Industrial policy is back in vogue and not a moment too soon. This brings images of engineering, digital technology, healthtech, factories in the West Midlands, and so on. In fact, take a look at the cover of the Government’s industrial strategy green paper and you will see a picture of the UK covered in lots of manufacturing, engineering, and science symbols. This image is precisely what we think about when we hear ‘industrial strategy’. But are we missing a big opportunity because of this way of thinking?
Alongside this traditional framing of industrial strategy, the morning news bulletins are chock full of stories about a failing care system. Councils and the NHS can no longer afford to provide a sufficient service. Councils alone face a £2.5billion per annum shortfall by 2020 to which the response will be a mix of making do somehow, but where possible further narrowing of provision, taking on commercial property deals to raise revenue streams, and attempted Council Tax rises. The workforce is generally poorly paid and demoralised. The Care Quality Commission has described the adult social care market in England as being at a ‘tipping point’. Individuals are increasingly using their assets to fund care even if these assets are relatively low. An ageing population and economic challenges drive this crisis but so does a weak Government response.
The old answer to these two problems would be separate: we need to increase industrial productivity to fuel a rise in export earnings, the taxation of which can support public services. But public expenditure increases on care are inevitable with or without growth. All that is happening now is that different layers of government are passing the buck between each other, deals are being done, and we are scraping together enough resource to keep the system functioning – just. It is a traditional British muddle.
There could be another way. Imagine if instead of muddling through, we took a whole system approach to reforming care and secured a new inclusive model of growth in the process. This is exactly the type of approach that the RSA Inclusive Growth Commission, to report in March, is looking into. A social mission driven ‘industrial’ policy would encompass a number of approaches – and this is something the Commission will be outlining.
Firstly, we would start with the social mission. In the case of care, that would mean setting ourselves the objective of nothing short of creating the best social care system in the world. If we start with such a bold mission then the nuts of bolts that seem to relentlessly get in the way – finance, tax, responsibility, professional development, public service organisation, workforce wellbeing, innovation and technology – might be set in the new frame. And yes, that would involve aiming to increase salaries in the sector in return for improved skills levels. Unlike manufacturing, this sector has high jobs growth potential so let's make them good jobs.
Of course, the resource question can’t be ducked. We can’t have world class care without sufficient funding but that applies to innovation as much as direct provision. A second design principle then becomes about the capacity to generate the innovation in systems, technology, training and organisation necessary to create the care system of the future.
Currently, the industrial strategy sees innovation in healthcare (which might include care services) as driven by NHS procurement. The problem here is that this is but one lever and a weak one at that. NHS procurement will always be driven by cost and proven quality over supporting innovation. The current incentives of the NHS are to reduce its expenditure social and nursing care rather than invest.
Having set the mission, the Government must see as one the whole system of the NHS, local authorities, patients, private providers, universities and colleges (who train the staff), funders, investors and technology and service providers. The third principle would be to identify potential new clusters of innovation involving all these elements. There are NHS vanguards but they don’t yet pull all these elements together in a comprehensive manner. However, they may create the seeds of investable models for the future – clusters of health and care innovation.
And finally, there would be support to export opportunities that arise out of the new care system capability. These would range from new assistive technologies to exporting models of care that match efficiency with quality and workforce satisfaction.
A true industrial strategy would do this. The work of Mariana Mazzucato has detailed the efficacy of mission-oriented industrial policy (worth noting that the Government also talks increasingly of mission-oriented business, a related but distinct process). The strategy doesn’t just have to be about defence or energy or biotech or automotive innovation.
It could be investment and re-organisation for a social purpose that has knock-on economic impacts. If we don’t develop modern defence capability including cyber-security then we could face a national emergency. The same is true of care. Should we fail to develop in the very best care a national social emergency will soon be upon us. Get it right and not only will we alleviate suffering but we may earn an unexpected economic dividend.