The Government has failed to set out its approach to industrial
policy following the recent scrapping of the Industrial Strategy,
leaving many businesses unclear about the future of the UK
economy, says the Business, Energy and Industrial
Strategy (BEIS) Committee in a report published today
[Monday].
The report is critical of the Government’s scrapping of the
independent Industry Strategy Council (ISC), which had been
chaired by chief economist of the Bank of England, Andy Haldane.
The report calls the axing of the ISC a ‘retrograde step’,
removing valuable independent scrutiny, insight, and expertise.
The report warns that the lack of industrial strategy and
oversight risks widening the gap between Government and business
at a time when delivering productivity improvements, economic
growth and decarbonisation is urgent.
While acknowledging that many businesses found the 2017
Industrial Strategy inaccessible and remote from their day-to-day
concerns, the report expresses fears that scrapping the strategy
risks leaving a ‘fragmented’ and piecemeal approach to solving
sectoral problems and enhancing growth opportunities.
, Chair of the Business, Energy and Industrial Strategy
Committee, said: “The Prime Minister and Chancellor’s
Downing Street coup of industrial policy from the business
department has resulted in a short-termist, unclear and unwelcome
approach to industrial policy when business is crying out for
long-term consistency and clarity.
“We were told the ‘Plan for Growth’ has replaced the Industrial
Strategy but the reality is that it is nothing more than a list
of existing policy commitments, many of which are hopelessly
delayed. Long term cross-economy challenges – from problems in
productivity and our ageing workforce to the opportunities
presented by new technologies and the net zero transition – no
longer appear to command ministerial support as long-term,
cross-party, whole-of-government policy priorities.
“To make it worse, the scrapping of the Industrial Strategy
Council has removed expert, independent oversight that provided
important guidance on how to shape industrial policy to meet the
country’s objectives.
“All of us – businesses owners, investors, trade unions, workers,
parliamentarians and others – are now left guessing what the
Government’s approach is to industrial policy, with no expert
oversight reporting on what Ministers have actually been able to
deliver.”
The report makes a series of recommendations to help ensure the
Government sets out a strategic industrial policy, including a
call for clarity on who is leading industrial policy in the UK —
is it the Prime Minister as Chair of the National Economy and
Recovery Taskforce, the Chancellor of the Exchequer as author of
the Plan for Growth, or the Secretary of State for Business,
Energy and Industrial Strategy?
The report also calls for the Government to commit to
co-producing industrial policy with the devolved governments and
regional and local leaders and to publishing industrial policy
metrics on an annual basis at local as well as national level.
The report finds that the effectiveness of the Government’s
‘levelling-up’ agenda risks being undermined by uncertainty
around the role of local and regional policy levers in delivering
local economic opportunities and concerns about the limited
powers, funding and support available.
The lack of access to patient, long-term finance is also a
concern highlighted in the Committee’s report. The Committee’s
report finds there is a gap in capital and that many businesses,
especially those outside of London and the southeast, appear to
find it easier to access capital from the US than they do from
the UK. The report notes that the Industrial Strategy Challenge
Fund provided a means to help fill this gap for some businesses,
but analysis suggests the fund is too small and increasingly
focussed on larger businesses in specific regions.
The report also covers sector deals, local Industrial Strategies,
R&D and innovation, the Advanced Research Invention Agency
(ARIA), and the role of public procurement.
The Industrial Policy report is part of the BEIS Committee’s
post-pandemic economic growth ‘super-inquiry’, an over-arching
inquiry likely to run through the Parliament which includes a
series of sub-inquiries examining issues such as devolution and
the ‘levelling-up’ agenda
and the measures needed to rebuild consumer confidence and
stimulate economically and environmentally sustainable growth.
Further terms of reference for these sub-inquiries will be
published during the course of the Parliament.
