Welcome to the second panel of the Business and Trade Committee’s hearings into the Government’s forthcoming industrial policy. Clare Barclay, we are delighted that you are able to join us today for your first outing in front of the Committee; I am sure it will be the first of many. We have lots of questions for you, but first could you give us your take on this ambitious target that the Prime Minister has set of becoming the fastest growing economy in the G7? Obviously, we had some difficult economic forecast news last week, and the end of this Parliament will be with us before we know it. In your view, how achievable is it going to be to hit that target of becoming the fastest growing economy in the G7?

It is not without its challenges, of course, but this is about ambition. The UK has many great assets, which means that growth and future growth have enormous potential. You have heard from the Prime Minister and the whole of the Cabinet about the priority for growth. As the chair of the industrial strategy council, it is about how we can play a role in helping stimulate that through focus, supply chain and some cross-cutting issues, and thinking about how you bring that together with the right place in the country. I can talk about some of the things I have learned along the way—it is still early days, but I am happy to share.

Would you bet on us becoming the fastest growing economy in the G7 by the end of this Parliament?

If you think about some of the assets that the UK has, compared to other, faster growing countries, like the US and China—on the topic of technology, for example—it is extremely well placed. It is the third largest country in terms of growth potential, skills, universities and investment. It is about how you take the very best of what the UK has to offer and how you fuel that. The previous panel articulated extremely well that the UK has been under-invested in. It is about how you unlock the great potential you have through this partnership between Government and business.

I did not hear you say yes in answer to that question.

I guess I would not have taken the job of chair if I did not believe there was some potential.

So you think it is within the bounds of possibility?

Yes.

Do you think the Green Paper has the right priorities?

Yes. The Green Paper was about setting out what we believe the priorities are, and they have been laid out in terms of picking the areas that have the greatest growth potential. This was about putting the Green Paper out in order to start the consultation process and get feedback on it. We had 3,000 responses, of which just over 200 were from business associations, which obviously have thousands of smaller business members. So there was good participation on it. We set out what we believed were initially the right strategies, but this is about listening and learning. Part of what the council has been doing is meeting the business associations, engaging with the regions and so on. It is about how that gets fine-tuned before the White Paper is released in the spring.

What has the feedback from businesses been, now that the Green Paper has been released?

Overall, if I look at it from a helicopter view, there has been extremely positive feedback on the prioritisation for an industrial strategy. The feedback on having an industrial strategy council which has a plan to be there in perpetuity has also been positive. Yesterday, I met the B5—the CBI, the British Chambers of Commerce, the FSB and so on—and it was overwhelmingly positive that the Government was putting this level of priority on it; it is something that businesses have been crying out for. We have extremely strong business, academic, union and Government representation, and that is about agitating to make sure we have a strategy that meets the ambition to drive growth for the country and the needs of businesses.

Have you seen the White Paper?

Yes, I have. Obviously, the White Paper itself is in production, so it is not final. And the Green Paper, I have seen, obviously—as you would expect.

I have had the pleasure of spending time with some of the people who were previously involved. There are a couple of things I would reflect on and have had fed back to me. First, the statutory intent of this industrial council is very important. Irrespective of Government, it will last in perpetuity, so businesses and investors can have confidence in the long-lasting nature of it. Secondly, there is the cross-Government involvement. This is very much sponsored by Business and Trade, as well as Treasury, but the agenda goes right across Government. Treasury involvement, in particular, is something I welcome and is something that would be part of lessons learned from previously. Those are the two things I would call out.

We are working across a complex set of workstreams that take in the priority focus for growth and cross-cutting themes like regulation, skills, access to finance and so on, and then intersects that with place. So you have this complicated matrix, and across that we are looking at how we put the right measurement control systems in place; that is one of the established workstreams. That is extremely important for how we set the right strategy and how, as both the Government and industrial strategy council, we can deem whether that particular intervention has been a success or not. Expect that to be published once the White Paper comes.

