The Chamberlain News

The making of an Industrial Strategy is hard work

For years there were none to be seen. The days of interventionists like Lords Heseltine and Mandelson and Sir Vince Cable were seemingly over. Former Business Secretary Sajid Javid was having none of that ‘active’ government lark and even poor old Vince struggled when surrounded by his Conservative “colleagues.”

Since Theresa May came to office, Brexit (soft or hard boiled) has dominated – and very little is likely to change that basic truth. But, she is trying to define her premiership by more than just something she didn’t vote for. Although it’s unlikely “Just About Managing” will feature top of her political legacy.

No, Industrial Strategy is back in fashion, along with our old friend productivity. They’ve even put the term into the title of a Government department. The one now run by Greg Clark, perhaps the minister we can most thank for doggedly and studiously pursuing the city and devolution agendas, long before George leapt onto his Powerhouse or Sajid warmed up his Engine.

Today, we are likely to hear more mentions of Industrial Strategy in the Autumn Statement. Green and White Papers are to follow soon.

But Monday was, in some ways, quite the day for the business of Industrial Strategies.

laid out the UK’s structural economic challenges as she sees them:

We have more Nobel Laureates than any country outside the United States, but all too often great ideas developed here end up being commercialised elsewhere.

We are home to one of the world’s financial capitals, but too frequently fast-growing firms can’t get the patient long-term capital investment they require, and have to sell-out to overseas investors to access the finance they need.

We have truly world class sectors and firms, but overall business and government investment remains lower than our competitors.

We have outstanding firms and clusters in every part of this country, but taken as a whole our economic success is still too unbalanced and focused on London and the South-East.

We have gold-standard universities, but we are not strong enough in STEM [science, technology, engineering and mathematics] subjects, and our technical education isn’t good enough.

And while the UK’s recovery since the financial crisis has been one of the strongest in the G7, our productivity is still too low. But if we want to increase our overall prosperity, if we want more people to share in that prosperity, if we want bigger real wages for people, if we want more opportunities for young people to get on, we have to improve the productivity of our economy.

Of an Industrial Strategy, she said:

It is not about propping up failing industries or picking winners, but creating the conditions where winners can emerge and grow. It is about backing those winners all the way to encourage them to invest in the long-term future of Britain. And about delivering jobs and economic growth to every community and corner of the country.

Theresa May announced a ‘new’ pot of money adorned by the IS title:

A new Industrial Strategy Challenge Fund will direct some of [a £2Bn] investment to scientific research and the development of a number of priority technologies in particular, helping to address Britain’s historic weakness on commercialisation and turning our world-leading research into long-term success.

She concluded:

It is a new way of thinking for government – a new approach. It is about government stepping up, not stepping back….

The select committee overseeing the Business, Energy and Industrial Strategy Department is currently undertaking an inquiry into Industrial Strategy and recently met in Coventry to take evidence. Councillor Bob Sleigh, Chair, West Midlands Combined Authority (WMCA), Matthew Rhodes, board member of the Greater Birmingham and Solihull LEP (GBSLEP), and Jonathan Browning, Chair, Coventry and Warwickshire LEP were among the witnesses and they were asked what they understood by the term Industrial Strategy.

Jonathan Browning:

From our point of view, it is very much about bringing together a sense of focus by sector, but also a focus on geography.

There is a real, strong need in terms of ensuring we maintain and build our global competitiveness within Coventry and Warwickshire, but also at a West Midlands level, to bring together this sense of our priority areas of focus and the particular strengths of the particular part of the geography. We are seeing that strategy discussed in a number of areas, whether that be the enablers of driving productivity, the physical infrastructure, the digital infrastructure or indeed the skills that we have within a particular area. It is a broad landscape, but needs to have a very particular focus.

Bob Sleigh:

Equally, how Government supports us in that process, in essence, if it is locally-based; it is important to us in the West Midlands to identify and understand what our opportunities are within the industrial strategy, what our strengths are, what our intelligence is within our systems to understand how we can best drive some of those economic imperatives. I think that that is where we are in the West Midlands.

Matthew Rhodes:

You have to go back to industry being about creating wealth and opportunities for the people of the region and industrial strategy is the set of activities that identify the critical areas that create those opportunities. It is the fundamentals of the economy.

As well as the PM’s first major economic speech on Monday, the GBSLEP published the final version of its Strategic Economic Plan (SEP). It featured a whole new section on Industrial Strategy. The Plan is….

New, improved, refreshed.

Selling is a bit like selling washing powder, you see.

The headline was that the SEP will create 250,000 private sector jobs and add £29 billion to the local economy by 2030.

The ambition behind the SEP is for Greater Birmingham to become “a top global city region by 2030 as well as the major driver of the UK economy outside of London.”

The Plan, revised following consultation, sees a personal commitment to an “inclusive economy” from the GBSLEP chair.

It also features a revised Vision, following feedback that something more distinctive was required:

Our vision is to be a top global city region that drives the Midlands Engine and harnesses its traditions of creativity, innovation and design, its diversity and youthfulness, its global connections and technology and sector leadership, its world class cultural assets and quality of life, to inspire, develop, retain and attract talent, for smarter, more sustainable and more inclusive growth.

The new section on Industrial Strategy in the SEP lays out some familiar elements. The advanced manufacturing supply chain; HS2’s supply chain and workforce; the continuing growth of the financial and professional services sector; the infrastructure that supports the life sciences sector; harnessing creative and cultural assets; a leadership role in the smart and distributed energy systems market and taking advantage of the opportunities arising from disruptive and emerging technologies all feature.

It is not clear how GBSLEP will move from its existing work led by ‘sector champions’ to a modern Industrial Strategy.

The real challenge for GBSLEP – and all its partners – is not the business of putting together an economic strategy based on a thorough assessment of strengths, assets and challenges. The headache comes from producing an implementation plan that delivers on an ambitious vision – not least tackling endemic skills and productivity challenges.

GBSLEP chair Steve Hollis said:

Greater Birmingham has put its best foot forward in creating a compelling offer for inward investors in recent years, and our track record speaks for itself. This – is the foundation of our thinking on ‘industrial strategy’ and lays out what we must do now to build on our status as the major driver of the UK economy outside of the capital, take advantage of the opportunities presented by HS2 and stake our claim as a truly global business destination.

John Clancy, leader of Birmingham city council added:

This plan clearly sets out what must be done and why. It is the blueprint for our own regional industrial strategy and we must use it as our guide if we are to make a difference to the lives of everyone in our region.

There is no question that Birmingham and the Midlands has momentum. Fuelled by HS2, HSBC and lots of other feel good factors and indicators, there is a genuine sense that it’s Birmingham’s time. For once, the city and region has the the ear of government.

So, GBSLEP is absolutely right to jump on the Industrial Strategy bandwagon. If it can construct one that makes sense and makes a difference, it will be doing both the city region economy and the UK a big favour.

But, it’s going to take a lot more creativity and innovation to make an Industrial Strategy that goes beyond sector lists and wish lists.

Main pic: ‘Theresa May, speaking exclusively at the GBSLEP Driving Regional Growth event, Conservative Party Conference 2016.’