The writer, a former FT editor, is head of industrial policy at Policy Exchange.
When Harold Wilson, Labour’s newly elected prime minister, set up the ministry of technology in 1964, he was thinking along the same lines as Rishi Sunak, who this week announced the creation of a new department for science, innovation and technology.
Wilson told the head of what came to be known as Mintech that his first task was to save the British computer industry. If you substitute semiconductors or artificial intelligence for computers, Sunak’s new science department looks remarkably similar to Mintech.
If that suggests a degree of continuity in UK industrial policy, nothing could be further from the truth. In 1970, Edward Heath merged Mintech with the Board of Trade to form the Department of Trade and Industry (DTI). This marked the start of an extraordinary saga which has seen the business department go through numerous reorganisations, several changes of name and a succession of generally short-lived ministers.
In 1974 Labour was back in power and Wilson split the DTI into three departments, for industry, trade, and prices and consumer protection. They were then brought together again a few years later by the Thatcher government. (Keith Joseph, Margaret Thatcher’s first industry secretary, had questioned whether a separate department was needed.)
The DTI portfolio changed several times during the 1980s and 90s. It took on the Enterprise and Deregulation Unit and later the Office of Science and Technology. Energy was split off, then reabsorbed.
The result was a large and confusing set of responsibilities, very difficult to manage. Michael Heseltine injected a new sense of dynamism between 1992 and 1995, but then momentum stalled. Further chopping and changing under New Labour broke up the DTI. In 2007, two new departments were created, one for Innovation, Universities and Skills (DIUS), the other for Business, Enterprise and Regulatory Reform (BERR). Two years later they were reunited under Peter Mandelson as the Department for Business, Innovation and Skills (BIS). Gordon Brown also created a separate department for Energy and Climate Change.
By this time, industrial policy was back in vogue and actively pursued by the coalition government (2010-15). Theresa May, prime minister from 2016, had even greater ambitions on this front, so the department took back energy again and was renamed the Department for Business, Energy and Industrial Strategy (BEIS).
Now, the merry-go-round is whirling again, with four new or remodelled departments and (inevitably) more names. In Sunak’s defence, the new structure may well have advantages. Energy probably does need a separate department, and the same applies to science, given its central role in the government’s new plan for growth. At a lower level, it has never made sense for digital industries (including semiconductors) to be handled by the Department for Culture, Media and Sport.
Yet two nagging questions remain. Are the advantages substantial enough to offset the disruption and delay these reforms will inevitably cause as the changes bed down? The other is how long will the new structure last?
The instability that has long bedevilled the UK’s industrial policy, and its approach to innovation, has not been helpful for business or scientific research; this seems to be a peculiarly British weakness.
Take the example of Darpa, America’s much-admired research funding agency and the model for the UK’s new Advanced Research and Invention Agency. Darpa was created in 1958 and continues to exist in roughly its original form; it does so partly because of some early successes, but also because it has never been the plaything of politicians. That sort of continuity is badly needed here.