Absolutely.

My discovery on that is early days, so I do not want to profess to be an expert on the institutions of the UK. What I have been pleased with, in the appointment of the council members, is their make-up, which includes other councils and the unions, so that you have that form of representation. We are also thinking about the engagement mechanism with business associations, the regions and mayors, and connecting with Scotland, Ireland and Wales. We have some small business representation, and we have entrepreneur representation. We are looking at the council itself, and then trying to make sure that we are interlocking with the right institutions across the country, who are very much connected to the frontline of what is going on in the UK and across the regions, to make sure we get that feedback.

I was interested in what you had to say about cross-departmental working in previous industrial strategies. As we went around the country during our fact-finding to set the agenda for this Committee, it was precisely that cross-departmental working and join-up that was flagged time and again to us by the businesses and unions we were talking to. It was particularly the interface with the Energy Department and skills, as well as with Treasury. I am close to the steel industry, and the impact of CBAM is really important. How will you approach the knotty issue of making sure that the industrial strategy council exercises influence over other Departments and DBT?

Ms Bance is being quite polite about the feedback that we received; it was pretty damning. How are you going to fix that?

It is good to hear that feedback. When I was appointed, I met most of the Secretaries of State for each Department at their request, which I took as a positive first sign. I have subsequently met the Prime Minister on this topic and said that, in order for this to be successful, I need his support on how it is made a priority. If growth is the main agenda and the industrial strategy council is there to support it, I need to make sure that that is made a priority across all the Departments.

What did he say?

He said, “I am here to support. Growth is the total priority for the country. The industrial strategy council is a core part of that.” He offered intervention and support if I faced any blockers or barriers along the way. I will take him up on that as I hit them.

Picking up on that point, with growth being at the forefront of the Prime Minister’s ambition, do you think that the right amount of money has been set aside for the industrial strategy?

I note that this question, in terms of how much money, got asked before. When you are trying to drive growth and change the trajectory of productivity and opportunity for the country, it is like a piece of string in terms of how much money. What I would say—this may be repeating what I said in answer to the last question—is that this has been put centre as the core strategy on growth for the Government. In terms of the investment that has been put into the council itself, one of the lessons learned was over whether there was enough impetus around the secretarial and operational support for both the council and council members, and that has been increased quite significantly. We have a very large secretariat to support the council itself, as well as its work across Government to make sure that the recommendations that are being put forward are listened to and heard. I was appointed in November, we had our first council meeting in December and we have our next one this week. Whether there is enough investment might be a question for me to come back to. I have not found there to be insufficient support, and I have all the support I need in order to get the job done.

What is your gut feeling? You said at the top of this session that you were reasonably confident that we could become the fastest growing economy in the G7. Basically, on current figures, that entails us tripling the growth rate. What is your gut feeling on the order of magnitude? Do not give us the precise number necessarily, but is the order of magnitude in the right place?

I do not want to unpick what I said earlier, but I want to clarify: we are here to drive ambition, but we have a tough task ahead of us. If you go back, the UK economy has not grown since the financial crisis. We have remained in a steady state, but that does not bode well versus some of our comparable counterparts. So we have to think about both ambition and focus, and about what it is that is going to unlock things. Having spent some time with the Treasury and the economics Departments, it is like a bowl of spaghetti: there are lots of different intersecting parts in terms of how you go about it. We have to focus on the sectors that are driving growth. In my day job, I work for a large technology company. I know there is growth and opportunity out there, because I see it every day. That can drive productivity, enablement, and ecosystem and small business growth, but this is really about how you unlock that in magnitude. And that is just looking at one sector. Some of that is about how much the Government invests. To go back to one of the previous speakers, Charlie, it is also about what you unlock in terms of investment from large companies, what you unlock with the stimulus in small and medium-sized companies, and how you connect those ecosystems together. Certainly, if I look at the tech sector, this is not about big businesses, small businesses or Government: it is about interlocking all of it together with the universities and future jobs, which will really unlock future potential. That industry, in itself, has significant potential for the UK.

