MPs criticise UK industrial strategy

MPs have criticised the UK government’s proposed industrial strategy, saying it should instead focus on ‘missions’ such as decarbonising heavy industry.

While recognising that the proposals unveiled by government in January mark a significant shift from approaches taken over the last 40 years, the Business, Energy and Industrial Strategy Committee called on the government to step back from its plan to focus on ‘sector deals’. The committee warned that the government’s challenge for businesses of any size to come to government with proposals on how to transform and upgrade their sectors risks “a return to the discredited credo of 'picking winners'.”

“To achieve an economy that works for everyone the government needs to bring together a much sharper focus on horizontal policies, such as skills and innovation, whilst adopting an ambitious mission-approach which could tackle challenges such as decarbonising energy-intensive industries, tackling health and social care, or automating and electrifying transport infrastructure, which will create prosperity and employment for the UK and its citizens for the long-run,' said committee chair Iain Wright.

UK business leaders have already begun meeting to develop sector deals. Last month, executives including from Siemens, Atkins and GSK met to discuss how government could support UK industrial digitisation. The committee warned that an industrial strategy should not become a vehicle for conforming to special pleading that protects and entrenches incumbents.

It also said that so far there is little evidence of the strategic framework or coordination across government necessary to achieve prime minister Theresa May’s ambition of an economy that works for all. It pointed to the government’s Housing White paper, criticising its failure to spell out how government and the construction industry could work together to tackle the housing challenge.

Among its recommendations were for the government to develop metrics to frame its goals, including improving productivity and the number of businesses that are scaled up. It noted that the UK lags behind other developed economies in how much is invested in R&D, repeating its call for government to increase investment in R&D to 3% of GDP from 1.7% in 2015. This would bring the UK in line with US investment but lagging behind Japan and Korea which are closer to 4%.

Following warnings that Brexit must not choke off access to the skills the country needs, the committee recommended that the government exclude university students from immigration totals and promote high skilled migration to the UK on an equal “who contributes most” basis to people wishing to invest and innovate in the UK.

And in the wake of the aborted takeover of Unilever by Kraft Heinz last month, the committee said given the prime minister’s previous comments about how additional powers are needed to prevent foreign takeovers, the government should explain what steps it intends to take to intervene and in what circumstances.

Responding to the report, the department for Business, Energy and Industrial Strategy said it would carefully consider the committee’s findings.