Summary
The Government’s re-found commitment to industrial strategy provides a significant opportunity to set a clear vision for what an “economy that works for everyone” should look like in practice, and put the UK on a path to reach it. We strongly support the Prime Minister’s aspiration of a stronger, fairer Britain “where wealth and opportunity are spread across every community.”
The Prime Minister’s rhetoric marks a significant shift away from that of previous Governments; consciously or unconsciously, it implies that the Government is willing to exchange some element of headline economic growth for more evenly distributed and resilient growth. At a time when Government is already having problems in balancing the books, any decision to slow the rate of short-term economic growth for other objectives (with a longer-term return) will make that task more difficult. Furthermore, success will only be achieved if policies are of a scale to match the Government’s ambition and clearly drive forward economic rebalancing.
But while the Government’s rhetoric marks a step change, and the creation of a new Department for Business, Energy and Industrial Strategy has significantly raised expectations, the Government’s approach appears to be evolutionary and reflects a continuation of policy approaches introduced from May 2015—a focus on horizontal policies, regional devolution, and sectoral “deals”. As it stands, there is a real risk that certain proposals benefit incumbents while lacking the multiplier-effect that a good strategy can deliver through bringing greater coherence and focus to policy objectives. Despite being over six months in preparation, with publication repeatedly delayed, the Green Paper has little discussion of the implicit tensions and conflicting demands that exist in policy making and provides little clarity on how regional rebalancing and sectoral deals will work in practice. It provides a long list of policy interventions but little by way of ground rules to provide a framework for future decision-making which, we would argue, should be the core of any long-term strategy. While we recognise that this is a Green Paper and the Government’s position is still developing, the weaknesses we have highlighted in this report leave us concerned that the Prime Minister has not yet been able to harness the political will across Government to truly drive forward her ambition and that the strategy will fall short of providing a clear framework for decision making in the long term.
We recommend that the Government reconsider giving sectoral strategies priority and instead focus on horizontal policies and specific ‘missions’ to meet UK-wide and local public policy challenges. This will make clear that the function of the Government’s industrial strategy–and of industry itself–is to solve societal problems and it will provide a clear focus for activity across Government and industry.
In conclusion, we urge the Government to continue to be ambitious developing its industrial strategy and ensuring that it remains true to the vision of achieving an economy that works for everyone.
1 March 2017