British Indutrial Policy: Structural Change, Policy Inertia

The structural weaknesses of the UK industrial economy are discussed and it is argued that the policy response does not match the scale of the crisis. Whether there should be an industrial policy is politically contentious. Aid has been directed towards the declining sections of manufacturing industry. Policy adaptation has been ad hoc and decision-making on industrial policy and programme administration is fragmented. Reform is difficult because of genuine policy disagreements between the main political parties, the inherent tendency to return to cautious middle-ground policies defined by the bureaucracy and the persistence of a laissez-faire tradition that leads to an institutional isolation of business and government. The unsatisfactory nature of British industrial policy is related to factors deeply embedded in the political system and a pessimistic view is taken of the possibility of profound change.