Sector deals or picking winners?A “modern” industrial strategy was a key point of difference for Prime Minister Theresa May when she assumed the role in July from predecessor David Cameron. May has since announced she will pursue “sector deals” in frontier industries in which the UK could become world leaders.
However, which sectors receive particular state aid is a contentious matter. Chancellor Philip Hammond announced a national productivity investment fund in the Autumn Statement, which would invest in infrastructure such as roads, which can boost productivity, but sectoral interventions are more controversial. Read more: Industrial strategy needs a three-pillared approach to boost productivity Akos Valentinyi, professor of macroeconomics at the University of Manchester, took issue with some of the choices the government has already made. He said: “It is unclear how the proposed policies will improve labour productivity. In particular, [the industrial strategy] focuses on sectors which do not lag behind in terms of labour productivity.” May stressed her desire to create “an economy that works for everyone”, and said Hammond would work with business secretary Greg Clark to support industries of strategic importance in doing so. She also tried to head off criticisms from some elements of her own Conservative party by saying the strategy would not involve “picking winners”. David Bell, a professor at the University of Stirling, said: “Any new policy should avoid focusing on individual companies. There may be value in investment in skills, infrastructure and information flows aimed at improving the competitiveness of domestic value chains.”