Expanding our Industrial Strategy for a better future for Britain
Matthew Hancock speaks at the CBI industrial strategy conference.
Fifteen years ago, when I was working in my family’s small IT business, the idea that today, Britain would have a major conference, with all major parties, most major companies, hosted by one of the major employers’ groups, with a broad consensus of support behind the idea of an industrial strategy - that idea would have been astonishing.
But more, that a conference like this on industrial strategy is regarded as forward looking, enterprising and dynamic would have been more surprising still.
Five years ago, when I entered Parliament, the idea that today, Britain could commit to become the best place in the world to start and grow a business, that idea would have been incredible.
But it is now possible. And in part that is thanks to our Industrial Strategy.
It shows how far we have come. That the dreams of Michael Heseltine have led not just to individual successes, like in the Docklands of London and Liverpool, but are now the basis of a whole approach to building Britain’s businesses.
So, building on the work of Michael Hestletine, Peter Mandleson, George Osborne and Vince Cable, let us today together commit to build on the success of our Industrial Strategy, and project it forward into the next decade.
I want to set out my party’s approach to industrial strategy, why we back it so passionately, and how we will strengthen it, expand it, and build on the start that it’s had.
But before I set out how, I just want to say a word about why.
For a long time, certainly under most of the previous government, an argument held sway that an industrial strategy meant a return to the past and picking winners, and instead government should be neutral.
I believe that argument has itself been consigned to history.
Yes, when it was first made in the 1980s, there were good reasons for this. As a theory, it has merit.
And it was born of the need to modernise our economy and stop subsidising failing enterprises.
But it went too far.
For we can all recognise that government has an imprint on industry simply by existing.
How we regulate pharmaceuticals is different to how we regulate construction, or finance, or any other sector you care to mention.
Where we choose to put our infrastructure has a sectoral impact, whether we like it or not.
So government has an industrial impact. Let us be strategic about that impact.
Rather than pretending we can be neutral, we should be as intelligent as we can about how we use that footprint to secure jobs, opportunity and long-term prosperity.
In skills, finance, procurement and science that means using the power of government to open up markets and break new ground.
Of course where taxpayers’ money is used value for money matters.
And the best guide to getting value for money is to ensure private capital goes in alongside public.
We’ve followed these principles now for the past 4 years. And the results are clear:
The value of the cars we export is outstripping imports for the first time in my lifetime. And we’ve seen more positive news with more jobs in Dagenham today.
Pharmaceuticals are growing; manufacturing jobs are re-shoring; our aerospace industry is growing at over 9% a year - almost triple the global average.
So how should we go further?
Open source industrial strategy
First, recognising that there is more to industrial strategy than manufacturing. We want a modern industrial strategy that reflects the modern economy.
We’re committed to offering support to all sectors of the economy, not just one. We need an open source industrial strategy.
We want to broaden its scope, cover the whole economy, and offer for the first time a business led industrial strategy in any sector that wants one.
So if your sector needs an industrial strategy, let us know.
Industrial strategy is a partnership between government and business, and it’s a partnership of equals.
The dialogue has to be open, business led, and lead to real results.
When we came to office, communication between business and government was too often ad hoc and informal.
Our sector councils have formalised this dialogue, providing a structure for interaction from the very top of government to the most detailed working level.
This year, for example, we set up the Tourism Council.
We have just set up the Rail Supply Group to build the supply chain for our railways including HS2.
And we are working alongside the metals industry, including steel, as they develop their strategy.
Open source means open to the whole sector too. In future, every sector council will include representatives of both small and of medium size businesses. They have different needs, and must be at the top table.
This open source approach is already reflected in our skills policy. We recognise that apprenticeships add value in all sectors, including new areas like healthcare, accountancy and the media.
Just as in this Parliament we’ve doubled the number of apprenticeships from 1 million to 2 million, we are today setting out how we will go further, to 3 million in the next Parliament, to train young people so they have what it takes to get the jobs that are increasingly available.
As well as more apprenticeships, crucially we’ve asked employers in sectors from finance to food, retail to steel, literally to rewrite the apprenticeship rulebook – replacing complex skills frameworks with shorter, clearer training standards, written for employers by employers.
Small businesses must be involved.
Clusters
So, first, our Industrial Strategy must be open source.
Second, we must unambiguously back success where we find it.
It sounds obvious, but too often in the past there was a sense that government would look at an area with a particular strength and conclude that it didn’t need help.
Or worse, it would complain that if one area had a strength, it somehow wasn’t fair and needed to be spread to other parts.
By contrast we’re committed to backing success wherever we find it, so where a cluster exists we want to double down.
So we are backing clusters, from life sciences in Cambridge, to defence and aerospace in Portsmouth, to oil in Aberdeen.
Perhaps the greatest example of this is our vision for a Northern powerhouse.
Clusters are supported by the privately-led LEPs.
And as they entrench and mature, it is vital LEPs must maintain the same business-led approach, and remain dynamic, open, and flexible.
Backing business
So, industrial strategy has a bright future.
But I have a warning.
Industrial strategy does not work on its own.
It cannot replace a strong business environment.
You can’t have a successful industrial strategy without a successful economic strategy.
You can’t duck the big issues, like the deficit, or bringing certainty to our relationship with Europe through a renegotiation then a referendum on that renegotiated relationship.
And you don’t strengthen an industrial strategy with anti-business rhetoric or action.
Attacking wealth creation, proposing higher taxes on business, punitive proposals setting business against business.
These things have no place in a pro-business government.
They undermine industrial strategy.
And anyway, they are mistaken.
Because business is a force for social good.
Not only does it create jobs and opportunity, it supports that Great British ethic of something for something. Profit is a measure of success in finding solutions to other peoples’ problems.
So our belief in industrial strategy is motivated by our belief in business.
But we know there’s more to do.
We want to expand, strengthen and build on that strategy. We want all businesses, all sectors of our economy to know that government is on their side, backing their ambitions, standing up for their success.
For that is how we shall secure a better and brighter future for Britain.