Industrial Strategy

Lord Willetts Excerpts

Thursday 1st February 2024 Lords Chamber

[Lord Willetts (Con)]

My Lords, it is a great pleasure to welcome the maiden speech from the noble Lord, Lord Rosenfield, to congratulate him on the points that he made and to welcome him to this House. By happy accident I follow him in this debate, and I realised that there were some rather significant career parallels. We both began our careers as Treasury officials and both then moved to 10 Downing Street. He worked for Boris Johnson; I worked for Margaret Thatcher. I am now here on the Tory Benches and he is a Cross-Bencher, which may tell us something about the particular qualities of bipartisanship that he will bring to this Chamber and which I am sure will lead to many interventions in the months to come.

I register my interests, particularly as president of the Resolution Foundation and chair of Innovate Cambridge.

Industrial strategy is a very fraught concept, which is sometimes argued about too much. It has a very simple meaning. All of us believe that we can promote economic growth by horizontal policies that apply across the entire economy: a good tax system and an efficient planning system. Industrial strategy says that there also have to be vertical policies addressing particular sectors, particular places—as we just heard so eloquently—and particular technologies. I have observed many Ministers who arrive in government determined to have purely those general horizontal policies and find that they are brought into having to take decisions—where to make transport investment, exactly what kit to buy, how to spend a limited science and technology budget—and they need some criterion for reaching those decisions. That is why you need some kind of strategic framework.

I welcome the excellent opportunity of this debate and the opening speech. However, I quarrel with some of the terms in the Motion before us, such as “comprehensive”. There are some sectors that just want to be left alone; I think “comprehensive” may be too ambitious. It should be comprehensive where there is a need, certainly, but I am not so sure that you can have something as comprehensive as Labour’s National Plan of 1965. Similarly, “industrial” has rather a precise meaning. Our work at the Resolution Foundation in our recent economic inquiry showed that it was absolutely clear that Britain has a real comparative advantage in services, which is an area where we can do more. For me, with my interest in higher education, I think of higher education as a really important British export industry. Therefore, any kind of industrial strategy really has to cover services as well.

There are, of course, risks to industrial strategy, and it is just possible that in subsequent interventions we may have warnings of some of those risks. One risk is producer capture: big, powerful lobbying firms getting things for their advantage. One reason why I very much agree with the excellent points made by the noble Lord, Lord Kakkar, is that one of the arguments for investing in disruptive new technologies is that they rarely favour incumbents. They are a great way of shaking things up, hence the particular importance I attach to technologies being supported.

One of the reasons why I very much regret the Government’s decision to abolish the Industrial Strategy Council is that the real purpose of that council was not to write detailed plans but to keep industrial strategy honest by scrutinising what was being done, what was proving to be effective and should be grown, and what was ineffective and should be abandoned. I very much hope that it will be possible in the future to recreate something like that excellent body.