“We need more state-owned financial institutions directing investment into building publicly owned industries that can create new higher value manufacturing and service jobs.”
By Eddie Dempsey
Andy Burnham has said that reindustrialisation is a priority for his government, arguing that it can help bring good growth to every postcode. I welcome that commitment, but we need to be clear about what reindustrialisation means and what it’s for. Britain’s manufacturing base has been gutted over a 40-year period. We’ve lost key export industries that help Britain pay its way in the world, but we’ve also lost industries that used to support whole communities in our regions. Reindustrialisation needs to be balanced and multi-faceted. It can’t just be about high technology exports; it’s also got to be about foundational industries that support our national infrastructure and about creating higher value decent jobs at scale across our economy.
RMT has argued that rail has the potential to play a key role in reindustrialisation. The Gross Value Added (GVA) contribution of rail and its supply chain exceeds the UK’s legal services sector and the electricity and gas sector. Network Rail is a significant consumer of steel. Electrification, needed for decarbonisation, could create thousands of skilled construction jobs. Train manufacturing, assembly and maintenance create particularly high-productivity jobs with an estimated Gross Value Added Reindustrialisation will need a change in economic strategy. of £105,000 per employee, more than double the national average.
But reindustrialisation won’t just happen if we say we want it. To make it happen, we have to understand the sources of our weakness and make sure we have the power and the levers to make it a reality.
Britain didn’t just deindustrialise by accident. The destruction of our industries was especially fast and devastating because of the economic and political power of our financial sector, organised in the City of London. The City’s economic activity is overwhelmingly international, and its contribution to domestic investment is comparatively weak by international standards. That’s not really surprising given the extent to which the City is in fact an outlet for US and foreign banks to get into European and other international markets. That’s not to say City financial firms don’t own British companies. They do, but owning a UK company is a low priority and forms part of a constantly changing portfolio of short-term investments. UK companies are geared toward generating rapid shareholder returns rather than long-term investment.
In rail, for example, we’ve stopped manufacturing our own trains. British workers just assemble components imported from overseas. The rolling stock manufacturing supply chain is dominated by four non-UK multinationals: Siemens, Hitachi, Alstom and CAF. This leaves Britain’s rolling stock supply chain strategically vulnerable. Without a steady pipeline of orders, these companies can simply close UK plants down and go elsewhere, as they periodically threaten to do.
If you look at the top of the privatised train operating companies like FirstGroup, the outsourcing firms like Mitie or the construction giants like Balfour Beatty, you’ll find the same familiar names among their major shareholders: Blackrock, Vanguard, J.P. Morgan and a clutch of Anglo-US private equity funds. These companies are geared toward regular dividend payments and engage in buybacks to ramp up their share prices. Then there’s the scandalous value extraction of rolling stock owners like Angel Trains, who recently paid a £200 million dividend to their owners in the Cayman Islands – a private equity offshoot of J P Morgan. As the economics journalist Larry Elliott said recently, ‘increasingly, Britain is a country of gig economy workers run by a cabal of rentier capitalists’.
The City’s growing shadow banking sector – unregulated lending by non-banking institutions – is also a time bomb in the UK economy. Even the Bank of England is worried about the extent of unregulated debt in the City. If this bomb goes off, we can expect the City to demand another even bigger bailout and yet more sacrifice from the British people.
The levers we need to deliver reindustrialisation don’t currently exist. Our state has been dismantled and disabled by decades of privatisation and neoliberal reform, leaving us unable to pay our way in the world and ill-equipped to deal with shocks from the global economy, pandemics and climate change. Reindustrialisation will be a fantasy unless this is reversed and the power of the finance spivs is challenged.
We can see germs of what’s necessary in the government’s attempts to use National Wealth Fund money and revised procurement rules to direct publicly owned Network Rail’s procurement toward steel purchases from the now publicly owned British Steel. We could use the creation of publicly owned Great British Railways to rebuild capacity in domestic train manufacturing and more secure supply chains among British businesses. But to do this, we need magnitudes more ambition than we’ve seen yet and a quantum leap in the pace of change. Time is running out, politically, economically and environmentally.
We need more state-owned financial institutions directing investment into building publicly owned industries that can create new higher value manufacturing and service jobs. That’s why we need the freedom to operate under democratically agreed policies without being bound by fiscal rules designed to appease the City and international trading arrangements that prevent significant public investment and government action.
We need an honest, democratic conversation with the British people and the banks who hold government debt about what’s needed to create growth, better public finances, and a more resilient economy and infrastructure that provide a decent life for our people.
- Eddie Dempsey is the General Secretary of the RMT. You can follow the RMT Union on Facebook, Instagram, Twitter/X and Bluesky.
- This article first appeared on the GFTU Substack on 14 September 2026.
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