Industrial strategy accused of failing to help key sectors

The government’s industrial strategy has been criticised by MPs for failing to help people working in ‘neglected sectors’ like retail and hospitality.

A report published today (19 March) by the cross-party business, energy and industrial strategy select committee said the government has not done enough to engage with some sectors, like steel, retail and hospitality and offer them a ‘sector deal’.

The government has already signed a number of ‘sector deals’ to provide support and financial assistance, including one recently with the offshore wind industry.

Instead the report calls on ministers to be ‘more transparent’ about the sectors with which it is willing to do a deal.

‘The government have not indicated whether the list of sectors seeking a deal is shrinking or growing, but the slow progress in achieving deals beyond the pioneer sectors, and the lack of clarity in what might be possible, is in the interests of neither business nor government,’ the report states.

The committee has also called on ministers to publish an action plan for how it is going to work with low productivity sectors, like retail and ‘provide the productivity boost they so urgently need’.

‘Sector deals won’t be enough on their own to tackle the UK’s productivity puzzle or insulate industry from the fall-out of a no-deal Brexit or of greater friction in our future trade with the European Union,’ said committee chair, Rachel Reeves.

‘But sector deals are a key plank of the government’s industrial strategy and, if agreed fairly and honoured fully, have the potential to make an important contribution to boosting the nation’s lagging productivity, improving competitiveness, and delivering growth to all parts of the UK.

“The government’s industrial strategy isn’t doing enough for the ‘everyday economy’, in sectors such as retail and hospitality where millions of Brits are employed. The government’s ‘open door’ offer to industry isn’t being delivered upon in these neglected sectors and the government needs to be much clearer about the criteria for sector deals and engage more actively and decisively to make these happen.

Responding to the report, the chief executive of the think tank Localis, Jonathan Werran, said: ‘The committee rightly points to the success of the offshore wind sector deal as an exemplary way to boost coastal areas, rebalance the economy and ensure the industrial strategy delivers economic, environmental and societal benefits which people can experience in their daily lives.

‘For industrial strategy to deliver strong regional impacts, and given Whitehall staffing constraints, it might not be necessary to locate BEIS officials throughout all four quarters of the land in emulation of the disbanded government offices or regional development agencies,’ said Mr Werran.

‘However, as our ongoing research into central/local government relations is informing us, a greater degree of understanding, respect and first-hand knowledge of local economies wouldn’t go amiss in SW1.’

A government spokesperson: ‘We welcome the committee’s chair recognising that sector deals have the ‘potential to make an important contribution to boosting the nation’s lagging productivity, improving competitiveness, and delivering growth to all parts of the UK’. We will consider the select committee’s findings, and will respond in due course.’