Conservative Prime Minister Theresa May's long-awaited industrial strategy white paper is an exercise in futility

 
Julian Harris
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Theresa May pledged a more interventionist approach when she entered Downing Street last year (Source: Getty)

The government's industrial strategy, published yesterday in the form of a 255-page white paper, is a farcical attempt at triangulation.

The brainchild of Prime Minister Theresa May, it represents her determination to find a compromise between two conflicting ideas that dominated 20th century politics – namely, whether economies should be primarily shaped by central state control, or the actions of millions of individuals operating in a free market.

May believes in the market, but only when its direction is determined by government. "At its heart [this industrial strategy] epitomizes my belief in a strong and strategic state that intervenes decisively wherever it can make a difference," she writes.

The white paper attempts to model our economy and predict which areas will succeed in coming years. The result is hilariously cringe-inducing. On page after page, we are treated to meaningless jargon and vague yet hubristic promises. "Our five foundations align to our vision for a transformed economy". "We will harness the power of innovation to help meet the needs of an ageing society".

And then my favourite: "We will become a world leader in the way people, goods and services move".

Read more: It’s pure hubris for politicians to think they can “rebalance” the economy

Ministers have been insisting for over a year that the government's industrial strategy is not about picking winners. Indeed, business secretary Greg Clark told a gathering at Mansion House that it would be more like the Big Bang, when sweeping deregulation transformed the City. Yet the paper quite explicitly pinpoints specific industries for its so-called "sector deals", which will see government step in and "collaborate" with private companies. Construction, artificial intelligence, automotive and life sciences, for example.

Life sciences are especially trumpeted, with the government keen to give the impression that its industrial strategy convinced pharmaceuticals giant Merck to commit to a huge state-of-the-art hub in Britain. Predictably, a bit of impressive digging by the BBC's Andrew Verity revealed that Merck had already "been reviewing our global R&D strategy for over two years and decided through this that London was the best place to site a new discovery centre". The decision "was already on the way", a spokesperson confirmed, irrespective of the government's grand designs.

Read more: World Bank report shows the importance of doing business

The alternative to May's industrial strategy is not some ultra-free-market stripped down minarchist state. It is perfectly normal to maintain a sizeable, redistributing, welfare-providing government funded by the revenues of a commercial sector that is largely left to innovate, evolve and create growth on its own. Britain's two most recent Labour prime ministers each had political philosophies built on this model.

Nick MacPherson, who served as permanent secretary to the Treasury under both Blair and Brown, responded to the white paper thus: "The starting point of any 'industrial strategy' must be recognition that government impedes growth more than it facilitates it." He added: "[The] state can and should make a difference. But [it] also needs to recognise the deadweight cost of tax and pandering to special interest groups."

Wise words. This Conservative government would do well to heed them.

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