Industrial Strategy

Lord Watson of Wyre Forest Excerpts

Thursday 1st February 2024 Lords Chamber

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[Lord Watson of Wyre Forest]

That this House takes note of the case for a comprehensive Industrial Strategy for the United Kingdom.

[Lord Watson of Wyre Forest (Lab)]

My Lords, I draw attention to my entries in the register, particularly for UK Music and Windward Global.

This Motion would not be debated in the legislative assemblies of the major economies: not in Germany or the USA, nor France, Japan, China, South Korea, nor any other developed nation on earth. Why? Because as the manufacturing trade group Make UK says, the United Kingdom is unique among advanced economies in not having an overarching, comprehensive industrial strategy.

I know that the Minister will point to the Government’s plan for growth, introduced under the previous-but-one Prime Minister in March 2021. I suspect he will want to advance the argument that the plan for growth, with its specific focus on five areas of economic activity, constitutes a strategy. I am sure he will be keen to mention the £500 million per year that the Government have earmarked for 20,000 R&D businesses, along with £650 million for life sciences. Let me say at the start that these are all commendable initiatives, and worthwhile in their own right, but they do not yet form part of an overarching strategy. I know that because, in June 2023, the then Minister in the Lords said:

“I think noble Lords will agree that this is a time for specialisation rather than a single, overarching, broad strategy”.—[Official Report, 20/6/23; col. 93.]


I disagree with that assertion.

I do not think we are doing enough to make a decisive difference to the UK’s economic prospects, given our sluggish growth, flatlining wages, regional disparities and chronic underinvestment. I invite the Minister to cogitate on why it is that the UK is unique in not having an industrial strategy, while reminding colleagues that a plan is definitely not a strategy. We have had a plethora of announcements, initiatives and institutions since 2010 and a constantly changing cast list: those 13 years have seen 11 growth strategies, nine Business Secretaries and seven Chancellors. This is partly, I am sure, why Make UK has said that:

“A lack of a proper, planned, industrial strategy is the UK’s Achilles heel”.


Meanwhile, the Centre for Economic Policy Research reports on the renewed interest within our competitor nations in

“effective tools and strategies to promote economic development and address new challenges, from supply chain risks to national security and climate change”.

It further says that industrial policy has featured significantly in the world’s largest economies. Again, I ask the Minister: why is the UK the odd one out?

What then is the case for an industrial strategy? An industrial strategy would

“help young people develop the skills they need to do the high-paid, high-skilled jobs of the future. It backs our country for the long term: creating the conditions where successful businesses can emerge and grow, and helping them to invest in the future … it identifies the industries that are of strategic value to our economy and works to create a partnership between government and industry to nurture them … it will … propel Britain to global leadership of the industries of the future—from artificial intelligence and big data to clean energy and self-driving vehicles”.

Those are not my words; they are the words of the then Prime Minister, the right honourable Member for Maidenhead, in her foreword to her Government’s Industrial Strategy document in 2017. It is hard to disagree with that, and even harder to understand why the Government cancelled it so soon afterwards. It is quite a head-scratcher.

Ministers also abolished the Industrial Strategy Council in 2021. It included Andy Haldane from the Bank of England, the Community union’s Roy Rickhuss, and ceramicist Emma Bridgewater—all of them were given their marching orders. If you do not have an industrial strategy, you do not need an Industrial Strategy Council to guide it. The respected Institute for Government states:

“Weak productivity performance and regional imbalances have worried politicians for a long time, as has a sense that the UK does not make enough of its abundant strengths in science. These alone are important justifications for an industrial strategy”.


The case is overwhelming. It is why the cry has gone up from trade union leaders, former Conservative and Labour Cabinet Ministers, civic leaders, entrepreneurs and investors. It is no wonder that 99% of British manufacturers back the need for an industrial strategy, and yet we do not have one.

