Seven ways for the industrial strategy to succeed

1. Define the mission – don’t just rehash existing policies

One of the traps for any government strategy is to draw a circle around an existing, disparate set of policies rather than articulate a clear mission or goal. One of the pillars – investment in technical education – is a repetition of existing policy to reorganise further education around 15 core technical routes, announced last year after the Sainsbury Review. Similarly, much of the material on infrastructure is repetition of announcements in the Autumn Statement. The strategy needs to be more than a drawing together of good but unconnected policies though: it needs to be built around a clear mission. The green paper starts that process but as it is developed, we want to see more detail on how the Government proposes to balance the twin objectives of raising productivity and making sure that growth is more evenly distributed.   

2. Avoid ‘picking winners’ (or losers)

Many columnists today call the Prime Minister’s new industrial strategy more interventionist in nature. For some, this will hark back to the industrial policy of the 70s, synonymous with ‘picking winners’ or, at worst, the state propping up failing industries. Government must work closely with business to ensure its industrial policies are targeted to what industry needs – but it must also ensure that it is not captured by the interests of a few sectors or businesses.

The current list of sector deals the Government is considering – pharma, automotive and creative industries – are already big players. Is this the right balance between powerful existing sectors and potential ones? The Government should talk to as wide a range of businesses as possible, from the FTSE 100 to small- and medium-sized enterprises (SMEs) and regional firms, to capture a broad set of views and interests, and avoid designing policies that only work for those who shout loudest.

3. Make this the last technical education reorganisation

One of the key pillars of the strategy is a boost for technical education. This is welcome. The UK skills gap has time and again been identified as one of the drivers of our enduring productivity problem. But if the Government is serious about enabling further education to produce the skills we need, this reorganisation has to be the last one.

Since the early 1980s, the further education sector has been subject to 28 major pieces of legislation and 48 secretaries of state. And no organisation has survived longer than a decade. For the new ‘Post-16 Skills Plan’ to be successful, this cycle of churn must be broken. As Chris Cook, of BBC’s Newsnight, has already outlined, further demands on the sector also need to be met with increased capacity.

4. Funding isn’t enough – support collaboration in science and research

Another pillar is investing in science and research, including an additional £4.7 billion by 2020–21 in research and development funding. This is crucial in a post-Brexit industrial strategy, but it is not enough if the UK is to retain its position as a global leader in science research. Funding is the easy bit. It is much harder  to maintain international collaboration in the face of Brexit – mobility of researchers is a big enabler of collaboration. The strategy needs to cover how the UK will continue to attract and retain the top scientists, from both Europe and the rest of the world.  

5. Adapt to Industry 4.0

One of the proposals is an Industrial Strategy Challenge Fund which will (among other things) support robotics, artificial intelligence and fifth generation mobile networks. This host of new digital technologies – usually called Industry 4.0 – is already starting to have a disruptive effect on the UK’s workforce. This is clearly a huge opportunity: some estimates suggest embracing Industry 4.0 could lead to productivity gains of 5-8%.

But to make the most of the opportunity Industry 4.0 brings, the industrial strategy will also need to include plans for investing in skills and training that allows the UK to make the most of these changes, particularly enabling vulnerable workforces to adapt. Join up between investment in tech and skills policy is critical.

6. Make cost-efficient infrastructure investments

The strategy emphasises infrastructure investment. The question though, is whether the right investments are being made: investments that contribute to growth and jobs in the most cost-efficient way possible. We have highlighted serious concerns about whether Hinkley Point C and the proposed Swansea Bay Tidal Lagoon project are the most cost-effective options for energy infrastructure investment. It is encouraging to see an emphasis on upgrading existing infrastructure rather than focusing solely on shiny new things. But the Government must be able to make convincing cases for any new investments it proposes.

7. Commit to a set of institutions for the long term

This is the third industrial strategy the country will have seen in the last decade. On top of this, the institutions used to support industrial strategy – regional governance and bodies used to bring government and industry together – keep changing. Yet industrial policy, like education and skills policy, needs to have the certainty of a much longer timeframe. It cannot thrive if it changes every few years. Given this, Theresa May is right to include ‘institutions’ as a pillar. But the machinery she puts in place needs to stay there for the long term.