Industrial strategy must show positive vision of the future

The UK has a compelling need to introduce a framework for strategic economic management and needs an industrial strategy with a positive vision for the future, says the Industrial Strategy Commission in its first major report Laying the Foundations.

Laying the Foundations sets out the emerging findings of the commission and outlines the key foundations for a successful long-term industrial strategy. It argues that across the private and public sector and the political spectrum there is strong support for a new ambitious strategy but it is now up to the government to grasp the opportunity this consensus presents.

With uncertainty about the UK’s economics prospects increasing, the report also outlines the serious and longstanding weaknesses and challenges affecting the UK economy and the significant opportunities. It argues that a new strategy will enable public and private sector to work together to invest in the UK’s people, places and industries and achieve greater future prosperity.

However, the report warns that a new strategy will only be a success if it is embedded throughout the public sector and secures buy-in from the private sector, if it has sound foundations and offers a positive vision for the future.

Kate Barker, chair of the Industrial Strategy Commission said: “Summer 2017 is a critical moment for the UK economy. The recent election has resulted in political fragility against a backdrop of growing economic concerns following the EU referendum. Now more than ever we need long-term strategic economic management to enable the UK to respond to current challenges and invest in our people, places and industries to achieve greater future prosperity. This is what industrial strategy is and how it should be thought about by the government as it prepares its new strategy. This will only be successful if it has the correct foundations and offers a positive vision for our country’s future. This report sets out how that can be achieved.”

The commission’s report highlights the importance of the government viewing industrial strategy as strategic economic management. The commission says that the strategy must involve the long-term co-ordination of all interactions between public and private sectors and should become the organising framework for UK supply-side economic policy.

“Industrial strategy is not about the government handing out money to chosen businesses or sectors,” the report says. Rather, the state’s role is to create the conditions for long-term investments in productive and innovative business activity, ensuring the economy is geared towards meeting key national challenges.

The commission has identified seven themes that the government must ensure are the foundations of a new industrial strategy.

1. A long-term set of institutions to determine, implement and monitor a new strategy
2. Recognition of the importance of place and the need to increase growth and productivity everywhere
3. A joined-up approach to science, research and innovation
4. A strong competition regime
5. An increased investment rate
6. A comprehensive effort to improve skills
7. Effective use of the state’s purchasing and regulating power

The commission says that the new strategy must be informed by a positive vision of a future destination for the UK and says that this can be achieved by reframing the challenges the country faces as strategic goals to be met. These goals are decarbonisation of the energy economy; ensuring adequate investment in infrastructure; developing a sustainable health and social care system; unlocking long-term investment; supporting high-value industries in building export capacity, and enabling growth in all parts of the UK.

Laying the Foundations sets out the emerging findings from the Industrial Strategy Commission’s work so far. As the commission works towards its final report, to be published in October 2017, they are keen to hear the views of business. To share thoughts and views on Laying the Foundations, email the commission at contact@industrialstrategycommission.org.uk

Click here to download the Laying the Foundations report.