The report from the Business, Innovation and Skills Committee concludes that while the Government has proposed a number of interventions which have the potential to help promote economic growth, it does not add up to a comprehensive growth strategy.
The report highlights the fact that in the absence of clear performance measurements the Department's strategy runs the risk that economic success could mask failures in policy while economic hardship could overshadow excellent strategies or interventions.
Bank lending to businesses lies at the heart of the economic recovery. The report believes that the agreement struck between Government and the banks (Project Merlin) is a step in the right direction. However, the report argues that:
"All that the Department does will be of little consequence if business does not get access to sufficient levels of working capital."
The Report concludes that:
"All the good that the Department hopes to achieve in its industrial policies will suffer without a vibrant business community which has adequate access for working capital. That, more than any Government initiative, will drive the recovery."
The Report argues that different sectors of the economy have different requirements when it comes to government support. It argues that the Department will have to develop a strong awareness of the needs of individual sectors and have the flexibility to react to them if we are to build capability across all sectors of the economy. While the Government's growth strategy appears to move in this direction, our evidence from three sectors has shown that much work needs to be done.
Adrian Bailey, Chair of the Committee said:
"The Department's focus on economic growth is welcome but warm words and aspirations are not enough. Unless the Department develops detailed plans to help industry then this positive message will mean little to UK businesses."
The banks' role in providing finance to business is crucial to the success of the economy and this is a key theme in our report. The agreement between the Government and banks may look like positive engagement, but the jury will remain out until it delivers real benefits to industry. If the economic recovery is to be sustained then both Government and banks need to move quickly from rhetoric to meaningful of support to the private sector."