The needs for a long-term industrial strategy that works for everyone
By Stephen Phipson CBE, Make UK CEO: Successive British Governments seem unable to stick to a long-term plan for economic growth. Instead, Businesses see a never-ending cycle of new initiatives and short-term fixes that fail to deliver sustained results.
This endless chopping and changing masks a myriad of other remit reforms, the most prominent examples being the bouncing back-and-forth of higher education and skills policy (including apprenticeships) between the education and business departments. The same can be said for energy policy. While trade has sometimes been the responsibility of the business ministry and at other times of its own bespoke trade department.
As a new report launched in May from Make UK shows, many businesses are warning that a habitual short-term focus on quick fixes and political publicity stunts from successive governments is impeding economic development.
Inconsistency in public policy breeds uncertainty in private industry. That prevents businesses from planning effectively so instead of incentivising investment, it incentivises intransigence
Of course, a long-term industrial strategy is not without its challenges. It means making difficult decisions about where to allocate resources, what to prioritise and what to sacrifice. It requires the political will to take risks. Yet the alternative, as we are now seeing, is stagnant productivity, increasing inequality, and low or zero economic growth.
A modern industrial strategy will require a significant, game-changing shift in the way policymakers approach business and economic policy.
The first step must be to agree on our industrial and economic ambitions. Over the last few years government’s approach to international trade has been to prioritise the quantity of our new partners rather than the quality of those relationships. Attachment theory is instructive about how to form more productive partnerships. It is imperative we set clear expectations from the start about what we wish to gain in future trade deals, as well as what we’re willing to give in return. Make UK has proposed establishing a Royal Commission on Industrial Strategy to help determine a cross-party consensus on these issues. That knowledge should then inform and underpin all economic policymaking.
A strategic approach also means sticking to the plan. One option might be to re-establish the independent Industrial Strategy Council to oversee and guide industrial strategy. The Cabinet Office could then be given responsibility for working across government, business, trade unions and other stakeholders to agree firm goals and targets, and put in place policies and practices to monitor progress and ensure accountability across all levels of government and industry.
The lessons of attachment theory are clear. Consistency and clarity are as essential for nurturing personal development as they are for economic growth. The UK needs a stable policy environment to support businesses and workers and create the conditions for sustained growth. Through a long-term industrial strategy we can build an economy that works for everyone, now and into the future.