How to do industrial strategy

The origins of modern Industrial Strategy in the UK can be traced back to Harold Macmillan's creation of the National Economic Development Council which first met in 1962 and was abolished in 1992. In his diary for September 1961 Harold Macmillan reported a discussion between his ministers about creating the new National Economic Development Council and noted:

a rather interesting and quite deep divergence of view between Ministers, really corresponding to whether they had old Whig, Liberal, laissez-faire tradition, or Tory opinions, paternalists and not afraid of a little dirigisme.

That division of opinion continues, in some form, to this day. The Treasury are usually sceptical - their objections a typical mix of high economic principles and wariness of a departmental rival in Whitehall shaping policies for the real economy. However there does appear this time to be a genuine Treasury commitment to Industrial Strategy as a key tool for growth. And rigorous Treasury analysis can help focus on the policies with greatest economic returns.

Across the media and politics there is a folk memory of disastrous attempts at picking winners - the collapse of British Leyland forty years ago still hangs over the debate. But, just as in Hollywood, sometimes the sequel can be better. Margaret Thatcher promoted the European Single Market and went to Japan offering subsidies and tax reliefs to their car companies to set up in the UK to access the European market. Getting Honda, Toyota and Nissan here to revitalise the British car industry is a case study in successful industrial strategy.