The UK Governments’ new Industrial Strategy
13 Dec 2017
A Roadmap for the Future of British Industry?
The UK Industrial Strategy has been a long time in the making. For several years, various stakeholders, including BFPA, have been in consultation with BEIS and other Government Departments in trying to establish a document that articulates the needs of UK Industry whilst meeting the political aspirations of the Government. One would hope that the two were in complete synchronisation but sadly, this is not always the case. Take the subject of robotics where the need for adoption of the technology is paramount if we are to secure the future of British Manufacturing but successive politicians have been too scared to be seen publicly supporting this cause for fear of being accused of destroying jobs. The solution to such conundrums often resides in the clever use of language which doesn’t explicitly describe the contentious technology but leaves the door open for its development! There is a small element of such manoeuvring in the final iteration of the current strategy document to the extent that Government is understandably seeking to develop industry in areas of high unemployment whereas industry would seek to prioritise the availability of skills and logistic considerations over the local demography. However, both stakeholders are sympathetic to the others drivers and there is a high degree of consensus as to the suitability of the chosen strategic objectives.
Born out of the green paper and associated consultation exercise early in 2017 which articulated ten primary strategic ‘pillars’ or focus areas for the strategy; the final iteration focuses its primary objectives around a consolidated version of what have been called “five foundations of productivity – the essential attributes of every successful economy.”
Those foundations are explicitly:
Through this process, Government has also identified Grand Challenges which they claim they will set for the UK government and wider economy. They are designed to be a response to the global forces that Government claims will shape our rapidly changing future, and which the UK must embrace to ensure that we harness all the opportunities that they present.
The Grand Challenges, which are four in number, are:
The headline policies that underpin each of the ‘foundations of productivity’ are essentially fifteen fold and will be made enduring by creating an independent Industrial Strategy Council that will assess progress and make recommendations to the government. Hopefully, this latter step will avoid the inevitable re-invention of policy in the event that there were to be a change in Government although the widely held view is that this may not be sufficient.
The headline policies by foundation of productivity are:
The Governments Vision longer term, for the UK is expressed as wanting the UK to become:-
- The world’s most innovative economy…
- Offering good jobs and greater earning power for all…
- Via a major upgrade to the UK’s infrastructure…
- Making it the best place to start and grow a business…
- Whilst creating prosperous communities across the UK.
In one of the closing paragraphs of the Executive summary in the white paper, Government makes a statement which captures their aspirations:-
“The Industrial Strategy sets out how we are building a Britain fit for the future – how we will help businesses create better, higher-paying jobs in every part of the United Kingdom with investment in the skills, industries and infrastructure of the future. It ensures that our country and its citizens can embrace and benefit from the opportunity of technological change.”
As with all Government statements of aspiration, there is an inevitable element of platitudinous optimism about the strategy. No one could take issue with the objectives, they are all very worthy but in their understandable attempt to address all sectors without alienating any of the voting populous, Government has tried to ‘keep all of the people happy all of the time’ which experience shows is rarely possible. BFPA members will have to search in a little more detail to find those policies and ultimately regulations that will have a major impact, positive or negative, upon their businesses. There is also the time element to consider for whilst industry takes a long-term view of any practical strategy, Governments have to work to the five-year lifetime between elections and take whatever steps are necessary to remain in power. If they don’t and there is a change of Government, it is highly likely that there will be changes in policy before strategic objectives have had an opportunity to impact upon the business community.
