‘Industrial strategy’? The last business secretary couldn’t even bring himself to utter the words!
commitment to the low-carbon economy.
The Automotive Council has continued. Critically, though, its work was previously backed up by a range of (modest) interventions to boost skills, rebuild supply chains, and encourage investment in the industry, such as through the Regional Growth Fund, the Advanced Manufacturing Supply Chain Initiative, MAS itself, and MAS’ Tooling up Fund to support investment in tools in the Supply Chain. All were scrapped by Javid.
The UK didn’t do industrial strategy for many years. It finally got things right in a few sectors on a modest scale and much of this has been tossed aside over the last year through the combined pressures of Osborne’s overblown austerity and Javid’s liberation instincts.
This was a shame as, where policy was reasonably well developed, as in the automotive industry, it really did make a difference.
For example, interventions like the Advanced Manufacturing Supply Chain Initiative and Tooling Up Fund cost small amounts of money in the big scheme of things (£245 million and £12 million respectively).
Enter, centre stage, the new business secretary, Greg Clark. What’s to be done?
Firstly, let’s hope that the Government looks again at the LEPs and returns to development bodies that can intervene more widely and strategically at a regional level, and do “smart specialisation” through regional level industrial policies.
Combined Authorities may be one way to do that, and is an area where Clark has much expertise.
Beefing up the local growth hubs to fill the vacuum left by the abolition of MAS could be part of this “Combined Authority Plus” model, as would complete devolution of skills funding to the regional level.
Secondly, there’s much more that the Government could be doing in really trying to “rebalance” the economy, for example by stimulating investment in manufacturing such as through enhanced capital allowances, by resurrecting something like the Advanced Manufacturing Supply Chain Initiative (preferably on a much wider scale), and by plugging funding gaps for small firms in the supply chain.
Thirdly, it should also do something about UK takeover rules to put the country on a level playing field with many of its main competitors.
More broadly, there is a strong case for UK industrial strategy to be afforded an institutional status similar to both UK monetary and fiscal policies. At the very least, it should be the subject of regular strategic long-term reviews. By giving it that sort of priority, the new government would send out the kind of powerful message that British industry badly needs to hear.
On a positive note, the new business secretary is perhaps unique in government in bringing with him a welcome devolving instinct that offers the possibility to join up sectoral policy at the national level with place-based policy at the regional level.
But let’s hope the new government really is more serious about the need to rebalance the economy than the last one. David Bailey is professor of
industrial strategy at the Aston Business School and co-author of the recent book