Industrial Strategy White Paper explained: good intentions, opportunities missed

The good news is that it’s here. That it exists at all. And that – for the most part – it’s trying to do broadly the right things.

The Industrial Strategy White Paper published yesterday offers five foundations, four grand challenges, several sector deals and some 255 pages of detailed analysis and action. It is certainly comprehensive. But it will be worrying for Greg Clark, secretary of state for business, energy and industrial strategy and BEIS (his department) that it doesn’t yet feel like a step change in the way Whitehall works together on such matters.

For the most part, BEIS has done its bit, but other departments and the government overall no longer feel quite as committed or quite as able to offer the comprehensive, long-term effort that a successful industrial strategy requires. That’s understandable. Most others have failed to offer the scale of cross-government buy-in that such an approach requires. 

On BBC Radio 4’s Today Programme, Clark doffed his cap to predecessors Vince Cable and Lord Mandelson, and the text of the Industrial Strategy duly does the same. Although with “five foundations” – “ideas”, “people”, “infrastructure”, “business environment” and “places” – it owes at least as much to Gordon Brown’s “five drivers of productivity”. In Brown's decade as chancellor, this was the framework used to set out the Treasury’s approach to managing the economy and the rest of Whitehall’s contribution.

That’s why we on the Industrial Strategy Commission, believed the Treasury had to be in the driving seat this time if other departments were to play along. 

In full: download the Industrial Strategy White Paper 2017

That’s also why we recommended an expert monitoring body in the style of the Office for Budget Responsibility. The Industrial Strategy agrees with this need for measurement as well as for better data, especially at regional and local levels. That’s good, too, although the proposed Industrial Strategy Council comes without the teeth of statutory powers.

For further education and higher education, all the measures are familiar, slotting effortlessly into the Industrial Strategy’s promise of delivering a skilled, productive workforce. Except they don’t really. These are policies that “have been prepared earlier”. Much earlier as it turns out.

The much vaunted “T levels” first surfaced in April 2016 in Lord Sainsbury’s review of technical education. Institutes of technology were first announced in George Osborne and Sajid Javid’s 2015 productivity plan. The HE White Paper that first proposed an Office for Students and the teaching excellence framework came out in May 2016 – although much had been trailed in the 2015 Conservative manifesto. 

These were then all from a time before Brexit. Another country where they did things differently. From a time when Industrial Strategy was in a hiatus between the Coalition and the accession of Theresa May. It was when Javid was running BIS (the Department of Business, Innovation and Skills, predecessor to BEIS); the phrase “Industrial Strategy” was effectively banned; and a picture of Margaret Thatcher hung behind his desk. Now the language of industrial strategy is back, but Javid has moved on. So, too, have Cameron and Osborne. BIS has been disbanded, the UK is leaving the European Union and the economy is stalling on wages, regional growth and productivity.

But policies for FE and HE somehow remain completely intact.

There are two notable exceptions. The Office for Students has acquired labour-market planning functions alongside regulation, accreditation and funding. However, according to BEIS at least, there is definitely going to be a “major review of funding across tertiary education”. This, the Industrial Strategy tells us, is so that they can provide “value for money” and work for “students and taxpayers”, as well as to “incentivise choice and competition across the sector”.

It sounds like a Whitehall form of words agreed only after much batting back and forth between the Department for Education, BEIS and No 10. But it suggests that whatever is set out in the White Paper, it is unlikely to be the last word. 

Elsewhere, some other big punches have been pulled. The Green Paper had talked rather more confidently about spatial inequality and of the 46 per cent of research funding going to the golden triangle of London, Oxford and Cambridge. It floated the idea of new institutions and new settlements in places “left behind” or disconnected from the prosperity and growth experienced elsewhere.

Accordingly, there are many mention of places, cities and others – even attempting to answer the “what about Grimsby?” question (that is, how to find better ways of caring for less fashionable towns and cities).

But in this respect, it falls short on the ambitions it set itself. There is a new £115 million “Strength in Places” fund, a promise of industrial strategies for city regions with mayors and combined authorities. A £1.7 billion “Transforming Cities Fund” focused on intra-city infrastructure such as roads, trams and suburban rail. Devolution remains a theme, but it isn’t developed very much beyond what already exists. It feels like an opportunity missed. Or quashed.

Nationally, however, there is quite a bit of money to throw around. More for the Industrial Strategy Challenge Fund and for R&D spending overall, with an extra £2.3 billion and a commitment to meeting the 2.4 per cent GDP target in the mid-2020s. In total – and with the addition of this extra money in 2021-22 – the Industrial Strategy now comes with some £7 billion to spend.

This is a much larger sum than Cable or Mandelson had, and it offers good headlines as well as serious opportunities. So decent that Philip Hammond decided to steal it for the Budget, before May jumped in and announced the increased spending first. 

Ultimately, however, it’s Greg Clark’s to spend and, over time, this might help address some of the weaknesses and omissions in today’s strategy. Some things can be fixed with more resources as well as smarter policy and better regulation. Others weaknesses in today’s strategy will be down to arguments that Clark and BEIS haven’t been able to have or win yet. Others will need greater ambition and drive from the centre of government. But neither BEIS nor Clark should be lowering their ambitions yet. Nor should the rest of us.

Andy Westwood is professor of government practice at the University of Manchester and a member of the Industrial Strategy Commission.