Labour’s plan for growth is an expensive exercise in failure

The party has no conception of why Britain began stagnating, so of course it can’t be trusted to dig us out of the hole

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Britain was once a country of industry, the workshop of the world. Millions were employed in bountiful coal mines and productive steel-mills – and then along came Thatcher, who ruined it all with her dangerous commitment to neoliberal globalisation. 
The jobs went overseas, the factories closed, and the economy was parcelled off by heartless bankers. If Britain is to remain competitive, the state must implement a new industrial strategy to bring back jobs, restore our communities, and guard us against foreign threats. Or so we’re told.
Unfortunately for fans of industrial strategy, this narrative is about as accurate as an OBR forecast. British industry wasn’t killed by free market capitalism; in fact, it was a victim of nostalgic, backwards-looking industrial policy. With the Government’s industrial strategy consultation closing on November 24th, Starmer and friends would do well to consider the real history of UK industry if they want to get Britain building again.
Because in fact, Britain’s industrial decline didn’t start in the late 20th century – it began in the 19th. After a century of successful growth, British industry began to fall behind its competitors in the United States and Germany, where mass production was cheaper and easier. During the Great Depression of the 1930s, many of the old Victorian industries failed altogether.
But all was not lost – new industries emerged, particularly in the Midlands, where the manufacture of automobiles and household electronics boomed. By 1936, Leicester was actually the second-richest city in Europe; the West Midlands was the fastest growing region of the country. And then along came the industrial strategists.
The much-vaunted Clement Attlee believed that growth in the Midlands was a threat to the old industrial heartlands of Lancashire, South Wales, and Scotland. Under Attlee, applications for any new factory had to be approved by the Board of Trade – which deliberately blocked industrial growth in Birmingham and London. The “advanced manufacturing” boom of the 1930s was killed by the industrial strategy of the 1940s.
Then as now, attempts to bring back industrial jobs to formerly industrial areas failed miserably – and in the process, the growth of new industries was stifled. Expensive subsidies kept inefficient industries, such as coal and steel, alive until Thatcher eventually pulled the plug. Yes, British industry shrank in the 1980s – but if it had been allowed to adapt and improve over the previous decades, it might have remained competitive.
So what can we learn from this potted history? It’s true that, compared to our international peers, the British economy is unusually services-heavy – but we won’t fix that by throwing subsidies at unproductive industries. There is a real risk that the Government’s industrial strategy turns into an expensive exercise in failure, with billions spent on doomed battery factories and ill-directed investment in “skills”. 
If it wants to support British industry, the Government should stop fiddling at the margins, and start addressing the underlying reasons for Britain’s economic stagnation. We have the highest industrial energy costs in the developed world, and it’s impossible to build anything without months of delay – whether that’s housing, railways, or factories. Against this backdrop, is it any wonder that British industry is dying off? 
Any sane industrial policy must start with planning and regulatory reform, making it easier to build and easier to innovate. Energy policy must be re-ordered around delivering low prices for industry and households alike; economic policy should not be hijacked by faddish political trends such as Net Zero. The Government shouldn’t be picking winners. Its focus should be on making Britain a great place to start – and grow – an industrial business.
But I’m not holding my breath. As William Graham Sumner once said, great captains of industry are as rare as great generals – but it seems that great politicians are even rarer.