How Industrial Strategy Contributed to the Decline of British Industry

The discourse surrounding the pursuit of ‘net zero’ emissions has evolved significantly, with advocates positing the idea that achieving this goal can serve as a catalyst for reindustrialisation in the UK. They argue that relying on imports from high-polluting countries like China and India contradicts the very essence of the net-zero initiative. Consequently, this perspective asserts that the UK should tap into the vast infrastructural demands set by the net-zero goal, which could foster the creation of numerous ‘green’ jobs. This rationale formed the backbone of the ‘Green Industrial Revolution’ promoted by the Johnson Government, which aimed to generate 250,000 green jobs through investments in domestic production of renewables and electric vehicles, thus fostering a sustainable economy while addressing climate change.

In response to the increasing emphasis on a green economy, the UK government introduced Invest 2035 as part of its modern industrial strategy. It promises an “ambitious and targeted” approach to industrial growth, designed to transform key sectors such as advanced manufacturing, clean energy, digital technologies, financial services, and life sciences into engines of economic prosperity. The strategy aims to stimulate growth through investment aimed at reducing barriers to investment, supporting net zero targets, and fostering regional growth. While there is potential for this strategy to succeed by addressing abstract industrial barriers, it raises alarms due to its broad focus on diverse sectors, including one as distinct as financial services alongside traditional manufacturing pursuits, which could undermine its efficacy.

Interestingly, the UK has not been without an industrial strategy since 2017, when Business Secretary Greg Clark introduced the ‘Industrial Strategy: building a Britain fit for the future.’ This strategy sought to prepare the UK for future economic challenges through substantial investments and support aimed at specific sectors, championing innovation and skilled job creation. This previous strategy identified four major global trends expected to shape the UK economy, namely artificial intelligence, clean growth, the aging population, and changes in logistics and services. It further proposed ‘Sector Deals’ to engage effectively with critical industries, exemplified by substantial investments in aerospace and other key sectors, ultimately aiming to equip them for forthcoming challenges.

Despite the strategic foundations laid by the Industrial Strategy of 2017, subsequent years reveal a stagnation within the UK industrial economy, indicative of a more complex political landscape post-Brexit. The 2017-19 parliamentary period was deeply affected by the negotiations and transitions related to Brexit, impacting the economy’s focus. As some initiatives were rolled out, the anticipated industrial renaissance failed to materialize, underscoring a lack of cohesive execution of the strategies in place. Reports by the Industrial Strategy Council revealed neglect of the initial strategy, raising concerns about the allocation of the existing funding which, although substantial, has not translated into tangible industrial growth.

With the onset of the pandemic, the government’s responses shifted again, introducing Johnson’s ambitious £12 billion ‘Green Industrial Revolution’ plan, which was aligned with net-zero aspirations. This plan projected significant job creation, particularly in regions that awaited investment and programs focused on renewable technology development. Following this, the strategy was incorporated into the broader ‘Build Back Better’ initiative, which sought to bolster the economy through significant infrastructural investments while addressing skills and innovation. Interestingly, Build Back Better continued the trend of intertwining industrial strategy with political goals like ‘levelling up’ the nation and enhancing economic resilience, showing a continual commitment to a politically charged narrative centered around sustainable growth.

As the UK navigates the complex interaction between industrial strategy, environmental responsibility, and political ambitions, it is clear that the achieving a successful outcome will require intense coordination and a refocusing of priorities. Stakeholders need to ensure that the strategies implemented are not only politically driven but also reflect a deep understanding of the realities faced by each sector. Navigating the economic landscape following Brexit and the unpredictability introduced by the pandemic will be crucial. If the UK can refine its focus in these strategies, emphasizing core economic barriers, as well as regional growth while promoting innovation, there exists a substantial opportunity for resurgence in timely industrial sectors, facilitating a smoother transition toward a net-zero future while enhancing domestic production capabilities.