So you are not drawing the conclusion that this is hopelessly underfunded?

No. As I have said, I have had two meetings on this. I believe that the Government is putting significant priority on this. We are working towards the publication of the White Paper ahead of the funding rounds. That might be a question we can come back to as we progress through in more detail.

You talked about the statutory intent, which is really important, because it shows the commitment behind it. The Government said that the council’s recommendations, “should not include specific proposals for tax or spending measures, or proposals for appropriate levels of spending.” Do you have enough scope to speak up if you come across things that might be undermining the strategy for growth and the work of the industrial strategy council?

That is a good question. The job of the council is to look at the publication of the industry, the cross-cutting, the place strategies and so on, and to make sure that we are agitating those to enable them. Are they fit for purpose? Are they going to be ambitious enough? Are they going to drive growth? That is why the remit has been set as it is. It is one of the growth pillars for the overall industry strategy overall, and the reason we formed the council in the way we have is really to make sure that we are in a position to agitate. We are not policymakers in our own right; we are business leaders, in the main. We need to make sure that we intervene on things we do not think are bold enough, ambitious enough or funded enough. So far, we have intervened in a number of areas that we believed were not clear or precise enough, and the feedback from Government has been very receptive.

What were those interventions?

We have been working on whole streams—one was on AI, one was on skills and one was on regulation. In order to unblock some of those, we need to think about whether they have gone far enough, where things are clear enough for businesses and whether we are going to create enough innovation. Those are just some examples. Q41            Matt Western: You mentioned that you met most of the Secretaries of State for the different Departments. Specifically, have you met the Chancellor and the Chancellor of the Duchy of Lancaster, as they are both key players in bringing this together?

I have met the Chancellor and the Chancellor’s team. I have not yet met the Chancellor of the Duchy of Lancaster. For clarity, I met all the Secretaries of State present at the investment summit, as the council was appointed and announced. It was not a lack of willing; they were just not there.

In the course of this inquiry and our parallel inquiry into the Employment Rights Bill, we have heard that many businesses want joined-up regulation and, in some cases, less regulation. Is it your job to deliver less regulation?

Our job is to look at the regulatory framework and how that lines up to the growth agenda of the Government.

Apologies, I am afraid I have a horrible cold. The Government has committed to put the industrial strategy council on a statutory footing. You have said that you do not want to talk about the budget and about staffing levels, although you have said that the secretariat is going to be quite large. You also talked about the bowl of spaghetti: how do you avoid becoming another strand in that bowl of spaghetti, and an expensive strand at that? How do you become the fork that draws those strands together? What powers might you need to do that?

Again, a good question. We have no desire to be a strand in the bowl of spaghetti; you do not want to add to an already complex thing. Part of the thought and consideration in terms of the remit of the council was the importance of it being put on a statutory footing so that it has longevity outside of Government. For this Committee, I would just underscore the importance of that. It was part of why I accepted the job as chair. With the skills and capabilities we have on the council, it is about trying to ensure that we become an independent body that can be an agitator for—I will not use the spaghetti analogy—how you streamline that meal and pick things that are going to make the very best ingredients that deliver the best outcome. That is the intent. Every single member of the council was a Secretary of State appointee, but every single one I met as part of that process was only interested in being part of the council if they felt they could be an agitator for change and for the growth agenda for the country; it was not to be another strand in the spaghetti or to be a member of another council or advisory. The statutory part was extremely important to them because they felt it was one of the missing ingredients. The cross-Government involvement was also very important to them. Those have actually been some of the things we have agitated on already.

You have helpfully talked a few times about agitating for the right thing, but as Ms Edwards pointed out, the Government have said that the council’s recommendations, “should not include specific proposals for tax or spending measures, or proposals for the appropriate level of spending.” What are you agitating for? Are you basically being banned from agitating on the core thing?

