The UK Government Industrial Strategy: Was it Worth the Wait?
Economists and policymakers have recently renewed their interest in industrial strategies; that is, the coordinated policies designed to influence a nation's industrial composition. Continuing this recent trend, the UK Government has released its long-awaited industrial strategy.
Rethinking government's role in shaping economies
Over the course of the late 20th century, overt industrial strategies lost popularity due to growing political scepticism about the state's capacity for successful market intervention. A key reason for this scepticism is that the future is quite difficult to predict. There was criticism of government's ability to see into the future and 'picking winners' to support through industrial strategies, and the adverse impact of lobbying by influential groups.
However, there are several significant challenges facing all economies that governments will have to address (the green transition serves as a prime example). Because of this, there's been a resurgence of interest in industrial strategies.
Industrial strategies: From May to Hunt
The last official industrial strategy from the government was published by Theresa May's government in 2017. Then, the government's industrial strategy aimed to grow the UK economy by focusing on five foundations of productivity. Boris Johnson's government unveiled a new 'Plan for growth' in 2021, replacing Theresa May's strategy. The plan outlined the government's post-pandemic strategy for boosting the economy and 'build back better'. In January 2023, Jeremy Hunt outlined the government's new economic growth plan, emphasizing five key sectors: digital technology, green industries, life sciences, advanced manufacturing, and creative industries.
A 10-year industrial blueprint
The current UK Government's new industrial strategy details a 10-year plan to revitalise the British economy and boost industrial heartlands and regions suffering from economic stagnation. Eight sectors with the highest economic growth potential (judged by the Government) have been identified: advanced manufacturing, the creative industries, life sciences, clean energy, defence, digital and technology businesses (including artificial intelligence and quantum computing), financial services such as banking and insurance, and professional services such as accounting and the legal profession. The majority of the support – cheaper energy, trade support, and skills training – will go to those sectors.
The UK Government also announced that freeports, investment zones, and enterprise zones will be grouped under the 'Industrial Strategy Zones' initiative. This restructuring aims to resolve the overlap between the three nearly identical special economic zones, a problem acknowledged even by those involved with them. There is still more detail to come on various important sectors: life sciences and financial services sector plans, along with the separate defence industrial strategy, remain unpublished.
A Strategic Fit for Wales?
This industrial strategy will help many parts of the Welsh economy. The UK Government's emphasis on key sectors and its long-term economic vision aligns with Wales's strengths in clean energy, defence, and advanced manufacturing.
The initial response from Welsh industry leaders shows mostly optimism and positivity. Welsh stakeholders across sectors strongly support the UK Government's industrial strategy, citing its alignment with their goals. There is a shared desire for swift implementation but effective implementation and impact hinges on collaboration with the Welsh Government, local authorities, and regional bodies. Although early responses are positive, more information is needed to understand how Welsh businesses will be supported in their growth plans and how the strategy will contribute to the growth of the economy.
Some have argued that the government should have concentrated on the larger economy, taking into account the retail and hospitality businesses that have been harmed by recent policies. The strategy offers no support for energy costs or business rates reform for them. Such inclusion would have had a positive impact on several areas in Wales where such industries dominate the economy. The tourism and hospitality industries in Wales employed nearly 160,000 people in 2024, representing 11.8% of the nation's workforce. The food industry and other important sectors in Wales are unsure if they qualify for the new funding and support programs.
Bold vision, hard choices
The UK (and Wales) needs more 'creative destruction,' a term coined by the Austrian economist Joseph Schumpeter to describe the replacement of underperforming businesses with more productive, high-growth ones. It therefore makes sense for the UK government to favour high productivity sectors that could grow further and have potential to form economic clusters.
The UK Government has deemed its industrial strategy vital to its overall growth objectives. However, its success hinges on the government's courage. Governments tend to support thriving businesses but hesitate to let failing ones go, especially in politically sensitive areas. While aiming to stimulate investment by easing regulations and planning, the government must overcome local opposition to various development proposals.
