Whoever emerges victorious from June’s general election, the UK’s long-awaited industrial strategy must be a winner. Terry Scuoler reinforces the importance of clear and focused action to support UK manufacturing.
They say timing is everything, and so it was that on the day the government’s consultation on industrial strategy closed, the Prime Minister fired the starting gun on a general election.
It is vital the strategy survives whichever government enters Downing Street on 9 June, because having waited so long to get one, industry would be dismayed if this opportunity were lost.
Our submission was forthright. An industrial strategy must systematically tackle the UK’s long-term structural weaknesses with a bold, focused and specific set of policy measures.
However, this can only be achieved if government sets itself measurable goals and provides a policy framework that forms the basis of future fiscal statements.
The challenges of unbalanced growth and weak productivity are longstanding and undisputed. Hence, government strategy must be bolder in its ambition to tackle three priority outcomes – reducing the productivity gap with G7 competitors, increasing the contribution to GDP growth from net trade and raising the UK’s innovation performance from follower to leader.
The 10 pillars identified in the green paper are the right areas for government to focus its policy, potentially enabling more investment and productive activity to take place in the UK.
The most important of these for manufacturers is support for a more skilled workforce, investment in more reliable infrastructure and world-class support for companies planning to innovate and export.
A number of recent policy decisions has been a good first step in addressing these issues, including support for new technical colleges, measures on science and innovation such as the Industrial Strategy Challenge Fund, and commitments to major infrastructure projects such as Heathrow expansion and Hinkley Point.
Widening and deepening strategy
However, there should be more emphasis on the cost of doing business in the UK, where recent policy decisions, especially on energy, have added to the cost burden for manufacturers.
Since industrial strategy aims to secure more investment in productive assets across the economy, a commitment to minimising costs to business will be an important signal to the private sector.
In addition, there are certain policies where government can build on the 10 pillars identified with specific policy interventions. These include, addressing the role of more-flexible higher education provision and its relationship to industrial strategy; widening devolution deals so that decisions on transport and infrastructure link up with national and local investment priorities; and examining how the tax system can play a much stronger role in accelerating investment in new technology.
Furthermore, government should set out a clear role for embassies and commercial posts in supporting new market access, along with a greater commitment to promoting the export support available from the Department for International Trade.
Finally, it should ensure the shift to a low-carbon economy is clearly integrated with an industrial strategy.
Many will say we have been here before in attempts to tackle the UK’s productivity problem. But, with a firm commitment from government to an industrial strategy, and an agreement from all parties and industry to stick to it, then this time it can be different.