The good thing about UK industrial strategies is that if you don't like one, you only have to wait another year or two for another one. Given that context, the green paper published this morning signals a strong direction: it does make choices, it does build systematically on areas of UK economic advantage, and it does pay attention to the enabling conditions for productivity and growth.
At a fundamental level, this emerging strategy decides to play on UK economic strengths. This is a bigger choice than it may appear. Whilst this doesn’t (usually) mean picking winners at a firm level, it does mean picking winners in terms of sectors, places and people. These choices are mitigated by a desire for growth that is inclusive and distributed but it’s very much growth first as an approach. This creates a big issue that I’ll come back to: what happens outside these sectors and places?
A key section comes in the annex (though it’s implicit throughout much of the document). The industrial strategy will enable successful sectors, successful places, successful markets, successful people, and successful institutions. Because the driving energy of the strategy is building on areas of comparative and emerging strength that means choices in terms of policy, resources and focus. Not everyone will like those choices but it is defensible: any good strategy has to make choices. This one does.
Some other thoughts:
The media coverage today around the paper was all to do with deregulation and scrapping “red tape”. I’m not sure how you get to that from reading the paper which is robust on regulation, albeit clear about the need for regulatory reform including through a Regulatory Innovation Office and planning reforms. For example, “the Government is committed to robust and independent enforcement of competition law and consumer protection.” There are no bonfires here, just reshaping.
Growth sectors from professional services to life sciences to clean energy to finance to digital, all of them, heavily rely on a domestic and global pool of highly trained and educated workers. This is really where the rubber hits the road in terms of migration policy, investment in education and skills, and widening opportunity. Squaring this circle will require strong political will, when the context will be pulling the Government away from the logic of this strategy (see the changes to higher education visas made by the last Government) as higher level skills and migration are hardly embraced close to everyone’s hearts. Apprenticeship changes made last month focusing on “trades” rather higher levy skills also point to the policy dilemmas. In fairness, this will always be messy and politics is about sub-optimal compromises. But these tensions, between the Department of Business and Trade, Department for Education, the Home Office and Number Ten are real and need strong collaboration over time.
There is one very significant missing growth sector: education. Yes, there are lots of good references to the need for strong higher education. Higher education and skills (not just universities but the wider skills sector) are vital industries in their own right. There is a strong case for adding a ninth growth sector to the list and I’m surprised higher education didn’t emerge in the data analysis that fed into this paper. Analysis for UUK found that universities account for £37billion of UK exports and it is sector with enormous need for innovation. Whilst a higher education industrial strategy would sit with the Department for Education, this is not really any different to the defence industrial strategy sitting with the Ministry of Defence. Under “successful people” the report notes the importance of increasing apprenticeships and skills training. I’ll have more to say on that in the future- but this is vital and a core purpose of Skills England.
One thing that we have to get beyond is characterising firms by their size. I’m not sure that the category “small firm” is in any way meaningful. What does a high growth fintech startup have in common a small local distribution company in fundamental terms or local cleaning firm? In Management and UK 2030, CMI instead looked at firms with different growth characteristics, those on a growth journey needing the best targeted support (including in support of developing management capability, one of the factors identified in the strategy). For the purposes of a growth strategy this more dynamic form of classification feels more useful than raw firm size.
This is the big one: what’s the deal for the sectors, areas outside of city-regions, firms and workers who fall outside of the strategy? Good strategies make choices and this one does. But there’s an awful large number of the UK’s economic life that is not the key focus of this strategy. The vast majority of workers, businesses and places don’t have a foothold in high growth, high productivity sectors (though they certainly are likely to benefit from their success).
Elsewhere, the Government is focusing on employment rights (the Department for Business and Trade is very busy at the moment!), opportunity, place development and shaping including social infrastructure and health, and public service reform.
It feels to me that there needs to be a parallel vision, further down the line, about how all these things come together as an experience of the common economic life of the nation(s). There is a need for articulating and making coherent how that comes together as a strategy, as a set of policies, institutions and governance, as a common experience of modern economic life. Don’t get me wrong, the logic to focus, as the industrial strategy does today is compelling and that it has is a relief. There’s a bigger story of inclusion and belonging too: let’s not leave that in the fragments of other policy areas.