My Lords, I draw attention to my entries in the register, particularly for UK Music and Windward Global.
This Motion would not be debated in the legislative assemblies of the major economies: not in Germany or the USA, nor France, Japan, China, South Korea, nor any other developed nation on earth. Why? Because as the manufacturing trade group Make UK says, the United Kingdom is unique among advanced economies in not having an overarching, comprehensive industrial strategy.
I know that the Minister will point to the Government’s plan for growth, introduced under the previous-but-one Prime Minister in March 2021. I suspect he will want to advance the argument that the plan for growth, with its specific focus on five areas of economic activity, constitutes a strategy. I am sure he will be keen to mention the £500 million per year that the Government have earmarked for 20,000 R&D businesses, along with £650 million for life sciences. Let me say at the start that these are all commendable initiatives, and worthwhile in their own right, but they do not yet form part of an overarching strategy. I know that because, in June 2023, the then Minister in the Lords said:
“I think noble Lords will agree that this is a time for specialisation rather than a single, overarching, broad strategy”.—[Official Report, 20/6/23; col. 93.]
I disagree with that assertion.
I do not think we are doing enough to make a decisive difference to the UK’s economic prospects, given our sluggish growth, flatlining wages, regional disparities and chronic underinvestment. I invite the Minister to cogitate on why it is that the UK is unique in not having an industrial strategy, while reminding colleagues that a plan is definitely not a strategy. We have had a plethora of announcements, initiatives and institutions since 2010 and a constantly changing cast list: those 13 years have seen 11 growth strategies, nine Business Secretaries and seven Chancellors. This is partly, I am sure, why Make UK has said that:
“A lack of a proper, planned, industrial strategy is the UK’s Achilles heel”.
Meanwhile, the Centre for Economic Policy Research reports on the renewed interest within our competitor nations in
“effective tools and strategies to promote economic development and address new challenges, from supply chain risks to national security and climate change”.
It further says that industrial policy has featured significantly in the world’s largest economies. Again, I ask the Minister: why is the UK the odd one out?
What then is the case for an industrial strategy? An industrial strategy would
“help young people develop the skills they need to do the high-paid, high-skilled jobs of the future. It backs our country for the long term: creating the conditions where successful businesses can emerge and grow, and helping them to invest in the future … it identifies the industries that are of strategic value to our economy and works to create a partnership between government and industry to nurture them … it will … propel Britain to global leadership of the industries of the future—from artificial intelligence and big data to clean energy and self-driving vehicles”.
We will be the only advanced nation unable to make steel, in a time of global turmoil and uncertainty. This would represent criminal negligence. I note the announcement that Tata will close the two blast furnaces at Port Talbot in a few months and install an electric arc furnace, which would cut productive capacity. This is mindless vandalism to our manufacturing base. The salt in the wounds is that the Government are throwing £500 million at Tata, to lose 3,000 jobs in steel manufacturing. British Steel in Scunthorpe is looking to close its blast furnaces. These twin actions will mean that we have to import primary steels, with huge costs to the environment.
The trade unions have a plan to transition to cleaner, greener steel production and safeguard local jobs. Community union and the GMB have a workable, serious plan. Is the Minister aware that Tata indicated that this plan is credible and viable but was rejected by the Government on the grounds of cost? Can he comment on the exact nature of the £500 million offered to Tata, and whether this is in any way related to Tata’s battery plant in Somerset? Does the Minister know that electric arc furnaces cannot produce the base steel that is needed for tin manufacture—yet 30% of Port Talbot’s output is for tin cans? It has the orders, but the means to fulfil them are being removed. Has he read the rescue plan?
I do not want to make the case just for saving jobs in this part of Wales, nor focus on the bitter human cost that will be paid by working people and their families in these proud communities. I do not want to point out just that 20,000 jobs in the supply chain rely on this plant. I am sure others will want to point out the similarities with the destruction of our manufacturing base in the 1980s, with the price paid by miners, steel-workers and skilled engineers and their families in that dark decade of deindustrialisation and demoralisation of whole towns and cities. I want to link what is going on with steel today with my central argument for the need for an industrial strategy.
I thank my noble friend Lord Watson for initiating this debate and look forward to the maiden speech by the noble Lord, Lord Rosenfield.
