PM’s industrial strategy has plenty of long-term potential

24 January 2017

“Monday's “industrial strategy” from Prime Minister Theresa May and Secretary of State for Business Greg Clark has three key points in its favour: it has a long-term time horizon, it does not seek to pick winners or losers and above all it targets education,” says Russ Mould, investment director at AJ Bell. 

“It also does not feature a country’s leader bullying firms via social media, which has to be another plus, as it suggests policy is being put together in a coherent manner rather than on a case-by-case basis.

“Long-term planning is not easy for politicians, as the strictures of the five-year electoral cycle mean they all too often find themselves obliged to focus on quick wins in the interest of preserving their own jobs as well as focusing on the needs of others.

“Yet education is the best solution of all when it comes to closing the skills gap, boosting productivity and helping future generations prepare for their careers.

“The £170 million investment in new Institutes of Technology is a step in the right direction here, as is a focus on a range of key industries and technologies, such as life sciences, robotics, 5G mobile communications and low-emission cars.

“While some may be disappointed that the amounts of cash involved are relatively minor the plan is at least realistic is terms of what governments can (and cannot) achieve.

“Governments can encourage investment, try to help the lot of some members of society and stimulate short-term economic activity. But they cannot create long-term growth from nothing or force an economy to jump to their every beck and call, as economic activity is determined by the millions of choices made by a country’s citizens every single day and no democratic authority can force them all to do something at the same time if they do not wish to do it.

“Prior statist interventions and strategies in the UK and elsewhere have foundered in the face of such harsh truths and as such, today’s package is a good step toward trying to marry the best of what the market can offer by way of capital allocation and the Government can provide by way of equality of opportunity.”

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