Boris Johnson’s goal of rebalancing Britain’s lopsided economy is at risk of failure because of the government’s neglect of its industrial strategy, the watchdog established to monitor progress of the flagship policy has warned.
In a critical report, the Industrial Strategy Council (ISC) said the policy to earmark government support for key sectors of the economy had made only limited progress since Theresa May first unveiled the plan three years ago.
The strategy comprises about £45bn of government funds, the equivalent of 2% of GDP, that has been committed to plans to improve the quality and scale of housing, transport, digital infrastructure and research and development.
However, the ISC said much of the funding was narrowly focused and that the majority of the 142 policies in the strategy had very limited funding, or no funds at all.
In a rebuke to ministers, the report said: “As a result, they are very unlikely to be operating at a scale necessary to have a material impact on the economy.”
The watchdog said it remained unclear whether the strategy had led to policy being better coordinated across government.
Andy Haldane, the chief economist at the Bank of England and ISC chair, said: “An effective industrial strategy is central to tackling some of the deep-seated structural challenges facing the UK economy, among them the climate crisis, ‘levelling up’ the regions, the skills deficit and the productivity puzzle.
“At present, these policies are not yet operating with the consistency and coordination, nor with the scale, necessary to meet these challenges.”
The strategy has faced criticism for a lack of progress from employers groups before. Senior business leaders have expressed concern that some Conservative MPs remain ideologically opposed to its existence. The former international trade secretary Liam Fox suggested last month the government should drop the industrial strategy altogether.
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