Why the UK government really abolished its own Industrial Strategy Council

The government’s old industry strategy – the one inherited from Theresa May’s administration – was “a pudding without a theme”, Kwasi Kwarteng, the business secretary, said the other day as he sang the praises of the chancellor’s new “build back better” plan to rewire the economy.

Up to a point, the Industrial Strategy Council (ISC), the body that was set up to monitor the strategy, might agree. It had, after all, judged the 2017 strategy and its 142 policy measures to be spread too thinly.

Is the new Treasury-led approach less of an blancmanche? It is hard to believe so when you read the ISC’s last annual report before it itself is abolished. The government’s new “build back better’ model, has 180 policy measures and “14 of them are commitments to publish a strategy for a specific policy area, which may multiply initiatives further”, it says. That is not encouraging.

Most damning of all, the ISC deems the new “levelling up” plan to be in need of “a comprehensive reorientation”. Lift-off is unlikely to be achieved if the Treasury insists on controlling funding from Westminster and views industrial strategy through the dominant prism of infrastructure spending, says the report. On localism, the ISC sounds keener on the May government’s imperfect version.

Kwarteng and Rishi Sunak might say it’s unfair to judge so soon. But, come on, outside scrutiny of governance around these far-reaching economic programmes is an essential part of the process, which is why the demise of the ISC feels such a backwards step.

The ISC as it signed off with a call for the creation of an arms-length body that looks a bit like itself. It was risking the cry of “sour grapes” but it’s point is correct. The Climate Change Committee and National Infrastructure Commission do useful work in their fields. An industrial strategy, which is also supposed to have a long life, should be treated no differently.

The ISC was chaired by the chief economist of the Bank of England, Andy Haldane, and included a strong cast of wise-head business figures. Why get rid of it? The only reason, one must assume, is that the government fears what it would say next time.

Cinema power has been screened

“This agreement shows the studio’s commitment to the theatrical business,” declared Mooky Greidinger, chief executive of Cineworld, putting an optimistic spin on events.

Warner Bros’ commitment to cinema exclusivity used to be 75 days in the US. From the start of the next year, the studio will be able to switch a release to its pay-per-view streaming platform after 45 days. In the UK, the exclusivity window will be tightened even more radically – from about 16 weeks to one month.

Greidinger can say he is “very happy” with the deal, but others will see a demonstration of cinema chains’ reduced bargaining power in the age of Netflix, Amazon Prime et al. The pandemic has merely accelerated the process.

Yes, the position could reverse if punters, when given the chance, flock back to cinemas in their old numbers. That plot-line, though, is starting to feel increasingly unlikely.

Should we trust the Trustpilot valuation?

Trustpilot, the consumer review firm, is a socially useful tech-driven company born in a garage in Denmark in 2007. Its arrival on the London Stock Exchange is to be welcomed. How, though, was the company valued at a top-of-the-range £1.08bn?

The short answer, of course, is that new investors, including five big “cornerstone” funds, were willing to buy shares at that valuation. But Trustpilot’s revenues were only $101m (£73m) in 2020 and operating losses were $9.4m (£6.8m), which doesn’t normally equate to a £1bn price-tag.

Yes, there’s plenty of growth happening – about 30% at the top line annually in recent years. But the reviews are free for consumers and the businesses don’t pay for Trustpilot’s basic service. The company only earns its money by selling “actionable insights” to those businesses and by allowing them to use reviews in the marketing materials.

Demand for insights will clearly grow as ecommerce expands, so one can understand why management’s current priority is to keep investing. All the same, after 14 years of operation, shouldn’t there be a hint of profits by now? Not everybody can be Ocado.