Spring is here, lockdown restrictions are easing and the evenings are getting longer. As we take each small step towards the new normal, we are reminded of just how far Britain has come since Covid-19 struck, and just how far we still must go.
Getting back on track will be no easy feat. As we emerge from hibernation, signs of the damage from the worst recession in three centuries will become clearer. Challenges predating the crisis will come back to the fore, not least Brexit and the task of hitting net zero carbon emissions.
Yet when it comes to these challenges, there are confused messages from Boris Johnson’s government.
On the one hand, there is the promise to “build back better”, spread prosperity by levelling-up, lead the world on decarbonisation and turn Brexit Britain into a destination for business and a powerhouse of global trade.
On the other, the government plans an austerity reboot – freezing public sector pay and cutting international aid. The pork barrel is rolled out for Tory-voting areas at the expense of those in most need. The £1.5bn green homes grant has been scrapped after just six months. Meanwhile, businesses face ribbons of red tape and new barriers with Britain’s largest trading partner.
The confusion was thrown into sharp relief last week by the Industrial Strategy Council (ISC), in an excoriating final report from the government watchdog before it and the industrial policy it was supposed to oversee is jettisoned this week.
After the worst economic crash for 300 years and on the cusp of a green industrial revolution, the government’s decision to disband the council – the supposed core vehicle for coordinating public and private sector investment – is beyond baffling.
One of the country’s leading industrialists, Jürgen Maier, fears such neglect could deliver a post-Covid rerun of the 1980s, when the Thatcher government let unemployment rip and left communities to sink during the previous cycle of earth-shattering industrial change.
“Now is not the time to just sneak the industrial strategy out of the way. We are at a critical moment,” he told me. As the former chief executive of Siemens UK and a member of the ISC, Maier believes there is a pivotal role for the government to work with the private sector in response to Covid, Brexit and the net zero transition.
“‘Let’s just throw a load of initiatives out there and the free market will sort this out’, isn’t going to work. It’s basically where our current government seems to be coming from, and we’ll get pretty much what we got in the 1980s.”
Back then, Britain destroyed old industries, he said. Many needed transitioning from outdated and uncompetitive practices, just like today, as the country pushes into battery technologies, electric vehicles, wind and hydrogen power. “Back then, we didn’t work out what would come for the coal-mining communities, or heavy steel, or the automotive sector, which wasn’t innovative and productive enough. We didn’t put anything in place.
“If we don’t get it right now, absolutely it will lead to not transitioning to the new jobs, and therefore it will lead to less well-paid jobs. What happened last time is those communities found employment again, but it was in lower-paid service industries.”
Since its inception under Theresa May in 2017, the industrial strategy had never sat well with Tory instincts to roll back the state and unshackle the free market. But travelling down that road had pushed Britain to breaking point: stepping back had allowed the London-centric economy to dominate and historic industrial heartlands to wane. Productivity flatlined, average wage growth stalled and inequality soared.
As lockdown is lifted, it is clear Covid has made matters worse. But in this age of unprecedented industrial turmoil, Britain will have a Department for Business, Energy and Industrial Strategy that no longer lives up to its name, led by a secretary of state with a defunct job title.
The government insists it remains committed to the outcomes of the industrial strategy; only the means of delivery will change. The business secretary, Kwasi Kwarteng, argues the economic landscape has been fundamentally altered since the strategy was unveiled four years ago. In its place, the government has launched the snappily named “Building Back Better: Our Plan for Growth” as a replacement.
While it is blindingly obvious that the economic landscape has changed, the problems posed by Covid ought to make the need for an industrial strategy more important than ever before.
According to the ISC, the replacement plan is not up to scratch. With 180 policy measures and “14 of them are commitments to publish a strategy for a specific policy area, which may multiply initiatives further”, it is far more scattershot than the plan it replaced. While such ambition could be applauded, the council fears a dangerous lack of direction will only result. Most damning of all, it warns the new “levelling-up” agenda is doomed to fail. “Comprehensive reorientation” is required. Like much of Johnsonian politics, it is a manifesto warm on words but cold on substance.
There have been plans for growth before. In 2011, the Conservative-led coalition set out such a document to equip the UK to compete in the global race. The changes spanned a range of policies including improving infrastructure, cutting red tape, root-and-branch reform of the planning system and boosting trade and inward investment. It is a familiar laundry list.
But in the austerity decade that followed, UK growth dropped below the average for a major economy, the trade balance worsened, new apprentice starts collapsed and business investment fell to the lowest rate in the G7. Analysis by Labour suggests Britain’s economy will be about £300bn smaller in 2026 than forecast at the time of George Osborne’s plan. That amounts to £4,500 for every person in the UK.
Given the muddle the government finds itself in, the opposition spies an opening to set itself up as a credible partner of business – the “home of industrial strategy”. It is a smart move when business leaders are calling for more opportunities to work with government, not fewer.
There are times when such seismic shifts require a response beyond our usual political orthodoxy. This is one such moment.