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You can find the current article at its original source at https://www.theguardian.com/business/nils-pratley-on-finance/2017/nov/27/industrial-strategy-is-welcome-but-good-intentions-are-never-enough
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| Industrial strategy is welcome, but good intentions are never enough | Industrial strategy is welcome, but good intentions are never enough |
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| Hurrah, the UK now has an industrial strategy – or, rather, a strategy that is designed to last longer than the next change of business secretary. We may also have conquered the national hang-up about government intervening to support business. And, on paper, there is now official acknowledgment that the geographically lop-sized state of the UK economy, and our historical underinvestment in infrastructure, are major sources of our woeful productivity performance. | Hurrah, the UK now has an industrial strategy – or, rather, a strategy that is designed to last longer than the next change of business secretary. We may also have conquered the national hang-up about government intervening to support business. And, on paper, there is now official acknowledgment that the geographically lop-sized state of the UK economy, and our historical underinvestment in infrastructure, are major sources of our woeful productivity performance. |
| In other words, there is much to like the white paper, even if the actual sums of new money to be put behind the new approach remain anybody’s guess. As with January’s green paper, too many existing polices were shoehorned into the document and presented as if they were fresh. | In other words, there is much to like the white paper, even if the actual sums of new money to be put behind the new approach remain anybody’s guess. As with January’s green paper, too many existing polices were shoehorned into the document and presented as if they were fresh. |
| Still, the future priority is consistent policy-making. On that score, there are reasons to be optimistic. The Institute for Government pointed out in its All Change report this year that the UK has had three industrial strategies in the past 15 years. The churn in policy-making has been caused, in large part, by disagreements about the relationship between industry and government. | |
| Sajid Javid, Greg Clark’s immediate predecessor, tended to be sniffy about industrial strategies (or, at least, anything that smelled like picking winners) and mostly saw government’s role as being one of deregulating and clearing obstacles to growth. Clark and Theresa May’s approach may mark the definitive moment when the UK decides to be interventionist. If so, that is very welcome. | Sajid Javid, Greg Clark’s immediate predecessor, tended to be sniffy about industrial strategies (or, at least, anything that smelled like picking winners) and mostly saw government’s role as being one of deregulating and clearing obstacles to growth. Clark and Theresa May’s approach may mark the definitive moment when the UK decides to be interventionist. If so, that is very welcome. |
| The new “sector deals” – in effect, collaborations between government and the private sector – really only acknowledge that other countries have taken a similar line for years. In fact, when its back is against the wall, so has the UK: without inducements for foreign investors, the car sector could have died with British Leyland. And, in a sector such as life sciences, where one of the new deals has already been struck, it would be ridiculous to ignore ties between public and private sectors. The UK has done well in pharmaceuticals partly because of the existence of the NHS and top-class universities. | The new “sector deals” – in effect, collaborations between government and the private sector – really only acknowledge that other countries have taken a similar line for years. In fact, when its back is against the wall, so has the UK: without inducements for foreign investors, the car sector could have died with British Leyland. And, in a sector such as life sciences, where one of the new deals has already been struck, it would be ridiculous to ignore ties between public and private sectors. The UK has done well in pharmaceuticals partly because of the existence of the NHS and top-class universities. |
| Will the new approach last, though? Alarmingly, the single biggest innovation in the 255-page document received only a half a dozen sentences. It was the creation of a new independent body to measure progress in the grand effort to retool the UK economy. | Will the new approach last, though? Alarmingly, the single biggest innovation in the 255-page document received only a half a dozen sentences. It was the creation of a new independent body to measure progress in the grand effort to retool the UK economy. |
| Such a body will exist – it will be called the Industrial Strategy Council – but Clark offered few details beyond the fact that would be be “drawn from leading business men and women, investors, economists and academics from across the UK” and would have access to government data. | Such a body will exist – it will be called the Industrial Strategy Council – but Clark offered few details beyond the fact that would be be “drawn from leading business men and women, investors, economists and academics from across the UK” and would have access to government data. |
| That tells us next to nothing about the new council’s standing in Westminster and Whitehall. The CBI had lobbied for an organisation with the status of the Office for Budget Responsibility and the government, it seemed, had encouraged the idea that was on cards. If so, it’s not the white paper in solid form. | That tells us next to nothing about the new council’s standing in Westminster and Whitehall. The CBI had lobbied for an organisation with the status of the Office for Budget Responsibility and the government, it seemed, had encouraged the idea that was on cards. If so, it’s not the white paper in solid form. |
| Dr Craig Berry, from the Sheffield Political Economy Research Institute and a member of the independent Industrial Strategy Commission, is right to worry that “the proposed advisory council falls short of the OBR-style monitoring body required to embed industrial strategy into the routine agendas of future governments”. The concern will be that Treasury and the business department are not acting in unison. | Dr Craig Berry, from the Sheffield Political Economy Research Institute and a member of the independent Industrial Strategy Commission, is right to worry that “the proposed advisory council falls short of the OBR-style monitoring body required to embed industrial strategy into the routine agendas of future governments”. The concern will be that Treasury and the business department are not acting in unison. |
| Clark and May need to address the point urgently. Yes, a round of consultation may required since, from a technical perspective, measuring the success of an industrial strategy is a tougher gig than the work done by the OBR. But the credibility of the new strategy hinges on how the government will be held to account. Get the body established quickly and agree its targets. Good intentions are never enough. | Clark and May need to address the point urgently. Yes, a round of consultation may required since, from a technical perspective, measuring the success of an industrial strategy is a tougher gig than the work done by the OBR. But the credibility of the new strategy hinges on how the government will be held to account. Get the body established quickly and agree its targets. Good intentions are never enough. |
| Home truths for Persimmon | |
| If you dig as far as page 104 of Persimmon’s last annual report, you will find the housebuilder admit it has received “indirect assistance” from the government’s help-to-buy scheme. You bet. Persimmon has prospered so merrily that the chief executive, Jeff Fairburn, will receive a £50m tranche of shares in the new year via a 2012 incentive scheme, with £40m to follow at the current share price. | |
| It’s up to individuals whether to accept all their windfall or donate a decent whack to charity. But it would be nice if Persimmon’s board admitted that its 2012 scheme, by not capping rewards, was appallingly designed. Fund managers should also hang their heads: they voted for these lottery-like features. |