It is not that long ago that the Government had an industrial strategy. When the noble Lord, Lord Henley, was Minister at the Department for Business, Energy and Industrial Strategy, he referred to it more than 300 times, including Written Answers, between 2017 and 2019. Described as a modern industrial strategy, it covered the Good Work Plan, the environment, safeguarding the post office network, life sciences, productivity and skills training. In a major debate in January 2018, the noble Lord, Lord Henley, referred to contributions by
“the grandfather of industrial strategies”,
the noble Lord, Lord Heseltine, and
“the godfather of industrial strategies”,—[Official Report, 8/1/18; col. 105.]
my noble friend Lord Mandelson. He also referred to contributions by my noble friends Lord Eatwell and Lord Chandos. Perhaps they were slightly less optimistic about the Government’s White Paper and he thought their contributions were “Eeyoreish”—difficult to say—but it was clearly central to government strategy, so what happened?
Theresa May went to the Back Benches; the noble Lord, Lord Henley, went to the Back Benches; industrial strategy disappeared from the title of the government department. Andy Haldane, who had been appointed chair of the independent Industrial Strategy Council to oversee the Government’s industrial strategy, commented on its subsequent abolition and the closure of the industrial strategy directorate in the department, saying:
“In the UK, industrial strategy is dead”.
He was lukewarm about the substitute policy, the plan for growth.
My Lords, I join other noble Lords in thanking the noble Lord, Lord Watson, for having secured this debate and in welcoming the opportunity to listen to the maiden speech of the noble Lord, Lord Rosenfield. I will confine my comments to the life sciences sector and in so doing draw noble Lords’ attention to my registered interests, in particular the fact that I am chairman of the Office for Strategic Coordination of Health Research and King’s Health Partners and actively engaged, outside this House, in biomedical research.
It is often argued that it is difficult to find a true position for an industrial strategy, as we have heard, that does not define a top-down impact by government and the state on what ultimately needs to be entrepreneurial activity to drive opportunity, growth and innovation in many sectors. But in a sector as complicated as the life sciences, where we need to bring together the universities, our health service, the commercial sector, big pharma, biotech, health tech and medtech, commercial sectors, entrepreneurs, financiers and legal and other professionals, it is essential that a framework exists so that government intervention can facilitate the creation, for instance, of a highly skilled workforce, the environment in which science can be delivered at scale and pace, a health service that can make an appropriate contribution to the delivery of life sciences and, indeed, the appropriate data infrastructure to ensure that a life sciences strategy and its broader contribution to our economy can be delivered.
Is the Minister content that His Majesty’s Government’s strategies, over many iterations, such as Life Sciences Vision and other commitments over the last 10 to 12 years, are actually delivering what has been anticipated? This sector is vital to our economy. It is estimated that some 250,000 highly skilled jobs attend the life sciences sector currently, contributing over £80 billion to our economy and sustaining some 63,000 organisations. It is anticipated that if the life sciences vision can be fully implemented over the next 30 years, there will be a further £68 billion contributing to our GDP, and there will be a 40% reduction in attributable burden of disease—not only wealth creation but health gain.
My Lords, as I rise in this place for the first time, may I say what a pleasure it is to follow the noble Lord, Lord Kakkar? I thank him and all Members for the warm welcome I have had so far. I also take a moment to thank the excellent staff, especially the doorkeepers for their kind and assured guidance as I find my way in this place.
After over a decade as a civil servant in His Majesty’s Treasury, it is especially pleasing—and somewhat daunting—to see so many familiar faces, friends and former political masters in this place. If I may, I would like especially to pay tribute to one of my former bosses, Lord Darling of Roulanish, whom I served as principal private secretary and who passed last year, sadly. He was an outstanding public servant, and a man of real depth and values, who I will miss dearly.
I also thank the former Prime Minister, Boris Johnson, for luring me back into public service after over a decade in the private sector, and for giving me the opportunity to serve my country and my Government at a time of real challenge.
Much of my career, both in public service and the private sector, has been take up with questions of economic policy, investment and growth. There is one theme that has struck me time and again, a theme that the noble Lord, Lord Watson, touched on briefly. It is the huge opportunity that we in the UK have to boost prosperity, if only we can find the right approach to address the stark regional and geographic disparities in productivity and economic performance. From regional development agencies to the northern powerhouse to levelling up, there have been many attempts and some good progress. No more so than in Manchester, my hometown, which I have seen recover from its post-industrial slump to thrive in a services-led economy, and have the sorts of jobs, skills and investments that any city in the world would envy. I wish only that it would also envy the leading football team in Manchester—that is, the red one—but that may be too much to wish for right now.
