Many of the initiatives set in train under the UK’s industrial strategy will make no difference to the performance of the economy, according to a scathing report by the independent body set up to assess its progress.
The Industrial Strategy Council said the government’s plans to boost productivity and earnings would need “a much greater degree of focus, financing and policy co-ordination” to meet its overarching goals.
The UK’s industrial strategy, first published in 2017, was welcomed by business groups who saw it as a means to set consistent, long-term policy priorities for the British economy.
Andy Haldane, chief economist of the Bank of England, and chair of the Industrial Strategy Council, said: “An effective industrial strategy is central to tackling some of the deep-seated structural challenges facing the UK economy, among them the climate crisis, ‘levelling-up’ the regions, the skills deficit and the productivity puzzle.
“At present, these policies are not yet operating with the consistency and co-ordination, nor with the scale, necessary to meet these challenges.”
Its report, published on Wednesday, said the council had identified 142 distinct policies set out in the strategy, most of which were now in a delivery phase. But the bulk of the £45bn covered by the strategy was focused on a few areas — housing, research and development, transport and digital. Most other policies had little or no funding attached, and many were simply commitments to review existing policies.
“As such, they are very unlikely to have a material impact on the economy’s performance,” the council found, adding: “The key to a successful strategy is prioritisation”.
The council said the strategy’s framing around four “grand challenges” — artificial intelligence, clean growth, ageing societies and the future of mobility — was an effective approach. But it said there had been little progress on plans to meet these challenges, and even less in acting on them — highlighting, in particular, the insufficient progress made towards achieving the 2050 net zero target for carbon emissions.
Scaling up the Industrial Strategy Challenge Fund — which has allocated £2.5bn so far in areas such as low-carbon technologies and precision medicines — would be one way to speed up progress, the council argued.
The report said a “step change” in the growth rate of spending on research and development, by both public and private sectors, would be needed to meet the government’s target of it reaching 2.4 per cent of gross domestic product by 2027.
It also called for reform of the apprenticeship system and said much more funding would be needed for further education, with recent initiatives on skills likely to “fall well short of the scale necessary”.