An industrial strategy that works for all places?

Theresa May has advocated stepping in to repair markets where they are not working, but will the first industrial strategy in a generation really deliver an economy that works for all places?

We wrote back in January about how a modern industrial strategy needed to be backed up by a greater spatial and redistributive drive.  This advocated direct investment toward areas of the country, which were not just the ‘winners’ but were also being left behind. Indeed, the Confederation of British Industry (CBI), British Chambers of Commerce and the manufacturers’ organisation EEF urged the Government to boost living standards and improve productivity in the country’s poorest regions, adding that we must avoid the outdated ideas of “picking winners”. [1]

However, the Industrial Strategy Challenge Fund recently launched by Business Secretary Greg Clark committed over £1 billion over the next 4 years with competitive funding. Its focussing on winners. Of course, we must unlock the markets and unleash the industries of the future, however we also must alter the fortunes of the people and places that are the pre-existing losers.

Firstly, we need a strategy for developing industrious places and people, not just our traditional industrial sectors.

A modern industrial strategy needs to move beyond the traditional three sector theory (primary, secondary, tertiary) to acknowledge that the modern economy is shaped by knowledge intensive activities which cut across traditional sectoral boundaries. The maker movement and 3D printing, have the potential to build industries from the bottom up – from places and from people. This alongside new technologies and sharing platforms are building a collaborative economy, disrupting old distinctions, create new patterns of work, production and consumption.

Secondly, we need a strategy for rebuilding a viable economic base in all places, building on local strengths, local assets and local visions of the future.

It is probable that globally and post Brexit, we will be in a period of at best sluggish growth, at worst no growth at all.  In this any industrial strategy needs to prepare for that, alongside making the economy more equitable. This is not about industrial policy which solely thinks about making growth inclusive, it also needs to think through inclusion without growth.  As such we need an industrial policy which seeks to both build on the parts which are growing, but also reach out to those areas which are not.

Thirdly, we need to reshape our economies for people more.

In creating a modern economy that works better for all, there is a need to develop the connections between the economy, wealth creation and the people.  In this we must rebuild a viable economic base from what we already have. In this, there is much untapped potential and huge opportunities for community wealth building. Local industries and anchor institutions are central to this concept as a result of the scale of the jobs they provide, the scale of spend through procurement, their land and assets, and the fact that they are unlikely to leave that place. Furthermore, we should also place greater value on the foundational sectors of the economy (retail and distribution, healthcare and education for example) which employ 35% of the working population.

Given that after 2020 we will no longer have access to EU regeneration funding, which is targeted at areas of economic need, we need to urgently reshape our industrial strategy, not as propping up failing industries or picking winners, but as creating the conditions where winners can emerge and grow in all places. A strategy with a greater spatial and redistributive drive, one for developing industrious people and places (and not just cities) will require rebuilding a viable economic base in some places, investing in deficient infrastructure which can create growth, while de-heating others where infrastructure is overly burdened.

We now face a snap election, so delivering an industrial strategy that works for all places will fall to the next government, but whatever government we have, it will be preoccupied with negotiating Brexit. Devolution offers real promise to develop a devolved industrial strategy that builds on local strengths, local assets and local visions of the future, providing opportunity to consider equality and the deeper and fairer allocation of resources.

What we need then is a truly devolved industrial strategy, one that give local places the power to actively shape their futures and build socially virtuous local economies that work for all.

[1] http://www.telegraph.co.uk/business/2017/04/17/industrial-strategy-must-make-poorest-better-say-businesses/