Speaking at the TUCs event which launched the final industrial strategy report in their series. Joined by General Secretary of the TUC Francis O’Grady and Greg Clark Secretary of State for Business, Energy and Industrial Strategy, the report brings together findings from the three different studies, and outlines policy recommendations on how to deliver great jobs across the regions. I spoke about regional imbalance across the country, the delivery of great jobs, and Labour’s plan to meet the challenge of the 4th industrial revolution.
Industrial strategy is experiencing something of a renaissance. However, Our economy is grossly imbalanced, both regionally and in terms of wealth distribution. It’s clear that the free market experiment has failed and it is time to define a new relationship between government and the economy.
To understand why industrial strategy has made a comeback, we must look back at what has happened to British industry and the UK economy over the past few decades; In Salford, we were once known as the workshop of the world, local universities specialised in manufacturing, engineering, chemical engineering and more, in order to compliment the industries that were booming around them. But the decline of these industries and indeed other key manufacturing hubs across the country has been largely due to the economic choices made by successive governments.
Their exit from places up and down Britain quite simply ripped the heart out of communities, leaving many areas struggling to bounce back. Those communities felt left behind, their pride, hopes and dreams shattered. Since then, Britain has relied on an economic model which is rigged in favour of narrow but powerful interests … in the financial sector in one corner of England … while vast swathes of Britain waste away. As a result, we now have the most regionally imbalanced economy in Europe. 40% of our economic output comes from London and the South East alone. This has created deep, structural problems. For every hour of work done, we now produce less than we did in 2007. Pay is lower now than it was a decade ago.
Due to the economic choices made by successive governments, industries which provided employment to so many across the UK were put into ‘managed decline’. We were led to believe that, released from the shackles of regulation, the growth of the City of London could sustain the whole economy. But the financial crash and its aftermath has demonstrated clearly that this theory was wrong, and that reliance on an unfettered and highly volatile financial sector is unsustainable. Headline growth may have recovered since the crisis, but the structural weaknesses of Britain’s economy remain.
Despite the progress we have made in recent years, in even getting industrial strategy on the agenda, the Government needs to do much more, especially in relation to a ‘place based’ approach to industrial strategy. Sheffield Hallam University research warned that the Government’s flag ship Industrial Strategy Challenge Fund could actually widen regional divides.
Labour’s industrial strategy plan, backed up by our National Transformation Fund and £250bn of lending by our new National Investment Bank and network of Regional Development Banks, will transform our economy and deliver 1 million good jobs over the course of the Parliament.
Our first mission is to ensure that 60% of the UK’s energy will come from low carbon or renewable sources by 2030. This ambitious target will spur the kind of bold and decisive action needed to face the biggest challenge facing the world and put us at the forefront of the emerging global renewable technology market. Transforming our energy system and investing in renewable technologies will create good jobs, boost our exports, and lower the price of energy for everyone.
Our second mission is to put Britain at the forefront of world innovation with the greatest proportion of high-skilled jobs in the OECD and 3% of our GDP spent on Research and Development by 2030. The next Labour government will invest £1.3 billion in R&D in the first two years of Government and we will broaden our understanding of innovation beyond commercialisation of elite science, to include innovation as it applies in the service sector.
We will invest in people and ensure that businesses can access the highly skilled workforce they want by setting up our National Education Service, allowing everyone to upskill and retrain at any point in life. We will harness the £200 billion the Government spends in the private sector each year, to promote responsible businesses, and we will make sure that local government, local business and local educational institutions are supported to really deliver a place based industrial strategy that draws on the existing strengths each region has and also allows them to identify new strengths and industries.
We will take action to reverse the offshoring seen in recent decades by bringing supply chains, and good jobs, back to the UK. Labour will also take action on excessive energy prices, which put our industries at a disadvantage. We will reverse years of under-investment in our infrastructure, investing £250 billion over the next ten years through our National Transformation Fund to upgrade physical and digital infrastructure, future proofing our economy.
We will transform our transport system across all our regions and nations for example we will deliver Crossrail for the North.
Finally, our industrial strategy will have a strong sectoral element. The strongest industrial economies in the world got to where they are today because their governments nurtured and supported key sectors as they grew. A Labour Government will do the same, breaking with the failed ideologies of the past and learning from the world’s best, by supporting sectors in which Britain is already a world leader and cultivating new strengths.
We will set up sector councils for each strategic sector - modelled on the highly successful Automotive Council – to bring together government, employers and workers and their trade unions as part of a new era of economic cooperation. Through collaborative effort between Government and industry, Labour will create the winners of the future, and we will deliver economic growth to every region and every nation.
Quite simply, Labour will build an economy that works for the many and not the few where our regions receive the prosperity they deserve.