The government’s new industrial strategy needs to create a cultural transformation, as much as an economic one

Regional cabinets probably aren't going to fix this mess. Image: Getty.

It’s a chilly January day, and the government has just broken with its previous laissez-faire approach and announced a bold, interventionist plan to boost the UK’s economy at a time of great uncertainty.

But instead of it being Theresa May and Greg Clarke doing the speeches and media interviews, it was Gordon Brown and Peter Mandelson. The year was 2010 – a time beyond the reach of human memory in today’s Twitter-driven politics. But look at the ideas and aims of the Labour government’s Going for Growth paper and they could well have been lifted straight out of a dusty filing cabinet by the wonk charged with writing May’s “new” strategy.

The truth is that numerous governments of every party colour have announced interventionist strategies of remarkable similarity for decades: big investment for infrastructure, funding for university research, support focused on the “sectors of the future” and teaching of the skills required by disruptive technologies. Harold Wilson made such an approach the very heart of his 1963 election campaign with the slogan the “white heat of technology”. Even the supposedly staunchly laissez-faire Margaret Thatcher did a heck of a lot of intervention.

Which raises a rather challenging question for this government. These sorts of policies have been tried so often in the past, yet have failed to address the UK’s very long-term problems of low productivity and regional economic imbalances. So why have they not worked before? And how can they be made to work this time?

There are two answers, I think.

The need for cross-party support

Firstly, there is the fact that these policies are often not followed through. We only need to look at very recent history with Brown and Mandelson’s industrial activism being seriously watered down by George Osborne as part of his austerity drive. Too often growth strategy is the victim of changes of government, minister or priorities.

The truth is that deep-set, long-term problems like productivity and economic imbalance can only be resolved with the application of consistent policies over decades not years. Germany’s much vaunted success in this area is not down to the originality of its policies, but the fact they have been applied consistently by a series of governments ever since 1945. One of the most successful sectors in the UK, our pharmaceuticals industry, has flourished because it has in effect been in receipt of activist support in the form of NHS contracts since the 1940s.

This is why if May is really serious about her goals she should spend as much time building a genuine consensus and commitment across the whole of the party spectrum as will be spent on implementing the policy itself. Of course that means opposition parties playing ball – and the Conservatives being willing to lose whatever electoral advantage they think they can achieve by making this new strategy a Tory idea. I fear we will have to live more in hope than expectation on those.

The creativity of people and communities

But what ultimately drives the innovation and competitiveness of a nation over the long-term is the same thing that drives the innovation and competitiveness of the best companies: the mind-set of its people. There needs to be a deep creativity, openness to change and powerful sense of self-determination embedded in communities across the UK. Big investment and infrastructure plans will only go so far if the country – or, more importantly, certain areas of the country – don't have the requisite restless entrepreneurial spirit.

This is where local government could play its most important role. Councils are far better placed than Whitehall mandarins to create a sense of transformational mission in a place and its people by working collaboratively with schools, colleges, local business, civil society organisations and cultural bodies. Councils have the knowledge and connections to nuance and promote such a message in a local context in a way Westminster never could.

This all sounds horribly fuzzy compared to ploughing billions into some new rail track. But as the increasingly influential economist and historian Deirdre McCloskey has spent a career pointing out, the last two and half centuries of remarkable innovation and growth were launched not by big plans from above, but by a cultural shift from below that made the entrepreneurial lifestyle and mind-set respectable and aspirational.

As McCloskey says, this was a shift that began in Britain – ironically, in the very same parts of the country that now struggle to break out of cycles of low productivity and growth. We must recapture that spirit across the whole of the country if this industrial strategy is not to go the way of previous industrial strategies.

Adam Lent is director of the New Local Government Network think tank.

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Britain’s housing policy must “ditch its relentless numbers game”

Some houses. Image: Getty.

Britain must build more homes – that much is certain. But a relentless focus on how many means we have lost all focus on the types of homes we must be building. This means we risk repeating the mistakes of previous decades, building homes entirely unfit for future generations.

This is the stark conclusion of a new report from Demos, Future Homes. Analysing the trends we expect to be shaping Britain in the future, we find our current approach to housebuilding has not kept pace with these changes. Indeed, we found that one third of the public don’t think new homes will be fit for purpose in thirty years’ time. Putting this right demands a revolution in our approach to housebuilding.

First, new homes must be fit for multigenerational living. This living arrangement is already on the rise: after decades of decline, average household size is rising, in part due to an increase in the number of multigenerational households. But housing design has not kept pace with these changes: our research found that two thirds of the public do not think new homes are not fit for multigenerational living.

We do not bemoan the rise in multigenerational households – quite the opposite. In a time of social isolation, multigenerational living may help to reduce loneliness amongst the elderly, helping them to stay integrated in society and play an active role in family life. More social contact between the young and old could also reduce the scope for intergenerational conflict, fostering mutual understanding between different generations.

Multigenerational housing may also help ease care burdens at both ends of life, making it simpler to look after the elderly, while allowing relatives to more easily help with childcare. It could also reduce the under-occupation of housing by the elderly, freeing homes at the top of the housing ladder. It is no exaggeration to say that in a time of increasing social and political division, building more multigenerational housing could help bring Britain back together – a first step on the path to a more connected society.

That’s why we call on the government to enshrine a commitment to multigenerational housing in its new Future Homes standard. Multigenerational households should also be entitled to council tax discounts and permitted development rights introduced for “granny annexes”, ensuring current housing stock can be made fit for multigenerational living.

We also need to build much more environmentally friendly homes whilst improving the state of our dilapidated housing stock. With the government aiming for net zero carbon emissions by 2050, this will require a radical change to housebuilding – especially when home energy efficiency has not improved since 2015.

To address this we call on the government to reintroduce the zero carbon homes standard and to launch a Green Homes Fund backed by a new, state-backed Green Development Bank. This would allow the government to make ultra-low interest rate loans to fund energy efficiency home improvements, as is widely and successfully done in Germany.

We must also begin to prioritise the creation of green space and gardens when building homes. This isn’t just what the public wants – we found gardens are the most important feature when choosing a home after location – but is good for our health too. Studies show that those living close to green space are more likely to exercise regularly – vital if we are to tackle today’s obesity crisis. That’s why our report calls for the government to introduce a new “green space standard” for all new homes, eventually giving all residents the right to a garden.

We recognise our proposals could increase the cost of housebuilding, potentially raising property prices – a great concern given the state of Britain’s overheated housing market. However, we believe our proposals can be justified for two reasons.

First, much of the recent explosion in property prices derives from land price increases, not construction costs. Therefore, if our changes were introduced alongside sensible policies to bring down land prices, such as a land value tax, their impact on cost would be limited. Second, even if there are additional costs today, the cost of pulling down new homes in just a few decades would be enormous. This has to be avoided.

Homes can be so much more than a roof over our heads, helping us respond to the great challenges of our time – loneliness, climate change, the crisis of care. But this can only happen if Britain ditches its relentless numbers game on housing and begins to care about the types of home we build, not just the number.

Ben Glover is a senior researcher at Demos.