Rishi Sunak’s lack of industrial strategy attacked by former business secretaries

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Three former affairs secretaries from different parties have accused Rishi Sunak of failing to prepare Britain for the future with an effective or even visible industrial strategy.

Greg Clark, a former Conservative affairs secretary, said the prime minister was so unenthusiastic about the idea that it was “like a guilty secret”, and that he had never even heard Sunak refer to “industrial strategy”.

Ministers insist that the government has a range of policies to support the industries of the future. But the Labor Party and business leaders have warned that in areas such as electric vehicles and battery manufacturing, the UK is far behind.

The role of the state in the market economy has become a big problem after the US president Joe Biden’s $369 billion green subsidy package and EU states struggling to respond.

Clark admitted the UK government has some strategic policies, but said: ‘It’s surreptitious. One of the points of an industrial strategy is that you should know what it is. Having an undercover strategy is counterproductive.

She said: “You have to be active and activist. When it comes to gigafactories, you have to go around the world, find out why people go elsewhere, and figure out what you can do about it.

When Chancellor Sunak trashed Clark’s industrial strategy in March 2021 in a move that even surprised some who worked in Boris Johnson’s government at the time. “The Treasury took us by surprise,” one official said.

Sunak’s allies said the prime minister has plans to help a number of sectors, but did not refer to industrial strategy “in those terms”. This year he he demolished the Department of Business, Energy and Industrial Strategy.

Lord Peter Mandelson, a former Labor affairs secretary, told the FT: ‘I remember Rishi Sunak telling me when he was chancellor that he did not consider it his job to have businesses form an orderly queue outside his office asking for handouts.’

Mandelson said that while the current chancellor, Jeremy Hunt, spoke industrial strategy and had “interventionist” instincts, Sunak’s lack of enthusiasm had left the government’s approach “mired in confusion”.

Mandelson, who revived the idea of ​​a “modern industrial strategy” in the final years of the Labor government 1997-2010, said: “The resulting situation is leaving our industrial competitors behind.”

Meanwhile Sir Vince Cable, Liberal Democrat affairs secretary from 2010 to 2015, said: ‘A lot of damage has been done. It was discontinued due to the ideological fanaticism of the current government”.

Mandelson, Cable and Clark represented a cross-party political continuum, crafting a strategy that saw government forming a partnership with business, investing money in key sectors such as automobiles and aerospace.

The strategy was abandoned in favor of a “Build Back Better” growth plan. Kwasi Kwarteng, the former Tory free-market affairs secretary at the time, he described Clark’s strategy as “pudding without a theme”.

Sunak focused the government’s attention on promoting five key sectors: digital technology, creative industries, advanced manufacturing, green industries and life sciences.

Hunt insisted on Wednesday at a British Chamber of Commerce conference: “We have an industrial strategy. We have been very clear on this. We have identified five growth sectors that we think we need to pay particular attention to.”

But government insiders admitted that the Sunak administration had trouble talking about it and that the policy was not contained in a single document. “It’s a communication issue, rather than a policy issue,” one said.

For example, an ally of Kemi Badenoch, the current business secretary, said the government had many support packages for key sectors, but added: “We don’t have an industrial strategy as such.”

Andy Haldane, a former Bank of England economist who chaired the board that oversaw industrial strategy before it was scrapped, said Sunak’s administration should be more direct in its approach.

“The world is going crazy over industrial strategy,” he said. “We are kind of going backwards here in Britain, when you look at the five sectors identified by Jeremy Hunt.

“But we can’t be so hidden or small-scale if we are to address our productivity challenges. It means that the business does not know what the game is and fails to follow it.”

Hunt promised to produce a response to Biden’s interventionist green plan – the Inflation Reduction Act – before or during his fall statement, even if that didn’t mean matching the US “grant for grant.”

A big test is coming for Sunak and Hunt as to how much money they are willing to offer Jaguar Land Rover parent company Tata Motors for build an electric vehicle battery plant in the UK, rather than in Spain.

Such a move goes against Sunak’s free-market instincts, but the prime minister is drawn into a race for international subsidies he would rather avoid. Political and commercial pressure is also mounting.

Make UK, the manufacturing lobby group, has urged ministers to stop “flipping” industrial strategy and come up with a long-term plan. Chief Executive Stephen Phipson said the UK was the only leading economy not to have one.

Labor has promised an industrial strategy if they take power, including a £28bn-a-year green tech plan. He argues that only in this way would it give “workers and industry the certainty and support they need”.

Mandelson described government policy as existing “in the ether” and Haldane said Sunak had to take a more open and ambitious approach. “There’s an arms race going on right now,” he said. “We can’t even pronounce the words ‘industrial strategy’ to ourselves.”