Building Back Worse
British Prime Minister Boris Johnson’s government is clearly happy for the state to play a larger role in the economy. And yet, by scrapping a perfectly sensible industrial strategy for no good reason, it has all but ensured that the country’s economic problems will remain unsolved.
LONDON – The term “industrial strategy” has a turbulent history. After being embraced in the United Kingdom by the Labour governments of the 1960s and 1970s, it was rejected by Margaret Thatcher and subsequent prime ministers on the (dubious) grounds that government is inherently wasteful and inefficient.
Although industrial strategy was partly rehabilitated by the Labour Party in 2009, and then again during David Cameron’s Conservative/Liberal Democrat coalition government, it took Theresa May’s Conservative cabinet to bring it back fully. In 2016, May established the UK Department for Business, Energy, and Industrial Strategy, which then published the UK’s first Industrial Strategy in decades.
To its credit, the strategy called for more funding for science, skill formation, and other productivity-boosting investment, with an emphasis on sectors that are key to future competitiveness (including life sciences, creative industries, construction, and aerospace). For the first time, such a strategy also explicitly targeted wider societal “grand challenges,” which the UCL Commission for Mission-Oriented Innovation and Industrial Strategy (MOIIS) – co-chaired by one of us (Mazzucato) – advised the government on how to implement.