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Government Launches Industrial Strategy

When Theresa May became Prime Minister last year, she spoke pointedly about making sure the country worked for everyone, that wealth should be spread around the UK. She also signalled that, to help achieve that outcome, her Government would be more hands-on in terms of industrial policy than its recent predecessors. This change in tack was epitomised by her intention to produce an Industrial Strategy, to be produced and overseen by a renamed Department for Business, Energy and Industrial Strategy (BEIS).

Today, that much trailed Industrial Strategy is launched, in the form of a Government Green Paper, at a special Cabinet Meeting in the North West of England. What should we make of its content? Here are some Nudge Factory observations.

The PM likes lists

Just a couple of weeks after the PM announced her 12 point negotiating strategy for Brexit, she includes a 10-point plan as part of her Industrial Strategy. The 10-point plan involves:

  • Investing in science, research and innovation
  • Developing skills
  • Upgrading infrastructure
  • Supporting business to start and grow
  • Improving government procurement
  • Encouraging trade and inward investment
  • 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 addition, five key sectors have initially been singled out for support, where it is believed that the UK can be a world-leader in. These are life sciences, low-carbon-emission vehicles, industrial digitalisation, the creative sector and nuclear industry.

Emphasis on technology

Perhaps unsurprisingly, a major focus of the Strategy is on helping develop the technologies and industries of the future. Building on the Chancellor’s Autumn Statement, which saw £4.7 billion of support to be targeted at Research and Development, the Industrial Strategy includes the creation of an ‘Industrial Strategy Challenge Fund.’ This will funnel money into favoured areas of research, including robotics and artificial intelligence and 5G mobile technology. This emphasis on the future picks up on the recent paper by the Free Enterprise Group of MPs – which we blogged about here – which called for the Government to embrace what it calls the Fourth Industrial Revolution.

 

Reinforcement of regional regeneration and job creation

The fact the Strategy is being launched in the North West demonstrates that, at its heart, is a goal of re-balancing industrial growth across the UK. This continues to build on recent policies designed to help the parts of the country outside of London and the South East to grow. One of the announcements accompanying the launch was more funding for the Northern Powerhouse, with money set aside for a new rail/sea/road link at Goole and a conference centre for Blackpool. (It is actually interesting to see the phrase ‘Northern Powerhouse’ is used in the Strategy. The post-Osborne Government had originally shied away from this phrase, which was closely identified with the former Chancellor).

Moreover, there is extra funding for training and skills to ensure workers are equipped to engage in the job market of the future. A greater focus on technical training is promised, including extending ‘the same opportunity and respect we give university graduates to those people who pursue technical routes.’ To help achieve this, a sum of £170 million is committed to help set up Institutes of Technology, which will focus on Science, Technology, Engineering and Maths (STEM) subjects.

Regional re-balancing and non-university training are subjects that will be returned to extensively over future years as the PM continues to promise to forge a UK that works for the many.

Centralised approach vs deregulation and devolution

There is an obvious tension between a centrally produced Industrial Strategy and deregulation and devolution. By emphasising this is a ‘modern’ Industrial Strategy, Theresa May is trying to suggest it is possible to avoid the mistakes of the 1970s by trying, and failing, to pick ‘winners.’ Some might say that she is trying to have her cake and eat it.

To try and get around the charge of greater centralisation, the Industrial Strategy promises a general process of de-regulation for business. At the same time, the devolution agenda continues apace, with Metro Mayors set to be elected in certain places around England later this year. The new Mayors, and local and regional leaders more generally, are clearly going to be key in ensuring the Strategy is not simply a top-down set of diktats.

One thing to look out for is how some of the more die-hard free marketeers on the Conservative backbenches react to this much more hands-on approach.

An extension of the Brexit Strategy

At the end of the day, this Industrial Strategy is an extension of the PM’s Brexit Strategy. This is all about trying to demonstrate that the UK economy will grow and thrive post-Brexit. The Strategy relies, in part, upon having more flexibility to support certain sectors than would otherwise be allowed as a member of the EU. And the vision it sets out is nothing less than what the PM hopes a post-Brexit British economy will look like.

All in all, the publication of the Industrial Strategy confirms that May-ism – in as far as it is an ‘ism’ – is more state-interventionist than most of her most recent predecessors. The initial reaction from business seems to be positive but there will be extensive consultation over the next 12 months or so. As decisions start to be made about supporting certain sectors, it is perhaps inevitable those sectors that miss out withdraw their backing for the plans. And the thorny issue of Brexit negotiations may also play a part in determining whether the Industrial Strategy is deliverable or not.

 

If you are interested in more information about our Public Affairs Practice, please contact David Park (Partner) at david@nudgefactory.co.uk

 

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