The UK's New Industrial Strategy

'Industrial strategy' has returned to the policy agenda, with the government recently setting out its plans in a Green Paper, and dedicated sections appearing in the election manifestos of all three main parties. Until recently, the term tended to be associated with attempts to 'pick winners' which often resulted in subsidising losers at taxpayers' expense. But every government has an industrial strategy however it is articulated: government affects the investment climate for business through tax and regulation, establishes national priorities, invests in skills, infrastructure and research, and procures outputs from the private sector, all of which influence the evolution of the private economy. What has varied over time is how far governments are willing to spell out their industrial strategy and the arguments that motivate it. An effective modern industrial strategy must be based on an understanding of market failures that are holding back economic growth, and whether these can be usefully addressed by government. It should be more than a collection of policies aimed at boosting business performance; rather, it should represent a long-term, coherent plan for sustainable and equitable growth in the UK.