MPs attack May industrial strategy for lack of detail

Theresa May’s industrial strategy is facing more criticism, with MPs pointing to a lack of detail co-ordinated action and proper planning.

In a report published on Friday, the business, energy and industrial strategy committee said the prime minister’s approach appeared on the surface to be a “significant shift” from decades of orthodoxy. But so far, it argued, ministers had produced little evidence of a long-term strategy.

Instead, the MPs found that January’s long-awaited green paper, or consultation document, on the UK’s industrial strategy was similar to a 2015 document called the Productivity Plan. Rather than being a much-needed “framework for future decision-making”, the report said, it was a long list of policy interventions.

The green paper also lacked clarity on how the government was to meet its aim of rebalancing the richest and poorest regions of the UK, the MPs said.

The committee also warned of a gap between Mrs May’s “tough rhetoric” on foreign takeovers and the lack of clarity on how ministers intend to intervene. Ministers were relieved that Kraft Heinz of the US walked away from its takeover bid for Unilever, the Anglo-Dutch company, as this would have tested the prime minister’s apparently protectionist stance and her powers to do anything to stop it.

Philip Hammond, the chancellor, will set out in more detail next week how he intends to spend £23bn of extra cash earmarked in the Autumn Statement towards improving productivity over the next four years.

The extra spending, billed by Mr Hammond as a National Productivity Investment Fund, will include cash for science, research, housing, transport, broadband and skills. Next week the Treasury will provide greater detail of how the money will be allocated to specific projects and schemes.

Ministers may also soon give details of how they intend to get more investment into innovative early-stage companies, the subject of a Patient Capital Review chaired by Sir Damon Buffini, former head of Permira, the private equity firm.

The government has also promised to use the Budget on March 8 to set out its approach to retraining staff in the workplace to improve skills in science, technology, engineering and maths.

But Mr Hammond’s Budget speech may not be enough to allay the widespread sense that the industrial strategy is still a work in progress, and that government assistance could still be eclipsed by the bigger challenges of Brexit.

The threat of job losses by Ford at its Bridgend plant, which emerged on Wednesday, came just hours after Nissan conceded that it may not stay in Sunderland after all if the government fails to make certain commitments. Executives remain concerned by other matters such as what will replace the customs union that allows the easy movement of goods between the UK and the continent.

The business committee is sceptical of the government’s focus on sectoral deals, saying this risks a return to the “discredited credo” of picking winners. It says a co-ordinated approach to industrial strategy is lacking across Whitehall, pointing to the failure of the housing white paper to spell out how the government and construction industry could collaborate to build more homes.

The criticism comes soon after Carolyn Fairbairn, director-general of the CBI employers’ group, said ministers still needed to provide clarity over several elements of the industrial strategy. Ms Fairbairn suggested the plan needed tighter focus as well as tangible targets.

Iain Wright, the Labour chairman of the committee, welcomed the government’s commitment to industrial policy but said the strategy would work only if ministers had a clear vision that was co-ordinated across government.

A “silo-based approach in Whitehall” would not achieve the changes to which the prime minister aspired, he added. “As a result, the industrial strategy will fall short in providing a clear framework for industries and businesses to deliver future success.”

Lee Hopley, chief economist at EEF, the manufacturers’ organisation, said the committee’s recommendations “on the need for industrial strategy to transcend the traditional ‘to do’ lists of existing policies will command wide support from manufacturers who recognise that industrial success will stem from a structured, transparent, long-term plan”.

The Department for Business, Energy and Industrial Strategy said: “Our modern industrial strategy represents an ambitious long-term vision for the UK that will build on our strengths as a country and deliver a high-skilled economy for the years ahead.

“The green paper is the beginning of an open dialogue to develop this strategy.”