Positive data all round: but don't forget the service industry

Green shoots in this sector are just as important.

Last week’s manufacturing and service sector data caused many sighs of relief, in Threadneedle Street, in Westminster, and also in boardrooms up and down the country, as evidence built of a sustained economic recovery in the UK. However, as is often the case, many were noticeably more enthusiastic about information from the "making things" part of the economy, than from the "doing things" part.

Much of that interest in manufacturing can be attributed to the perception that manufacturers offer the solution to the UK’s trade deficit. However, while it is certainly be part of the solution, the service sector has an equally important part to play in ensuring the UK’s international competitiveness.

The UK leads the world in many specialist and high-quality areas of manufacturing, but we also possess genuine excellence in the services sector. The UK has world leaders in media, marketing, publishing, entertainment, accountancy, law, technology, scientific research, business consulting and more. Those are all industries capable of providing knowledge and expertise at an economically significant level for global consumption, and helping to secure a sustainable recovery for the UK economy.

And to laud our professional economy should not take away from those parts of the service economy that do not export – the retail parks, the high streets and the back offices of our country. Such enterprises are often condemned by those wont to complain that our economy is the weaker for having such a high proportion of service sector businesses, but this is wrong. A manufacturer that does not export still adds value to the economy, and the same is true of a wholly domestic service business.  The contribution of such a business is not measured in the value of exports, but in the efficiency of the business, and the support it can render to its customers in the wider economy. Such businesses are as worthy of investment as any other and, as we plan for a brighter economic future, we will need to plan for the long-term future of both manufacturing and services, and not just those services with an international operation.

So, how should we go about preserving and enhancing the UK’s success in services – to make sure that our international companies compete with the world’s best, and that our non-professional services add the maximum value to the economy? Well, in this case, service industries should take their cue from the manufacturing economy, where leaders have long called for a fundamental change in the skills and knowledge that young people take from their basic education.

Much of the UK’s education system is world-class but, if it is to sustain a world-class economy, then ongoing reforms will need to ensure a greater focus on science, technology, engineering, and maths (otherwise known as STEM) skills. In fact, that is one change that could help secure the successful future of both manufacturing and services. STEM skills are now just as important for service workers as they are for those in manufacturing. The business world is now so reliant on technology that few processes can be properly understood without some knowledge of the enterprise systems and applications that make them possible.

Furthermore, it would be a huge mistake to think that such understanding is only relevant to those destined to be managers and technicians. In my work, I see all levels of the service economy – one day I might be showing a publishing CEO how technology can help her company engage with new audiences, the next I might be advising a telecoms customer experience manager on how to keep his contact centre staff motivated and appropriately skilled. Whether speaking with MBA graduates or school leavers, my team and I see that the skills and knowledge required in the modern workplace are changing quickly.  Whether for a customer service representative being asked to advise on appropriate apps for a small-business phone user, or a lawyer who sees her case turn on the capabilities of data protection infrastructure, some level of technical knowledge is often indispensable.

Successful businesses and successful economies are not just built on good management, but on good work, and good work comes from a workforce with skills and knowledge appropriate to the world in which it operates. If we want the British workforce to be like this, then we should make sure that the foundation for such skills and knowledge is laid at the earliest opportunity.  Doing so will have equal benefits for both services and manufacturing, helping us preserve our global leadership in the creative and professional industries, and making sure that the consumer facing service businesses we use every day remain fit for purpose.

Photograph: Getty Images

Sanjiv Gossain is the SVP & Managing Director at Cognizant

Show Hide image

Geoffrey Howe dies, aged 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.