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Theresa May’s industrial plan signals shift to more state intervention www.theguardian.com
Theresa May will signal an era of greater state intervention in the economy as she launches her industrial strategy with a promise of “sector deals”, a new system of technical education and better infrastructure.
The prime minister will publish the strategy at a cabinet meeting in the north-west of England, setting out five sectors that could receive special government support: life sciences, low-carbon-emission vehicles, industrial digitalisation, creative industries and nuclear.
She will say the government would be prepared to deregulate, help with trade deals or create new institutions to boost skills or research if any sector can show this would address specific problems.
The deals will only be available to sectors that organise themselves and make the case for government action, with May citing the automotive and aerospace industries as sectors that have successfully used this model.
Helping specific industries may be easier once Britain has left the EU because it might no longer be bound by state aid rules that restrict ways that governments of member states can support companies. The new industrial strategy is also a marked change from the approach of the previous Conservative-led coalition, which took a more laissez-faire approach to the economy.
“The modern industrial strategy … will be underpinned by a new approach to government, not just stepping back but stepping up to a new, active role that backs business and ensures more people in all corners of the country share in the benefits of its success,” May said.
On top of the sector deals, an “industrial strategy challenge fund” will help distribute millions of pounds in funding for research and development in areas such as smart energy, robotics and artificial intelligence, and 5G mobile network technology.
Another focus of the plan will be on technical education aimed at the half of school-leavers who do not go to university. It will suggest maintenance loans for those wishing to pursue technical education, institutes of technology built in every region and 15 core technical “routes” for students that train them in the skills most needed by employers in their regions
The plan will reveal 10 pillars to guide the industrial strategy, including investing in science, developing skills, upgrading infrastructure and making sure growth is shared across the whole country.
Carolyn Fairbairn, the director general of the Confederation of British Industry business group, said the industrial strategy was a landmark opportunity. “It must help fix the country’s productivity problems and remove the regional inequalities that have dogged our country for generations, having a positive impact on living standards, wages and the future opportunities of many people,” she said.
Others were more critical, with the University and College Union (UCU), which represents more than 110,000 higher education staff, saying it was little more than a “relaunched skills strategy”.
Sally Hunt, the UCU general secretary, said: “This is a drop in the ocean that will do nothing to solve the funding crisis in further education, which has seen 1m adult places lost since 2010. If government wants to support technical education, it should invest in our further education colleges, which desperately need thousands more teachers, rather than another set of gimmicks.”
The Joseph Rowntree Foundation charity said it should help young people in the longer term but the plan did little for the low-paid who were currently in insecure jobs.
“Improving maths and technical education for young people will certainly benefit the economy in the future. But this is a policy for the long term,” said Ashwin Kumar, its chief economist. “Millions of people already in the workforce are struggling with low pay and insecure work … The government’s industrial strategy will only make a real difference to our productivity gap, and to people at risk of being left behind, if it goes beyond manufacturing and high-skilled roles.
“It needs to help the millions of people who work in low-paid sectors, live in low-skilled areas and work in low-productivity firms. Action to close the productivity gap and support people who lack basic literacy, numeracy and digital skills would help to achieve this.”
May will also announce a £556m boost for the so-called northern powerhouse. Among the projects to benefit are the Goole intermodal terminal to place the town’s existing rail, sea, motorway and waterway links in one site and a £10m life sciences innovation fund for Manchester and Cheshire firms. Blackpool will get a new conference centre and hotel at the Winter Gardens to help re-establish the town as a leading conference destination.
May is publishing the plan on the same day as a report from a cross-party group of MPs urging more help for the steel industry, with seven policy demands including cheaper energy and action against Chinese dumping. They said the government was still not doing enough to help the beleaguered industry, despite being heavily criticised under David Cameron for failing to wake up quickly enough to the threat of plant closures.
Stephen Kinnock, the Labour MP for Aberavon and a co-author of the report, said: “If we continue along the current path, characterised by a government whose attitude can best be described as a toxic combination of incompetence and indifference, we will see the further decline of the industry and our communities.
“However, as this report shows, another path is possible and achievable. With strategic action from government and the industry, we can build a better future for the British steel industry, we can trigger a modern manufacturing renaissance, we can rebalance the British economy, and we can forge a new, more resilient, kind of growth.”
In particular, he called for the government to “remove the existing disincentives to investment posed by a punitive business rates regime and crippling energy prices.
“The government must firm up procurement policies to support the British steel industry, support skills development, invest in R&D and build a partnership approach to industrial relations and management,” Kinnock said.
Published Date:2017-01-23
