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How industrial strategy 2.0 is taking shape

Parliament Commons politics Big Ben Westminster night

Theresa May, her new government and the rebranded Department for Business, Energy and Industrial Strategy are shaping a revamped agenda with major potential consequences for construction.

Britain’s new PM has wasted no time in putting the concept of industrial strategy at the heart of her government’s agenda.

Within days of taking over at Number 10, Theresa May revealed the new-look Department for Business, Energy and Industrial Strategy (BEIS) and formed a committee for major Cabinet ministers to tackle these critical areas.

These measures are now beginning to offer tangible consequences in shaping policy and approach.

Asking the big questions

The creation of the BEIS department saw the dissolution of the old Department for Business, Innovation and Skills and the reassigning of several responsibilities.

Energy projects will still comprise a major element of the new department’s brief, with no project more controversial and pressing than the proposed new nuclear plant at Hinkley Point C.

Sir Vince Cable, who served as business secretary for five years in the coalition government, has said the government should not approve Hinkley Point C simply to create jobs in the construction industry.

“It would be completely wrong to charge ahead with Hinkley simply on the basis that it provides some jobs for the construction sector”

Sir Vince Cable

Supporting the decision to delay a decision on the new nuclear plant, Sir Vince Cable expressed doubts over the cost and security of the project.

He said: “It would be completely wrong to charge ahead with Hinkley simply on the basis that it provides some jobs for the construction sector.”

Listen:

Sir Vince Cable and CN reporter Jack Simpson speak to Dehavilland for its How to build in Brexit Britain podcast

He added that there were a large number of smaller-scale projects that could generate more employment and present far less risk to the public, as opposed to concentrating on “a handful of mega projects that cost billions”.

Under his tenure in government between 2010 and 2015, the Department for Business, Innovation and Skills developed an industrial strategy that identified critical sectors of the economy to work with, including construction, with the Construction 2025 report launched in 2013 along with the government and industry co-chaired Construction Leadership Council.

Mrs May revived the focus on industrial strategies upon becoming prime minister last month with the creation of the BEIS department.

Central planks of the strategy

Sir Vince praised Mrs May for restoring “salience” to the discussion around creating an industrial strategy, but provided a steer to his Conservative successors by explaining how a partnership-based approach had been adopted to tackle the issues facing construction. “I feel the sector was pleasantly surprised by the level of engagement,” he reflected.

Asked what the central planks of the new government’s strategy should be, Sir Vince called for greater investment in the public sector, as well as more action on infrastructure and housing.

“I would encourage the government to do more by borrowing to invest in the public sector, to do much more in infrastructure […] There is no reason why local councils should not be able to do more – not just in terms of social housing, but also in terms of mixed developments.”

“Construction is essential to modernising our infrastructure and supporting economic growth – the government’s new industrial strategy will need to recognise this”

Iain Wright, BIS select committee

One of Mrs May’s first acts in Downing Street was to create the economy and industrial strategy committee to bring together key Cabinet ministers. The committee has already met to discuss the formulation of an industrial strategy to boost the UK and will meet again next month.

Construction is represented by not only BEIS secretary Greg Clark but also transport secretary Chris Grayling, communities secretary Sajid Javid and chancellor Phillip Hammond.

A Downing Street spokesperson said: “The PM will be engaging closely with the business community, including the construction industry, as she delivers on the government’s priorities: ensuring that we make a success of Brexit, showing the world that we remain outward-looking and open for business, and crucially building a Britain that works for all its citizens.”

The construction sector was one of many that is feeding into discussions at the highest levels of government, according to a source from BEIS.

Gathering momentum

As ministers begin to shape the new industrial strategy, calls are growing both inside and outside of Westminster to recognise the importance of construction, which represents 6-7 per cent of GDP.

The BIS select committee is currently taking evidence for its inquiry on the government’s new industrial strategy, with hearings expected when parliament returns in the autumn.

“Construction must make an offer to work with government to develop a leaner and fitter industry”

Rudi Klein, SEC Group

Committee chair Iain Wright MP said: “The construction sector is essential to modernising our infrastructure and therefore a vital element in supporting economic growth – the government’s new industrial strategy will need to recognise this. As part of our inquiry into this strategy, we want to hear from different sectors, including the construction sector, about what should be in it.”

Last week, the Specialist Engineering Contractors’ Group wrote to the prime minister calling for clarification over whether construction fell within the remit of the new EIS Committee.

SEC chief executive professor Rudi Klein urged his colleagues to seek a productive relationship with the government. “Construction must make an offer to work with government to develop a leaner and fitter industry […] In this post-Brexit period, time is not on our side. The industry must respond with urgent and specific proposals to address its appalling low levels of productivity.”

The return of parliament early next month is set to add further momentum to the industrial strategy.

Construction leaders will be looking to voice the industry’s needs and shore up its position in government thinking as policy continues to take shape.

Mike Indian is a senior political analyst at DeHavilland, a provider of political intelligence and research services.

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