What’s in an industrial strategy?

As political change looms, Utility Week asks what a future industrial strategy might look like – and assesses the dangers of continuing with the current approach.

With a general election guaranteed in the next few months, there’s a golden opportunity to bring an industrial strategy for the UK to the fore once again.

It’s not that such a strategy disappeared altogether in recent years. It’s that efforts by the state to enhance the competitiveness of UK industry, including energy, have been piecemeal and uncoordinated, experts say. (Perhaps symbolically, “industrial strategy” was erased from the name of the department for business in the transition from BEIS to DESNZ.)

Political change means the chance to start afresh, and the signs are that politicians are keen on industrial strategy once again, just as they were in the wake of the financial crisis.

That’s certainly the case with Labour. A member of the shadow cabinet goes as far as to suggest that the party does not feel it will succeed in government without a coherent industrial strategy. “I am delighted we have one,” he says.

Energy UK believes the enthusiasm is genuine. Adam Berman, deputy director, advocacy, says: “There is every reason to believe a good industrial strategy would create growth, and lock in longer-term growth in sectors we expect to be the industries of the future.”

Berman points out that initiatives including investing in electric arc furnaces for steelmaking, pumping money into electric vehicles (EVs), and insisting parts of the supply chain for offshore wind are sourced locally, are all indeed part of an industrial strategy.

“But these elements are not structured in the way we would like. We need a more centralised process. We have these very powerful levers of state, but they are disconnected.

“The industrial strategy should be delivering more than it currently does.”

Three wise men?

For one thing, industrial strategy should provide the impetus to attract investment into British (or at least UK-based) energy, engineering and manufacturing businesses. Or as three notable former business secretaries from across the political spectrum said last year: ”Investors will respond to a clear industrial strategy for the UK that brings together founders, companies, researchers, government departments and local leaders to create the best conditions to turn discoveries into jobs.”

A similar point was made by an electricity network development director at a recent public-private summit organised by C-suite networking company Winmark. “There is an enormous amount of capital that needs to be deployed. But we need a stable, enabling environment to do it.”

Another senior figure from a regulator adds there should be “urgency” and a “clear sense of mission” when it comes to industrial strategy. The success of the Accelerated Strategic Transmission Investment framework bears this out, they say.

Whatever form a new strategy takes, everyone agrees that lots of chopping and changing at the heart of government is unlikely to do it any favours. “It’s important that whatever policies are put in place after the next election, they are given the chance to bear fruit. The market should be given the opportunity to adapt to them,” says Gareth Miller, chair of the SSEN DSO advisory board.

Several attendees at the Winmark event also highlighted the recent high level of ministerial churn (Labour’s familiar refrain of “chaos at the heart of government”) as particularly problematic for building good relationships between industry and government departments.

Labour says … well, that Labour would do things differently. “Uncertainty is unhelpful. We want to create political and economic stability,” says the shadow minister.