No, we are not. If you think of the workstreams we are working on, it is about making sure that the constitute of them is fit for purpose. I used the example of regulation earlier. Is it going far enough? Does it have a growth agenda? If you are thinking about the constitute of what it would take to make the UK one of the world leaders in AI, do you have the right skills and capability? Have you thought about the role the Government plays in the way they do procurement? Have you thought about skills for small businesses? Have you thought about the supply chain you would go after? Those are just some examples.

You have something of a dichotomy: you need to be quite close to Government, in that you are going to have to co-ordinate all these people, but you are also talking about being outside, being separate and being agitators. Do you think you are going to have an office in Government? If so, would that sit in the Treasury? Where would that sit?

That might be a question for Government. Obviously, we are in the process of working through what the slot for the statutory side is.

What would you ask? The final decision will of course sit with Government, but what would your ask be?

I do not know if I have an opinion on that at this stage. You need some independence, but you obviously do not want to be too far away. I may be able to answer that question the next time I come here.

At this stage, do you have a budget for the council?

No.

Do you know how many staff you are going to have?

The team can correct me if I am wrong, but the secretariat is currently about 35.

Do you know what your powers are going to be?

The remit for the council is clearly published, and we will be working to that.

Will you have any legal powers?

We are in the process of looking at how that will come into statutory, so that is not determined yet.

Have they given you an office?

No.

No budget, 35 staff, unclear powers and no base yet. There is still some work to do in getting the infrastructure.

As I said, we have had one meeting so far. I actually like that you have called me here for this meeting, but it is a very early start to the work we have been asked to do.

That is useful to know.

Good afternoon, and thank you for being here. Focusing on productivity and growth, which is why the council has been set up, and on the economics rather than the politics if possible, what would it do for UK economic growth if we were inside the customs union and single market?

I do not know if I know the answer to that question.

Really?

Yes.

We have a data adequacy agreement that is going to be a real problem if it does not get signed in the summer.

I do not know if I am the expert to answer that question. Sorry.

Since the election, we have seen a number of large companies in a variety of sectors get into trouble, whether it be Stellantis in Luton, the refinery at Grangemouth, or AstraZeneca and the failed investment there. What role will the industrial strategy council have in intervening where things are demonstrably going wrong? Will that be one of the topics of your agitation?

That is not in the remit.

Not in the remit. So you would not be taking a view on the public policy lessons from those?

No. We have a clear remit on the growth sectors that have been picked, the cross-cutting themes and the place. Obviously, we are going to be taking feedback from businesses. We have good representation through the councillors I made reference to, but that is not in the remit and the charter.

Grangemouth, for example, is an oil refinery, and one of the growth areas in the industrial strategy is clean energy. One would think there might be a possibility for the industrial strategy council to take a useful view on whether we might need oil refineries in the future, possibly even for sustainable aviation fuel.

If you were looking at green energy priority, we are thinking about what the interventions would be, and the people working on that particular workstream may take some lessons from that example. But it would not be in the investigation of that particular thing; it would be taking the lessons from it for how we would think about unlocking growth for the country, which is the purpose of the council.

Will you take wider considerations into account alongside growth? Both Luton and Grangemouth are depressed areas where there will be a significant number of jobs losses. Obviously, there is a national mission around growth, but seeing the place-based dimension of some decisions that are made to invest or not to invest is really important. Will you take learning in that direction as well?

Part of the make-up of the council includes the unions, and you will hear from Kate later on. Making sure we have the unions’ point of view is important as we think about the resolute focus on growth and what that does. That is part of the feedback they will give us as part of the process.

It is an industrial strategy council, and we understand that tax is outside its remit. I just asked about the single market and customs union, and you said that that was not something you were going to give a view on. What aspects of trade are inside or outside the remit of the council?

