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Wednesday 27th June 2012 | 10:41
Britain is in dire need of a 'fourth generation' industrial policy, a new report by the economist Vicky Pryce suggests.
Writing on behalf of the think tank CentreForum, Vicky Pryce picks apart 'three generations' of industrial policy: the state interventionism of the post war era, the industrial upheavals under Margaret Thatcher, and the piecemeal approach of the 1990s and 2000s. She concludes that none of these approaches has provided the optimal conditions for business success.
Her 'fourth generation' policy, set out in the report, challenges the government to play an active role in shaping Britain's industrial future. The report says that policy makers need to understand:
* the challenges and opportunities facing Britain as a whole in the short, medium and long term.
* why Britain is so strong in some sectors and yet so weak in others in order to see the best place to grow further specialisation into areas of current strength, or diversification into areas of current - not necessarily long term - weakness.
* that government must provide the conditions for business success. This is true both in the conventional sense of providing good laws, infrastructure and a well educated workforce and in the less conventional sense of government using its might to borrow long and cheap in order to share the risk in new and yet unproven technology areas and help in their development and commercialisation.
* that interaction between government and industry is complex and can be done well or badly. All stakeholders need to have clear roles and responsibilities - not just the government.
* the importance of incentives, innovation and competition in driving private sector performance at every level.
* the importance of evaluation and periodic review, undertaken by those with no vested interest in the answers, ensuring that policy is evidence based and effective in delivering desired outcomes.
Vicky Pryce said:
"My ten years in the business department taught me that government policy really matters. We can get it very right or very wrong. This report draws on lessons from the past to set out the policies that our country needs today."