New report calls for urgent industrial strategy overhaul

The UK’s people, places and businesses will only achieve their potential if there is a complete overhaul of how the government views industrial strategy, according to a major new report published today by the Industrial Strategy Commission.

The report argues that the new industrial strategy must be an ambitious long-term plan with a positive vision for the UK, and it must be rethought as a broad, long-term and non-partisan commitment to strategic management of the economy.

Chaired by Dame Kate Barker, the Commission is an independent joint initiative by The University of Manchester and the University of Sheffield. Its bold new recommendations include:

• The new strategy should commit to providing Universal Basic Infrastructure. All citizens in all places should be served by a good standard of physical infrastructure and have access to high quality and universal health and education services.
• Health & social care must be part of the industrial strategy. As well as offering potential for productivity gains and new markets, achieving better wellbeing outcomes must be placed at the centre of the strategy.
• The new strategy should be organised around meeting the long-term strategic goals of the state. These include decarbonisation of the economy, investing in infrastructure and increasing export capacity.
• Innovation policy should focus on using the state’s purchasing power to create new markets and drive demand for innovation in areas such as healthcare and low carbon energy.
• A new powerful industrial strategy division should be established in the Treasury to ensure the new strategy is driven from the centre and embedded across government.
• A new independent expert body - The Office for Strategic Economic Management - should be created to monitor the new strategy. It should be created on the model of the Office for Budgetary Responsibility.

The Commission says the new strategy must have an ambitious plan to tackle our major regional imbalances. Its report argues that an industrial strategy should not try to do everything everywhere, but it should seek to do something for everywhere.

The Commission calls for a national framework within which all places will need their own plan to suit their needs. Decisions are best made by people close to the ground so the new strategy requires further and faster devolution to towns, cities and regions from Whitehall.

Dame Kate Barker, Chair of the Industrial Strategy Commission, said: “The UK’s people, places and industries have great strengths and untapped potential, but we must accept the reality that the economy also contains many long-established weaknesses. Industrial strategy needs to be embraced as a long-term plan to manage the economy strategically and embedded throughout government. If we get the new strategy right it can build on these strengths, tackle our weaknesses and above all have a positive, long-lasting impact on people’s everyday lives. This implies that sometimes it will be right to choose equity and long-term-gains over short-term efficiency.”

Universal Basic Infrastructure is a bold proposal to upgrade the UK economy’s productivity potential. Our version of UBI would give all people, places and businesses access to the physical infrastructure they need (such as transport, energy, digital) and also to the ‘soft’ infrastructure of high quality health and education services that are essential to everyone’s well-being and capacity to find jobs.
Professor Diane Coyle, Co-Director of Policy@Manchester

Dr Craig Berry, Deputy Director of SPERI at the University of Sheffield, added: “Industrial strategy isn’t just about supporting a small number of sectors. It should focus on big strategic challenges like decarbonisation and population ageing – and ultimately it should aim to material differences to people’s everyday lives. This will mean rethinking how government makes policies and chooses its investments. Cost-benefit analysis should apply to the real world, not just to a spreadsheet.”

Professor Andy Westwood, Professor of Government Practice at The University of Manchester, said: “The government has been keen to stress the importance of technical skills in the industrial strategy, but our track record in policy has been poor for many years. To create a step change in skills and productivity, we must look beyond ‘T Levels’, Institutes of Technology and other supply side reforms and make sure universities and colleges are better linked to wider objectives including sector strategies and tackling regional inequality. This will require careful consideration of how recent reforms in further and higher education can complement, rather than contradict, an effective industrial strategy.”

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