My Lords, it is a great pleasure to welcome the maiden speech from the noble Lord, Lord Rosenfield, to congratulate him on the points that he made and to welcome him to this House. By happy accident I follow him in this debate, and I realised that there were some rather significant career parallels. We both began our careers as Treasury officials and both then moved to 10 Downing Street. He worked for Boris Johnson; I worked for Margaret Thatcher. I am now here on the Tory Benches and he is a Cross-Bencher, which may tell us something about the particular qualities of bipartisanship that he will bring to this Chamber and which I am sure will lead to many interventions in the months to come.
I register my interests, particularly as president of the Resolution Foundation and chair of Innovate Cambridge.
Industrial strategy is a very fraught concept, which is sometimes argued about too much. It has a very simple meaning. All of us believe that we can promote economic growth by horizontal policies that apply across the entire economy: a good tax system and an efficient planning system. Industrial strategy says that there also have to be vertical policies addressing particular sectors, particular places—as we just heard so eloquently—and particular technologies. I have observed many Ministers who arrive in government determined to have purely those general horizontal policies and find that they are brought into having to take decisions—where to make transport investment, exactly what kit to buy, how to spend a limited science and technology budget—and they need some criterion for reaching those decisions. That is why you need some kind of strategic framework.
I welcome the excellent opportunity of this debate and the opening speech. However, I quarrel with some of the terms in the Motion before us, such as “comprehensive”. There are some sectors that just want to be left alone; I think “comprehensive” may be too ambitious. It should be comprehensive where there is a need, certainly, but I am not so sure that you can have something as comprehensive as Labour’s National Plan of 1965. Similarly, “industrial” has rather a precise meaning. Our work at the Resolution Foundation in our recent economic inquiry showed that it was absolutely clear that Britain has a real comparative advantage in services, which is an area where we can do more. For me, with my interest in higher education, I think of higher education as a really important British export industry. Therefore, any kind of industrial strategy really has to cover services as well.
It is a pleasure to follow the noble Lord, Lord Willetts, and to join him in congratulating the noble Lord, Lord Rosenfield, on an excellent maiden speech. We look forward to his contributions to this House in the future. I thank my noble friend for securing this debate. He will recall our time together as Ministers in the MoD and my enthusiasm then for industrial strategy for defence, and he will not be surprised that my belief in the importance of industrial strategy for our national wealth, our security and the challenging transition to net zero has not dimmed since. I draw the House’s attention to my entry in the register of interests.
History tells us that there is a clear dividing line between Conservative and Labour Governments when it comes to industrial strategy. Labour has consistently used industrial strategy as a core part of its policy framework, based on a commitment to set a long-term vision in partnership with industry, to help businesses grow, to create well-paid jobs across regions and to compete on a global stage, within a belief that it is part of the role of a responsible Government to have the courage to make choices that seek to build a fair, meritocratic and prosperous nation.
I shall concentrate in my time in this debate to offer eight principles based on my experience in government in developing and implementing industrial strategy that I believe are key to making sure that the implementation of industrial strategy works. There should be a commitment by the Prime Minister to ensure that the UK has an industrial strategy that will provide the long-term certainty that many noble Lords have mentioned, that commitment to work with industry, business, academia and local leaders to develop the strategy together; the full engagement across government of all the relevant government departments, particularly the Treasury, to ensure that the various levers that the departments have—be it regulation, procurement, skills or finance—are all brought to bear in a policy that helps to create synergy between them and prevent rivalry; the recruitment and development of a cadre of civil servants with the knowledge and experience to develop policies based on a sound understanding of the science, technology—as the noble Lord, Lord Willetts, mentioned—and, most importantly, the processes of innovation and wealth creation; painstaking leadership by a Minister in a powerful government department of the policy development process, with single-point accountability to the Prime Minister; active engagement to create that consensus, maintained over time, and a planning horizon that provides the certainty for industry needed beyond one Parliament; once the strategy has been developed, provision of the resources, oversight and ownership to ensure its implementation, ideally by the same Minister who led its development; and, finally, a biannual review to take stock, identify what is and is not working and make the necessary corrections.
My Lords, I offer congratulations to my noble friend Lord Watson on securing this debate, and a warm welcome to the noble Lord, Lord Rosenfield—I appreciated his speech.
