You may remember my blog last month in which I drew attention to a letter from Vince Cable to the Prime Minister and Deputy Prime Minister calling for a more long-term plan for industry. The original article and excerpts from the letter appeared in the FT (£), but the complete letter has now been leaked to the BBC and can be read here.
The full letter sheds further light on the concerns that the Business Secretary has about the government’s direction of travel with regards to growth. Whilst stating that they have ‘united around an economic strategy’, it is clear that he feels that the government could be going further to set out a more strategic vision of where the UK’s ‘future industrial capabilities should lie’. Significantly, he also makes a rather brutal assessment of some government policies focused on ‘identifying and supporting key technologies’ which he describes as ‘frankly, rather piecemeal’ and not being ‘followed through systematically’.
This letter will dominate the headlines for the next few days, but what is evident is that the call for a more strategic long-term industrial policy is something which is gaining momentum. In fact whilst some of the language the Business Secretary uses in the letter is surprising, he has been making the case publicly for an industrial strategy on a regular basis (see his recent IPPR speech for example).
Putting in place a long-term industrial policy is an inherently complex task and as Vince Cable concedes the term has a bad reputation in the UK. However, given the increasing competitiveness of the global economy, the UK’s economic standing cannot be taken for granted and we should therefore not get too sidetracked by an ideological debate on industrial policy. Instead, we should look objectively at what lessons can be learnt from past failures and also what competing nations are doing to give their economies a competitive edge.
Interestingly enough the Chancellor said in a speech to the EEF on Tuesday night that ‘this Government is unashamedly backing those parts of the economy that are a British success story’ and will support such industries to ‘maintain that edge’. It would appear therefore that there is some degree of coalition consensus on this. The real question it seems is less about whether we need a modern industrial policy, but instead what would this look like in practice?