Assessing May's industrial plan
UK prime minister Theresa May has outlined an industrial strategy aimed at boosting some of the country's leading sectors. The FT's Robert Armstrong and Sarah Gordon discuss the key elements of her plan and how effective it is likely to be.
Filmed by Nicola Stansfield. Produced by Vanessa Kortekaas. Still images by Reuters and Getty.
SARAH GORDON: UK Prime Minister Theresa May has announced an industrial strategy to boost some of the country's world leading sectors. With me to discuss what the government plans to do is Rob Armstrong, our chief leader writer. Rob, what are the main elements of what the government plans to do?
ROBERT ARMSTRONG: Well, there's a lot of them, but the most emphasis was put on supporting those sectors at which the UK already leads. These are mostly tech sectors, pharma, clean energy, digital, and so forth. A lot about making sure that the regions of the UK, prosperity is spread more broadly, not just into London and the southeast. And finally, about the skills gap.
SARAH GORDON: Is there more vagueness than detail? Is that one of the problems with it?
ROBERT ARMSTRONG: I think there is an excess of detail. There's detail on everything. So before this turns into a white paper-- a green paper says, what do you think about all this? Here's a very long wish list. I'd like this, I'd like a pony. And then white paper is a more specific statement of policy. So it's about what gets winnowed out from here on.
SARAH GORDON: Carolyn Fairbairn, the director-general of the CBI, who I just spoke to, said it's better to have an industrial strategy than not to have one. Do you agree?
ROBERT ARMSTRONG: I do not. I think we ought to have a productivity policy in the UK. Indeed, a lot of countries could use one, especially the UK, because it lags its European peers and productivity so badly, both in absolute level and in growth of productivity.
What's the difference between a productivity strategy and industrial strategy? Well, just the word "industry" makes you think about certain things. In other words, manufacture, getting particular evidence. Where are the buildings we're going to build, et cetera, et cetera. What are the companies doing? Whereas productivity policy might deal much more with intangibles and won't be tempted to pick winners.
SARAH GORDON: I mean, one of the issues about picking winners is that none of us, sadly-- or we'd be extremely rich now-- identified Apple as the future largest and most successful company in the world. I mean, how effective, in the past, have been policies to pick champions and specific sectors as well?
ROBERT ARMSTRONG: They have been terrible. And the reason industrial strategy became, in a sense, a bad word for a long time in this country is that in the '70s, industrial strategy meant propping up industries that were definitely going to die anyway.
SARAH GORDON: Like the car industry.
ROBERT ARMSTRONG: Yeah. You ended up with cars with square steering wheels and funny things like that here in the UK. Industrial strategy has since made a comeback. And the first thing, on page one of any modern industrial strategy, it says, we're not going to pick winners. Governments tend to go on, after that point, and pick winners.
For example, you talk about regions. When you pick a region or an industry, you're still making a decision about what is the best, the most productive way to spend your money, whereas I think what I would prefer and what the FT would prefer is investment and policy that makes it easier for everybody to do business and sort of gets out of the way.
SARAH GORDON: I mean, one example of that, which is the thing that businesses which I speak to complain the most about, is not being able to find people with the right skills. And specifically, it's STEM-- science, technology, engineering, and maths. I mean, the government made announcements about this today and said it would be investing more. But someone I spoke to later pointed out to me that the problem is, that even people who graduate in STEM then don't go into the jobs where they're most needed. I mean, do you think that an industrial strategy, like the one that's been announced, is actually going to be effective in addressing that skill shortage?
ROBERT ARMSTRONG: I think you have to keep trying on this one. People love to talk about Germany as an example of a country with a successful industrial strategy, and I think they systematically exaggerate the degree at which the German government has picked out particular manufacturing sectors and made them successful. But what Germany really is good at, for example, is vocational training, something that we're a little more snobby about in the United States and in the UK. So you have to keep trying to churn out people with the right skills. We don't have the exact right formula, but that's definitely one of the areas that is a crucial part of productivity policy.
SARAH GORDON: So you think, just the more attention the better.
ROBERT ARMSTRONG: More attention the better. More experiments the better. Figure out what works, and send more money that direction.
SARAH GORDON: Rob, thank you very much.
ROBERT ARMSTRONG: Thank you.