Arguably, the biggest failure of the British economy over several decades now has been that we face a falling share of global investment in industry in its widest sense, including the service and digital industries. That means we have to have the confidence of investors—and by “investors” I mean everybody from the boards of multinational companies, those who run the great sovereign funds which decide where the money goes, those who run private equity firms and, indeed, those who run the more mundane pension schemes and the ordinary Joe who has a few shares. They all want to invest and they take the risk to invest, but one of the essential contradictions of capitalism—of which there are a few—is that those who earn their money by taking risks actually require a degree of certainty. That applies to investors of all sorts. I remember industrial policies, or whatever they were called at the time, from Harold Wilson onwards, and none of them lasted long enough, none of them was clear enough and none of them convinced the investors of the world that Britain was the place to invest. It was different in other countries, as my noble friend Lord Watson said.
Over the past 48 hours, I have met three sectors of business. All of them are operating under what may be a high-level industrial strategy: the pathway to net zero. Each told me the same thing, in effect. I met the nuclear industry, which has suffered over decades through changes to industrial policy when it needs a real, long-term environment. I met the automotive industry, which is now committed to moving away from fossil fuel-powered vehicles but sees the Government changing dates and not giving enough certainty there. And I met the new sector of carbon capture and storage, which will be another vital sector in delivering net zero but needs greater certainty from government; it has already had two false starts in developing technology where we could have been world leaders.
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Those are not my words; they are the words of the then Prime Minister, the right honourable Member for Maidenhead, in her foreword to her Government’s Industrial Strategy document in 2017. It is hard to disagree with that, and even harder to understand why the Government cancelled it so soon afterwards. It is quite a head-scratcher.
Ministers also abolished the Industrial Strategy Council in 2021. It included Andy Haldane from the Bank of England, the Community union’s Roy Rickhuss, and ceramicist Emma Bridgewater—all of them were given their marching orders. If you do not have an industrial strategy, you do not need an Industrial Strategy Council to guide it. The respected Institute for Government states:
“Weak productivity performance and regional imbalances have worried politicians for a long time, as has a sense that the UK does not make enough of its abundant strengths in science. These alone are important justifications for an industrial strategy”.
The case is overwhelming. It is why the cry has gone up from trade union leaders, former Conservative and Labour Cabinet Ministers, civic leaders, entrepreneurs and investors. It is no wonder that 99% of British manufacturers back the need for an industrial strategy, and yet we do not have one.
Thankfully, we have a lot to build on. On manufacturing, the Economist recently reported a survey of the public that asked respondents to state where they thought the country ranked in global manufacturing league tables. The median answer was 43rd, which was wrong. The latest comparable data makes Britain the world’s eighth-biggest manufacturer. The Economist said:
“Many manufacturers believe that the successes of recent years have come about despite rather than because of government policy”.
What would a new industrial strategy look like? My starting point is that an effective industrial strategy is not about picking winners or propping up losers, or meddling in markets when they work, and it is not about Ministers interfering in the business of business. It is about working in partnership with firms to identify problems and fix them; to see opportunities and seize them; to ask not why but why not.
The moon landing in 1969 needed a strategy that included not only aeronautics but electronics, nutrition, product design, computer software and engineering. The UK right now needs to define its moonshot equivalent. It could be fixing the climate crisis, although we know that is a global challenge. It could be that we are the first country in the world to have a sovereign quantum computing facility. It may be that we choose to build homes for everyone before they are 30, and orient things around that. My point is that there should be a small number of clearly understood and defined national goals where there is currently a vacuum. I am greatly influenced by the work of the economist Mariana Mazzucato, who said:
“Industrial strategy thus holds a dual promise: helping to address climate change and revitalizing industry so that it can compete in the twenty-first century. We need not accept … a trade-off … The two can go hand in hand if green policies are deployed to fuel growth and innovation, and if sustainable practices are woven into the fabric of how we consume, move, invest, and build”.
A new industrial strategy would take full cognisance of the UK’s context. We have a growing and ageing population, and a huge wealth of talent and expertise in science, technology and manufacturing. We have world-class universities, and fantastic entrepreneurs and inventors. We are a global leader in creative industries—gaming, film and music—and native speakers of the English language. We are a great nation, straining at the leash to be allowed to get ahead. It would view climate change as both an existential threat as well as an opportunity for economic growth and technological advance, leading the way in carbon capture, renewable energy, and post-carbon manufacturing of everything from hydrogen to nuclear, and from electric vehicles to the next generation of batteries for our phones. It would negate the need for a Department for Levelling Up because it would promote economic activity and growth in every nation and region, not just the south-east and London.
