Policy shift that indicates national industries may get support at last

UK’s steel industry shown by successive governments is alarming in its lack of insight and vision for the strategic needs of our economy.

Yet the restructuring of the former ministry of Business Innovation and Skills (BIS) into the ministry of Business, Energy and Industrial Strategy (BEIS) may indicate – perhaps - the stirrings of a long-awaited change.

Specifically, the Government looks to have accepted that to compete with other industrial nations, an element of coordination of the economy is necessary.

The Government’s Green Paper on industrial strategy, released in January, sets out how this will be achieved. The overarching ambition is to improve living standards and achieve more balanced growth by increased productivity. This will yield a stronger economy, ‘fairer society’ and ‘high paid, high skilled’ jobs. It will ‘build on strategic strengths’ and ‘tackle underlying weaknesses’.

The industrial strategy is, though, to be ‘modern’. Greg Clark, Minister for BEIS, said that this is not about directing the economy and a 1970s style industrial strategy, which is ‘mistakenly focused’ on existing industries and the big firms within them. Instead, it will help nurture new industries that will ‘challenge and in some cases displace’ existing industries.

Picking losers seems central to this philosophy. In the absence of key supports for manufacturing and energy intensive industries, the danger is that this might become a self-fulfilling prophesy.

The steel industry is of particular relevance to Yorkshire and Humberside. More than 10,000 people are employed in the region’s steel industry, more than anywhere else in the UK. The region is responsible for most of the industry’s electric arc furnace output.

This, alongside Basic Oxygen Steel produced by British Steel Scunthorpe, and the speciality steel produced at for example Stockbridge, makes this the country’s strategic centre for steel production.

In July 2015, then-Secretary of State for Business Innovation and Skills, Sajid Javid, explained that he believed in an ‘industrial approach’ for the UK industry rather than an ‘industrial strategy’.

It was the crisis in steel, its near-death experience that in large measure, which propelled the government to think again about the extent to which it should intervene in the workings of the economy.

The vehicle through which the needs of the steel industry influenced the government to act was the ‘Steel 2020: forging a future for the British Steel Industry’, report, launched in January of this year.

I researched and co-authored this report with the All Parliamentary Policy Group on Steel and Related Metals (APPG). Research on industrial restructuring and the steel industry has been ongoing in Leeds for many years and the Centre for Employment Relations Innovation and Change (CERIC) at Leeds University Business School had the expertise.

A key question for the government now is to what extent will the UK’s industrial strategy provide a supportive framework for steel and other Foundation industries.

Although manufacturing accounts for around only 12 per cent of GDP, Foundation Industries provide a critical impulse for a nations R&D, innovation and skill effort.

The industrial strategy Green Paper is based on ten pillars, and covers much ground.

However, it is concerning that apart from its reference to the aerospace and auto industries, mention of the wider manufacturing sector and its key Foundation industries like steel is scant.

One hopes this reflects presentation, rather than intent. There are signs of a more co-ordinated approach to economic co-ordination, but there is still a long way to go.