Thankfully, we have a lot to build on. On manufacturing, the Economist recently reported a survey of the public that asked respondents to state where they thought the country ranked in global manufacturing league tables. The median answer was 43rd, which was wrong. The latest comparable data makes Britain the world’s eighth-biggest manufacturer. The Economist said:

“Many manufacturers believe that the successes of recent years have come about despite rather than because of government policy”.


What would a new industrial strategy look like? My starting point is that an effective industrial strategy is not about picking winners or propping up losers, or meddling in markets when they work, and it is not about Ministers interfering in the business of business. It is about working in partnership with firms to identify problems and fix them; to see opportunities and seize them; to ask not why but why not.

The moon landing in 1969 needed a strategy that included not only aeronautics but electronics, nutrition, product design, computer software and engineering. The UK right now needs to define its moonshot equivalent. It could be fixing the climate crisis, although we know that is a global challenge. It could be that we are the first country in the world to have a sovereign quantum computing facility. It may be that we choose to build homes for everyone before they are 30, and orient things around that. My point is that there should be a small number of clearly understood and defined national goals where there is currently a vacuum. I am greatly influenced by the work of the economist Mariana Mazzucato, who said:

“Industrial strategy thus holds a dual promise: helping to address climate change and revitalizing industry so that it can compete in the twenty-first century. We need not accept … a trade-off … The two can go hand in hand if green policies are deployed to fuel growth and innovation, and if sustainable practices are woven into the fabric of how we consume, move, invest, and build”.


A new industrial strategy would take full cognisance of the UK’s context. We have a growing and ageing population, and a huge wealth of talent and expertise in science, technology and manufacturing. We have world-class universities, and fantastic entrepreneurs and inventors. We are a global leader in creative industries—gaming, film and music—and native speakers of the English language. We are a great nation, straining at the leash to be allowed to get ahead. It would view climate change as both an existential threat as well as an opportunity for economic growth and technological advance, leading the way in carbon capture, renewable energy, and post-carbon manufacturing of everything from hydrogen to nuclear, and from electric vehicles to the next generation of batteries for our phones. It would negate the need for a Department for Levelling Up because it would promote economic activity and growth in every nation and region, not just the south-east and London.

It would provide a stable platform for long-term investment and sustained growth instead of political chopping and changing, which business always tells us is the drag anchor on its success. It would represent a true partnership with small and medium enterprises, growing companies, unicorns, long-established British businesses and government at every level of our devolved constitution. It would allow businesses to thrive, turn profits and create decent, well-paid jobs, and it would allow the state to invest these products of growth into our public realm and shared services. Without economic growth, we do not grow as a society. It would allow the next generation to grow tall.

In my peroration, I will highlight one area where the absurd absence of an industrial strategy is most keenly felt and where the price is most heavily paid: the steel industry. Unless we act soon, the UK will lose its ability to make primary, or virgin, steel forever—[Interruption.]

[Baroness Williams of Trafford (Con)]

My Lords, I apologise for interrupting the noble Lord. I remind noble Lords that speaking on mobile phones is not permitted in the Chamber.

[Lord Watson of Wyre Forest (Lab)]

We will be the only advanced nation unable to make steel, in a time of global turmoil and uncertainty. This would represent criminal negligence. I note the announcement that Tata will close the two blast furnaces at Port Talbot in a few months and install an electric arc furnace, which would cut productive capacity. This is mindless vandalism to our manufacturing base. The salt in the wounds is that the Government are throwing £500 million at Tata, to lose 3,000 jobs in steel manufacturing. British Steel in Scunthorpe is looking to close its blast furnaces. These twin actions will mean that we have to import primary steels, with huge costs to the environment.

The trade unions have a plan to transition to cleaner, greener steel production and safeguard local jobs. Community union and the GMB have a workable, serious plan. Is the Minister aware that Tata indicated that this plan is credible and viable but was rejected by the Government on the grounds of cost? Can he comment on the exact nature of the £500 million offered to Tata, and whether this is in any way related to Tata’s battery plant in Somerset? Does the Minister know that electric arc furnaces cannot produce the base steel that is needed for tin manufacture—yet 30% of Port Talbot’s output is for tin cans? It has the orders, but the means to fulfil them are being removed. Has he read the rescue plan?

