By Dr George Dibb is Head of the IPPR Centre for Economic Justice.

Earlier this week the Prime Minister attributed the success of the Oxford/AstraZeneca Covid-19 vaccine to “greed” and “capitalism”. His comments, at a meeting of the 1922 Committee, may have been light-hearted in intent, but we need to understand the story of the vaccine if we’re going to learn from it.

Yes, the vaccine roll-out couldn’t have been achieved without the efforts of the private sector, but nor could it have come about without both long-term investment and short-term direction from the state.

There are lessons for the Government in the incredible speed and success of vaccine which were set out in a report this week by the government’s own Industrial Strategy Council. The story of its development – crucial to the ambition to make the UK a ‘science superpower’ – is one of the public and private sectors working together.

It is a story of a government unafraid to use the unique powers of the state to radically accelerate innovation. And it is a story of the public reaping the reward of long-term taxpayer investment that the private sector would never have made alone.

Yet just when the case for it couldn’t be clearer, the Government has chosen to scrap its industrial strategy. The UK economy faces a range of stubborn structural challenges – from the disconnect between productivity and incomes, to regional economic inequalities, and the embarrassingly low levels of both public and private sector investment. This is all on top of the urgent need to drive a post-Covid recovery.

Now is not the time to lose the 2017 industrial strategy developed under Theresa May, it’s the time to reinforce it. As Boris Johnson too has come to realise across the twin focuses of net zero and levelling up, none of these will be solved by leaving it up to the free market alone. So how did the Government make the critical interventions to lead the vaccine race?

First, where the Government provided bold direction in the mission for a Covid-19 vaccine, the private sector followed and invested. As the severity of Covid-19 became clear, ministers set a target for developing a publicly available vaccine for the coronavirus. This challenge, clearly articulated and held at the highest levels, drove effective working across government and spurred directional activity in industry.

There is plenty to learn here about how government and industry can work together that applies to a broader industrial strategy, in particular around the UK’s net zero carbon emissions target. Clear signals from government create certainty in businesses and create the environment for action and investment. This is even more effective when targeted at a specific goal rather than generalised economic growth or a boost to GDP. This is because it transmits to the private sector clear signals of the government’s direction of travel.

A second lesson is how the state leveraged the powers that only it possesses: it provided risky, targeted investment that would be hard to justify for a business alone. Innovation occurs within an environment that can be shaped by government policy. For too long governments have been told that they shouldn’t intervene in markets, yet the vaccine success tells us otherwise. Early in the pandemic the Government invested cash into highly uncertain vaccine innovation. Most failed but we only needed one to succeed. A similar concept applies to the high-risk, high-reward research that should be pursued by the government’s new Advanced Research and Invention Agency (ARIA).

Third, the government effectively de-risked business investment by guaranteeing it would buy a successful vaccine in huge numbers – leveraging its power as a purchaser or procurer of this innovative technology. All innovation requires both a push and a pull to successfully reach its market – the push comes from an invention or breakthrough, while the pull is the market demand that it satisfies.

By guaranteeing it would buy a successful vaccine in huge numbers of doses, the Government provided what is known as a volume guarantee. AstraZeneca could invest safe in the knowledge that there was a ready customer for its vaccines. The Government has adopted a similar approach to secure private investment in offshore wind power, by offering a price guarantee for the electricity generated. The result: the Prime Minister was able to boast that the UK is well on its way to becoming the “Saudi Arabia of wind”.

There is scope for much greater use of this purchasing power as part of an industrial strategy. Every year the government buys goods and services worth a hefty 14 per cent of GDP – almost eight times what it invests in research and development. Using even a fraction of this to drive innovation can transform a range of technologies. If we provided similar guarantees for new car batteries, electric heat pumps, or the efficient retrofit of buildings we could lead in those areas and decarbonise our economy too.

Finally, the vaccine success reaped the benefits of patient, long-term public investment in the UK’s life sciences – supporting the UK’s scientific and technological capacity and expertise, built up through years of strategic funding by the government.

The Government has a new-found enthusiasm for attempting great leaps forward in high-risk, high-reward scientific areas, known as “moonshots”. Yet success here will depend on a strong foundation of technical capabilities that may appear of little significance at first glance. This capacity may lie in universities, but equally it may lie within bodies that bridge the gap between academia and industry by supporting the commercial development of technologies.

Effective examples of this “near-to-market” support include the Centre for Process Innovation’s world-leading mRNA vaccine technology, and the work of the High-Value Manufacturing Catapult, which convened businesses to rapidly develop new ventilator technology. Both have received long-term public funding, and – with one based in Darlington and the other in Solihull – both also contribute to the aim of levelling up beyond the South-East.

It can take decades to develop this kind of technical capacity, critical to confronting new scientific challenges ahead, but only a year or two of ill-judged budget cuts to undermine it. If ministers want an innovation-led UK economy fit for the 21st Century, they need to ensure patient public funding and support continues, even during periods of spending restraint.

Now, as the Government looks to “refresh” its industrial strategy with a new Treasury-led “Plan for Growth”, voices across the political spectrum are anxious that the momentum of the 2017 white paper might be lost. The vaccine success shows how business and government can best work together towards a common goal, transforming both growth and society.

We need to turn neither to the statism of the 1950s and 1960s, nor to the pure free-market ideals of the 1980s, but to a new model of cooperative endeavour that recognises the unique power of the government to shape the “free” market. Only by heeding this lesson can the UK thrive as an economy built on science and innovation – inventing, manufacturing and exporting the high-value technologies crucial to our success in the 21st Century.