The focus is more on how to drive growth for the UK. But, as you can imagine, place could indicate how to unlock manufacturing growth, for example, in the midlands. Place could also include what international partnerships we will go after. I had the pleasure at Winfield House two weeks ago of meeting all the equivalents doing industrial strategy. We talked about the work we are doing on the council and about the charter we had, and we had the opportunity to learn from them.

Trade is about international and domestic supply chains. Are trade and our relationship with our trading partners—what is and is not working—inside or outside the scope of the industrial strategy council?

I am sorry to be a little vague on the answer. The focus at the moment is on getting the council set up and it being part of the UK. But the place, in partnership with the Trade team, if you are thinking about unlocking something for energy, is really about both the place in the UK, as well as the supply chain out. We are doing some work on it, but we have only just started it.

Do you think it would be a good idea if trade was included in your remit?

I work for a large international company that invests in the UK, so, yes, of course.

Services have done okay, but goods are being hammered. I am worried about all those manufacturing companies in the UK that are being smacked by being cut off from key markets, and what we are going to do about it. I am worried because it seems that trade is not part of your remit or otherwise.

No, it is. Obviously, advanced manufacturing is one of the growth sectors we are going after.

Which bits of trade are inside your remit? What are you going to be doing as a council on trade?

Literally, we have had one meeting so far. If you could give me time to get this set up and moving, I would appreciate it.

It is a really fair answer. We are trying to check the circumference of where you are going to go.

They are good questions for me to take back and clarify, so I appreciate it.

To pin this down, would your ambition for the council be that, in due course, it could provide productive advice on the kind of trade strategy we are going to need in order to deliver the industrial strategy to deliver growth?

If you think about the sectors we are going after that we think will drive growth for the country, there is a natural parallel there. I will pick my own sector, because I know it better. If you are thinking about growing the UK to be the strongest AI and tech superpower, or one of them, you cannot do that without considering trade partnerships, inward investment by the larger tech companies, how they can create ecosystems, whether you have the right data centres and whether you have the right energy to go after it. So, absolutely, yes.

I was glad to hear you mention manufacturing in the midlands, which is a subject very close to the heart of a number of us on the Committee as midlands MPs. Many people would say that an industrial strategy would normally focus on industry, rather than the wider set of services industries. Do you think you have the right make-up for your council to ensure that you focus on the good manufacturing jobs that we want to see in this country? We want growth, but we want growth with good jobs.

The Government has set out a very clear focus on the industries they believe will drive growth for the country. Advanced manufacturing is one of those. It is very important to learn lessons from the past and not bifurcate the focus and spread it too thin. How do you think about growth in the sectors that are providing opportunity for the country? That is really about making choices, then thinking about the cross-cutting themes that will unlock growth and then intersecting that with the place, which is why I mentioned the advanced manufacturing and Birmingham. As part of the council’s job, we are trying to help the Government focus on what will deliver growth for the country.

I am very glad you have an eye on Birmingham and the Black Country.

Yes. We try not to take people’s opinion but to use data. If you look at the data based on the first round of meetings I did with the Treasury and the economics team, those are the sectors that have provided growth over the last couple of years for the country. They have tried to look at where future trends are going to go as well. So it is not just backward looking; it is also thinking about some of the global trends that are going on and what it takes in order to position the UK well.

Based on the data I have seen, they have looked at future trends and future potential market growth, as well as growth as it is driving today. I feel the sectors are focused and encompassing enough to make sure we have future growth potential as well. In terms of some of the feedback and learnings from what happened in the automotive sector, and the bet on EVs, that is a good lesson, that asks how you test where future growth will come from in the sectors that are picked. Based on the data I have seen, I think they have picked the right sectors. Some of this is also about making sure that we do not splinter things too much and trying to pick the ones that really have growth potential, and you pick the enablement as part of that.

Last couple of questions. How did you get the job?

I was approached by the Department for Business and Trade.

So it was not a competitive application process?

