Industrial strategy can mean many
different things.
In the 1970s, industrial strategy became synonymous in
Britain with the failures of nationalised industries like British Leyland,
“picking winners”, poorly targeted government investment and sclerotic growth.
More recently, industrial
strategy has been used to describe successful interventions in countries as
diverse as South Korea, the United States, Germany and in some aspects, the UK.
Targeted interventions – ranging from tax breaks and deregulation to strategic
procurement decisions and specific investment in particular skills – have been
combined with free market economic policies to nurture growth in particular sectors
and places.
Far from the experience of 1970s Britain, the international
approach to industrial strategy has often been fruitful, leading to more
productive and better balanced economies. This document sets out a new vision.
A vision for a modern British industrial strategy that does not repeat the
mistakes of our past, and learns the lessons of our own successes and those of
our overseas competitors.
It is a vision to support, strengthen and develop our
different industries, and to get all parts of the country firing on all cylinders.
The objective of our modern industrial strategy is to improve living standards and
economic growth by increasing productivity and driving growth across the whole country.
This is not about the Government directing the economy or determining the
industries of the future from Whitehall.
Instead, we will identify our
competitive strengths, explore with industry the ways in which government can
help, and put in place institutions and relationships to sustain higher levels
of productivity over the long term. It is about creating an economy resilient
to change and fit for the future.
The Government has long worked collaboratively with the aerospace industry to create one of the world’s best business environments for advanced aerospace engineering, design and manufacture.
In the automotive sector, close partnership between government and industry has supported strong growth, with thousands of people employed in highly skilled jobs. But this relationship is less developed in other industries, and we have not established a coherent framework for industrial strategy across all sectors.
This document starts to set out that framework.
We identify 10 pillars we believe are important to drive forward our industrial strategy across the entire economy: science, research and Building our Industrial Strategy; innovation; skills; infrastructure; business growth and investment; procurement; trade and investment; affordable energy; sectoral policies; driving growth across the whole country; and creating the right institutions to bring together sectors and places.
These pillars frame our approach, and across each of them we set out a programme of new policy. The way in which these pillars relate to specific places will vary, and will change over time.
In some areas, it will be important to target government investment flexibly to support specific areas or sectors. In others the right intervention might be to create new sector bodies, research institutions or financing bodies – where the lack of those institutions is holding back growth and productivity.
In all cases, we will work with industry and draw upon the considerable expertise of UK business to design our industrial strategy.
Why we are proposing this strategy.
This strategy draws on lessons from other countries and identifies some of the key approaches that have enabled stronger productivity and more balanced growth in other economies. It also draws on our own history: what has worked and what has failed; the strengths we must build on and the weaknesses we must correct.
These lessons have led us to the 10 pillars for the industrial strategy we set out in this paper. We are proposing these areas because the evidence shows that they drive growth. Places with higher rates of investment in research and development, more highly skilled people, better infrastructure, more affordable energy and higher rates of capital investment grow faster and have higher levels of productivity. Policies on trade, procurement and sectors are tools we can use to drive growth by increasing competition and encouraging innovation and investment.