The strategy is bold and ambitious and looks to target long-term flaws in the UK economy. Providing the Government is serious about what it says, we should all give this strategy a chance to succeed.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
North Wales Chronicle
17 minutes ago
- North Wales Chronicle
Welfare rebellion looms for Starmer despite concessions to Labour rebels
Ministers hope a partial U-turn will be enough to win over Labour rebels when MPs vote on welfare changes on Tuesday. The concessions included protecting people claiming personal independence payment (Pip) from changes due to come into effect in November 2026, and rowing back plans to cut the health-related element of universal credit. But backbench anger has continued to simmer, with a statement from Work and Pensions Secretary Liz Kendall laying out the concessions on Monday receiving a negative response. Asked whether he was 'confident' that the concessions had done enough to secure passage of the Universal Credit and Personal Independent Payment Bill, disabilities minister Sir Stephen Timms would only tell Sky News: 'I certainly hope it passes.' Some 126 Labour MPs had previously signed a 'reasoned amendment' proposed by Treasury Committee chairwoman Dame Meg Hillier that would have stopped the legislation if approved. That rebellion appeared to have been averted after Dame Meg described concessions agreed on Friday as a 'workable compromise'. But in the Commons on Monday, she was one of several senior Labour figures to raise concerns about the Government's revised proposals, while another MP involved in negotiations, Debbie Abrahams, suggested ministers had rowed back on what had been agreed. A second amendment rejecting the Bill has been put forward by York Central MP Rachael Maskell with the backing of 138 disability groups, saying disabled people had 'yet to have agency in this process'. Ms Maskell's amendment is reported to have been signed by only around 35 Labour MPs – far fewer than the 83 needed to overturn Sir Keir's majority, but enough to deliver the largest rebellion of his premiership just before the first anniversary of Labour's election victory. Other sceptical MPs are expected to abstain on Tuesday, but could vote against the Bill next week if there are no further concessions. One of the chief concerns revolves around a review of Pip to be carried out by Sir Stephen and 'co-produced' with disabled people. His review is not expected to report until autumn next year, making it difficult to incorporate his findings into the Pip changes due to take place at the same time. Ms Abrahams suggested the timing meant the outcome of the review was 'pre-determined', while Sarah Owen, another select committee chairwoman, warned it could create a 'three-tier' benefit system. Groups including Disability Rights UK and Disabled People Against Cuts criticised the Government's claim that Sir Stephen's review would be 'co-produced' with them and urged Labour rebels to stand firm. They said: 'The Government have made it very clear that they are intent on slashing the support that so many disabled people rely on to work and live independently, no matter how many disabled people tell them what a harmful policy this will be.' Tory leader Kemi Badenoch said her party's MPs would vote against the proposals, describing them as 'not serious welfare reform' and saying ministers had 'watered down the small savings Labour were making'. The original proposals were expected to save £4.8 billion by 2030, but Ms Kendall revealed on Monday that the revised proposals were likely to save less than half that figure.
