Joe Sarling investigates developments in the debate on industrial policy
Last week I attended the event “Developing an Industrial Strategy for the UK” hosted by the IPPR, the Resolution Foundation and New Economics Foundation.
The key point to come out of the event is that politicians are looking for potentially new ways to respond to the economic challenges the UK is facing and industrial policy could be an area for development.
After the shortcomings and problems industrial policy faced in the 60s and 70s and its abandonment over the coming decades, politicians and academics were invited to the event to discuss both the broader remit of industrial policy as well as the specific recommendations for its implementation.
The debate was far less polarised than in previous decades. Most of the speakers recognised that key innovation and research are not going to be undertaken purely by the private sector especially in such a de-risking financial climate. But there was also a recognition by the panellists that the state, and indeed the rhetoric, should move away from the notion of “picking winners” and understand how other factors, such as competition, the regulatory framework and skills, can improve productivity.
Therefore, the speakers suggested that whilst “horizontal” policies (i.e. those policies which are not sector specific such as education, tax, regulation etc) should be used, the Government should also support the strongest sectors and have a strategy for “vertical” policies. Support, presumably in the form of procurement or investment, could be a reward for firms who are delivering on key long-term objectives such as research and development, employee training and up-skilling or long-term investment growth plans.
A key rhetoric change to come from the event was the recognition that 21st century industrial policy needs to be more spatially aware if it is to be successful – there is no industrial policy without regional policy.
Any future development of industrial policy needs to combine both vertical and horizontal policies with a spatial awareness that understands and recognises the strengths of different places. With a lot of activity across the cities agenda – LEPs, City Deals, mayors to name a few – it is imperative that industrial policy development does not ignore the role that cities can play.
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