The move follows a shake-up of the business department, which is now renamed as the Department for Business, Energy and Industrial Strategy (BEIS). Greg Clark, the new secretary of state, has said the new-look department will be ‘charged with delivering a comprehensive industrial strategy, leading government’s relationship with business’, as well as delivering affordable, clean energy and tackling climate change.

The committee says it will consider what the government means by industrial strategy and questions how interventionist in the free market it should be, such as whether it should prevent foreign takeover of UK companies.

A number of foreign acquisitions of established UK businesses have taken place over the past decade, including the sale of Boots to US investment vehicle KKR, the acquisition by Tata of both Corus steel and Jaguar car manufacturers, and the takeover of Cadbury by Kraft.

However, a proposed mega-merger between pharma giants Pfizer and AstraZeneca attracted strong criticism from politicians, partly over fears about the risk to the UK science base.

During her campaign to be the new Conservative party leader, Theresa May indicated that she would favour intervention to defend what she described as sectors important to the economy such as pharma. However, since she became prime minister, the UK technology company ARM Holdings has announced it is to be acquired by the Japanese firm SoftBank. 

The inquiry will also look at the priorities for the private sector, in terms of what businesses want from a revamped industrial strategy, the pros and cons of a sectorial approach and possible geographical emphasis, and whether the government should proactively ‘pick winners’.

This will include an examination of how an industrial strategy will link with devolution initiatives aimed at devolving taxation and decision making away from Westminster.

Scotland is set to get wider powers to vary the rate of income tax from April 2017, as well as control of Air Passenger Duty by 2018, while from 2019/20 the receipts raised in Scotland by the first 10 percentage points of the standard rate of VAT would be assigned to the Scottish Government’s budget. Scotland has already introduced two new devolved taxes: Land and Buildings Transaction tax, replacing stamp duty, and landfill tax. Wales has also been offered greater devolved tax powers, while there are plans for Northern Ireland to cut corporation tax from 2018.

Iain Wright MP, chair of the BIS committee, said: ‘I am pleased that the new prime minister agrees that a modern innovative and competitive economy needs an industrial strategy. But we on the committee want to explore what this means in practice. Will this be a return to “picking winners” by the government? Is it just a rebadging of existing policies? Or is the government going to make a genuinely new offer to support key industries right across the country?

‘We will want to explore the rationale for the support and the means of providing it, particularly in a coordinated way across government departments. We will also want to test how a new government industrial strategy fits in with its own devolution agenda, so that local, regional and national policies and strategies can be aligned as much as possible.’

As part of the inquiry, MPs says they will be looking at the industrial strategies of previous governments and of other countries to see if there are any lessons to be learnt.

The deadine for feedback is  27 September.

Details are here.