MPs question whether the UK’s Industrial Strategy is fit-for-purpose

MPs on the BEIS Committee are launching an inquiry into the UK's Industrial Strategy, questioning whether major updates to the policy package are needed in light of the 2050 net-zero target and the Covid-19 crisis.

MPs question whether the UK’s Industrial Strategy is fit-for-purpose

The Industrial Strategy was developed under Theresa May

Unveiled in December 2017, the aim of the Industrial Strategy was to help businesses create better, higher-paying jobs with investment in the skills, industries and infrastructure of the future.

The policy package set out a set of ‘Grand Challenges’ for the UK, including clean growth – defined as decoupling economic growth from emissions and leading the world in the development of low-carbon technologies and solutions which cost less than their traditional counterparts. It is because of the Industrial Strategy that there are sector deals for fields like construction, aviation and offshore wind.

However, with the UK off track to meeting its fifth carbon budget and now attempting to grapple with both the climate crisis and the economic fallout of Covid-19, MPs and others have begun to question whether the Industrial Strategy is fit-for-purpose post-2020.

On the clean growth piece specifically, the Strategy was developed at a time when the UK was striving for an 80% fall in net emissions by 2050, against a 1990 baseline. Regarding coronavirus, the UK has seen more than 650,000 workers removed from payrolls since the start of March, with Ministers facing calls to reskill these individuals for jobs in the green economy.

The BEIS Committee’s inquiry will seek to ascertain how Covid-19 and net-zero has impacted the evidence base Ministers use to understand, diagnose and monitor challenges to economic growth; whether the Industrial Strategy is relevant and accessible to investors and suppliers; and whether Whitehall is allocating sufficient funding to deliver on the aims of the package.

Participants will also be asked whether the strategy is prioritising the right sectors in the context of pressing environmental, social and economic challenges, and whether the Industrial Strategy has had any tangible impact on GDP. On this latter piece, Ministers are keen to hear thoughts on whether GDP is the correct metric to measure success, given historic challenges incorporating the value of things like wellbeing and nature into decision-making processes. Some governments, such as Bhutan, have shifted to different metrics that also account for things like living standards, public health and biodiversity.

The Committee has written to all FTSE 350 firms requesting their input to the inquiry and is also in talks with trade bodies across the green economy and beyond, including the CBI, Institute of Directors, Federation of Small Business and the British Chambers of Commerce. The closing date for submissions is 1 September, with hearings due to begin in autumn.

“In this inquiry, we will want to examine whether, particularly following the impact of Covid-19, the Government’s current industrial strategy is fit for purpose, whether it is genuinely strategic, and whether it is focused on the right sectors, issues and policy areas,” BEIS Committee Chair Darren Jones said.

Criticism and context

The inquiry will form part of the BEIS Committee’s wider probe into post-pandemic economic growth in the UK, which it is running in collaboration with the Environmental Audit Committee (EAC) and others. 

The EAC is specifically assessing whether the UK’s economic recovery package for Covid-19, which Chancellor Rishi Sunak has said will total £160bn, is aligned with the Government’s long-term environmental and social ambitions. MPs will also assess the package’s impacts abroad.

Last year, the BEIS Committee warned that the Industrial Strategy, in its existing form, is not sufficiently assisting decarbonisation in the UK’s largest sectors. MPs argued that decisions by Ministers and the sector deal framework itself have focused on “high-tech” sectors such as renewable power and construction, putting industries such as retail and hospitality at risk of being “left behind”.

The warning was the latest in a long string of criticisms, with green groups and MPs repeatedly slamming Ministers for their failure to address high-emitting sectors like transport and put the UK on track to meeting its fifth carbon budget.

It is worth noting that the European Commission is currently updating its industrial strategy, and has faced mounting calls from businesses and MEPs for a clear focus on decarbonisation. Its Covid-19 recovery plan was poorly received by members of the green economy, so there are hopes that an update to the industrial strategy could spur alignment with the EU’s long-term net-zero target.

Sarah George

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