Labour pledges to be “the home of Industrial Strategy” as Conservatives signal industrial policy to be scrapped

Labour has today pledged to be the home of Industrial Strategy, following news the Government has controversially axed its Industrial Strategy Council and is preparing to rip up its industrial policy.

Shadow Business Secretary Ed Miliband has criticised the Business Secretary Kwasi Kwarteng’s “allergy to industrial policy” and the Government’s “devotion to the market”, which has seen key sectors unsupported during the Covid-19 crisis and taxpayers’ money spent without conditions on companies that have closed UK plants and cut jobs.

Just one month after Kwasi Kwarteng was appointed Business Secretary, it was reported that plans for an Industrial Strategy paper had been abandoned. Kwarteng once described Britain’s “false belief in the value of industrial policy”.

The Government has repeatedly let down industry throughout the Covid-19 crisis. Labour is today highlighting a litany of failures symptomatic of the Conservatives’ aversion to industrial strategy:

• During the crisis, there has been no sectoral support for key industries. Labour has called repeatedly for sector deals for the automotive, aerospace and steel industries through a £30bn green recovery.
• In the Budget, the Government provided no additional support for those industries and forgot to even mention the steel industry in a 112 page ‘plan for growth’.
• The Government has placed no conditionality on its support for industry, where it has existed. After receiving £1bn from the Covid Corporate Financing Facility — the biggest single company pay-out - the German chemicals group BASF closed its UK plant, leading to job losses. Labour described this as “economic negligence”.
• Only one company – Celsa Steel - received any funding from the much trumpeted ‘Project Birch’, a scheme to support businesses in strategic sectors.
• The trade deal with the EU that has left the fishing industry in turmoil. The Government has provided £23m for seafood exporters that suffered a financial loss because of delays in January 2021, but the fishing industry has said they are facing continuing, systemic issues.

The Government’s new National Infrastructure Bank will not solve the problems facing industry. It will provide less than half the investment lost from the European Investment Bank - and falls well short of the recommendations of the National Infrastructure Commission and comparable banks in France and Germany. The OBR does not expect it to create growth.

Ed Miliband MP, Labour’s Shadow Business Secretary, said:

"Ministers have talked the talk on industrial strategy, but the Budget failed to deliver - and now their true agenda has been revealed.

"We have a Secretary of State for Industrial Strategy who doesn't believe in industrial strategy. He rips up plans for a white paper and axes the Council advising him on it. It shows why the Government cannot be the partner business needs to help us thrive in the future as a country, including meeting the demands of the green transition and creating the jobs we sorely need as a country.

"At a time when we need to be strengthening our industrial strategy and make it work, the Government decides we don't need one. And we see the results in a Budget which provided no support for key industries including steel and automotive, and was missing the green stimulus we need.

"Labour believes in the power of industrial policy, and would work with businesses and workers to grow industry, create wealth and jobs, and tackle the issues facing our society. This Government's dangerous dogma will take us backwards - and will damage businesses and jobs."

Ends

Notes to Editors:

• Sky News article from March 4 reporting that Kwasi Kwarteng has axed the Industrial Strategy Council.
• The Industrial Strategy Council is an independent non-statutory advisory group providing "an impartial and expert evaluation" of the Government's progress in delivering an industrial strategy. It is led by Andy Haldane, the Chief Economist at the Bank of England, and comprised of leading men and women from business, academia and civil society.

• FT article from February 9 reporting that the new industrial strategy paper has been abandoned.
• The Government’s 112 page ‘plan for growth’ failed to even mention the steel industry
• In response to the Budget, the SMMT said, “In this crucial year, with COP26 in the autumn and the sector facing a mammoth task in decarbonizing within just nine years, we had hoped to see more measures to support the transition. This is an opportunity lost…”
• In response to the Budget, the ADS Group said UK aerospace “can become a global leader in delivering future net zero flight, but must be supported to weather this crisis, sustain our capabilities and skills, and deliver future investment.”
• According to the OBR, the new National Infrastructure Bank will not plug the gap left by the European Investment Bank - providing less than half the funding. The Bank’s financing (£5bn HMT equity, £7bn borrowed) will be less than the amount recommended by the National Infrastructure Commission (minimum of £20 billion over 5 years) - This lack of ambition means the new Infrastructure Bank will also invest less in the UK every year than the £5 billion per year the European Investment Bank did.