The UK’s recently updated industrial strategy seeks to ‘level up’ the UK economy, through an ambitious programme of ‘one nation’ research and development (R&D) investment. However, its overwhelming focus is on frontier sectors, to the neglect of vast swathes of the economy. This does not simply risk exacerbating rather than reducing regional divides, due to the heavy geographical concentration of these high-tech sectors. It also ignores the challenge of raising pay, dignity and quality in sectors of the economy that meet our everyday needs and shape crucial aspects of our everyday lives.

This paper explores what a different kind of industrial strategy might look like – one directed towards this neglected ‘foundational economy’. The ‘low-value’ status of many foundational sectors is rooted in the deeply embedded devaluation of ‘reproductive labour’ – the caring and nurturing work which sustains our existence. This devaluation condemns a large, disproportionately female, migrant and minority ethnic section of the population to poverty and poor working conditions. But it also lies behind a deterioration in the quality of services used by everyone.

Some efficiency increases in these sectors are possible, and desirable where they can improve wages. However, mechanical attempts to drive up productivity in foundational sectors, without recognising their ‘human’ dimension, risk seriously damaging service quality. The real challenge in these sectors is not to increase output, but - and thus the amount that society is willing and able to pay for them.

At the heart of industrial strategy for the foundational economy would be radical social innovation. It would aim in the short term to improve pay, conditions and quality through modest productivity improvements. By opening up space for the creativity, imagination and autonomy of the foundational workforce, it would help to make their work more fulfilling, whilst also raising the value of what they produce. In the medium term, such a strategy would seek to catalyse a more fundamental revalorisation of foundational sectors, enabling significantly higher levels of collective investment in them.

Recommendations

Taking inspiration from emerging experimentation in the adult social care sector, the paper argues that such an industrial strategy must encompass:

• Innovation in supply, e.g. new service models, business models and governance models which, associated with improved training, would enable better pay, better services, and opportunities for fulfilling and creative work for a much larger part of the population.
• Demand-side policies to encourage the uptake of emerging alternative models. E.g in social care, the commissioning process could be used more purposively, to drive up the quality and dignity of care work and services. Closer collaboration between commissioners and providers is needed to move beyond the current tendency to risk aversion.
• Regulation to steer innovation in a more healthy direction. E.g. new metrics for the inspection and evaluation of social care services, which moved beyond the narrow focus on biomedical needs, would create space for experimentation with more holistic and creative models of care.

An industrial strategy for the foundational economy should also be:

• Driven by local experimentation, not imposed top-down. It should be a collective project, driven by those who use foundational services, those who provide them, social movements and other civil society actors in collaboration with local authorities, employers and researchers.
  
• Treated as a priority for public R&D investment. For these forms of innovation to flourish, local authorities and providers must have the resources to permit experimentation. Equally crucial are resources to support the orchestration of key stakeholders – a function that the market typically fails to provide. A major role of UK Research and Innovation should be the provision of these resources, as well as other forms of support, potentially through the Industrial Strategy Challenge Fund.