The industrial strategy strikes back
A thorny issue. Do we want one or not? Is the political class committed to this concept (or still seen by many as interventionist), and what should an industry strategy look like? Can the UK afford it, and can it not afford to have one?
Peter Marsh writes three articles in Made Here Now that summarise the legacy attempts of government's formal strategy for manufacturing and industry, and why this is back on the agenda.
He says, “After several years on the fringe of top-level political deliberations, industrial strategy looks like returning to centre stage. With a general election this year, the The Labour Party has pledged to introduce a set of “strategic priorities for...industrial policy” should it take office.
More on Labour’s ind strategy plans here , authored by Jonathan Reynolds MP , shadow business and Industrial Strategy minister.
A quick review of the recent history of industrial strategy policies does not suggest a country united by a common purpose… People familiar with this tired tale may be forgiven for cocking a snook at any new plans, for fear of another “launch, lunch and a lurch” in Westminster, with little substance beyond the first year.
Lord Mandelson launched a detailed strategy in 2008 in response to the financial crisis, ‘famously’ stating the UK needed more real engineering, not financial engineering. This was followed by “New industry, New jobs’ that introduced a plan to steer industry towards higher-value activities, including support for sectors like automotive. That approach and the formation of the Automotive Council, Labour says, put the UK on a path to become a net exporter of cars in the last decade.
Peter Marsh writes: "In the past decade, however, successive governments have taken inconsistent views about the need for an industrial strategy, resulting in substantial policy uncertainty. Under the coalition government, the former business secretary Vince Cable continued some of the work New Labour had put in motion, but this was jettisoned after the 2015 election. In 2017, Theresa May’s government published an industrial strategy and established an Industrial Strategy Council. But since 2019, there has been little serious attempt at industrial strategy, and the 2017 Industrial Strategy was set aside and the Council disbanded.
What form should a strategy take? The Labour Party 's paper says:
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In the past, industrial strategy has often been seen as describing a set of policies by which government targets pre-selected high-value-added sectors,? using a range of subsidies and investments to? drive their growth.
However, while industrial policy has returned to the policy mainstream in many advanced countries after, at least rhetorically, a number of decades in the political wilderness, there is an emerging consensus that modern industrial strategies must have a different emphasis.
They must focus more on ‘establishing a sustained collaboration between the public and private sectors’ to meet societal goals, or missions.
This approach is not about top-down planning by the state, but instead “about providing a direction for growth, increasing business expectations about future growth areas and catalysing activity that otherwise would not happen”. (references provided in the paper)
It adds: this approach involves the state working with the private sector, shaping and creating markets and setting strategic direction.
Such ‘mission-based’ strategies take a cross-sectoral approach, one that moves beyond a focus purely on manufacturing and instead recognises that the different sectors of the economy are connected. Examples of this can be seen in Germany’s “Industry 4.0” plan, and Biden’s ‘Build Back Better’ programme to create millions of jobs in green energy.
Here, Peter identifies the content that an effective industrial strategy needs, explains the six key principles of Labour’s strategy, and his third piece discusses “advanced manufacturing”, asking if we can define this, we can write policies to develop high-growth manufacturing more successfully.
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Chairman at JJ Churchill Ltd.
7 个月Three outstanding pieces from Peter Marsh - prescient reading for anybody who believes industrial strategy is an essential precursor to a balanced, thriving and diverse economy for the UK in the 21st century.