Business leaders urge government to create productivity watchdog

Business leaders have warned that the government’s new industrial strategy risks being blown off course unless ministers create a powerful independent watchdog to monitor progress in boosting Britain’s weak productivity.

While welcoming a white paper detailing five areas where the UK’s economic performance needs to improve, employers’ groups said it was vital Greg Clark, the business secretary, gave “teeth” to a planned advisory council.

Trade unions called for the government to ensure that workers were represented on the watchdog, which Clark has said will be modelled on the Office for Budget Responsiblity, the body that provides economic forecasts for the Treasury.

Labour said the white paper was made up of re-announced policies and old spending commitments, while Michael Heseltine, the former Conservative business secretary, said the best industrial strategy would be to call a halt to Brexit.

In a forward to the white paper, Theresa May said the proposals would help “build a Britain fit for the future” after its departure from the EU.

The industrial strategy emphasises five areas for attention: innovation, infrastructure, skills, spreading prosperity across the country, and ensuring that businesses have access to finance. Clark also said the government was keen to forge partnerships between Whitehall, the private sector and universities in sectors seen as having particular importance to the economy in the future.

Stephen Martin, director general of the Institute of Directors, said businesses welcomed the ambition to turn around the UK’s “woeful productivity” but said the industrial strategy would only be the beginning of a new bold approach if it was followed through in successive parliaments.

“Now more than ever, the public and private sector need to join forces on this long-term vision that targets all dimensions of the UK economy – people, place and business. In a moment of heightened political volatility, much will depend on whether there will be a guardian of industrial strategy to shield it from the rigours of a short-termist political cycle. If this is to be the new independent industrial strategy council, it must be given the necessary teeth for the task.”

Josh Hardie, CBI deputy director-general, said: “The CBI has long made the case for an independent body to get to grips with monitoring and measuring the success of this roll-out. This will allow for frank and honest assessments that would help avoid the trap of the industrial strategy becoming a political football.

“If the industrial strategy council is to have real teeth then it needs to have clear measurements and metrics to judge the success or failure of the strategy.”

Clark is to consult over the shape and powers of the industrial strategy council, but has been won over to the idea that a body based on the OBR is the right approach.

But Craig Berry, deputy director of the political economy research institute at the University of Sheffield, and a commissioner on the independent industrial strategy commission, expressed concern that the watchdog would not be strong enough.

“A genuinely long-term strategy must be overseen at the heart of government. This means the Treasury, not BEIS (the business energy and industrial strategy department). But the two departments seem as far apart as ever.

“Furthermore, the proposed advisory council falls short of the OBR-style monitoring body required to embed industrial strategy into the routine agendas of future governments. After the hype fades, we will need to normalise industrial strategy.”

Frances O’Grady, the TUC general secretary, said: “A key reason behind the success of Germany’s industrial strategy is that government, business and unions all sit down together. And plan decades ahead. The UK should be following this blueprint. Unions must be represented on the new industrial strategy council.”

Rebecca Long-Bailey MP, the shadow business secretary, said: “Nothing in the white paper will help give businesses the certainty or incentives they need to invest in the face of the government’s catastrophic handling of Brexit.

“What detail there is concentrates on a few elite industries in which Britain already has an advantage, and will do nothing to help the millions of people who work in low productivity and low wage sectors such as retail, hospitality and social care, or those based outside the ‘Golden Triangle’ made up by London, Oxford and Cambridge.”