Industrial strategy and growth

When Theresa May created a new Department of Business, Energy and Industrial Strategy after taking office last summer, plenty of eyebrows were raised. Industrial strategy, it was widely remarked, was something attempted by the Labour governments of the 1960s and 70s – and it had dismally failed. British Leyland, Concorde and Delorean were the dead proof that governments were useless at "picking winners" and shouldn’t attempt to. What was the new Prime Minister thinking? 

A few commentators did observe that the concept of industrial strategy had in fact been revived at the end of the Labour government and in the early years of the Coalition. Gordon Brown and Peter Mandelson had successfully revived the motor industry in 2009-10 and initiated a new offshore wind manufacturing sector; Vince Cable and David Willetts had identified key manufacturing growth sectors and established new support systems for innovation. But they also pointed out that this had been largely abandoned by the next Business Minister, Sajid Javid, and was never embraced by David Cameron or George Osborne. 

So what did May mean? We are about to find out, when the government publishes its green paper on industrial strategy today. 

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UK car output reaches record high

The number of cars made in the UK reached a 17-year high last year, according to the industry's trade body.

About 1.7 million cars rolled off production lines in 2016, a rise of 8.5% on the year before.
The Society of Motor Manufacturers and Traders (SMMT) added that exports rose 10.3% to 1.35 million vehicles, a record for the second consecutive year.
But SMMT head Mike Hawes repeated fears that investment would suffer without a suitable post-Brexit EU trade deal.

Mr Hawes said that car production was on course to reach an all-time high before 2020. But the SMMT's statement sounded a note of caution after revealing that investment by the industry fell to £1.66bn last year, compared with about £2.5bn in recent years.
On Tuesday, Mr Hawes told MPs on the Treasury Committee that many carmakers are putting off investment until there is more clarity over the UK's trade relations with the EU.

'Red line'

Mr Hawes said: "Significant investment in new plants and products over the past few years has driven this growth, not a post-Brexit bounce.

"We want trade deals but they must be the right deals, not rushed deals. Failure to do so could damage UK automotive manufacturing beyond repair."

The imposition of tariffs would be "a red line for the industry," he said. "There would be an impact on demand and jobs - that's a cliff edge we want to avoid."

However, Business Secretary Greg Clark insisted the car industry would thrive, saying: "Our modern industrial strategy will make the UK one of the most competitive places in the world to grow a business and these figures show why the UK automotive sector has such a vital role to play as we build on our strengths and extend excellence into the future."

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