One of the key lessons to emerge from comparative research on national policy responses to digitalisation, automation and AI is that nations start in very different places in terms of their levels of capacity to confront these issues. Put bluntly, some countries have a stronger and more effective policy response capacity than others.

Besides the ability to create and sustain a broad political consensus about policy in this area, other important aspects of national policy capacity include:

1. The ability to concert policy across intra-governmental boundaries to produce a joined-up and integrated suite of responses, rather than a set of uncoordinated and disjointed initiatives. ‘Critical mass’ matters in helping ensure effective policy delivery.
2. Research and analytical capacity in government, academia and among other groupings (think tanks, civil society organisations, trade unions, business representative bodies, etc).
3. Policy networks that embrace key actors and stakeholders and which can be used to gather intelligence on change, enable consultation and dialogue around policy options, and marshal and mobilise collective responses (e.g. on the part of employers or industrial sectors).
4. A range of resources, including public funding, effective public institutions, and a set of shared values around the importance of effective public policymaking.

In addition, the ability to maintain and if needs be incrementally adjust policies over a reasonable length of time is also highly important to generating cumulative impact on real world practice. Stability and persistence tend to deliver better outcomes than endless waves of institutional instability and fundamental changes in policy direction.

As Working Paper 8 argues, countries like Germany and Singapore have a stronger policy capacity than England. For example, Germany has been able to develop and then pursue a nested suite of policies on digitalisation – Industry 4.0, Work 4.0, and Skills 4.0 – in a way that England has not tried to emulate. In Singapore’s case, the long-standing tradition of a developmental state deploying an active industrial policy means that both government and firms have a shared understanding and expectation about what state policy is aiming to deliver. It also has a framework for policy to focus on, in the shape of Industry Transformation Maps for 23 industries, grouped into six clusters. These provide an integrated plan for skills, innovation, and productivity enhancement.

There are many reasons why England has not sought to follow the examples set by Germany or Singapore.

Some are ideological – the current UK government is uncertain how far it should go in creating any kind of industrial strategy. The Industrial Strategy launched in 2017 was discarded in 2022 and the in a recent re-shuffle of central government departmental roles and missions the words Industrial Strategy were removed from the name of the relevant ministry. The government is also extremely averse to raising expectations about the role of government in regulating and enhancing the employment relationship or setting standards for what happens inside the workplace. Indeed, there is a deep-seated desire within sections of the governing party for greater labour market de-regulation (as part of the ‘Brexit bonus’).

An example of this is the fate of the 2017 Taylor Review of Modern Working Practices. This was a government-commissioned enquiry prompted by mounting concerns about the effects of platform work, casualisation, zero hours contracts and low pay in some parts of the labour market. The Review recommended some narrowly focused reforms to the legal status of some workers and a limited strengthening of their rights. The government claimed that it would legislate to enact most of these, but nearly six years on no draft legislation has yet been introduced in Parliament and the current prospects of this occurring appear vanishingly slender.

The other main reason for England’s weaker and more disjointed response to digitalisation is capacity issues. To begin with, there are questions about the strength and representativeness of employer bodies, with particular weaknesses at sectoral level in key parts of the economy. The government abolished its support for Sector Skills Councils in 2017 and wound up the national body that supported their efforts. Since then, the Government’s aim has been to deal with employers on an individual basis or at local levels. The other major capacity constraint relates to research. There is a great deal of research on the impacts of digitalisation under way, but it is relatively fragmented, and the capacity of central government’s analytical services staff to assimilate and synthesis this is constrained.

In addition, in recent years there have been a plethora of institutional and policy initiatives, including an Innovation Strategy, a Digital Strategy, an R&D Roadmap, a science plan, the creation of an Office for Science and Technology Strategy, two re-organisations of the UK Research and Innovation agency (UKRI), and since 2017 seven changes in the Secretaries of State in charge of the relevant central government department. Most recently, overall strategic responsibility for digital technologies has been removed from the Department for Digital, Culture, Media and Sport (DCMS) and been incorporation into the remit of a newly announced Department of Science, Innovation and Technology (DSIT). The transient nature of policy and the machinery that creates it, and the danger that the different elements do not add up to more than the sum of their parts, both attest to long-standing problems with policy design and delivery in a country that has an enduring culture of ‘muddling through’.

Countries with limited national policy capacity are being tested in a world where the policy challenges are multiple, complex, inter-related and fast-moving. England offers an example of a country that is finding itself challenged by these conditions.

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