We don’t yet know much about Brexit, but we know that as a result of leaving the European Union, the United Kingdom will lose something, economically. An Oliver Wyman report, for TheCityUK, estimated that a hard Brexit will cost the financial services sector alone up to 70,000 of its highest paying jobs and £40 billion of annual trade. Nissan’s decision to delay further investment in the UK until Brexit negotiations are concluded is being echoed, less publicly, across the country.
The Government’s task is to ensure that the opportunities Britain creates will outweigh what we will undoubtedly lose. The initial signs from Theresa May were encouraging. Within a week of assuming power, she had announced that under her leadership Britain would have a “comprehensive industrial strategy” and Greg Clarke became Secretary of State for the re-focused Department for Business, Energy and Industrial Strategy. But since then, the Government’s focus has been on domestic politics and winning the 2020 General Election. Grammar schools are aimed firmly at the “squeezed middle” and Amber Rudd’s disastrous flirtation with naming and shaming companies with a high proportion of international workers, is a direct pitch to UKIP Brexiters. Although the proposal has been withdrawn, it has further harmed Britain’s already damaged international reputation.
At Conservative Party Conference in Birmingham last week I set out to learn more about the “comprehensive industrial strategy” and found that things haven’t progressed as much as they might have in the two months since Theresa May’s initial announcement. There is no formal framework for business and industry to feed into the development of the strategy and no clear protocol for co-operation between Government departments. On the plus side, there is progress on energy (Hinkley Point and, to come, tidal energy) and transport (hopefully airport capacity and HS2) – although it’s unclear whether that will mean we have either a coherent energy or transport policy. In terms of scope, the industrial strategy is intended to include financial and professional services, as well as “industry”. On the down side, there is the familiar ideological resistance to “national planning”, among those that believe the market should rule. I once asked David Willets if he thought we should consider a greater level of industrial planning and he responded by asking me if I was a Marxist. A familiar comment at conference was that we don’t want to do the things that Singapore and Switzerland do, although it seems to me that their coherent approach to attracting quality business is exactly what we do want to do.
Some things – energy policy, major infrastructure projects, mass house building, regulatory environment, taxation policy – are either the preserve of the state or require state intervention. All are important to our future. This week, it’s taking Southern Rail commuters two to three hours to travel 70 miles from Chichester to London – while the Japanese Shinkansen regularly travels at between 150-200mph and it is over 50 years old. Depressingly, the only British politician talking of the scale of investment required to modernise our creaking infrastructure is Labour’s John McDonnell with his £500 billion National Investment Bank. The Government’s tentatively suggested “infrastructure bonds” don’t, at first sight, appear to have the required scale, but we shall see.
Philip Hammond’s first significant announcement as Chancellor, the Autumn Statement, comes on 23rd November. The Economist has already declared that “he will need to stimulate the economy” although he has himself ruled out a “fiscal splurge”. Collectively, those of us in the private sector need to pressure the Government to outline its approach to developing a comprehensive industrial strategy. Trade associations and industry bodies have never been more important and it’s vital that they act as visionaries for their respective sectors and communicate a wish-list to Government. Individual companies also need to air their views as well as participating in their trade bodies.
As the clock will soon be ticking towards Brexit, our economic losses in terms of jobs, company relocations and headquarters shifts come ever nearer. To outweigh them, we need the benefits from the promised industrial strategy as quickly as possible.