Britain Needs an Industrial Strategy and It Doesn't Mean Picking Winners

The Birmingham Post (England), June 11, 2015 | Go to article overview

Britain Needs an Industrial Strategy and It Doesn't Mean Picking Winners


Byline: Vicky Pryce

THE Queen's speech last week outlined the way that the new Conservative government will take forward in practice the contents of its pre-election manifesto. The mooted European referendum bill attracted a lot of attention. There was also more emphasis on spreading the benefits of growth across all regions and across all segments of the population. But of great interest also was the glimpse, in advance of the first post-election Budget on July 8, of how the new government intends to meet the various spending and tax commitments made before the election while still achieving the improvement in finances that will allow for the hoped for elimination of the deficit before the end of this new parliament.

We all know though that the answer must lie in growth. And a lot of it and soon please. But how will it be achieved. On the face of it the omens are not particularly good. Although there are some signs of a pick-up in the service and manufacturing sector and retail spending remains strong, first quarter GDP growth data disappointed and the Bank of England has downgraded its growth forecasts for this year from an earlier 2.9% to 2.5% , from 2.9% again to 2.6% in 2016 and from 2.7% to 2.4% in 2017.

There are some obvious things holding us back not least the strength of the pound and the weakness in the Eurozone which is our main export market. Uncertainty about the outcome of the elections and now concerns about a possible 'Brexit' do not help either. But much of the problem also lies in the UK's poor overall structural competitiveness. Productivity has been weak. The labour market, though increasingly skilled has shifted increasingly from high productive sectors to less productive ones ;and a lack of both public and private investment has reduced innovation and growth - even traditional high productivity sectors such as mining and extraction and the financial sector have also seen a drop since the financial crisis.

How do we reverse this? Clearly anything that improves the conditions for growth will help. A better climate for business is a must. There will be focus in the Queens speech for further devolution of powers to the regions and crucially an Enterprise bill, aimed at reducing bureaucracy and encouraging entrepreneurship, productivity and profitability. That is good news, particularly for small firms who will eventually get better help also with resolving disputes over late payments from larger firms. Also good news for jobs if pledges to create an extra 3million apprenticeships and helping women back to work by extending the hours of free childcare or all come to fruition.

But will we know anything more about industrial policy more generally? An industrial strategy had finally been crafted by the new Business Secretary Sajid Javid's immediate predecessor, Vince Cable with an emphasis on 11 sectors. There had also been a ring fencing, at least in nominal terms of science and technology spending , encouragement of industryuniversity collaboration backed by 'catapult' innovation centres and money from 'Innovate UK', previously the Technology Strategy Board, and a focus on science or STEM skills to enable the UK to flourish in advanced manufacturing and innovative technology areas. …

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