A flagship industrial policy has made government think afresh about how it should support the economy. But will the plan have the staying power to influence decisions in the years to come?
The importance government attaches to its new industrial strategy was illustrated when the launch of the flagship document echoed one of the British government’s biggest milestones – the Beveridge report that created the welfare state.
Whereas William Beveridge identified the five ‘giant evils’ of squalor, ignorance, want, idleness, and disease in 1942, the Department for Business, Energy and Industrial Strategy’s eponymous document set out four ‘grand challenges’: artificial intelligence and data, the ageing society, clean growth, and the future of mobility.
The strategy, published last November, sets an overarching vision to make the UK the world’s most innovative nation by 2030 and Theresa May, who made the creation of a cross-government plan a priority upon becoming prime minister in July 2016, said the proposals would “shape a stronger and fairer economy for decades to come”.
Echoing those great reforms of the last century is part of a deliberate effort to learn from the successes – and failures – of governments past, the official charged with leading the development of the plan told Civil Service World.
“We’ve been trying to learn from what has worked in the past, build on what’s worked – and learn from what didn’t work so well,” Alexandra Jones, BEIS’s director of industrial strategy, says.
As well as learning from more distant history, BEIS – formed specifically to lead on the development of the plan – is also building on work government was already doing, she adds.
“Industrial strategy is not so new to government – Peter Mandelson had one [when business secretary], there was an industrial strategy that [coalition business secretary] Vince Cable had, and we’ve very much built on some of the work they have done,” Jones says. “The Automotive Council [set up in 2009 to strengthen co-operation between government and the automotive sector] has proved really useful in terms of pulling together a sector to think about their opportunities, their challenges and what they need to do, so we very much tried to build on successes.”
Jones joined BEIS to lead the development of the strategy in March 2017, moving from the Centre for Cities think tank where she was chief executive.
Upon returning to Whitehall – she had been a civil servant in the Treasury earlier in her career – Jones says she was quickly struck by how much the development of the strategy was a cross-Whitehall endeavour, incorporating inputs from many departments including the Treasury, Cabinet Office and Department for Education.
“We had regular catch-up meetings with the Treasury and No 10 and it was a genuinely cross-government effort,” she says of the strategy’s development, through both green paper and white paper iterations. “If you look at some of the chapters that were authored and talk to other departments, many of them would see what they had authored in that strategy. We worked really hard to make sure this was cross-government, because the point was this is pulling everything that government does together, towards the aim of boosting productivity and earning power across the UK.”
As well as setting out the grand challenges – which Jones says have “captured the imagination” – the strategy pledges to boost UK productivity by focusing on five economic foundations. These building block are innovation, people, infrastructure, the business environment and communities.
These aims are supported by sector deals between government and industry, which tackle specific problems that currently hinder productivity. Four have been agreed so far, covering life sciences, automotive, construction, and artificial intelligence sectors, and more are likely in the year ahead, Jones says. The strategy is also supported by over £1.7bn in funding tied to the grand challenges, covering areas such as more affordable construction and development of next generation battery technology.
These sectors illustrate the breadth of the analysis, and experts say it will be important for the strategy to act as a framework for everything government does.
A guiding hand
Craig Berry, the deputy director of the Sheffield Political Economy Research Institute (SPERI) at the University of Sheffield, is a member of the independent Industrial Strategy Commission formed to act as a sounding board for ideas by SPERI and the University of Manchester’s Policy@Manchester.
The commission’s key conclusion is that a successful strategy needs to be used to make overarching decisions across government, Berry tells CSW.
“The point of doing industrial strategy is to make sure you use that guiding hand in a way that seeks to benefit the people of the country over the long term – it is recognising that government has a role in laying the foundations of market activity,” he says. “That work should be embedded in the work government does across all departments, and all forms of government procurement and spending.”
Berry, who also previously worked in the Treasury, says the grand challenges identified in the strategy represent “a slightly idiosyncratic take on something that has become quite conventional – the idea that an industrial strategy should be based on missions”.
“We can end the debate about whether the right challenges are identified – everyone is broadly agreed about the right challenges,” he says. “How many you have and what exactly is included as a grand challenge can be debated, but in broad terms it is the correct approach.”
However, he adds, the industrial strategy shouldn’t just be focused on abstract ideas like productivity and growth. “Although those things very much matter, they should be seen as a means to overcoming the actual challenges that we face like climate change or an ageing society,” Berry says.
