The Coalition began to rethink Thatcherite orthodoxies on industrial policy. Theresa May's government has a chance to go much further—which it must seizeby David Willetts / January 23, 2017 / Leave a comment
Read more: A real industrial revolution
Update, 23/01/17: Governments of all colours try to boost the performance of the economy using “horizontal” measures operating across the whole economy—reforming taxes or raising educational standards. But when it comes to serious Industrial Strategy, governments have to focus on “vertical” measures that get down into the substance of particular places and technologies. That is what the UK government’s new Industrial Strategy Green Paper does—so it passes the crucial test of being serious and credible. It is not just about skills in general but the creation of new institutes of technology with a focus on particular STEM skills. It is not just about boosting the performance of British industry as a whole; it gets into identifying key sectors and technologies which can gain the most from shrewd government policies. Whitehall is wary of such granular decision making but without it, those tasked with implementing policy are like generals who will only fight an air war and never gain any ground as a result. My essay for Prospect gave some examples of what these actual decisions might be. They are hard to get right and it is good that the government is genuinely consulting and listening. That should lead up to more specific substantive decisions for the Autumn Statement. But we have a first map and it is taking us in the right direction.
The Brexit majority comprised an alliance of two groups. First, there were those who felt they had lost out from globalisation and blamed migration for stagnant wages. Then there were the older generation enjoying greater financial security, for whom the performance of the economy just did not matter. It was an alliance of the excluded and the insulated.
I personally believe it would have been far better if we had voted to stay in the European Union, and—with what happens next still far from clear—hope that the coming negotiations produce a result that leaves us positively engaged with Europe. But, just possibly, we can use the shock of the aftermath of the Brexit vote to tackle the deep problems that it revealed.
The troubling truth, revealed by the Brexit vote is that even when the British economy did grow, and even where productivity did improve, very little of that benefit has been feeding through into median wages—many…