Industrial Strategy — House of Commons, 2016-10-20
Topic: Macroeconomics
Michelle Rhonda Thomson (Independent, Unknown): I certainly look forward to hearing other contributions to this debate and to taking part in the Business, Enterprise and Industrial Strategy Committee’s inquiry on this important area In October 2015, in light of problems with the UK steel industry, I asked the then Minister if she regretted the Government’s lack of an industrial strategy. She said, "You could have had all the strategies in the world and it wouldn’t have made any difference." I guess we can add this to the list of topics on which the new Prime Minister and the right hon. Member for Broxtowe (Anna Soubry) disagree I welcome the Prime Minister’s decision to implement an industrial strategy and to recognise that the fact that that is difficult does not mean we should not bother trying. A coherent and forward-thinking industrial strategy can set the foundations for economic growth and improve productivity, but only if it is done properly. This debate will be full of questions. We need to ask what sort of industrial strategy the country requires, what the Government’s most effective levers are for improving economic growth and productivity, where Government intervention can have the biggest benefit for research and innovation, when we should get out of the way of business and when we should get involved. We also need to consider timescales, as we have heard. When can we realistically expect a White Paper or Green Paper on the industrial strategy? Will it be by early next year? We need to bear in mind that, even if we get full realisation by the end of the first quarter of next year, that will be only three years before the next general election. I reflect on the comments of the hon. Member for Hartlepool (Mr Wright) that Governments have been consistently making policy and then moving away from it with the fashion of the time. Industrial strategy will be even more of a challenge, given the all-consuming task of co-ordinating Brexit at the same time Although we do not yet have a White Paper, we have had speeches and letters from the Secretary of State setting out some of the areas that the industrial strategy needs to cover. He has noted the need for a long-term sustained approach to policy making, as well as the development of an enduring policy framework that provides a stable and predictable environment for business In principle, I do not disagree. Many businesses in my constituency and beyond made long-term investment plans on the assumption that they would have unfettered access to the largest market in the world—one that is right on their doorstep. They therefore would, I am sure, appreciate knowing sooner rather than later whether their rights to trade in Europe will be equal to those of their competitors. That point was highlighted really clearly by the Japanese Government, who said: "Uncertainty is a major concern for an economy" They went on to note that Japanese businesses had "invested actively in the UK, which was seen to be a gateway to Europe." Investor certainty is vital. The Brexit vote has shown how incredibly difficult it is to implement a long-term strategy that is resilient enough to withstand the change in fortunes of Ministers and Governments. A focus on evidence-led policy making could provide some ballast against the constant upheaval that exists in a parliamentary democracy Even when there is evidence in favour of a policy, however, more needs to be done to ensure that it is, in fact, implemented. Look at airport expansion in the south-east of England. We know there is evidence that that needs to happen to support businesses right across the UK. We have research on the costs and benefits, and several options are on the table, yet we still do not have a decision on which runway to build or extend. The link between timescales, vital infrastructure and decision making needs to be recognised. We know that the decision is being delayed for political reasons. This is a prime example of political priorities getting in the way of sensible industrial policy. We could also mention here the Green Investment Bank, which is based in my constituency of Edinburgh West. As soon as it made a profit, plans were made to sell it to the private sector. Those examples do not demonstrate a long-term, sustained approach to policy making, so I hope that they are considered when the strategy is put together. The Secretary of State has also highlighted the need to build on and reinforce the UK’s existing industrial strengths while developing a local approach to strategy—noble sentiments indeed. Given that stated commitment to localism and desire to build on existing areas of strength, perhaps he will look again at some of the mistakes made by his predecessors in government. I and many others were disappointed to see funding to reduce carbon emissions and tackle climate change scrapped or reduced by the previous Chancellor. Whether we look at the cancellation of the proposed carbon capture and storage plant in Peterhead, the cuts to efficiency schemes or the withdrawal of support for onshore wind generation, we see that the Government have demonstrated neither a local approach nor a desire to build on one of Scotland’s undoubted economic strengths That disregard for local and long-term policy considerations and the failure to support national and regional economic strengths have had a major impact on the Scottish Government’s attempts to harness the country’s natural advantages, in turn putting at risk plans to reach a target of generating 100% of Scottish energy needs from renewables by 2020. A milestone was reached this year when, for one full day, 100% of Scotland’s energy needs were met by renewable power. That was an exciting glimpse into a possible future that could be supported by a sensible industrial strategy from the UK Government Another example of short-term politics taking priority over economic needs was the cancellation of the popular post-study work visa in Scotland. This was a highly popular route for overseas graduates from Scottish universities to stay in the country. Many of the people who obtained this visa contributed a great deal to the Scottish economy and wider society. Universities Scotland conservatively estimated that Scotland lost out on at least £254 million pounds of revenue between 2012 and 2015 as a direct result of scrapping this visa route Scottish politicians in this Chamber have repeatedly declared that they would like more control over immigration policy in Scotland and the return of the post-study work visa. Scotland has shown its commitment to helping those in need by finding homes for a third of all Syrian refugees who have settled in the UK in the past 12 months. The long-term economic benefits of such a policy are obvious; the political will exists and the local need is there Finally, I just want to touch on the idea, also suggested by the Minister, of an upgrade in corporate governance. During our previous debate about BHS and Sir Philip Green, the topic of corporate governance was brought up several times. For too long, the focus of corporate governance has been on financial profit without any reflection of ethical values. Professor Christopher Hodges of Oxford University has led thinking about how improved corporate governance can lead to more ethical business practices and move everything forward To sum up, there is often a tension at the heart of industrial strategy between horizontal policies, which cut across all sectors, and vertical policies that focus on specific sectors. Prioritising specific sectors can see wider industry suffer, and if no sectors are focused on at all, the strategy runs the risk of being unfocused and unsuccessful. In evidence submitted to the Business, Energy and Industrial Strategy Committee, the Korean technology company Samsung said: "In a fast-moving digital economy, the Government should not seek to direct or manage innovation, but instead should seek to create the conditions which promote innovation." If all other sensible ideas fall foul of political pressures, I hope that this one principle will remain On balance, I welcome the Government’s commitment to an industrial strategy. I hope it will not only lead to greater economic growth and productivity, but rectify some of the mistakes of the previous Government.