Gov's industrial strategy: 'Look, we've changed the words above our door'

Any rabbits in Hammond's hat, or just a dead dove?

Analysis We know the government is serious about an industrial strategy because it renamed the Department for Business, Innovation and Skills to the Department for Business, Energy and Industrial Strategy.

Unfortunately, five months on that's still just about all we know.

More details are expected in the Autumn Statement today.

Whatever they entail, Malcolm Tucker's advice to the hapless minister in The Thick of It tasked with announcing a non-policy on the fly could apply:

It better not be too boring, and it better not be too interesting either, OK? And it better not cost too much. It can't be an old thing, obviously, and don't make it too new. And whatever you do, please try not to embarrass yourself, right?

To be entirely fair, Prime Minister Theresa May did trial a couple of strategy policy morsels in her speech at the Confederation of British Industry this week, such as £2bn in science R&D innovation funding by 2020.

But as Lee Hopley, chief economist at the Engineering Employers' Federation, pointed out in a BEIS Parliamentary committee hearing yesterday on the strategy, even that announcement doesn't amount to a consistent approach to investment.

Essentially, it was "more or less reversing cuts in this area which we have already seen".

The Register has also pointed out that as a proportion of GDP even with the top up our R&D spend still falls well short of what the CBI has previously called for.

And whether May's Industrial Strategy Challenge Fund to back priority technologies – such as robotics and biotechnology – amounts to anything more than the flag-waving we've previously seen in the government's "eight great technologies" remains to be seen.

Earlier this year, the Public Accounts Committee slammed the government for its lack of "evidence-based" science investments.

As a phrase, a government "industrial strategy" harks back to some of the worst mistakes of the 1970s. For example, the Industrial Reorganisation Corporation, which nationalised the British Leyland Motoring Corporation, creating an unwieldy borg that subsequently filed for bankruptcy.

But according to May: "It's not about propping up failing industry or picking winners, but creating the conditions where winners can emerge and grow."

Stephen Pattison, veep of public affairs at UK chip designer ARM, told MPs at the committee hearing that the strategy should not be about 1970s-style planning. "I don't think it's particularly helpful to think of it in terms of massive government investment. And the industrial strategy of our times would look much more at how the government can enable certain areas of our economy to go faster."

On the question of whether the takeover of ARM by Japanese firm Softbank for £24.3bn in six weeks ought to have been subject to greater scrutiny, Pattison was unsurprisingly upbeat.

He said takeovers amount to greater investment in the UK. Unlike Cadbury, which closed its UK factory, he said the business would retain and grow its HQ and operations in Blighty.

Simon Walker, director general of the Institute of Directors, said he was anxious that the strategy would amount to "pouring money into failing industries" when it ought to be about identifying areas where the UK has an existing competitive advantage.

While Rhian Kelly, director for infrastructure at the CBI, noted that the UK still needs a clearer idea of the outcomes of the industrial strategy in terms of productivity, the role of technology, and globalisation.

One area of clarity the speakers seemed to be in agreement on is how opaque it all is.

"[We've heard] vague terminology," said Mark Littlewood, Director General at the Institute of Economic Affairs. "The talk about a horizontal industrial strategy [is to] my mind just economic policy. My horizontal industrial strategy is to slash tax and remove a lot of the regulatory burden on businesses."

He said the key role for the government in helping business was to bring more predictability and stability in light of the referendum.

Chancellor Philip Hammond will certainly be keen to help create that impression in his maiden budget today. Unfortunately, that takes a bit more than a departmental name change to achieve.

On the subject of how the government ought to regulate emerging "disruptive" businesses, Littlewood suggested a more honest approach would be to open a new department of "We Don't Know What it is Yet".

While we're at it, the government may as well create the ministry of "What the Hell do We do Now?" It might be a more helpful starting point. ®

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