An oral evidence session held by the UK Business and Trade Committee heard three former business secretaries stress the importance of a cohesive industrial strategy that had long-term goals, that was not subject to the electoral cycle and provided confidence for investors, while Lord Harrington provided cause for optimism. In November, the same three former Business Secretaries penned a joint letter calling for an industrial strategy and pointing to SCI's Manifesto as a blueprint.
A strategy for the long-term
‘We have a massive growth challenge in this country.’ said Lord Mandelson (Business Secretary 2008-2010), opening up the discussion. ‘We have a set of chronic economic weaknesses. We are the only economy in the G7 with investment below 20% of our GDP. That’s a terrible situation to be in. We are stuck in a fearful hole as a country. We genuinely need some new thinking.’
Mandelson added, ‘Productivity growth is driven by skills and competition. Chronic underinvestment means that productivity falls’.
Commenting on the role of government, Mandelson said that the around the world governments were seen to be partnering to make economic growth a reality. ‘We in Britain are exceptions to the normal, because we don’t, in the main, accept that joined-up partnership role for government with business, markets, and stakeholders to the extent which all our competitor economies do.’
The sporadic approach to industrial policy had negatively impacted the UK, Mandelson asserted. ‘The key requisites for a successful industrial policy are consistency and continuity. It also depends on international trust if we are going to compete effectively for international capital,’ he said.
Existing models
Looking at existing strategies, Vince Cable (Business Secretary, 2010-15) said that for many countries an industrial strategy was essential to growth. ‘This whole idea of government-private sector planning; not state direction, but working together trying to adopt a long-term approach, is embedded in their system.’ Cable said. ‘Our challenge in the UK is to look at best practice and add that to our own experience.’
Former Business Secretary (2016-19) and current Chair of the Science, Innovation and Technology Committee, Greg Clark added ‘An industrial strategy has to be for the long term. Since the financial crisis, productivity growth has been flat. There are long-term challenges which need long-term solutions. We have had an intermittent industrial policy over many years.’
He noted that the Integrated Review published by the government on 16 March 2021 set out what Clark described as a succinct statement of what an industrial strategy should be. ‘I note, slightly ruefully, that the integrated review was published on 16 March 2021. On the 3rd of March 2021, less than two weeks before, the industrial strategy was abolished.’ Clark said.
A clear policy to attract investment
All three witnesses agreed that the UK had a strong base to build upon, but without clarity potential investors were not likely to look to the UK. ‘The elements are there, but my dismay is that we are not making the most of what we have,’ said Clark.
This was an issue that the fourth witness, Lord Harrington, stressed needed to be addressed. ‘The government and the Chancellor are well aware of the problems. There are deals, which had we been better organised the UK might not have missed.’ Lord Harrington said.
Commenting on the review that he chaired, Lord Harrington said that he was optimistic that a number of the recommendations made to address the structural problems mentioned by the business secretaries would be adopted.
‘Companies are tired of going from one department to another. We want one government-related person. For an investment decision you want a package. Part of the strategy to make the UK more competitive is around organisation and consistency. I believe the review will, in part, help organise the government to make it much more business-friendly,’ Harrington said.
Visit Blog