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Now more than ever we need long-term strategic economic management

While the government still deliberates the feedback to its industrial strategy consultation, the independent Industrial Strategy Commission has identified a number of key foundational themes to make it a success. PSE’s David Stevenson reports.

As PSE went to press, we were still waiting for the government’s response to the feedback it received for its ‘Building our Industrial Strategy’ green paper consultation.

An interesting point that was made in the consultation was a pledge to work with local government to review how to bring more business expertise into the sector, “for example through the creation of a modern ‘Alderman’ type of role”, and working with Local Enterprise Partnership (LEPs) to review their role in delivering local growth, “examining how we can spread best practice and strengthen LEPs, including extending the support they receive from the What Works centre for Local Economic Growth”.

These will definitely be areas to keep an eye on when the government’s plan for a new strategy and white paper are released.

In his foreword to the green paper, Greg Clark, secretary of state for business, energy and industrial strategy, said: “In building an industrial strategy we aim to set out an approach which endures.

“The policies that the government pursues, the institutions it sustains and creates, and the decisions that it takes, should be, as far as possible, stable and predictable. In a world containing much uncertainty, public policy should aim to be a countervailing force for stability, not an additional source of unpredictability.”

This was also a point made recently by leading economist Dame Kate Barker, chair of the independent Industrial Strategy Commission, who stated that while it is welcome that political consensus exists for a new and broadly-based industrial strategy, it may prove fragile over the coming years.

“For this reason, our first and most important conclusion is that the UK needs a set of institutions which will ensure public and private sector bodies can plan on the basis of confidence in a shared long-term vision,” she said. “The business sector is also supportive of a long-term, clear and ambitious industrial strategy.”

During July, the commission, an independent inquiry into the development of a new, long-term industrial strategy, supported by the University of Manchester and the University of Sheffield, launched its ‘Laying the Foundations’ report.

The document, which sets out the emerging findings of the commission’s work before a final report is published in October, warned that a new strategy will only be a success if it is embedded throughout the public sector and secures buy-in from the private sector. It is also vital to have sound foundations and offer a positive vision for the future.

In its interim report, the commission identified seven themes that must be considered foundational, which the new strategy should be built upon: a long-term set of institutions to determine, implement and monitor a new strategy; recognition of the importance of place and the need to increase growth and productivity everywhere; a joined-up approach to science, research and innovation; a strong competition regime; an increased investment rate; a comprehensive effort to improve skills; and effective use of the state’s purchasing and regulating power.

It was also suggested that the new strategy should be informed by a positive vision for the country’s future, which can be achieved by reframing challenges the UK faces as strategic goals to be met. These goals, the commission stated, include decarbonisation of the energy economy, ensuring adequate investment in infrastructure, developing a sustainable health and social care system, and enabling growth in all parts of the country.

Dame Kate added that this summer is a critical moment for the UK economy. “The recent election has resulted in political fragility against a backdrop of growing economic concerns following the EU referendum,” she explained. “Now more than ever we need long-term strategic economic management to enable the UK to respond to current challenges and invest in our people, places and industries to achieve greater future prosperity.”