To tackle inequality we need to break London’s stranglehold

An industrial strategy is welcome but this one focuses on the same failed solutions, says Nigel Wilcock

The Institute of Economic Development (IED) faced the new year with a similar dilemma to many UK organisations in 2017.

The decisions of 2016 were not the decisions that the IED leadership would have taken in the UK or the US, but organisations such as the IED which represent their members must move on and continue their work within the context of the new landscape rather than hark back to the past.

As an organisation we were acutely aware that in summer 2016 no fewer than 11 government ministers had been summoned to give their input into an all-encompassing industrial strategy that was sufficiently important to be named in the title of the government’s Department for Business, Energy and Industrial Strategy.

We had heralded this as good news and continue to believe that this is the way forward. The policy then fits perfectly with an industrial strategy linked to making economic development a statutory function in local government – in fact, how can delivery of such a far-reaching strategy be ensured if this is not the case?

The IED wrote to all 11 ministers seeking some involvement, and while frustrating that we weren’t consulted, it seems we were not alone. The result of the work over the last six months has actually been a green paper rather than the strategy itself – or in other words a sophisticated consultation brief. On balance though, this approach seems sensible.

So, with a positive view on the situation, the government has set out ten headings against which an industrial policy may be structured. As a list of ten factors, these are as comforting as motherhood and apple pie but the real issues are in the detail. It is difficult to disagree with any of them, but then we have seen them all before.

The industrial strategy diagnoses problems – intractable problems such as poor productivity and regional imbalance – but then prescribes the same solutions as would have been seen in the economic strategies of the regional development agencies at their outset in 1999 and no doubt in documents before that.

New initiatives such as ‘sector deals’ led by industry around technologies driving sector change are welcome. These initiatives, if they work correctly, will breathe life into industrial digitisation, low emission vehicles, nuclear, life sciences and creatives industries. These initiatives will be led by industry rather than government. Investing in science, research and innovation along with encouraging trade and investment and developing skills seem to be, at best, strengthening what is already in place.

The commentary about the requirement to support businesses to start and grow is a somewhat staggering inclusion since the government has spent the last few years single-handedly removing services that carry out this work piece by piece.

Perhaps most disappointing is the lack of new ideas on addressing regional disparities. The report discusses procurement but tends to gloss over the fact that in many cases a lack of, steady, reliable and on-time commitments in areas such as infrastructure, transport, energy generation, energy transmission would have done much to avoid undermining areas of UK manufacturing.

The report talks about procurement as though it is mostly about how the contracts for office paperclips are handed out rather than ensuring that industry had absolute certainty on commitments and timescales in areas such as nuclear new build, offshore wind and smart grid.

On regional disparities much is made of research, infrastructure and skills along with the apparent devolution of powers to combined authorities backed up with the ability to retain business rates and claim growth deal funding.

The reality, of course, is that applications for growth deal funding isn’t really devolution, but rather a method for Whitehall to only provide funds for those things that the centre agrees with. Total funding for local authorities continues to reduce with local authorities suffering disproportionate expenditure cuts since 2011.

So, it isn’t that we disagree with the need for a strategy and it isn’t that we have a problem per se with the headings, but we do believe that the strategy could have been far bolder particularly in the area of addressing imbalance.

However, one of the key aspects of this would be to break the policy stranglehold held by institutions all based in London and that always needs turkeys to vote for Christmas.