Greg Clark: ‘This government’s industrial strategy shows serious ambition, and deserves cross-party support’

It’s good news that the UK is going to have an Industrial Strategy again.

Most other developed countries – our competitors for investment – have thought it important to provide clarity and stability in their approach to business policy.

But Britain went the other way, abolishing the Industrial Strategy that I developed following extensive consultation in 2017, and even getting rid of the independent Industrial Strategy Council I established to assess progress.

The govenrment’s serious plan deserves cross-party support

Yesterday at the Investment Summit in the Guildhall, the Government launched its Green Paper – Invest 2035: The UK’s Modern Industrial Strategy. It is a serious and substantial document that bodes well for the work ahead in drawing up and implementing the Strategy.

I hope that the work to develop a new Industrial Strategy will gain cross party support. It is strongly in our national interest for it to succeed.

The Green Paper rightly makes clear that if we are to attain higher levels of growth and to boost the productivity on which our national prosperity depends, our economy must be more investment-intensive.

Investments are made in anticipation of future returns, so the predictability of the policy environment is of great importance. In a world in which turbulence seems endemic – think Covid and Russia/Ukraine in the last four years alone – UK public policy should be a counterweight to that volatility, not amplify uncertainty.

Some people are hostile to the idea of Industrial Strategy, thinking that it is wrong for the Government to play an activist role with respect to business investment. Yet in the modern world where the regulatory environment, the provision of skills and training, research in our universities, public procurement and so much more, strongly influence business performance, public policy shapes economic success.

Can you imagine a CEO saying we’ll play our long-term strategy by ear?

This is true across the world. I sometimes encounter people who argue that the UK should be more like Singapore, which they regard as being a sort of neoliberal earthly paradise of miniscule government and laissez-faire economics. Yet Singapore’s success has for decades been supported by clear and deliberate industrial strategy – continuing to this day in that country’s Economy 2030 Plan for trade, enterprise, manufacturing and services.

The future is hard to predict, and foresight will always turn out to be imperfect. But that does not mean that we shouldn’t look ahead and consider whether we are as prepared as we can be to meet its challenges and opportunities.

Can you imagine a company chief executive who, asked by a shareholder at an annual general meeting what the strategy of the business was, replying “we haven’t really thought about the future and how we will be competitive in it. We thought we’d just play it by ear…”? That CEO would not be very long in post.

We need to confront why productivity and real income growth have stalled

Britain has great strengths – world-class universities, creativity that is admired across the globe, a strong financial system with deep pools of capital, a trusted business environment in an uncertain world, and many more. But they need to be maintained and renewed to be competitive in the future. And we need seriously to confront the factors that have caused productivity growth to have stalled since the global financial crisis, and growth in real incomes to have stagnated.

I’m particularly pleased to see the importance of place clearly recognised in the Industrial Strategy Green Paper. Growth doesn’t happen in the abstract – it takes place in particular places where businesses are set up or expand. Each place is different, and its strengths should be understood and built upon, and its weaknesses deliberately addressed.

In Government I worked with local leaders to create the Mayoral Combined Authorities which now provide a vital leadership to drive forward local growth. In many parts of the country, universities – such as the University of Warwick in the West Midlands, where I work – are some of the most capable institutions in their regions. They can deliver real impact quickly if they are partners of national and regional government through the Industrial Strategy.

It is right, in my view, that the proposed Strategy will have a sectoral, as well as a cross-cutting, dimension. The eight sectors put forward – advanced manufacturing, life sciences, the creative industries, clean energy, financial services, defence, professional and business services, and digital and tech – are fields in which it is not mainly government subsidy that will determine future success, but dimensions such as the quality of the regulatory environment and its orientation to foster innovation.

I hope the new Centre for Sectoral Economic Performance at Imperial College, launched last week by that remarkable Labour philanthropist Lord David Sainsbury, will be instrumental in the success of the strategy as it is developed.

Governments too often operate in silos

The Industrial Strategy must focus the whole of government in a common purpose. Government departments too often operate in silos, with policies inconsistent and sometimes incompatible. An important sense of a strategy is that it should be integrative – bringing together the aims and energy of all parts of government and beyond.

In this regard the Treasury and Number 10 are crucial, and so it is right that the Prime Minister and the Chancellor as well as the Business and Science Secretaries were so prominent in launching the Green paper at the Investment Summit yesterday.

We need to get the Industrial Strategy right and then stick with it – a short-term strategy is a contradiction in terms. The 10-year horizon of the Strategy is appropriate.

No one reading the Green Paper published yesterday can doubt that the Government is serious in its ambition. It deserves support as it gets to grip with what we all want: a growing economy creating good jobs and opportunities in every part of the United Kingdom.

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