By Daniel Hunter

EEF, the manufacturers’ organisation, has challenged the government to end its inconsistent approach to growth, by outlining a clearer plan for the future of the economy and putting in place a long-term industrial strategy to deliver it.

In a new report, The Route to Growth: a new approach to Industrial Strategy, EEF argues that progress towards a better-balanced economy has stalled because the government has yet to demonstrate the same relentless and clear-sighted approach to growth that it has done on reducing the deficit.

“We all know that we need stronger growth built on firmer foundations, but the economy and re-balancing have hit the buffers. We will only get back on track if the government demonstrates the same clarity and single-mindedness on growth that it has done on reducing the deficit," EEF’s Chief Executive, Terry Scuoler, said.

“Business is seeking certainty to invest, but too often it is left with the impression that government is responding to events, rather than leading on growth.

“This will not change until government is clear about its economic ambitions and setsout some simple benchmarks to measure progress — just as on deficit reduction.

“To do this we need a new economy-wide industrial strategy for achieving stronger, better-balanced growth. This must become the definitive statement of the government’s economic intentions and the guiding principle for every policy and spending decision from now to the election and beyond.”

In its report EEF highlights the consensus that has emerged on the need for a new UK economic model, based on trade and investment rather than on consumption and borrowing. The on-going eurozone crisis and continuing uncertainty in the UK economy, however, mean that that this new-economic model remains a long way off.

While the government has made significant progress on meeting its fiscal mandate, EEF is critical of the government’s current approach to growth, noting in particular that the lack of a clear long-term plan for the economy has meant:

- Prioritisation and reprioritisation of government spending on growth had been opaque and lacked focus
- A lack of accountability and coherence on the delivery of growth across government, leading to welcome initiatives in areas like tax and apprenticeships funding being undermined by decisions elsewhere

Symptomatic of these failings, has been the implementation of the Government’s Plan for Growth. This has focused on too broad a range of initiatives, with no single Department or Minister having overall responsibility for delivery.

EEF argues that this must be replaced with a simpler approach, bringing the same clarity to growth as the government has already outlined on reducing the deficit. This should consist of:

- A clear vision of the kind of better-balanced economy the government is trying to create and an economy-wide industrial strategy for delivering it.
- A cross-government commitment and approach to work relentlessly to deliver that vision
- Measurable benchmarks and an accountability framework that holds all parts of government accountable for progress

The report points out that there will be occasions where government should seek to support individual technologies, but a modern industrial strategy should focus on measures to help the widest number of companies seeking to grow by investing and exporting. To achieve this broad approach to growth, the government should adopt four economic ambitions:

- More companies bringing products and services to market
- A lower cost of doing business in the UK
- More globally focused companies expanding in the UK e.g. the number of companies with 25% or more of turnover coming from exports will increase
- A more productive and flexible labour market

“This shouldn’t be a plan for picking winners; it should be about creating the right environment for any company seeking to grow through investment and exports," Terry Scuoler added.

The report also outlines benchmarks for measuring progress towards these ambitions and policy proposals for achieving them.Commenting on the need for immediate growth measures, Terry Scuoler said:

“Clearly we need measures to get growth going now and priorities should include encouraging business investment, increasing access to finance, reducing energy prices and rebuilding our infrastructure. But these need to be part of an overall industrial strategy for growing and rebalancing our economy and not a series of uncoordinated initiatives.”

Looking forward, progress towards the growth ambitions outlined in the report must be monitored and reported annually alongside the Budget. Responsibility for this strategy must be owned at the highest-level of government, with a Cabinet Committee for Growth jointly chaired by the Prime Minister and Deputy Prime Minister.

This committee would ensure that policies could only be brought forward if they support growth and competitiveness, that there is consistency across government and a relentless focus on getting them delivered. The sub-Cabinet Growth Implementation Committee, announced on Wednesday 6 September 2012 could fulfil this function, but this should be about more than implementation, which is the back-end of the policy process.

This Committee should also provide a growth check on the complete pipeline of government policies from development through to action.

“The government has put its neck on the block on the deficit and there should also be no hiding place on growth either," Terry Scuoler concluded.

"We need the Prime Minister and the Deputy Prime Minister to hold Ministers’ feet to the fire on growth and the Chancellor should regularly come before the House of Commons and report on progress.“

Likewise this industrial strategy must underpin decisions on how new resources are deployed across government, how existing expenditure is reprioritised to support growth and what activity the government should step back from. This should start from this year’s Autumn Statement.

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