Geoff White, Peter Tyler and Colin Warnock discuss how the Labour Government’s Green Paper – Invest 2035 – could be strengthened if it is to make sense as a fully-fledged Industrial Strategy in the White Paper promised for Spring 2025.
The government has put a ‘modern’ industrial strategy at the heart of its economic approach. And it should be commended for the speed with which Invest 2035 – its draft strategy – was produced. Published in October 2024, it is a statement that cuts to the chase and sets-out a pragmatic way forward in both the short and longer terms. But, as a Green Paper, the draft strategy is cast at a general level which skates over issues of definition, theories of change, critical assumptions and risks, and the inevitable trade-offs required.
In our policy brief, Making sense of Labour’s modern industrial strategy, we identify a range of key issues and how they might be addressed to ensure that the promised Spring white paper is fully-fledged.
The primary objective of the strategy is securing higher growth. But we suggest that net zero, regional growth and security/resilience should be used as the primary objectives to shape the type of growth being pursued, rather than cast almost as subsidiary objectives to be achieved at the same time as growth.
Additionally, it is necessary to specify the theories of change and causal mechanisms by which the growth mission objectives are expected to be achieved. This will require the identification of the key mission driving technologies and places, as well as sectors, that should be the focus for investment/innovation and where government intervention through a variety of means – information sharing, collaboration, public funding, levered private funding, tax incentives and regulation – could bring about additional and sustainable outcomes.
It is important to recognise that the promotion of the wider transformation of the economy has to be underpinned by a sectoral framework that shows the distinct mechanisms by which each sector can innovate and adopt good practice.
A place-based framework is needed that depicts the relative needs and opportunities of different places and the appropriate strategic policy direction for each combination of need and opportunity – including those places most likely to remain left behind.
| Places with… | Low growth opportunities | High growth opportunities |
| High capacity and low needs | Strengthen the flow of opportunities | Strengthen local capacity further to exploit the opportunities |
| Low capacity and high needs | Intensive and persistent actions to strengthen the demand side, supply side and access to opportunities | Strengthen the supply side to access the opportunities |
We recommend that a wide range of policy instruments – including fiscal incentives as well as funding, regulation, and procurement – should be identified and mapped against the priority mission driving sectors, technologies and places. The balance between their devolved and central delivery should also be made clear.
The range of instruments includes blended finance and other mechanisms by which private capital looking for market rates of return is mobilised to fund sustainable growth by catalytic funding from the public sector with non-market objectives and riskier return profiles. Caution is needed here to avoid simply shifting public responsibilities off the public balance sheet or offering a risk/reward balance that favours the private sector disproportionately or defer costs or liabilities for accounting purposes.
Tax incentives are another instrument for improving growth performance, especially in potentially left-behind places. For example, Inclusive Growth Areas could be designed to accelerate the delivery of industrial and commercial floorspace on specified parcels of land, as identified in Local Growth Plans. This could then be supported by wrap-aroundemployment and skills support and additional incentives for participation from residents in wider target areas around the land parcels (akin to the place-based trailblazers in the recently published Get Britain Working White Paper).
Adequately resourced monitoring and evaluation frameworks should be adopted from the outset. Too often evaluations of major policy initiatives have been configured as an after-thought rather than actively used to shape and develop strategy and enable all stakeholders to learn what is working well and what is not. A strong place-based focus on evaluation is required in parallel with the national effort.
In short, whilst a promising start, there is much work still to do to ensure that the UK Government has a fully-fledged industrial strategy that is capable of producing a step-change in the UK growth rate that the country urgently needs.
Read the policy brief: Making sense of Labour’s modern industrial strategy
The views and opinions expressed in this post are those of the author(s) and not necessarily those of the Bennett Institute for Public Policy.
