The Industrial Strategy marks a return to centralised economic planning – but who cares when there’s a Royal engagement to enjoy?
The launch had been planned for months in advance: a national industrial strategy that would demonstrate that the government could think outside the Brexit box and had ideas about our future direction as an economy. It should have hogged the headlines – then the Royal engagement was announced on the same day and snaffled up every available column inch in the redtops but also in much of the serious press. I’m not sure if the government felt upstaged and frustrated or (as I suspect) mightily relieved that if the people were distracted by bread and circuses they might disregard the small print of a strategy that takes us back to the central economic planning that was condemned in Corbyn’s manifesto and which lost favour with the Conservatives after the defeat of the 1974-9 Labour government by Margaret Thatcher.
This is a Tory government proposing selective intervention in markets, centralised determination of economic goals and a hands-on engagement with key sectors. They call for an independent watchdog to monitor our progress in international productivity league tables through steps to boost innovation, upgrade infrastructure, increase workplace skills and ensure that the City of London funds companies in all parts of the country. Government will seek strategic deals to boost growth in construction, life sciences, automotive and artificial intelligence. Published in the same week as the independent Office for Budget Responsibility halved its forecast of the UK’s long-term productivity trend to 1% the Industrial Strategy is timely.
In another foretaste of the document, the Chancellor Philip Hammond announced plans in the budget to raise UK spending on research and development from 1.7% to 2.4% of national income by 2027, essential if we are to exploit ideas and initiatives currently trapped in our universities for lack of a proven route to market. This extra spending on R&D could mean bout £80bn of additional investment in advanced technology in the next decade, which is hugely important.
However, the UK’s worst productivity performance is not in the sophisticated high technology sectors, where we often excel, but at the opposite end of the scale, such as manufacturing, food processing, distribution and even retail. Years of under-investment in training and infrastructure have undermined productivity and reinforced the social and economic disparity between the south-east and the rest of the UK. The industrial strategy considers the potential for artificial intelligence, the importance of clean growth, the challenges of an ageing society and the shape of future mobility from driverless cars to drones. Government aims to put UK companies at the vanguard of the new wave of technologies such as robotics and genomics, but the test will be whether the Strategy can help improve productivity in more traditional sectors.
Meantime – let’s wish Harry and Megan all the best, bless ‘em!