Making sense of the Industrial Strategy

By Tom Stannard | 04 December 2017
  • Tom Stannard

Just as the UK painfully extracts itself from the EU, the Government remains intent in its new Industrial Strategy on Building a Britain Fit for the Future. Lord Heseltine commented in reply that ‘the best industrial strategy for the UK would be to stop Brexit’. So is the new Industrial Strategy contradictory, or something to genuinely shout about?

In the Industrial Strategy’s 240+ pages of detail, I do not necessarily buy the instant conclusion jumped to by many in local government that it devalues local authorities at the expense of local enterprise partnerships (LEPs). It certainly contains a fair dose of old wine in new bottles. But as a first attempt at a proper pan-Government plan for raising productivity that is in part its proper role – gathering a plethora of policies and interventions on skills, R&D, business growth and infrastructure into a more coherent position from Government is to be applauded. So good marks for effort.

I accept the strategy’s basic premise – that we must support growth by fixing the productivity problem.  On this, Greg Clark gives a sound diagnosis, together with some interesting part-solutions, as to how we might address this. The problem is so hard to dispute even on the Government’s own figures showing us lagging behind Germany, France, the USA and even Italy on GDP per hour worked. The gaps get bigger in regional productivity analyses in many economically disadvantaged regions of the UK. Further good marks here for the correct strategic focus.

The diagnosis is also hard to dispute. Five foundations point us to a more cogent account of the drivers of growth than the ten consultative pillars they replaced. Innovation, people and places, infrastructure and business environment are the order of the day. The four ‘grand challenges’ work well and show a Government ready to accept we need to do more on population mobility, ageing and new sector revolutions. Points gained here for clarity of vision.

But our impending EU departure muddies the waters. Where the Industrial Strategy preaches a visionary world of gleaming new sectors, mind-expanding innovation, and product and population mobility knowing no bounds, it simultaneously seeks ‘a continuing deep partnership with the EU’ post-departure. We know this conundrum is politically and economically challenging in equal measure. So I give the strategy mixed reviews on economic realism here.

Against a backdrop of very necessary infrastructure, land, R&D and innovation investment, my view is  the strategy’s ‘ageing society’ grand challenge, and ‘people’ foundation remain its most powerful messages. As we busy ourselves with colossal physical regeneration schemes, like our own £350m town centre redevelopment plans in Oldham, if the productivity conundrum is accepted it is these challenges we consistently return to.

The strategy contains some real positives on this – a new national service for adult retraining, £40m of new money, a sector approach, skills advisory panels and devolved skills funding. But it also contains some worrying signs – a prevalent focus on young people and higher education, another ‘apprenticeships for all’ exhortation, a delayed careers strategy, and yet another ‘major review of funding across tertiary education to ensure a joined-up system works for everyone’. Council productivity initiatives now proven in practice, like Oldham’s Career Advancement Service for working age adults, recommend themselves for widespread up-scaling and adoption to support this whole challenge.

Overall, a government committing to ‘addressing our economic weaknesses’ is to be applauded. This is the most explicit policy since 2010 seeking economic and spatial rebalancing of geographically uneven economic performance across the UK. Productivity improvement is the new Holy Grail, and sector deals support to drive growth in key and emerging industries. Local Industrial Strategies, including here in Greater Manchester, will determine a sound devolved flavour to this approach. Even the Prime Minister’s preamble to all of this confirms ‘…it epitomises my belief in a strong and strategic state that intervenes decisively wherever it can make a difference’. 

There has to be realism to all of this. Areas like Oldham face imbalances in the local housing market and land values, local productivity crises in the working age population, set against a priority to attract new high value sectors whilst simultaneously nurturing existing industry. Local productivity crises will only be solved by grabbing the nettle of paying for adult retraining at scale. This all requires a scale of intervention that seems so far beyond this strategy’s reach. 

And let’s be very clear. This is not just about public sector intervention from councils or combined authorities. Intervention to support growth and prosperity requires new, imaginative public, private and community partnerships – an area where an enhanced role for LEPs might actually be welcome. 

The question remains as to whether the new Industrial Strategy is just intervention policy or actual intervention practice. Like many, I think at this stage the jury is out, leaving councils grappling again with how best to effect that intervention in a post-Brexit world across the increasingly complex leadership role that we now play. 

The optimist in me says that this is surely a role of choice for the local authorities of the future, who live and breathe economic renewal for their communities.

Tom Stannard is director of economy and skills at Oldham MBC and Society of Local Authority Chief Executives deputy spokesman for economic growth and housing

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Local economies Economic growth Industrial strategy