UK to resurrect ‘industrial strategy’ in bid for global funds, says Reynolds

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Britain’s business secretary Jonathan Reynolds says he is “sick” of the UK losing out to France and Spain and will launch an “industrial strategy” in the coming weeks to wrestle global investment away from rival nations.

Some business figures have warned that the UK government is moving too slowly in attracting spending, and that a major “investment summit” planned for next month risks being overshadowed by a backdrop of huge fiscal uncertainty, with key government jobs still unfilled.

The business secretary said he would set out how Britain intends to sell itself to the world before the October 14 summit, with an industrial strategy aimed at attracting cash to key sectors such as advanced manufacturing, professional services and the creative industries.

“We are sick of hearing about how the UK has lost out to France and President Macron,” he told the Financial Times. “We are sick of hearing how other countries like Spain, when it comes to automotive policy, are coming across hungrier than we are.”

Prime Minister Sir Keir Starmer wants the October conference to showcase Britain, but his warnings of a “painful” Budget on October 30 hang over the event, while consumer confidence in the UK has slumped.

Starmer is still seeking an investment minister after his first choice — advisory firm Global Counsel boss Ben Wegg-Prosser — pulled out, while ITV chief Dame Carolyn McCall turned down an approach to chair the UK’s new industrial strategy council.

Reynolds said he would announce the new council and its chair before October 14, saying that he was working with a “high calibre set of people” who would oversee the revival of UK industrial strategy.

“The role of an industrial strategy is to attract a greater share of investment to the UK in key sectors — the big, high productivity, high growth, high export, high investment sectors,” he said.

Former Tory Prime Minister Theresa May briefly introduced an industrial strategy but it was binned in March 2021 by Rishi Sunak, Tory chancellor at the time. Reynolds admires much of May’s strategy, but not its short lifespan.

The industrial strategy council, whose role will be enshrined in law and will include business and union members, would develop and oversee the new approach, reassuring investors that “the policy is there for the long term”.

“We are committed to what I would call a strategic state, whether that is the government getting involved to shape markets through an industrial strategy or around the transition to net zero,” he said.

“Many businesses tell us it is too hard to invest in the UK, that we make it too difficult,” he said. “But most of all, they feel that other countries are hungry for it.”

Even as he draws up the new strategy Reynolds is firefighting multiple industrial crises including the potential collapse of Titanic builder Harland & Wolff, job losses in Grangemouth, and what he admits is an “emergency situation” at British Steel. 

Reynolds also recognises there has been some frustration about the pace at which the government elected on July 4 has rolled out its new approach and made key hires.

Lord Richard Harrington, who advised former Tory chancellor Jeremy Hunt on inward investment, said: “Labour have got to get on with it. I’m disappointed at the speed at which this is moving. There’s no Budget in place, no investment minister and no industrial strategy.”

A business leader with strong connections to Number 10 said: “The whole thing isn’t where it should be. There’s a massive vacuum before the Budget. Having the investment summit before the Budget is the wrong way round.”

But Reynolds insisted progress was being made, with a new National Wealth Fund being created to support a green transition. Rachel Reeves’s Budget on October 30 will give more details of how much financial firepower will be behind the new industrial strategy.

He denied that Reeves’ focus on fiscal discipline — and speculation she may raise taxes on business to close a fiscal hole — would scare off investors. “If you can’t offer economic and political stability, you don’t have anything,” he said.

Business has also expressed concern about the package of workers rights being overseen by Reynolds — dubbed Making Work Pay — but he said: “We have talked to business and will continue to talk to business at every stage.”

The government wants to make people having access to flexible working as the default. “I would like that to be open and available to more people, if it can be agreed between employer and employee.”

But Reynolds said in some cases, homeworking would not be appropriate: “I’m not telling anyone how to run their business.”