The Schizophrenia of UK (De) industrialisation Policy

It is now over a decade since the run on Northern Rock augured the onset of a financial crisis whose reverberations are still being felt in the British political system. The response to the crisis, not least the austerity inflicted on the majority of the population, fanned the flames of social and economic discontent that found its political expression in the 2016 referendum decision in favour of leaving the European Union.

Brexit prompted another outbreak of soul-searching amongst the UK establishment about how to allay the plight of those ‘left behind’ or ‘let down’ by globalisation. Against this background Theresa May’s turn to industrial policy, with its tacit acceptance of a role for the state in shaping economic outcomes, appears to mark the resurrection of the kinds of selective government intervention thought to have ended with the Thatcher administrations.

The industrial strategy put forward by the May government, formally outlined in a White Paper published in November 2017, is unlikely to rectify the economic and social discontent that led to Brexit. The strategy perpetuates the schizophrenia evident at the heart of UK industrial strategy over the last four decades that has accelerated the demise of manufacturing and accelerated dependence on financial services. Reports of the death of UK industrial policy were always widely exaggerated. Despite a reluctance to confess it, every government of the past forty years has pursued an industrial strategy. Eulogies to free markets have stood alongside interventions to support specific sectors and firms. Moreover, the industries the White Paper touts for assistance exhibit a startling similarity to those supported in the past. For instance, the backing anticipated for manufacturing industry in the White Paper is dwarfed by that being offered to the biggest beneficiary of UK industrial policy since 1979, the financial services industry.