Nusrat Ghani, MP for Wealden, has welcomed the latest Business, Energy and Industrial Strategy Committee report. The report, 'Post-pandemic economic growth: Industrial policy in the UK', found that the Government has failed to set out its approach to industrial policy following the recent scrapping of the Industrial Strategy, leaving many businesses unclear about the future of the UK economy.
Darren Jones, Chair of the Business, Energy and Industrial Strategy Committee, said:
“The Prime Minister and Chancellor’s Downing Street coup of industrial policy from the business department has resulted in a short-termist, unclear and unwelcome approach to industrial policy when business is crying out for long-term consistency and clarity.
“We were told the ‘Plan for Growth’ has replaced the Industrial Strategy but the reality is that it is nothing more than a list of existing policy commitments, many of which are hopelessly delayed. Long term cross-economy challenges – from problems in productivity and our ageing workforce to the opportunities presented by new technologies and the net zero transition – no longer appear to command ministerial support as long-term, cross-party, whole-of-government policy priorities.
“To make it worse, the scrapping of the Industrial Strategy Council has removed expert, independent oversight that provided important guidance on how to shape industrial policy to meet the country’s objectives.
“All of us – businesses owners, investors, trade unions, workers, parliamentarians and others – are now left guessing what the Government’s approach is to industrial policy, with no expert oversight reporting on what Ministers have actually been able to deliver.”
The report makes a series of recommendations to help ensure the Government sets out a strategic industrial policy, including a call for clarity on who is leading industrial policy in the UK — is it the Prime Minister as Chair of the National Economy and Recovery Taskforce, the Chancellor of the Exchequer as author of the Plan for Growth, or the Secretary of State for Business, Energy and Industrial Strategy?
The report also calls for the Government to commit to co-producing industrial policy with the devolved governments and regional and local leaders and to publishing industrial policy metrics on an annual basis at local as well as national level.
The report finds that the effectiveness of the Government’s ‘levelling-up’ agenda risks being undermined by uncertainty around the role of local and regional policy levers in delivering local economic opportunities and concerns about the limited powers, funding and support available.
The lack of access to patient, long-term finance is also a concern highlighted in the Committee’s report. The Committee’s report finds there is a gap in capital and that many businesses, especially those outside of London and the southeast, appear to find it easier to access capital from the US than they do from the UK. The report notes that the Industrial Strategy Challenge Fund provided a means to help fill this gap for some businesses, but analysis suggests the fund is too small and increasingly focussed on larger businesses in specific regions.
The report also covers sector deals, local Industrial Strategies, R&D and innovation, the Advanced Research Invention Agency (ARIA), and the role of public procurement.
The Industrial Policy report is part of the BEIS Committee’s post-pandemic economic growth ‘super-inquiry’, an over-arching inquiry likely to run through the Parliament which includes a series of sub-inquiries examining issues such as devolution and the ‘levelling-up’ agenda and the measures needed to rebuild consumer confidence and stimulate economically and environmentally sustainable growth. Further terms of reference for these sub-inquiries will be published during the course of the Parliament.
The full report can be read here.