The entire white paper is actually 255 pages long thus, only those with sufficient resource or personal stamina are likely to try to digest it in its entirety. For those that do wish to have a copy, it may be found on;
Dods Parliamentary Communications Ltd is a specialist political publishing house based in London. It was formed in its current state in 2004 as the result of the merger of Vacher Dod Publishing and Parliamentary Communications Ltd. They are noted for their expertise in Parliamentary affairs and have made a suggestion that the Industrial strategy may be broken down into twelve ‘sector’ headings, each with associated key policy announcements:-
1) Construction – 14 Key Announcements
2) Education & Mathematics – 12 Key Announcements
3) Employment – 10 Key Announcements
4) Mobility – 9 Key Announcements
5) Artificial Intelligence – 6 Key Announcements
6) Research & Higher Education – 5 Key Announcements
7) Clean Growth – 5 Key Announcements
8) Business & Enterprise – 5 Key Announcements
9) Environment & Food – 3 Key Announcements
10) Healthcare – 3 Key Announcements
11) Automotive – 3 Key Announcements
12) Exporting & Access to Finance – 3 Key Announcements
Given that most BFPA members operate at tiers two and three of the manufacturing supply chain, any one of the chosen policies might have an impact on their businesses. Equally, those of a more generic nature such as those relating to education and healthcare will have a very wide impact on all stakeholders. For BFPA members wishing to scrutinise the specific key policies, they were as follows:-
Construction (Key Policies)
- A Construction Sector Deal, including £170m of investment through the Transforming Construction programme which will support innovation and skills in the sector (pg.139)
- Under the Construction Deal, the sector and the Government will work to ensure construction projects across the public and private sectors are procured and built based on their whole life value (pg.197)
- A joint commitment to invest in a transformative programme which brings together numerous sectors to develop and commercialise digital and offsite manufacturing technologies. (pg.198)
- They will agree Local Industrial Strategies that build in local strengths and deliver on economic opportunities. The first will be agreed by March 2019 (pg.216)
- Places in England with a Mayoral Combined Authority will have a single strategy led by the mayor and supported by LEPs. In addition, from next year, the Prime Minister will chair a biannual ‘Council of Local Enterprise partnership Chairs’. (pg. 223)
- The Government are reviewing the roles and responsibilities of LEPs and will work with them to set out a more clearly defined set of activities and objectives in early 2018. (pg.223)
- The Government will make additional financial resources available to LEPs that demonstrate ambitious levels of reform following the review. (pg.223)
- The Government will work with local partners to develop a portfolio of High Potential Opportunities (pg. 227). They will also consult next year on the precise design and priorities for the UK Shared Prosperity Fund. (pg.228)
- Create an independent Industrial Strategy Council that will develop measures to assess and evaluate the Industrial Strategy and make recommendations to the Government. (p.29)
- Launching a new competitive £115m Strength in Places fund to support areas to build on their science and innovation strengths and develop stronger local networks. They will also set an expectation of all laboratories in receipt of significant public funding to support local economic growth (pg.85)
- Devolve the adult education budget to mayoral areas in 2019, with Skills Advisory Panels rolled out “shortly” and integrated into Mayoral Combined Authorities and LEPs to inform the analysis that feeds into Local Industrial Strategies. (pg.114)
- As part of the National Retraining Scheme, £34m will be provided to expand innovative construction training programmes across the country, including a programme in the West Midlands (pg.119)
- The National Productivity Investment Fund will be extended to 2022/23 and increased from £23bn to £31bn, including £11.6bn for housing (pg.132)
- The Transforming Infrastructure Performance programme will use government spending to help drive the adoption of modern methods of construction (pg.139)
Education & Mathematics (Key Policies)
Education
- Government commitment to conduct a major review of funding across tertiary education. The Government will also invest up to £20m between 2018/19 and 2019/20 to help further education colleges develop the skills of their staff to deliver the new technical qualifications.
- The UK will host a major Skills Summit with leading employers and publish a public consultation on the detailed design and delivery of T levels before the end of the year. (P103)
- The Government will update school and college performance measures to ensure that students can make an informed choice between technical or academic education in time for the introduction of the first T levels, recognising them as equally valued routes. (P102)
- There will be a review into higher-level technical education at levels 4 and 5 which will consider the supply of, and demand for, quality higher-level classroom-based technical education, responding to the recommendations of Lord Sainsbury’s review. (P103)
- The Government will work with Mayoral Combined Authorities and Local Enterprise Partnerships across all areas of England to establish Skills Advisory Panels. These will enable mayors and Local Enterprise Partnerships to support employers, education providers and local government in identifying current and future local skills needs shaping the provision and funding of post-age 16 education and training and careers guidance.
- Enterprise Partnerships to support employers, education providers and local government in identifying current and future local skills needs shaping the provision and funding of post-age 16 education and training and careers guidance. (P230)
Maths-specific
7) Through an £8.5m pilot new approaches to improve outcomes in basic maths for those aged 16 and over. (P105)
8) An investment of £40m to establish Further Education Centres of Excellence across the country to build teaching capacity and spread best practice. (P105)
9) To better understand the gender disparity in STEM subject choices at ages 16-19 the Government will explore how to improve the accessibility and transparency of data published on STEM, by institution and subject. (P106)
10) As announced at the Autumn Budget there will be a £600 Pupil Premium for students who take maths or further maths at AS/A level or core maths. (P106)
11) Working with the Royal Society and British Academy to encourage universities and employers to signal the value of level 3 maths qualifications for entry to undergraduate courses that have a significant quantitative element, and the value for a wide range of job roles. (P106)
12) Government will invest £27m in the further expansion of Teaching for Mastery maths programme to reach 11,000 primary and secondary schools in total by 2023 along with providing £350,000 annual funding for every maths school to deliver the specialist maths school model. (P107)
Employment (Key Policies)
Ageing workforce / more flexible labour market /older workers.
