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The purpose of an industrial strategy is not only to generate the resources needed to underpin rising living standards and enable the nation to pay its way in the world, but to create a vision of a country at the forefront of human ingenuity, skills and expertise. National pride demands an unfolding agenda of national achievement.

This must embrace not just the manufacturing sector, but the economy as a whole, including, critically, services. In academia, in enterprise and in public service we have much that is excellent. But an underperforming tail drags averages down to unacceptable levels in areas such as education, skills and productivity. The fact that emerges from the most casual scrutiny of government is that there is no industrial strategy. Indeed, there is a strong body of opinion that suggests there should not be one. Elsewhere, I have argued a different case.

Whitehall is managed by strong functional departments in creative tension with the legitimate cost-controlling responsibilities of the Treasury. Yet what we need is a competitiveness unit in the Cabinet Office whose job it is to monitor and understand the performance of our competitors.

At present, there is no process to ensure co-operation between departments where the national interest requires a view wider than the specific departmental responsibility. The problem is exacerbated by the virtual independence of powerful quangos. The solution lies in the new industrial strategy committee chaired by the prime minister. Each department should set out its vision for industry and be scrutinised by the competitiveness unit, thereby allowing an industrial strategy to emerge.

If the machinery of government could be started again from scratch, the role of Whitehall would be defined as to set standards and ensure quality at the point of delivery of appropriate services.

There is a need to devolve more of Whitehall’s power to local control, particularly in the fields of education, skills provision and employment. We need a significant reduction in the number of local authorities and an extension in the number of mayoral authorities that better reflect the actual economies. This would allow greater choice of provider, and with it greater participation of the people most affected.

Whitehall’s machinery needs co-ordination at a local level to reflect the growing number of grassroots strategies that are driving government policies. To encourage and take advantage of this, each Local Enterprise Partnership should prepare and publish its own detailed agenda for the future. Increasingly, government funding should be distributed on the basis of results rather than entitlement, and influenced by the scale of local contribution.

The private sector is ill-equipped to co-operate with the government in the implementation of an industrial strategy. Reform of the trade associations and the creation of more effective local representative bodies is critical.

At present, there are more than 2,500 trade bodies. Many are small, with limited resources and lacking the ability to do more than present the latest complaint of their members. They are the voice of the slowest ship in the convoy. Officials know this and rate them accordingly. Yet there remains little appetite among business leaders to merge and rationalise the number of associations, so the government must choose the leading ones with which to conduct dialogue. There is much to be gained from conversations on skills, productivity, long-term investment and patient capital, for example, but it cannot take place if a trade body is so short of cash that it can only concentrate on the perceived failures of government.

A similar problem exists in the towns and cities where the rivalries between various representative groups and the local chambers have led to a situation where, in aggregate, their total membership amounts to just 20 per cent of the whole constituency. Our competitors have much more effective support systems for their companies. The Paris Chamber of Commerce, for example, has 300,000 members; the London equivalent, 20,000.

The workplace in the public and private sector is being transformed at unprecedented speed. Frontiers are crumbling and distances shrinking as technology drives change. The process will be more pervasive and the speed will accelerate. We are governed by a machine designed to run an empire, yet we still have local authorities more suited to the transportation and communication world of horse and cart.


The writer is a former British deputy prime minister

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