I do not want to make the case just for saving jobs in this part of Wales, nor focus on the bitter human cost that will be paid by working people and their families in these proud communities. I do not want to point out just that 20,000 jobs in the supply chain rely on this plant. I am sure others will want to point out the similarities with the destruction of our manufacturing base in the 1980s, with the price paid by miners, steel-workers and skilled engineers and their families in that dark decade of deindustrialisation and demoralisation of whole towns and cities. I want to link what is going on with steel today with my central argument for the need for an industrial strategy.

An industrial strategy must seek answers to the central questions of our age: our negotiation with rapid technological change, our need to decarbonise, our desperate need for growth and the big shifts in our society. An industrial strategy can mitigate the risks, manage the transition and soften the hammer-blows that rapid change can bring. This is not top-down statism, but not free-market fundamentalism either; it is a true partnership with communities, companies, industries and government.

An industrial strategy must view the steel industry as part of a bigger landscape of manufacturing, and manufacturing as part of a bigger landscape of economic activity. It must view economic activity as the basis of our society, culture, well-being and national character. All the moving parts interact and interrelate, just as all humans do. What happens in Port Talbot, in Scunthorpe, in the long-ignored corners of our country and in the left-behind towns and estates happens to us all. This is an essential truth that the Government seem to have missed. I beg to move.

--- Later in debate ---

[Lord Watson of Wyre Forest (Lab)]

My Lords, I thank all contributors to today’s debate. I thought it was both interesting and thoughtful and set the terms of future discussions that we will be having in the years ahead in this House. In particular, I thank the noble Lord, Lord Rosenfield, for his considered contribution and welcome him to the House. Like him, I felt very nostalgic when he described working at No. 10. I have very fond memories of working there myself, and I know that his experience in the Treasury and in No. 10 will ensure that his contributions to this House really make a difference.

The nostalgia did not stop there. Is it really over 30 years since I shared a flat with my noble friend Lord McNicol and was so infuriated when I was reading the seminal work of the noble Lord, Lord Willetts, Modern Conservatism, page by page? I am grateful and relieved, of course, that both of their thinking has moved on in the last 30 years, on the basis of their contributions today.

But the nostalgia does not stop even there. It is 40 years since I was appointed as the photocopy kid in the library at Labour Party headquarters, where the general secretary, my noble friend Lord Whitty, as he is now, used to tell me about how he worked for the Ministry of Technology under Harold Wilson—we all know that Harold knew how to back a winner and was very good at industrial strategies.

Then it reminded me that I am just getting on a bit. Indeed, my noble friend Lord Rooker reminded me in his contribution that he was the first MP I ever met, at the age of seven years old, which gives me the right to say to him that, this month, I believe, we will see his 50 years of unbroken service to the Houses of Parliament, both in the Commons and the Lords. It has been a genuine pleasure to see his contributions in both Houses during those years, and I am delighted and honoured that I can say that while wrapping up this debate.

An industrial strategy sets a longer-term higher order of direction for a country to take, perhaps even more than markets can predict, with goals like technological leadership or sustainable development. I was particularly entertained, amused and impressed by the contribution of the noble Lord, Lord Frost. I will just remind him by way of conclusion that the company of his fellow Hayekian anarchist, Elon Musk, the boss of Tesla, had a market capitalisation of $588 billion the last time I checked. He must be very grateful for the $465 million he got as a loan guarantee from the American Government because they had an industrial strategy. Would it not be great if we could have the same in this country?

[Lord Evans of Rainow (Con)]

My Lords, please forgive me: I forgot to mention the excellent speech of the noble Lord, Lord Rosenfield. Coming from Manchester, he is most welcome to the House, and I look forward to working with him and finding out if he is a blue or a red.