1) The Government will continue to build on the Fuller Working Lives Strategy and has already appointed a Business Champion specifically for older workers.
2) Encourage industries to lead in adapting their workplaces to the requirements of an ageing workforce.
3) Will work with business to make flexible working a reality for all employees across Britain and to inform the evaluation of the Right to Request Flexible Working regulations.
Barriers faced by workers from underrepresented groups in realising their potential.
4) The Government will continue to increase the rates of labour market participation among underrepresented groups.
5) Make £60m available to support apprenticeship take up by young people and poorer families from disadvantaged areas.
Adult learning/ retraining
6) Will form a high level advisory group – the National Retraining Partnership – to bring together the Government, businesses and workers, through the Confederation of British Industry and the Trades Union Congress, to set the strategic direction and oversee implementation of the scheme.
7) Start the National Retraining Scheme (informed by £40m announced in the Spring Budget) next year.
Good environment for workers.
8) Government will continue dialogue on the Matthew Taylor Review, with worker representative bodies such as the Trades Union Congress, organisations like the Chartered Institute for Personnel and Development and business bodies such as the Confederation of British Industry.
9) They will publish a comprehensive careers strategy shortly that will set out plans to improve the quality and coverage of careers advice for people of all ages.
10) Will be publishing plans shortly to achieve the ambition to see one million more disabled people in employment in the UK by 2027.
Mobility (Key Policies)
- A flexible regulatory framework will be established to encourage new modes of transport and new business models. (p50)
- A project with the Law Commission will be carried out to set out a long-term regulatory framework for self-driving vehicles. (p50)
- A strategy will be published in the coming months on government support for the transition to zero emission road transport. (p50)
- A consultation with industry on the Government’s role in supporting the future mobility marketplace will be launched. (p51)
- A Future Mobility Strategy will be produced in the next 12 months. (p51)
- The National Infrastructure Commission will launch an innovation prize to determine how future roadbuilding should adapt to supporting self-driving cars. The West Midlands will be a key testing location for the best entries. (p51)
- £5m from the TG Testbeds and Trials programme will be used for a trial of 5G applications and deployment on roads, including helping to test how to maximise future productivity benefits from self-driving cars, starting in 2018. (p51)
- An R&D competition will be launched by the Centre for Connected and Autonomous Vehicles, to ascertain how simulated digital environments can support and accelerate development of self-driving technology. (p51)
- £178m will be invested in interim funding to the Catapult Network, to allow them to continue their work, long-term funding for the network will be agreed next year. For Catapults where improvement is needed, UK Research and Innovation will run a 12-week process to develop their plans. (p82)
Artificial Intelligence (Key Policies)
- Investing £9m in a new Centre for Data Ethics and Innovation. This world-first advisory body will review the existing governance landscape and advise the Government on how it can enable and ensure ethical, safe and innovative uses of data including AI. This will include engaging with industry to explore establishing data trusts to facilitate easy and secure sharing of data. The Government will consult widely in due course on the detailed remit for this new centre. (P40)
- The Alan Turing Institute will become the national research centre for AI. (P39)
- Government will invest £45m to support additional PhDs in AI and related disciplines, increasing numbers by at least 200 extra places a year by 2020-21, aiming to expand the numbers in UK universities year-on-year into the next decade. (P39)
- The Government will support universities and businesses to develop an industry-funded master’s programme, with an initial scale of over 200 places. (P39)
- Investing £20m in a new Institute of Coding, which will be formed through a consortium of universities and employers. The new institute will sit alongside Ada, the National College for Digital Skills, and work with employers and businesses to deliver higher-level digital skills. (P110)
- The Government will invest £84m over the next five years to deliver a comprehensive programme to improve the teaching of computing and drive up participation in computer science, with a particular focus on girls.
Research & Higher Education (Key Policies)
- The Government is asking UK Research and Innovation to develop a new Knowledge Exchange Framework that will benchmark how well universities are doing at fostering knowledge, sharing and researching commercialisation. This will sit alongside the Research Excellence Framework and the Teaching Excellence and Student Outcomes Framework. The importance of ‘impact’ will be changed in the next Research Excellence Framework assessment round from 20 per cent to 25 per cent. (p79)
- Higher Education Innovation Funding (HEIF) which enabled universities in England to engage with businesses and improve the commercial skills of their staff will see an increase of £40m a year in funding with a commitment to total of £250m a year by 2020-21. (p79-80)
- Building on the Science and Innovation Audits the Government are launching a new competitive £115m Strength in Places Fund to support areas to build on their science and innovation strengths and develop stronger local networks. The fund will support collaborative programmes based on research and innovation excellence and potential in places right across the UK and will explore the regional economic impact of existing institutions including universities, research institutes, Innovation and Knowledge Centres and Catapults and will link to Local Industrial Strategies. This will be delivered through UK Research and Innovation as a competitive fund for collaborative bids. (p84-85)
- The Government will launch a new International Research and Innovation Strategy in early 2018 in partnership with UK Research and Innovation and a £110m fund for International Collaborations to enhance the UK’s excellence in research and innovation through global engagement. (P89)
- The Government welcomes chances to discuss possible options for future UK involvement in EU framework programmes that promote science, education and culture. (p91)
Clean Growth (Key Policies)
- Will launch a new Industrial Strategy ‘Prospering from the energy revolution’ programme to develop world-leading local smart energy systems that deliver cheaper and cleaner energy across power, heating and transport.