No. I do not know what the process behind that was, but I was reached out to. Previously—for the last four years—I was the CEO of Microsoft. I have recently moved from that role, although I am still at Microsoft. Part of my role is working across all industries, so I work with Government, manufacturing and retail. As far as the technology agenda is concerned, I have had experience of working across many of the different sectors, so I have an appreciation of that. Many of the industries I have had the pleasure of working with, I now have an opportunity to work with and partner with on the council.

Is it a paid role?

There is some per diem payment for all council members to ensure that it is not a part-time advisory thing, but something that people put time and commitment into, and people thought that that was right. It was less about the money, and more about making sure that people always prioritise the time, given how important this council’s job is.

How much time are you going to give it?

The contracted terms are two to three days a month.

That does not sound much for such a big topic.

Already, it is challenging. Part of it is how I prioritise where I spend my time, versus where the other council members spend their time. There are a lot of people to meet, both across Government and in business, so it is about making sure we do a good job of divide and conquer and leveraging the capabilities and skills we have across the council.

It sounds a ridiculously small amount of time. Is that your view?

I have quite a busy day job too, so I have to balance this in line with everything else. There are peaks and troughs in that. This week, for example, is a peak because we have a council member meeting and this meeting. There were meetings with the Treasury yesterday. Overall, I am managing within that time. I need to make sure we can do the job that we are being asked to do in that amount of time, and that time is not our enemy in terms of the job that needs to get done. I have managed it so far, but it is something I am keeping a careful eye on.

You have some impressive names on the council. Were you involved in their appointment? Are they contracted to give up a similar number of days—two to three days a month—or are some able to give more?

Contract-wise, it is all the same. Let me answer the first question first. They were all Secretary of State-appointed, with agreement across the Department for Business and Trade and Treasury, with consultation with No. 10. After I was appointed, I was part of the process, but they were ministerial-appointed. They have the same number of hours as I have specified. Some are in full-time employment—acting CEOs of large organisations—and some have different work arrangements, and it will be their choice how much time they give to this outside the contracted hours they have.

We wanted to get a view on how you manage conflicts of interest. Microsoft is a pretty significant contractor to His Majesty’s Government, and you are going to be someone with P&L responsibilities and punchy growth targets at Microsoft, so how do you manage that conflict of interest?

As I was appointed, we managed the conflict of interest by moving me out of the CEO—the active P&L—job. I am now president of enterprise and industry for Europe, the middle east and Africa, and I have removed myself completely from the day-to-day running of the UK.

So you are not asking for access to HMRC systems?

No. If any of my previous engagement arises, I actively state that I am not doing it, because of any perceived or real conflict of interest. I manage it extremely carefully. Even where I am at an event in my chair capacity, but people are really interested in the topic of AI, I try to keep the two things extremely separate where it pertains to any influence one way or another. I take that very seriously, because I never want that to be the case.

Thank you. That is on the record. As we draw up our recommendations to the Government about, for example, how the industrial strategy council should evolve, what things do you think we should be considering?

There is the statutory part, as the previous panel and I said earlier. In terms of taking lessons from the past, which you asked about earlier, it is so important for the future industrial and economic strategy for the country. We have experienced quite a lot of change in Government. If you imagine that the council had been in place for the last five years, we would have had a much stronger position that did not keep swapping and changing. One thing investors and businesses hate is change and uncertainty. So making sure that we can demonstrate that the UK has a stable Government and a consistent, predictable and stable industrial strategy will be extremely important. I would ask for your support with that. The other thing I mentioned earlier was making sure that we get support across the Government and do not get caught in the politics of one Department versus another. We need cohesion across the Departments on what the growth agenda is and how we can be enabled to push the Departments on the things we think will help unlock growth for the country. Those would be the two I would reinforce—and maybe my time too.

We might ask for an office for you as well. Ms Barclay, thank you very much. This has been extremely illuminating. We appreciate that this is early on in your tenure, but we are really grateful to you for coming to Parliament to set out some thoughts as we draw together our recommendations for Government. That concludes this panel.