Kwarteng rebuked for scrapping industrial policy plan

A former Conservative business secretary has described his successor Kwasi Kwarteng’s abandonment of a planned industrial strategy for the UK as “mystifying”.

Greg Clark said the government’s current lack of industrial policy was having “alarming consequences”, in the foreword of a report by the Centre for Social Justice (CSJ) think-tank published on Monday.

The former business secretary, who developed a 111-page industrial strategy while in office between 2016 and 2019, wrote that the aspects of this blueprint that had been implemented “proved to be beneficial”.

In the report, Making the Change, Clark calls for the current government to prioritise the revival of manufacturing to reduce regional disparities.

“It is mystifying that, at the very moment a longer-term perspective was proved to be beneficial, the previous administration abandoned the industrial strategy,” he wrote.

Labour is stepping up pressure on the government to take a more interventionist approach, including putting more money into helping the struggling steel industry to move to greener production processes.

Bill Esterson, shadow industry minister, has written to business secretary Grant Shapps, saying Labour would invest £3bn “in transforming our steel industry” and asking the government to take a similar approach.

Kwarteng, who became chancellor last year during Liz Truss’s seven-week tenure as prime minister, scrapped the industrial strategy in March 2021. He replaced it with a looser set of aspirations as he pushed for a realignment of the policy to make it more responsive to market signals.

Clark pointed to his strategy published in 2017 on developing vaccines, which he said had helped the UK to manufacture new, effective drugs during the Covid-19 pandemic.

It was “a relief” that some schemes initiated under the strategy had become too entrenched to be scrapped by the time he left office, he added.

“[Without those] we would not have had the investments into vaccine development, small modular nuclear reactors, and battery storage that have been made to our advantage,” Clark wrote.

The foreword was careful not to attack the current government of Rishi Sunak over the issue and Clark said that the signs of a return to setting such a strategy were “promising”.

He added that as chancellor Sunak “recognised the importance of research and development” and had doubled public spending on innovation and science.

However, Clark made it clear that he did not believe the government’s plan to ensure industrial investment was adequate.

Referring to remarks by the former head of the UK Vaccine Taskforce, he wrote: “As Dame Kate Bingham told the science and technology committee of the House of Commons last month, we are at a critical period in which the absence of an industrial strategy for manufacturing is having alarming consequences.” Bingham said UK manufacturing had been “sold and mothballed”.

In the report, the CSJ said manufacturing had declined as a proportion of gross domestic product from 25 per cent in the 1970s to 9 per cent. It said the sector declined “more rapidly than any other industrialised nation”.

It called for the government to aim for manufacturing to become 15 per cent of GDP and wrote: “There is strong evidence to suggest the relative decline of manufacturing has been a key contributing factor to growing regional inequality.”

The Department for Business, Energy and Industrial Strategy did not immediately respond to a request to comment.