This consultation will inform the basis of Labour’s Industrial Strategy. We invite contributions from right across the country, from businesses and business groups to trade unions, third sector organisations and members of the public.
Britain has great strengths and enormous potential, but we are not currently doing the best we can. Structural problems with our economy are giving rise to too much inequality, instability and uncertainty. Solving these problems is a long-term challenge, and to rise to it we need your help.
For decades, policy-makers have assumed that the best way to secure a successful economy is to leave the market to its own devices. It is a logic that accepted deindustrialisation on the basis that a market-led expansion of services, and particularly financial services, was more efficient. It is a logic that reduced economic policy to inflation-targeting, rolled back state spending on public services, and demanded the retreat of the state from broader economic objectives such as full employment or balanced growth. It is a logic that embraced full-throttle globalisation without regard for its social and economic costs, and while cutting across collective bargaining rights and trade union strength.
While this model led to boom periods, most notably in the early 2000s, it has also allowed long-term economic problems to accumulate. Inequality has ballooned as the economy has shifted towards low-paid, insecure jobs. A decline in Britain’s manufacturing base and our over-reliance on the financial sector, centred around London and the South-East, has created vast regional and sectoral imbalances. While the South-East struggles with a rising cost of living crisis, post-industrial northern and coastal towns have seen their economies and communities left behind. We have also seen the current account, productivity growth and infrastructure investment all deteriorate, while research and development investment in Britain is more than a quarter lower than the OECD average, both in the public and private sectors.
If the 2008 financial crisis brought these economic problems to a head, the EU referendum represented their political fall-out. What else to take from the fact that the highest leave votes came from areas with low or precarious employment? We need to start learning the lessons of this failed economic experiment in free market fundamentalism. That redistribution isn’t enough – work satisfaction and quality of life also matter. That it matters where growth comes from, as the absence of vibrant local economies destroys fabric of communities. And that the British economy as a whole needs to create value – not just monetary value in the form of profits for employers, but social value through the creation of jobs and things communities actually need.
All this is occurring against the backdrop of a growing climate crisis which threatens, not just lifestyles, but the very civilisations we live in and environments we depend upon in the UK and abroad. Confronting this threat will require systemic changes in the ways we organise our economy and society. With 2016 the hottest year on record again, and with increasing flood risk facing British citizens, especially those on low incomes, action to bring about these changes have become pressingly urgent. Fighting climate change used to be seen as going backwards, but with opportunities growing and countries across the world beginning to decarbonise their economies, this is rapidly becoming the largest mobilisation of capital the world has ever seen.
Britain needs to be geared up to deliver and export the products and services to harness this change. Doing so will bring forth benefits not just of exports and growth but also new high-quality jobs in green tech and innovation, cheaper energy bills, cleaner air and safer communities. To maximise the positive outcomes of this transition we must pay careful attention to the jobs and areas currently dependent on fossil fuel industries. We cannot allow those currently employed in such industries to pay the price of tackling climate change. We must include those communities which powered our country for many years, harnessing their skills and knowledge to gain the advantage in decarbonising markets. This means developing radical and far-reaching plans to ensure that, as carbon-based industries are phased out, each individual affected has the support and assistance necessary to maintain their quality of life and to retrain and build complimentary skills for an alternative, high quality job.
This is why we need an industrial strategy. By this we mean a vision of the kind of economy we want, and a plan for how to deliver it. Because, while we do face significant challenges, Britain also has great strengths we can build on, such as our world class universities and extraordinary heritage of scientific research. A Labour government will take bold steps to make the most of these strengths and provide support and investment where it is needed. This isn’t about old-fashioned centralisation or command and control. It is about the state bringing workers and employers together with other stakeholders, and working with them in a way that is proactive, integrated, and long-term, drawing on best practices from other countries. Labour will be seeking views from all sectors to help design an industrial strategy that helps build a modern economy that works for everyone and everywhere in the country.
