The Industrial Strategy Commission has published its report ‘Laying the Foundations’. The report highlights that, following the political and economic fragility caused by the recent election result and the EU referendum last year, now is a ‘critical moment’ for the development of a new industrial strategy. With a general consensus across the political spectrum, and public and private sectors, that an industrial strategy would deliver prosperity, this is an ideal time for the report’s formulation. There is however, a significant emphasis on it enduring in the long-term, with a degree of immunity to political transiency:
“Its time-horizon must go beyond the lifetime of single parliaments and governments. It requires a long-term policy framework that can anticipate and adapt to future change and must be co-ordinated through a stable institutional framework.”
The Report calls for an analytical approach to consider past, present and future trends to remedy some of the UK’s economic weaknesses. These weaknesses, to a large degree, mirror those identified in the Government’s Industrial Strategy Green Paper ‘Building Our Industrial Strategy’ published in January 2017 (i.e. low productivity, pronounced regional differences in economic performance, a high degree of centralisation, low rate of investment, uneven skills distribution, weak trading performance and weakening diffusion of innovation). It highlights that industrial policy bodies have traditionally been weak within the wider institutional framework of Whitehall and ‘implemented within departmental silos without co-ordination across government’. Consequently, it advocates a more holistic, inter-departmental approach that encompasses social policy; recognising the direct impacts of welfare and education policies on the economy.
On the role of the Government, the Report notes “the state’s role is to create the conditions for long term investments in productive and innovative business activity, ensuring that the economy is geared towards meeting key national challenges”. This involves mobilising the private sector to improve productivity and innovation alongside targeted public sector investment. Echoing the sentiments of the Government’s Green Paper, it supports institutions where public and private sector representatives serve as long-term partners in meeting and shaping key objectives.
Reflective of the ten strategic pillars that form the backbone of the Government’s Green Paper, The Commission has also identified seven themes upon which the new strategy must be built:
- Institutional Framework: Requirement for strong industrial strategy institutions at local and regional levels and in the devolved administrations involving public/private sector co-operation.
- Place: The strategy must build upon the existing strengths of the UK’s local economies and seek to improve productivity elsewhere.
- Science, research and innovation: A new strategy that corrects regional disparities and creates new institutions and partnerships.
- Competition Policy: A strong competition and state aid regime to enable innovation, new entry and structural change.
- Investment: A new strategy to increase the UK’s investment rate, encourage industry, institutional investors and venture capital to increase and unlock long term investment.
- Skills: Address the UK’s historic deficit in skills and on better utilising skills to drive higher growth and productivity.
- State’s Purchasing and Regulating Power: The state’s purchasing and regulating power should be used to drive innovation and long-term growth and will required a greater level of risk taking.
While the Report aims to work at all tiers of Government, the thematic similarities between this Report and the Government’s Green Paper mean that it is subject to the same criticisms that are largely based around the absence of any commentary on the role the planning system could play (at either a national, devolved administration and local level) in meeting its objectives. This is particularly surprising given the planning system can make a significant contribution to meeting the objectives of the strategy, through the plan-making and decision-taking process, as well as through to the role of Enterprise Zones and simplified planning regimes.
Fundamental structural changes would be required to the planning system as an essential prerequisite to the effective delivery of a more productive economy and the placed-based ethos at the centre of current economic discourse. These would need to complement the far-reaching objectives of the industrial strategy.
There is an opportunity to ensure synergy between the aims of the Industrial Strategy and National Planning Policy through the forthcoming amendments to the NPPF. Furthermore, the Raynesford Review of planning is currently underway with a Call for Evidence running up to 31st October to arrive at constructive solutions to the inherent weaknesses that blight the current planning system. For example, to help achieve the objectives of the national strategy, the NPPF could (as with housing) set out a clearer expectation for Local Plans to use their evidence base to demonstrate how the growth and infrastructure needs of the wider functional economic area (and any business agglomerations within them) are understood and can be met.
The Commission is currently seeking views on the Report and aims to publish its final report in October 2017, which will include recommendations in respect of the metrics by which the industrial strategy should be assessed.
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