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The cancellation of the government鈥檚 industrial strategy will make it harder for businesses to tackle long-term challenges such as achieving net zero and improving productivity, MPs have warned.

In a damning report, MPs on the cross-party business, energy and industrial strategy committee said that the government鈥檚 commitment to a coordinated industrial policy that can withstand independent scrutiny had 鈥渨aned鈥�.

A flagship policy of Theresa May鈥檚 government intended to address long-term economic challenges in the UK, the industrial strategy was scrapped in March. It has been replaced by a Treasury-led 鈥減lan for growth鈥�, which takes into account changed economic circumstances in the wake of the covid-19 pandemic.

But the committee鈥檚 report said that by abandoning the original strategy and the council which would scrutinise its implementation, the government risks distancing itself from industries which must deliver long-term policy objectives such as reducing carbon emissions.

The report added that the abolition of the council was not consistent with the government鈥檚 wider 鈥渃ontention鈥� that the Treasury鈥檚 new plan is an evolution of the strategy.

The original plan also included ten 鈥渟ector deals鈥�, which outlined practical actions to be taken in specific areas including construction, rail, nuclear and offshore wind to boost productivity, employment, innovation and skills.

Dick Elsy, a witness to the report who is chief executive of the High Value Manufacturing Catapult, a group of UK manufacturing research centres, said that the sector deal for construction would have allowed firms to work together on 鈥渂ig systemic innovation challenges鈥�.

He said that, while the other sector deals were 鈥渙pportunistic鈥�, largely favouring sectors where collaboration between firms was already present, the deal for construction was a significant exception and would have enabled firms to pool research and development.

Chair of the committee Darren Jones was quoted as saying that business leaders were 鈥渘ow left guessing what the government鈥檚 approach is to industrial policy鈥� at a time when they were 鈥渃rying out for long-term consistency and clarity鈥�.

He added that the 鈥減lan for growth鈥� is 鈥渘othing more than a list of existing policy commitments, many of which are hopelessly delayed鈥�.

In a report published last week, the Climate Change Committee said that the government had been too 鈥渢imid鈥� in developing policies which matched up with its rhetoric on achieving net zero. It warned that several government departments including the Department of Business, Energy and Industrial Strategy were 鈥渓agging behind鈥� in their approach to tackling carbon emmissions.