Leaving Behind the Industrial Strategy – Losing the ‘North Star’ of Investment?
By Jacob Joad
It has recently been reported that Kwasi Kwarteng, the UK’s Secretary for Business, Energy and Industrial Strategy, is axing the Industrial Strategy Council, a committee comprising executives from top UK firms, academics, and trade union leaders. The Council, set up by the then Business Secretary Greg Clark, sought to improve productivity, infrastructure and business investment through consultation with the private sector, as well as through overseeing the government’s progress on implementing the 2017 Industrial Strategy which had been introduced during Greg Clark’s tenure as Business Secretary.
The composition of the Council includes representatives from some of the foremost UK business names: the head of McKinsey’s UK operations, the former chair of John Lewis, Facebook’s Vice-President for Europe, the Middle East and Africa, the founder and chair of Emma Bridgewater, and the former chief executive of Siemens UK are but a few of the people who sit on the Council.
Kwarteng’s official justification for the disbanding of the Council was that it is incompatible with the government’s new ‘plan for growth’, citing that the economy was substantially different to what it was four years ago. He also mentioned the net-zero emissions objective of the UK government as being another reason why the Council was being axed.
Valued for its connections to Theresa May’s drive as Prime Minister to improve the UK’s manufacturing sectors, which had been the focus of her Industrial Strategy in 2017, the move to disband the Council has been met with dismay from major UK manufacturing lobbyists. Make UK’s chief executive, Stephen Phipson, expressed fears that the government is neglecting the manufacturing sector in the UK’s economic recovery from the coronavirus pandemic.
It is worth bearing in mind that since the Council’s primary role was to oversee and evaluate the old Industrial Strategy, it now seems redundant with the ‘plan for growth’ superseding the Industrial Strategy. However, direct consultation with some of the leading UK business names could have helped to properly coordinate a COVID recovery strategy, particularly considering that some of the businesses represented on the council are in most need of a proper recovery plan. John Lewis & Partners in particular has had to close many of its stores over the past year and Marks & Spencer (which is also represented on the council) joins John Lewis as having reported its first loss in their its history. Leaving behind the Industrial Strategy might also leave businesses in the UK without – as the director-general of the British Chambers of Commerce termed it – a “north star” to follow in their investment decisions and strategy. The alternative guidance in the ‘plan for growth’ has been criticised by business executives as being too broad and aspirational, without actually setting realistic and definite targets for businesses. The Industrial Strategy Council’s website outlined many easily-digestible metrics for tracking the progress of the various areas which the Industrial Strategy targeted, and such transparency for both firms and the public at large may come to be missed.
Last year’s Annual Report from the Council outlined areas of improvement which the government are now addressing in the ‘plan for growth’. Among these areas are the ‘future skills challenge’, which the Chancellor has announced will be addressed through investment in post-16 technical education, and ‘addressing regional disparities’, which the government is on track to do with the announcement of a UK Infrastructure Bank based in Leeds. This is not to say that they will be wholly successful in their endeavours: without the accountability and transparency offered by the Industrial Strategy Council’s work, many businesses might be left in the dark with regards to the progress of the ‘plan for growth’.
Nevertheless, both the industrial strategy, and the Council which oversaw it, were not perfect. The strategy itself was quite complex and multifaceted, with buzz-phrases like “Grand Challenges” and “global mega-trends” supposedly summarising the direction of the strategy and what it sought to address. It was even highlighted by the Industrial Strategy Council itself that it had failed to lead to “significantly improved policy co-ordination across government”, and that the Strategy’s policies were unlikely to have a “material impact” on the economy. Regarding the Council, doing away with a board of high-ranking officers at top UK firms to supposedly hold the government to account on a fixed, predetermined course of intervention allows for a more flexible response to economic needs going forward. Further, the latest budget targeted a more free-market approach to improving investment, with the Freeports initiative and ‘super deduction’ being the most prominent policies seeking to encourage businesses to take the initiative to invest. These naturally conflict with the idea of a government-led investment push for industry, which was at the core of the old Industrial Strategy.
Many of the UK’s objectives on improving the long-term quality of the economy remain the same, even throughout the pandemic, which is why concerns have been raised about the abandonment of the Industrial Strategy. The new ‘plan for growth’ might be seeking to meet some of the objectives which the Industrial Strategy Council outlined, but if it truly is superseding a long-term government strategy on core industry improvement, the loss of accountability and advice from a diverse advisory group might be concerning.