The government is looking to Germany for inspiration for a strong industrial policy. It’s a welcome development, but the most important lesson it could draw is that policy has to remain consistent.
Strong sectors need a strong strategy
Britain needs a strong manufacturing sector. It’s a statement that’s been made many times over the decades by politicians, with a lesser or greater amount of action to back it up. Indeed, for many years, a lack of action was the policy: the best way to help industry flourish was to leave it alone and let it get on with it. But now, opinion seems to have swung the other way. Industrial policy is now the order of the day, with an understanding that only with a policy can you have a strategy, and a centrally planned, agreed strategy is now seen as vital to the development of strong manufacturing sectors.
And engineering and manufacturing, of course, go hand in hand. Indeed, with the realisation that it’s only in sectors where we can add value to technology — where we can find and develop the cutting edge and bring the strength of the UK’s much-vaunted science base to bear — that we can help the manufacturing sector strengthen and increase the amount that it contributes to the UK’s GDP, restoring balance to the economy and reducing the reliance on banking and other financial services that so nearly proved catastrophic in the late 1990s.
As the features in this supplement show, much of the inspiration for the UK’s developing industrial policy has come from Germany. The Catapult Centres, whose goal of helping new technologies bridge the gap from laboratory to market by providing access to equipment and resources, were inspired by Germany’s Fraunhofer Institutes - here we describe how they are intended to work. Meanwhile, the idea of regional banks, similar to the German Landesbanks that help support the Mittelstand of small- and medium-sized businesses that are the powerhouse of the German economy, is among the proposals being discussed for the finance sector — this, and other matters of finance for innovation-centred companies, is described here.
These are early days, however, and one of the most important advantages that the German model has is its longevity. If British politicians are to take it as a model, the biggest single thing that they can take from it is that strategy and policy has to be formulated to last well beyond the lifetime of a single government, and new governments must resist the temptation to tinker. There’s some indication that this message might have sunk in — the Catapults, after all, were the result of a Labour government policy report, developed and adopted by the Coalition — but we need, desperately, to see stability and continuity if engineering and manufacturing are to flourish in the 21st century UK.