Burnham's industrial strategy: Is it worth anything?

I have huge admiration for Professor Chris Grey, who writes what is widely recognised as the best and most intelligent blog on Brexit, usually once a week. I am always amazed at the new insights he brings to current issues, and always as seen through the prism of Britain’s exit from the EU. His latest effort is about what sort of change we might expect from Andy Burnham, particularly on the EU question. If you thought there might be a sea change in Labour's red lines, then you are likely to be disappointed.  Burnham’s cabinet is broadly pro-EU, but then so was Starmer’s. The Parliamentary Labour Party is full of pro-Europeans, so it could hardly be otherwise. However, Grey doesn’t see any significant revision of the UK’s stance on Brexit. Burnham, he says, thinks that Brexit was “a symptom of a deeper malaise and, therefore, tackling that deeper malaise, rather than tackling Brexit, is the primary task."

Burnham’s position is perhaps slightly more nuanced than Starmer’s. He has openly stated that he would like to see Britain rejoin the EU "in his lifetime," but more recently, he made it clear that he doesn’t intend to “re-run Brexit arguments” or propose rejoining. So, don’t expect anything dramatic in the short term.

He wants to reverse Thatcherism, reindustrialise the north and restore some of the privatised utilities to public control or even ownership. This is the deeper malaise Burnham blames for Brexit. It’s quite a task and more than enough to be going on with. If he succeeds and stimulates decent economic growth, it could paradoxically have the effect of pushing rejoining back even further into the future. Alternatively, it could encourage the EU to offer more attractive terms.

It’s an interesting idea, but I’m not convinced he’s right.  Is growth likely to come without rejoining the single market? Maybe, but it will be much harder to achieve. I don't see the point of creating unnecessary obstacles to your primary task.

Grey speculates about which sectors Burnham will focus on. He's right to conclude that the old industries like ship building, steel, textiles and coal mining are gone and there is no way they will be coming back soon or at scale. He suggests aerospace, pharmaceuticals and biotechnology, plus the service industries. 

However, the government has already identified eight industrial sectors in its own policy paper, published last November. They are: advanced manufacturing, creative industries, life sciences, clean energy, digital and technology, defence, professional services and financial services.

The policy paper was the work of Jonathan Reynolds as Business Secretary. He was then appointed Chief Whip by Starmer, taking him away from the industrial strategy he had developed. Burnham has now restored him to the Business Department, but it shows what little weight was being given to this ‘strategy’ by Starmer.

It should be remembered that Theresa May also had an industrial strategy in 2017. That had four ‘grand challenges’ and five ‘foundations of productivity' – ideas, people, infrastructure, business environment and places – “with a clear and complementary vision for each.”

That was nine years ago. I’m not sure when that stopped being government policy or whether it ever really amounted to anything that could remotely be termed a strategy. Whitehall is very good at producing these policy papers; it's one industry we actually excel at.

May's effort had a National Productivity Investment Fund of £31 billion, supporting investments in transport, housing and digital infrastructure. That was raised to £37 billion by late 2018 to cover a longer timeline up to 2023-24. How much of it was actually disbursed? Answer: We don’t know because it was subsumed into general departmental spending totals. How do you track a strategy if you don’t even know how much you have actually spent, and you don't measure the results?

I suspect the projects were always determined by departments and simply collected together to make a headline. There was never any real joined-up strategy.

Whether the new 160-page industrial strategy will be any different, I really don’t know, but I suspect it will be the same. British governments have industrial strategies because they think they ought to have one.  There are a lot of very impressive figures in the latest iteration, but it’s not always clear if the £billions contained in it are annual spends or intended to be spread across a number of years. 

 The Government is said to be "investing an additional £120 billion over the Spending Review period, compared with the plans set out at Spring Budget 2024." To find the absolute total you need to look back at the Tory's 2024 Spring budget. The whole thing seems designed to obfuscate the figures.

The new policy also talks of an additional £725 billion in the 10-Year Infrastructure Strategy, which the government is funding - assuming it's in office for a decade, which is not certain.   I am sure none of the other parties was consulted, so when the government changes, so will the strategies. That is no way to plan for the long term.

Burnham is certainly a better communicator than Starmer, and that is one thing the government needs to improve significantly. How many voters are actually aware that there is an industrial and an infrastructure investment strategy? I think very few.

 

I have incidentally written about this topic before, when Labour promised to develop an industrial strategy in late 2024. It took a year to write the policy, after which the lead minister (Reynolds) was moved on.  

My own field was in process control and end-of-line packaging. We import a lot of what one might consider relatively simple machines, like case erectors, case packers, flow wrappers, form-fill-seal machines, palletisers, conveyors, check-weighers, stretch and shrink wrapping machines and so on. Most of it from Europe. None of it is rocket science, or patented, but we just can’t seem to make this stuff, and we obviously can’t export it. Italy and Germany seem to do very well out of it.

I suspect there are plenty of other fields, too. We import an awful lot of relatively simple manufactured goods that could easily be made here if we had the mindset and determination. I am not sure what difference government funding will make in the eight areas identified so far. It is, as I have said before, an attitude thing.

To become successful, you first need good design and innovation at the nuts and bolts level. If you have that, and can prepare a reasonable business case, the money will or should come without needing taxpayers' help. Secondly, you need a market where a firm can quickly scale up. The bigger the market, the greater the scope to expand. If you exclude yourself from the biggest, richest and closest market, then you are not being serious.

Andy Burnham seems to think there is a magic formula that has so far escaped politicians from both main parties over decades. This is an illusion. It does not exist.

As Grey says, Burnham is aiming to treat the illness, not the symptom. But that only works if you have genuinely identified the illness and not confused it with the symptom. I suspect he has got it wrong. 

We need to rejoin the single market first. Nothing is more likely to spur investment and growth in the short term.