May 18, 2023 - 4:00pm
Today, Rishi Sunak is in Tokyo where he’s just announced £18 billion of Japanese investment in the UK economy. But there’s a fly in his miso soup.
With exquisite timing, three former business ministers (Labour’s Lord Mandelson, the Lib Dems’ Sir Vince Cable and the Conservatives’ Greg Clark) have got together in a Financial Times article to attack Sunak’s industrial strategy — the main plank of which is not to have an industrial strategy.
When he was Chancellor in 2021, Sunak scrapped the strategy drawn up by Clark just four years earlier. According to the FT, the move came as a shock to many people working in Boris Johnson’s government, and the report quotes an official who claimed, “The Treasury blindsided us.”
His Majesty’s Treasury is notorious for its attitude to other Whitehall departments — and especially the Business department, its closest rival. However, this destructive act can’t solely be blamed on civil service turf wars. As PM, Sunak went to the trouble of creating a string of new departments so he could dismember the Department of Business, Energy and Industrial Strategy (and thus consign those last two words to the scrapheap).
The erasure of industrial policy appears to be a very personal mission for the Prime Minister. Perhaps he thinks it is superfluous — after all, its absence didn’t stop him from securing billions in Japanese investment. But on closer examination, most of this cash is being invested in the clean tech sector, where the Government does have an industrial strategy (even if doesn’t refer to it as such). Energy and climate policies set long-term objectives so that businesses can commit billions to multi-year projects without being undermined by short-term political flakiness.
This is what grown-up countries do; and so if it works for the energy sector — which, judging by the Japan deal, it does — then why not take the same strategic approach to other industries?
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SubscribeCan you actually have an industrial policy without a strong and vibrant energy sector? I would think cheap energy and cheap goods like steel are essential to industrial competitiveness.
Can you actually have an industrial policy without a strong and vibrant energy sector? I would think cheap energy and cheap goods like steel are essential to industrial competitiveness.
So if Peter Mandelson (had to resign not once, but twice for dubious personal dealings – but should have been sacked) and Vince Cable (the man who sold Royal Mail off too cheaply) are in favour of something, we should just assume they are correct ?
I also think it’s a little optimistic to assume that the politicians commentators like this one frequently deride as incompetent will be able to come up with a sensible and viable industrial strategy. You can lump civil servants in with the politiicans here. Pursuing a bad strategy is probably worse than letting business get on with it. Letting politicians hose our cash around on their pet projects certainly isn’t the answer. They like nothing better than spending money.
Stephen Walsh has already – quite correctly – pointed out that we cannot compete with China or the USA on subsidies. Nor should we try to. Better to buy and use the cheap products they subsidise.
Most industries are now global with global products. Services will go the same way in time.
We need to focus on activities where we can be competitive on the world scale. Things where we can be number 1 or 2 in the market – 3 at the very worst. You don’t make any money by being the 10th or 20th largest car or mobile phone maker these days. So Rolls-Royce aero engines would be one. JCB might be another.
So if Peter Mandelson (had to resign not once, but twice for dubious personal dealings – but should have been sacked) and Vince Cable (the man who sold Royal Mail off too cheaply) are in favour of something, we should just assume they are correct ?
I also think it’s a little optimistic to assume that the politicians commentators like this one frequently deride as incompetent will be able to come up with a sensible and viable industrial strategy. You can lump civil servants in with the politiicans here. Pursuing a bad strategy is probably worse than letting business get on with it. Letting politicians hose our cash around on their pet projects certainly isn’t the answer. They like nothing better than spending money.
Stephen Walsh has already – quite correctly – pointed out that we cannot compete with China or the USA on subsidies. Nor should we try to. Better to buy and use the cheap products they subsidise.
Most industries are now global with global products. Services will go the same way in time.
We need to focus on activities where we can be competitive on the world scale. Things where we can be number 1 or 2 in the market – 3 at the very worst. You don’t make any money by being the 10th or 20th largest car or mobile phone maker these days. So Rolls-Royce aero engines would be one. JCB might be another.
Britain would be better off getting the benefit of other countries’ subsidies – in the form of cheaper cars and other imports – rather than paying higher taxes to throw money at global manufacturers to prop up at enormous expense a small number of (sadly) doomed jobs. Nobody can compete with US and Chinese subsidies. But ultimately these will cost them more than they cost us, unless we foolishly try to compete in a game we just don’t have the resources for.
Britain would be better off getting the benefit of other countries’ subsidies – in the form of cheaper cars and other imports – rather than paying higher taxes to throw money at global manufacturers to prop up at enormous expense a small number of (sadly) doomed jobs. Nobody can compete with US and Chinese subsidies. But ultimately these will cost them more than they cost us, unless we foolishly try to compete in a game we just don’t have the resources for.
The latest news is that Vauxhall can’t make the 2035 deadline so they will probably close soon.
