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State intervention is back

Industrial strategy needs more than just innovation

By Saskia Perriard-Abdoh  

Britain has an industrial strategy. State intervention is back. Incentivising R&D and skills training have always been accepted as part of the government’s remit. On the other hand, government support of specific sectors—typified by Labour’s failed industrial strategies of the 1970s—has fallen out of favour.

However, if we are to hold the state accountable for its failures, we should also recognise its successes. For example, without substantial government support, it is highly unlikely that successful UK industries, such as pharmaceuticals, would have grown to their current scale.

Last year’s creation of the Department for Business, Energy and Industrial Strategy is an open acknowledgement that the state not only has a role to play in monitoring and co-ordinating economic activity but indeed has a responsibility to do so.

Perhaps the biggest departure from industrial strategies of the recent past is the government’s continued emphasis on “inclusive” growth. The government’s Industrial Strategy white paper, released in November, cited the notion of “place” as one of the five foundations of productivity growth and also stressed the importance of addressing the challenges of Britain’s ageing society in its “Four Grand Challenges.” Indeed, there is an implicit acknowledgement throughout the document that an industrial strategy can only succeed if it is developed in tandem with wider government policy.

However, just as previous industrial strategies have made the mistake of “picking winners,” are we in danger of falling victim to “innovation blinkers”? In effect, is the white paper’s focus on innovative sectors made at the expense of the wider economy? While innovation has the potential to deliver tremendous economic growth, it is impossible to bridge the gap between R&D and production without a strong manufacturing base and skilled workforce. Also, a lack of access to international markets, whether due to international regulation or lack of trade agreements, runs the risk of placing the UK in an economic chokehold where productivity is increased but barriers to exporting remain insurmountable.

Britain’s upcoming exit from the European Union has created a new urgency around policies to help homegrown industries compete on the global stage. Despite the ongoing negotiations and the current lack of clarity over our future relationship with our largest trading partner, the recently-unveiled white paper nevertheless remains a welcome and necessary first step towards determining the future of British industry.


Brexit Britain: the future of industry is a publication which examines the future of UK manufacturing through the prism of the recently released Industrial Strategy White Paper. The report features contributions from the likes of Greg Clark MP, Miriam Gonzalez, Richard Graham MP and Frances O’Grady.

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