North Wales Chronicle
18 minutes ago
- North Wales Chronicle
Immigration reforms for ‘complete reset' to be introduced in Parliament
New rules to be laid in Parliament on Tuesday will also seek to increase salary and skills thresholds up to degree level for skilled workers, which will cut eligibility for 111 occupations. A new time-limited temporary shortage list will also be introduced until the end of 2026 for below degree level, where recruiting foreign workers is key to build critical infrastructure or industrial strategy. But those workers will no longer be able to bring their families and will not be entitled to salary and visa fee discounts. The legislative measures are the first policy changes to be introduced from the Government's Immigration White Paper to tighten controls and cut migration to the UK. Home Secretary Yvette Cooper said: 'We are delivering a complete reset of our immigration system to restore proper control and order, after the previous government allowed net migration to quadruple in four years. 'These new rules mean stronger controls to bring migration down, to restore order to the immigration system and to ensure we focus on investing in skills and training here in the UK.' The changes, if approved by MPs and peers, will come into force from July 22. Further measures from the White Paper such as increasing English language requirements and raising the immigration skills charge are also expected to be in place by the end of the year. The White Paper is aimed at reducing numbers, clamping down on abuses of the system and ending a reliance on cheap foreign labour. Home Office estimates indicate that changes from the plan could reduce the number of people coming to the UK by up to 100,000 per year, when looking at eight of its proposals including on study and work routes and a higher level of English language requirement. But the move to scrap care worker visas has sparked concerns from the sector, with GMB national officer Will Dalton describing the decision as 'potentially catastrophic' as the care sector was 'utterly reliant on migrant workers' and still had more than 130,000 vacancies across the country. The Home Office believes there are 40,000 potential members of staff originally brought over by 'rogue' providers who could work in the sector while UK staff are trained up. Transitional arrangements for overseas care workers already in the UK have also been set out on Tuesday, according to the department.
Glasgow Times
18 minutes ago
- Glasgow Times
Welfare rebellion looms for Starmer despite concessions to Labour rebels
Ministers hope a partial U-turn will be enough to win over Labour rebels when MPs vote on welfare changes on Tuesday. The concessions included protecting people claiming personal independence payment (Pip) from changes due to come into effect in November 2026, and rowing back plans to cut the health-related element of universal credit. But backbench anger has continued to simmer, with a statement from Work and Pensions Secretary Liz Kendall laying out the concessions on Monday receiving a negative response. Liz Kendall (Dominic Lipinski/PA) Asked whether he was 'confident' that the concessions had done enough to secure passage of the Universal Credit and Personal Independent Payment Bill, disabilities minister Sir Stephen Timms would only tell Sky News: 'I certainly hope it passes.' Some 126 Labour MPs had previously signed a 'reasoned amendment' proposed by Treasury Committee chairwoman Dame Meg Hillier that would have stopped the legislation if approved. That rebellion appeared to have been averted after Dame Meg described concessions agreed on Friday as a 'workable compromise'. But in the Commons on Monday, she was one of several senior Labour figures to raise concerns about the Government's revised proposals, while another MP involved in negotiations, Debbie Abrahams, suggested ministers had rowed back on what had been agreed. A second amendment rejecting the Bill has been put forward by York Central MP Rachael Maskell with the backing of 138 disability groups, saying disabled people had 'yet to have agency in this process'. Ms Maskell's amendment is reported to have been signed by only around 35 Labour MPs – far fewer than the 83 needed to overturn Sir Keir's majority, but enough to deliver the largest rebellion of his premiership just before the first anniversary of Labour's election victory. Other sceptical MPs are expected to abstain on Tuesday, but could vote against the Bill next week if there are no further concessions. Sir Stephen Timms (House of Commons/PA) One of the chief concerns revolves around a review of Pip to be carried out by Sir Stephen and 'co-produced' with disabled people. His review is not expected to report until autumn next year, making it difficult to incorporate his findings into the Pip changes due to take place at the same time. Ms Abrahams suggested the timing meant the outcome of the review was 'pre-determined', while Sarah Owen, another select committee chairwoman, warned it could create a 'three-tier' benefit system. Groups including Disability Rights UK and Disabled People Against Cuts criticised the Government's claim that Sir Stephen's review would be 'co-produced' with them and urged Labour rebels to stand firm. They said: 'The Government have made it very clear that they are intent on slashing the support that so many disabled people rely on to work and live independently, no matter how many disabled people tell them what a harmful policy this will be.' Tory leader Kemi Badenoch said her party's MPs would vote against the proposals, describing them as 'not serious welfare reform' and saying ministers had 'watered down the small savings Labour were making'. The original proposals were expected to save £4.8 billion by 2030, but Ms Kendall revealed on Monday that the revised proposals were likely to save less than half that figure.
