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The number of UK graduates going into professional services careers rather than manufacturing represents a “failure” of industrial policy, former Royal Dutch Shell chief Peter Voser has said.
Voser, who now chairs Swiss engineering group ABB, said that British university graduates had been let down by the country’s education system and successive governments that neglected its manufacturing sector.
“I think the UK forgot how important certain sectors are,” he said. “It’s a failure . . . [that so many graduates go into consulting]. There should be more in, for example, advanced manufacturing.”
Professional services firms such as consultancies have expanded rapidly, helped by demand from companies short on staff and desperate to make their operations digital after the pandemic. The need for advice on compliance with regulations and the adoption of climate impact targets has also driven demand for advisers.
Just under 6,700 UK graduates were recruited into consulting, accounting and professional services roles, according to a 2023 survey of 100 top graduate employers from market research company High Fliers Research. This compared to 2,900 graduates joining engineering and industrial companies and 3,900 joining the finance sector, including investment banking.
“If you look at countries like Germany, Switzerland, Austria, the Nordics, what drives their GDP? It’s small, medium-sized enterprises that are extremely innovative,” said Voser, who ran Shell between 2009 and 2013.
“The UK doesn’t have these enterprises, the small manufacturing guys who are very innovative, who have to compete globally,” he said on the sidelines of the student-run St Gallen Symposium in Switzerland.
Britain’s manufacturing sector accounts for about 10 per cent of the country’s GDP, down from 25 per cent in the 1970s. Industry group Make UK said that trying to change the perception that “Britain does not make anything anymore” was “like trying to turn an oil tanker around”.
Make UK said there had to be a focus on encouraging young people to do apprenticeships rather than going to university. Until recently, “successive governments . . . took the view that we don’t need a manufacturing base and can get by on services”, it added.
Voser also criticised the lack of technical training at top British universities and the popularity of prestigious, cerebral humanities degrees.
“When you take graduates from Cambridge or Oxford, they come in with a history degree, and for the first three or four years you actually educate them to be in multinational companies.”
More than half of manufacturing companies in the UK have complained of challenges hiring skilled labour, with 70 per cent stating that young people are not leaving the education system with the necessary skills, according to a 2023 survey of 352 manufacturers by WorldSkillsUK.
Voser said that the fact that Indian conglomerate Tata was able to reverse the fortunes of Jaguar Land Rover, the UK automobile manufacturer, demonstrated the loss of local capacity.
“[JLR] was completely dead when they bought it. But they actually designed new models and instilled excellence in manufacturing.”
Tata is widely seen as having pulled JLR back from the brink, more than doubling its sales between 2011 and 2023 and investing in its range of electric and hybrid models.
“And why do you need foreign companies to do that? That should be possible [in the UK]. It had a huge car industry”.
Voser struck a more positive note on the future of the manufacturing sector in the west.
He said that robotics and automation would mean “a lot of benefits going back into the European and American space”, as they would be able to manufacture “cheaper than China . . . because salaries in China are growing”.
But he warned that “social safety net thinking” in Europe could prevent automation due to the fear of job losses. “That’s the challenge [facing Europe],” he said.