Germany is throwing billions at the steel industry to generate green steel. When this is available our steel will attract penalties for not being sufficiently green. The steel industry will probably close in the UK. Is this a bad thing?
The UK is a world leader in ideas. If these ideas involve getting poorer and poorer, we will lead the way proudly. Our universities will say that if we have any spare money, we should give it away in reparations. We lead on Green. We can get greener faster – as long as we get poorer.
We will focus on cars powered by Li batteries while other countries look for better alternatives – clearly our battery cars do not belong in the future and everybody can see this – literally everybody – except those in Parliament. We will encircle the UK with wind turbines in the sea but nobody will accept the pylons to join them to the Grid. We will accept more immigrants but nobody will allow new houses to be built. We will waste hours and hours talking about reversing Brexit – as if Ursula and her gang will help us.
To summarise, we are f**ck*d.
I disagree about “we’re finished”. There’s so much blatantly obvious waste – and far worse stuff of really negative value – going on that we could instantly make a step change improvement by scrapping all of those things. It’s all fixable. Though sadly little sign that we will do …
If only there were some period in British history we could check back against to see how things might be done more successfully …
What happens when other countries get good at ideas or just nick ours? Do we also have enough people bright enough to generate ideas, but without the ability to turn them into useable products to generate the wealth to sustain an entire economy?
I disagree about “we’re finished”. There’s so much blatantly obvious waste – and far worse stuff of really negative value – going on that we could instantly make a step change improvement by scrapping all of those things. It’s all fixable. Though sadly little sign that we will do …
If only there were some period in British history we could check back against to see how things might be done more successfully …
What happens when other countries get good at ideas or just nick ours? Do we also have enough people bright enough to generate ideas, but without the ability to turn them into useable products to generate the wealth to sustain an entire economy?
The latest news is that Vauxhall can’t make the 2035 deadline so they will probably close soon.
Germany is throwing billions at the steel industry to generate green steel. When this is available our steel will attract penalties for not being sufficiently green. The steel industry will probably close in the UK. Is this a bad thing?
The UK is a world leader in ideas. If these ideas involve getting poorer and poorer, we will lead the way proudly. Our universities will say that if we have any spare money, we should give it away in reparations. We lead on Green. We can get greener faster – as long as we get poorer.
We will focus on cars powered by Li batteries while other countries look for better alternatives – clearly our battery cars do not belong in the future and everybody can see this – literally everybody – except those in Parliament. We will encircle the UK with wind turbines in the sea but nobody will accept the pylons to join them to the Grid. We will accept more immigrants but nobody will allow new houses to be built. We will waste hours and hours talking about reversing Brexit – as if Ursula and her gang will help us.
To summarise, we are f**ck*d.
13 years, 7 years post Brexit and still a vacuum.
However just occurred to me, maybe it’s all about making us such a basket case we won’t have any migrants want to come here ever again. Got to be hasn’t it?
Well BT hollowing put 10% jobs to AI and ALL jobs in a well known British telecoms company are de facto checked for their ability to be offshored to India and other such locales (all very quietly). I’ve thought for sometime that immigrants are heading in the wrong direction. As the daughter of immigrants I certainly wouldn’t advise mum and dad to come to the UK given their time again. There is currently a brain drain of UK talent to other geographies (destination dependent on field of expertise). In cyclical terms Europe is anchored on a few declining great powers. Every dog has his day, and since I believe in cycles, this one may just need to play out.
Well BT hollowing put 10% jobs to AI and ALL jobs in a well known British telecoms company are de facto checked for their ability to be offshored to India and other such locales (all very quietly). I’ve thought for sometime that immigrants are heading in the wrong direction. As the daughter of immigrants I certainly wouldn’t advise mum and dad to come to the UK given their time again. There is currently a brain drain of UK talent to other geographies (destination dependent on field of expertise). In cyclical terms Europe is anchored on a few declining great powers. Every dog has his day, and since I believe in cycles, this one may just need to play out.
13 years, 7 years post Brexit and still a vacuum.
However just occurred to me, maybe it’s all about making us such a basket case we won’t have any migrants want to come here ever again. Got to be hasn’t it?
Rishi Sunak HATES miso soup. I have it from his secretary, who has it from his cook’s wife’s friend’s brother!
Credit is contracting in coming years for a variety of reasons (boomer switching out of markets to safety now they’re retired, liquidity, geopolitics). The latter is also raising need for resiliance in supply chains via reshoring/friend shoring/derisking. When those 2 collide you’d better have an industrial strategy to pick the winners and losers. As ever, govt behind the ball.
Meanwhile, I feel sorry for Andy Haldane. One of the more versatile thinkers in the BofE in recent years yet given his marching orders. May he do for the Northern powerhouse what Sunak wouldn’t allow him to do for UK.
There is so little strategic nous in gocernment. It is disheartening.