We will be consulting on how people understanding the idea of an industrial strategy and its role, and seeking views on what are the main barriers confronting Britain’s economy.
Industrial Strategy – Terms of Reference
An industrial strategy is first and foremost about deciding what kind of economy we want. Labour’s answer is that we want an economy that is prosperous and competitive, and that leaves no one behind. This means cultivating industrial strength, while guaranteeing a good standard of living for everyone, everywhere, in a way that can endure, and respecting rather than destroying our environment. We think this means meeting the following objectives.
- Jobs – we need a strong commitment to making all jobs decent, well-paid, secure and open to workers of all backgrounds, so that no one has to suffer the hardship or indignity of unemployment or of being trapped in insecure, low-paid work.
- Productivity – it is only through a high and rising rate of productivity – achieved through improved technology and workplace management rather than intensified exploitation of the workforce – that we will remain competitive on the world stage and create the value necessary to raise the wages and living standards of everybody.
- Sustainability – it is imperative that we refashion our economy so that it alleviates rather than exacerbates the mounting global climate crisis, with a just transition to reduced energy consumption, a balanced energy policy, and meeting our commitments under the Paris agreement. Doing so presents an opportunity to take a leading role in the development of environmental technology.
- Regional Balance – prosperity must extend to all regions and areas, so that every part of the country has a vibrant local economy and flourishing community life.
- Sectoral balance – balanced growth that cultivates strengths in a variety of wealth-creating sectors, such as manufacturing, will help to ensure the resilience and stability of our economy, as well as contributing to regional balance and productivity.
We will be consulting on these objectives – whether they should be the main objectives of an industrial strategy; whether there are any additional objectives that we have not mentioned; what should be the order of priority across these objectives; and in what sequence we should try to achieve them.
2. Scope of Labour’s review
The scope of Labour’s review will be wide reaching. We are keen to hear from everyone about how the government can work with employers, trade unions, universities and other stakeholders to best shape our economy. A non-exhaustive outline of some of the areas we would like to get views on are set out below. Ideally feedback would identify missions and then set out the associated priorities, interventions, economic environment, institutional framework and process.
We encourage suggestions for the overarching missions an industrial strategy should set out. These should be challenge-led, addressing the key problems of our age, and measurable and accountable, so that a future Labour Government can be assessed on the extent to which they meet the missions they set for themselves.
We invite comments on what our priorities should be and how they would best be achieved across the following areas. Respondents are encouraged to reflect on the respective roles of the private sector, the Government, and enabling actors such as universities, trade unions and local authorities.
- Productivity and skills
- Job creation and quality
- Environmental goals and capacities
- Nurturing and supporting each of manufacturing, services, foundation industries, and cultural industries,
- Regional balance, diversity and inclusion
- Implications of Brexit
- Digital economy/growing automation/industry 4.0
We will be seeking views on the policy levers and interventions that should be used to deliver an industrial strategy and how, including, but not limited to:
- Supply chains/Reshoring
- Trade agreements
- Access to finance
- Public investment and infrastructure
- National and local investment banks
- Tax and business rates
- Reporting and other corporate governance requirements
We invite views on the broader economic environment and how it might be shaped to support an industrial strategy, including:
- Corporate governance
- Labour market regulation and workers’ rights
- Macroeconomic framework
We are also consulting on the institutional framework that will best deliver our industrial strategy, for example:
- What structures do we need in place to deliver an industrial strategy across local, regional, and national levels, and how should they interact?
- How should our industrial strategy utilise/ accommodate devolution?
- Do we need sectoral-based structures in place, such as industry councils setting priorities and guiding interventions? If so, how should they be structured and what powers should they have?
- How do we incorporate worker voice in the design and delivery of an industrial strategy?
- How do we secure the representation and buy-in of the corporate sector?
We will gather responses and contributions over the coming months, and will use them to inform the missions and goals of our industrial strategy and plan for achieving it.