When it comes to implementation, his chief question is whether BEIS has the heft to make the strategy a guide for the rest of government.
“It has to be led from the centre – and probably the Treasury,” he argues. “The Treasury has traditionally been one of the barriers to industrial strategy, so if you can’t go around the Treasury you need to reform it instead and make industrial strategy actually one of the Treasury’s key responsibilities, in a coordinating role.”
“There’s always more the civil service can learn – and the grand challenges will be an opportunity to do policy making in an open way” – Alexandra Jones, BEIS
But Jones insists the cross-government approach to developing the strategy – which is now being used for implementation – will ensure the necessary collaboration happens.
The Economy and Industrial Strategy Cabinet Committee, chaired by the prime minister, “keeps an eye on us and makes sure that we are doing the right things”, says Jones, while there are two other cross-Whitehall groups – an implementation taskforce chaired by the Cabinet Office that brings ministers and officials together from different departments, and a senior strategy group based in BEIS.
“It is a priority for the prime minister and it has been talked about by senior Cabinet ministers so there is an awful lot of will and momentum behind it, and an awful lot of cross-government thinking going on,” she adds.
The decision to have the Cabinet Office chair the implementation taskforce is intended to draw on the centre’s expertise in getting departments to work together.
“They have set up taskforces to make sure we’re really delivering on the things we’d said we deliver, so we’re trying to draw on the best expertise and that sits in the Cabinet Office,” Jones says.
“Close relations with No 10, with Treasury, with Cabinet Office are really important in driving this,” she continues. “Certainly, if you look at the white paper you can see there is a lot of cross-government effort in there, and if you look at the 25-year environment plan [produced by the Department for Environment, Food and Rural Affairs] or the careers strategy [from the Department for Education] the industrial strategy is in all of those.
“So we are making sure across government we are all talking about the same things.”
One strategy, many plans
She also highlights that the strategy “is not just about Whitehall”. Its implementation will require close working with local government: local enterprise partnerships and recently-created mayoral combined authorities are tasked with developing local plans to focus on their strengths within the strategy.
“The three priorities for me are implementation, engagement, and then iteration: making sure we stay up to date with what is going on,” she says. “And all three require us to engage with businesses, universities, local government and the public, and that is what we are trying to do.”
Jones adds that “some of the best ideas will always come from outside Whitehall”, meaning it is vital that the strategy has feedback channels so BEIS can “make sure the fabulous stuff that is going on across the economy is equally a part of implementation”.
The local work is being led by the cross-government Cities and Local Growth Unit, which is assisting three groups of mayoral authorities – Greater Manchester, West Midlands, and Oxford, Milton Keynes and Cambridge – to develop their local plans.
SPERI’s Berry hopes the strategy could even unlock further devolution in England amid concerns the pace has slowed.
“One of the problems with devolution under [former chancellor] George Osborne’s vision of it, was that I struggled to see what it was for. What was his vision for local government that he felt devolution was the answer too? He never seemed to have one,” he notes.
“Whereas the industrial strategy is that vision, and that is why we need devolution. I hope that the industrial strategy could be the vehicle to reset the relationship between local areas and the centre, and the way we manage our economy.”
Jones says the government is working to “make sure these local industrial strategies are distinctive and different, and help local areas make the most of their strengths”.
Local areas have until March 2019 to produce these strategies, and Jones highlights this point as one of the early markers of progress in what could be a decades-plus endeavour. Others include the agreement of more sector deals and further work on tackling those Beveridgean grand challenges.
“It will be a challenge to us all to make sure we’re boosting productivity right across the country,” she says. “There is always more the civil service can learn – and the grand challenges will be a great opportunity to do policy making in an open way. There is lots we can learn not just from what we’ve done [in the past], but actually from around the world.”
Having helped analyse what government does – and should do – as a think tank boss, Jones recognises she now has a unique opportunity to implement policy. “It has been a real privilege, and a huge opportunity, to learn from people inside Whitehall but also to bring many of the things I’d learnt from local government and businesses – and central government outside Whitehall – into this job.”
She ends with a pledge to prioritise the collaboration required to make this vision a reality.
“The industrial strategy is genuinely an opportunity to do more with the work that government is doing. What my experience from outside taught me most is how important it is to have lots of partnerships. And this will be a partnership.”