Today’s industrial strategy consultation is however not a throwback to the dirty industrial sixties, rather a reflection by the Government of the need for a modern, all encapsulating business plan, apt for the 21st century; less to do with mines and factories, more to do with data centres and laboratories.
For several decades now, growth in British business has been disproportionately spread, both geographically and by sector, the apex being London’s financial centre. George Osborne’s economic strategy aimed to rebalance the economy to be less reliant on London, but had stuttering results. May seems to be refocusing her predecessors efforts, just with more oomph. Brexit has only amplified the need for some kind of industrial reform, with the possibility of a remodelling of the British economy (either by choice or necessity).
Pivotal to the industrial strategy is a Government green paper, “an offer to businesses to strike new ‘Sector Deals’, driven by the interests of firms and the people they employ, to address sector-specific challenges and opportunities.”
Where industrial sectors “can organise behind strong leadership to address shared challenges and opportunities” the Government will be active in offering assistance. This may be in the form of removing “barriers to innovation”, securing specific “trade and investment deals to increase exports”, and even creating “new institutions to provide leadership, support innovation or boost skills.” The Government has listed its 10 pillars of industry, which the strategy will focus on, which are:
- Investing in science, research and innovation
- Developing skills
- Upgrading infrastructure
- Supporting businesses to start and grow
- Improving procurement
- Encouraging trade and inward investment policy
- Delivering affordable energy and clean growth
- Cultivating world-leading sectors
- Driving growth across the whole country
- Creating the right institutions to bring together sectors and places
In short the Government has assessed the industries it views as most critical to prosperity, asked them what they need, and then committed to delivering this. This does offer an immense opportunity to (certain) businesses, by allowing them to be part of a dialogue which could shape a climate conducive to prosperity for many years to come.
Sadly, as with everything in politics, this is not as simple as it sounds, for three reasons.
Firstly the industrial strategy is heavily reliant on the assumption that sectors can organise and coherently demonstrate what they need. This puts significant pressure on businesses to coordinate (with potential competitors) to list their shared interests. In instances where the sector is divided it is likely that the ‘big boys’ may be given preferential treatment over small businesses.
Secondly, this is a distinct shift from the more neoliberal approach, which was favoured by the Cameron Government. A more interventionist model is not something which will be feared by those left-of-centre, but it does assume that the Government is better at ‘picking winners’ than the free market. History suggests results on this are mixed.
Thirdly, this strategy is already complex due to its vastness: with sectoral, infrastructural, regional, educational, and entrepreneurial reform, the project is highly ambitious. In the age of Brexit though we have to increase the complexity of everything by at least 20%. We will have to wait and see whether the Government is capable of launching the most significant industrial strategy reform since the sixties, whilst also negotiating the most radical shift in economic and geopolitical policy with Brexit since the Second World War.
Also lest we forget, exactly two months ago today, Philip Hammond’s Autumn Statement revealed that finances were forecasted to be £122 billion worse off by March 2021. Although a successful industrial strategy would stimulate growth, it also requires an ‘economic push’, at a time when finances are hardly flowing.