UK needs an industrial strategy with a positive vision for our future
A major new report published today by the Industrial Strategy Commission says that the UK has a compelling need to introduce a framework for strategic economic management.
Laying the Foundations is the first major report from the Industrial Strategy Commission, an independent commission established by the Sheffield Political Economy Research Institute (SPERI) and Policy@Manchester, chaired by Dame Kate Barker. The report outlines the key foundations for a successful long-term industrial strategy.
The Commission’s report argues that across the private and public sector and the political spectrum there is strong support for a new ambitious strategy. The government must grasp the opportunity this consensus presents. The report outlines the serious weaknesses affecting the UK economy – and the significant opportunities. A new strategy will enable public and private sector to work together to invest in the UK’s people, places and industries and achieve greater future prosperity.
The foundations include an independent institution to monitor policy outcomes and a focus on creating opportunities for growth in areas other than London and South East England.
But, the report warns that a new strategy will only be a success if it is embedded throughout the public sector and secures buy-in from the private sector, if it has sound foundations and offers a positive vision for the future.
• As it prepares a new strategy, the government must think about industrial strategy as strategic economic management. It involves the long-term co-ordination of all interactions between public and private sectors. It should become the organising framework for UK supply-side economic policy.
• Industrial strategy is not about the government handing out money to chosen businesses or sectors. The state’s role is to create the conditions for long-term investments in productive and innovative business activity, ensuring the economy is geared towards meeting key national challenges.
• The Commission has identified seven themes that the Government must ensure are the foundations of a new industrial strategy. They are: a long-term set of institutions to determine, implement and monitor a new strategy; recognition of the importance of place and the need to increase growth and productivity everywhere; a joined-up approach to science, research and innovation; a strong competition regime; an increased investment rate; a comprehensive effort to improve skills, and effective use of the state’s purchasing and regulating power.
• The new strategy must be informed by a positive vision of a future destination for the UK. This can be achieved by reframing the challenges the country faces as strategic goals to be met. These goals are: decarbonisation of the energy economy; ensuring adequate investment in infrastructure; developing a sustainable health and social care system; unlocking long-term investment; supporting high-value industries in building export capacity, and enabling growth in all parts of the UK.
"Summer 2017 is a critical moment for the UK economy," said Dame Kate Barker, Chair of the Industrial Strategy Commission. "The recent election has resulted in political fragility against a backdrop of growing economic concerns following the EU referendum. Now, more than ever, we need long-term strategic economic management to enable the UK to respond to current challenges and invest in our people, places and industries to achieve greater future prosperity."
"This is what industrial strategy is and how it should be thought about by the government as it prepares its new strategy. This will only be successful if it has the correct foundations and offers a positive vision for our country’s future. This report sets out how that can be achieved."
The business sector, including all sizes of firms from around the UK, wants a clear and sustained strategy. The uncertainty caused by Brexit is beginning to have a negative impact on the economy and is triggering a welcome recognition of the need for government and business to work together to tackle long-standing weaknesses in the economy. Politicians across the spectrum must embrace this ambition, and the government should quickly set out a clear timetable for the development and implementation of a new industrial strategy.
"With the right foundations and a positive vision, industrial strategy offers the potential to create huge wealth and greater prosperity, and achieve outcomes that will benefit current and future generations," said Dr Craig Berry, Deputy Director of SPERI and one of the Commissioners. "For this to be possible, our first and most important conclusion is that the UK needs a new institutional framework that can deliver a new strategy."
"Fresh thinking is also needed about the importance of place, how public interventions should be assessed, the funding of research and development, how to increase investment throughout the economy and the role of the government in procurement."