It would provide a stable platform for long-term investment and sustained growth instead of political chopping and changing, which business always tells us is the drag anchor on its success. It would represent a true partnership with small and medium enterprises, growing companies, unicorns, long-established British businesses and government at every level of our devolved constitution. It would allow businesses to thrive, turn profits and create decent, well-paid jobs, and it would allow the state to invest these products of growth into our public realm and shared services. Without economic growth, we do not grow as a society. It would allow the next generation to grow tall.
In my peroration, I will highlight one area where the absurd absence of an industrial strategy is most keenly felt and where the price is most heavily paid: the steel industry. Unless we act soon, the UK will lose its ability to make primary, or virgin, steel forever—[Interruption.]
An industrial strategy must seek answers to the central questions of our age: our negotiation with rapid technological change, our need to decarbonise, our desperate need for growth and the big shifts in our society. An industrial strategy can mitigate the risks, manage the transition and soften the hammer-blows that rapid change can bring. This is not top-down statism, but not free-market fundamentalism either; it is a true partnership with communities, companies, industries and government.
An industrial strategy must view the steel industry as part of a bigger landscape of manufacturing, and manufacturing as part of a bigger landscape of economic activity. It must view economic activity as the basis of our society, culture, well-being and national character. All the moving parts interact and interrelate, just as all humans do. What happens in Port Talbot, in Scunthorpe, in the long-ignored corners of our country and in the left-behind towns and estates happens to us all. This is an essential truth that the Government seem to have missed. I beg to move.
Make UK, the body representing the manufacturing industry, has claimed that the lack of a formal strategy is damaging to the UK, regionally and internationally, and called for, as my noble friend Lord Watson said, a long-term national manufacturing plan similar to those in Germany, China and the US. This has been backed up by research from the CEPR and the OECD. Why is the UK the only major economy not to have an industrial strategy? Does the Minister agree with the CBI that “the clock is ticking” for the UK to publish an industrial strategy that can rival other markets in fast-growing green economy sectors?
Regrettably, many of the indicators suggest that we are not sustaining our position. Is the Minister content that we are doing enough to ensure that we remain globally competitive?
Yet there is much more to do, and the UK remains one of the most geographically unequal countries in the OECD. As this House considers the need for a comprehensive industrial strategy, I would argue that an essential ingredient is government working in tandem with the private sector to unlock the huge potential of those towns and areas that have not yet seen the sort of economic success of Manchester, let alone London and the south-east.
I would also observe the impact of such disparity, coupled with the phenomena of geographic disparity, on social mobility. Speaking personally, if I may, I feel truly lucky to be born into the British Jewish community, and I celebrate the multitude of fantastic personal stories in that community; for instance, families finding personal and economic success within a generation of arriving in this country with only the possessions in their suitcase, something my own father experienced as a second-generation immigrant. He became the first of the Rosenfield family to attend a grammar school and university and to take up a profession.
Does the Minister agree that a credible industrial strategy must seek to address those geographic disparities, not through short-term subsidies but through long-term investment in infrastructure, education and skills, and a stable framework to support growth and empower the private sector?
There are, of course, risks to industrial strategy, and it is just possible that in subsequent interventions we may have warnings of some of those risks. One risk is producer capture: big, powerful lobbying firms getting things for their advantage. One reason why I very much agree with the excellent points made by the noble Lord, Lord Kakkar, is that one of the arguments for investing in disruptive new technologies is that they rarely favour incumbents. They are a great way of shaking things up, hence the particular importance I attach to technologies being supported.
One of the reasons why I very much regret the Government’s decision to abolish the Industrial Strategy Council is that the real purpose of that council was not to write detailed plans but to keep industrial strategy honest by scrutinising what was being done, what was proving to be effective and should be grown, and what was ineffective and should be abandoned. I very much hope that it will be possible in the future to recreate something like that excellent body.
None of this is rocket science, but it requires a new type of politics that goes beyond the soundbites and provides proper answers to complex questions—that delivers the how as well as the what. Whoever wins the next general election will face some major challenges—ones that can be managed if these principles are put into practice.
We need an industrial strategy that provides certainty both to investors and to the future workforce that we hope to recruit and benefit from. It needs to be a just and fair transition—fair to workers and to different parts of the country. That means it has to involve an effective medium-term to long-term policy for training, including the retraining of existing staff and the training of future generations. We will have to take the workforce, including the trade unions, on board in this; we will also have to take those who are in different parts of the country into consideration in developing the strategy.
But a long-term strategy is what we need. We have not had it properly and we need it even more desperately now.