”
When Cameron delivered his Saltaire speech, he hoped to bring certainty, after the chaos of the financial crisis – but instead, he and his four Tory successors have overseen wave after wave of fresh tumult.
Paleja, of the CBI, argues this may be the best explanation of lacklustre business investment. “We had the financial crisis, which at the time caused an unprecedented recession, we had the eurozone crisis kicking off, we had the Scottish referendum, and then we had Brexit and everything that Brexit came with,” he says.
Avoiding any mention of Liz Truss by name, he adds: “You need macroeconomic stability. And I think the last year really hammered home how important this was.”
And in the wake of fresh delays to HS2, there was another factor almost everyone pointed to as a barrier to investment and growth: transport.
Mark Casci, head of policy at West and North Yorkshire Chamber of Commerce, says: “There’s a lot to be proud of and a lot to be optimistic about but we could be doing so much better if we the same access to infrastructure as other parts of the country. The rail network around here is dismal.”
“We need to get people into an office in central Leeds, reliably, two days a week – that’s really hard,” agrees Forth. “I can’t hire the right people: it’s not because they don’t exist, it’s because they can’t get to me.”
Shadow chancellor Rachel Reeves, a Leeds MP, has repeatedly highlighted the UK’s anaemic investment record as among the long-term challenges a Labour government would seek to tackle.
At last week’s Make UK conference she promised to boost R&D spending, beef up the Industrial Strategy Council and reform business rates, as part of a package of measures aimed at creating a better climate for investment and growth. Labour has also promised to build “Northern Powerhouse” rail, the east-west link so important here.
West Yorkshire’s Labour mayor, Tracy Brabin, strikes an optimistic note, pointing to fast-growing local sectors including the creative industries. “We’re just getting on with it, and we’re rolling up our sleeves in a very Yorkshire way – we’re not going running back to the government all the time with a begging bowl”. She cites grants to fast-growing local firms and a scheme to help train bus drivers in Bradford.
But she argues that she could be much more effective in boosting growth with powers over skills and transport – as well as the promise of major projects such as northern powerhouse rail. “I am holding out – you won’t be surprised to know – for a Labour government,” she said.
