January 23, 2017
This lunchtime (Monday 23rd January), Prime Minister Theresa May formally outlined the government’s new Industrial Strategy – an approach designed to lay in place plans to prepare the British economy for the post-Brexit landscape.
Under the plans announced today, companies will be urged to produce “sector deals” that target new opportunities to develop products and services in areas “where Britain has the potential to lead the world – from electric vehicles to biotech and quantum technologies.”
While the strategy has been viewed by some as an attempt to strengthen government control over the economy, the Prime Minister also gave some hope to industries hoping for a lighter regulatory burden; hinting that Whitehall could water down regulations that limit growth in certain sectors; potentially in a push to outmanoeuvre the European Union post-Brexit.
The direction of travel indicated by Theresa May is that there will be in increased role for government in setting the direction of economic activity – this doesn’t necessarily mean government will ‘step in’ more frequently, but that it will ‘step up’ when it is required – including on the removal of regulatory burdens. It’s clear that while the Northern Powerhouse brand is perhaps not quite as evident as under the former administration, launching the Industrial Strategy alongside a Cabinet meeting in the North West shows that this Prime Minister is just as committed to economic performance that benefits all corners of the UK.
In remarks expected to be delivered in the House of Commons shortly, the Business, Energy and Industrial Strategy Secretary Greg Clark is expected to outline three core objectives driving the Strategy:
The plans focus on a number of key “pillar” areas:
“The Industry Strategy will be underpinned by a new approach to government, not just stepping back but stepping up to a new, active role that backs business and ensures more people in all corners of the country share in the benefits of its success.”
– Theresa May, Prime Minister
In terms of Number 10’s presentation on this much anticipated strategy, it is interesting to see which leading individuals from business and business organisations have been involved not only in the preparation of the strategy but also its presentation.
Organisations such as the British Chamber of Commerce, Federation of Small Businesses and the Engineering Employers Federation all publicly welcomed the strategy and including media-ready quotes in government-issued press releases made available some twelve hours prior to the Strategy’s publication.
Notable by its absence was the CBI, clearly signalling a determination on the part of Downing Street to position this strategy as part of the Prime Minister’s very clear commitment to supporting SMEs and trying to distance herself from the “big, corporate” businesses represented by the CBI. Much has been made of the Strategy’s emphasis on the regions, clearly reflecting the Prime Minister’s promise when she took office to build prosperity for all and across the whole country. Theresa May is not the first Prime Minister to make such a promise; the difference will be whether her Government can genuinely deliver for communities across the country and whether this is a long term commitment by the Prime Minister or a short term PR initiative.
Fundamentally, the challenge remains that some regions – most notably Greater Manchester and Birmingham – are genuinely more cohesive and better placed at capitalising on such funds whilst others either for cultural or political reasons struggle to seize such opportunities. Added to which, Local Enterprise Partnerships are a key mechanism for delivering investment however they vary in effectiveness and the Government offers no solutions in terms of their structure or remit.
As May holds her regional Cabinet in Warrington South – a tight Tory marginal once held by Labour under Blair – her talk of “stepping up not stepping back” may strike a chord with Labour voters for whom state intervention is naturally welcome. Most notably, the Conservatives will seek to capitalise upon the pro-nuclear content of the Industrial Strategy as the party seeks to make a by-election gain in Copeland – home of the Sellafield Nuclear Power Station and roughly 10,000 nuclear-aligned jobs.
Labour are unimpressed, though, with the government’s overall approach. The Shadow Business Secretary Clive Lewis has called the announcements “too little, too late”. On skills, for instance, he argues that the £170m extra announced for technical education does not come near to offsetting cuts in government spending have been made since 2010.
Lewis argues that whilst boosting infrastructure and innovation, welcome as they are, May’s vision of an Industrial Strategy will not deliver the kind of restructuring the “dysfunctional economy” needs: the dial of the economy needs to be “reset”, not just piecemeal tinkering around the edges, and the Conservatives’ desire to deregulate will “turn us into a tax haven”. Despite the widespread scepticism, Labour’s opposition is not absolute – the party is, after all, currently consulting on its own version of the Industrial Strategy.
The proposed Industrial Strategy will now move towards a process of consultation, with businesses and individuals being invited to respond to thirty-six key questions regarding the final form the policy should take. The consultation process will run until April 27th, with the government expected to publish its final Industrial Strategy before the summer parliamentary recess in July.
“We are inviting businesses and workers to contribute to this vision to help us create a high-skilled economy where every place can meet its potential.”
– Greg Clark, Business Secretary