- New Industrial Strategy ‘Transforming Construction’ will take advantage of new technologies to provide places to live and work that use dramatically less energy to build and run.
- Investing £162m in innovation for low carbon industry, and developing a new strategy for the bio economy.
- Will work with industry to stimulate further market investment in clean and efficient technologies and process, including through all manufacturing Sector Deals.
- Will develop a new scheme to support investment in industrial energy efficiency.
Business & Enterprise (Key Policies)
- A review of what actions could be most effective in improving productivity of SMEs will be conducted, including how to address the ‘long tail’ of less productive businesses. The review will evaluate the role of digital services, data and information in the take up of effective business advice and support services. Policies the Government intends to take forward from this review will be announced in Autumn 2018.
- The Government will also work with partners to pilot and evaluate the role that customer feedback and online ratings marketplaces could play in making it easier for SMEs to assess the quality of advice. This will start in the first half of 2018.
- The Government will work with UK businesses to encourage emerging consumer markets, and the development of innovative products and services that support people throughout their working life and into retirement.
- Based on a review of the Small Business Research Initiative programme, the Government will improve public procurement as an important source of finance for innovative businesses.
- The Government will appoint nine UK Trade Commissioners, to head the overseas operations for the Department of International Trade (DIT). These HM Trade Commissioners will develop a regional trade plan covering export promotion, investment (inward and overseas direct investment) and trade policy overseas
Environment & Food (Key Policies)
- The Government will establish a new Food and Drink Sector Council to increase collaboration between government and the whole food chain. An early task of the council will be to build on proposals for a sector deal in food and drink manufacturing. (P188)
- The Government announced three new industrial strategy programmes in Clean Growth across energy, construction and agriculture. (p144)
- New ‘Transforming food production: from farm to fork’ programme will put the UK at the forefront of advanced sustainable agriculture. (p148)
Healthcare (Key Policies)
- The Government will support new products and services for the growing global population of older people. This will include a forthcoming Industrial Strategy ‘Healthy Ageing’ programme and an exploration into opportunities to work with UK businesses to encourage emerging consumer markets, and the development of innovative products and services. (p54)
- In response to the Life Sciences Industrial Strategy, the Government will be working to develop a number of regional Digital Innovation Hubs. These hubs will support the use of healthcare data for research purposes within the strict parameters set by the National Data Guardian. (p55)
- For the care sector, the Government say they will support the sector to innovate and develop new business models, including by making better use of emerging technology through the Industrial Strategy Challenge Fund. It will also encourage care businesses to access the opportunities provided by the strengthened Growth Hub network. (p55)
Automotive (Key Policies)
- Increasing the productivity and competitiveness of UK suppliers, especially as new value chains emerge, is central to the deal and an industry-led productivity improvement programme will be rolled out to target areas where UK suppliers need to improve.
- The programme will provide bespoke training and enhanced business processes to help build the vertically integrated supply chain to manufacture the future generation of vehicles at volume. This will support the sectoral ambition to increase the level of UK content in nationally produced vehicles to 50 per cent by 2022. (p201)
- Support for connected & autonomous vehicles will be coordinated under the MERIDIAN hub, which will seek to convene UK industry around a set of long-term strategic priorities that require long-term investment to ensure we remain at the cutting edge of the industry. (p202)
Export & Access to Finance (Key Policies)
- The Government will launch a new Supply Chain Competitiveness programme that will target areas where key businesses need to improve to match the best in Europe and beyond, supporting training and enhanced business processes.
- The Government will undertake a review of export strategy, reporting in spring 2018. The review, as well as the GREAT Britain campaign, will ensure the Government has the right financial, practical and promotional support in place for new and existing exporters to sell overseas. The review will include expertise from across government and the private sector, including:
– better support for medium and larger businesses to access new markets and export more;
– identifying smaller businesses with the potential to succeed and grow as exporters;
– better signposting to online and local sources of information, and access to finance;
– working with the private sector to ensure all businesses receive high quality export advice;
– strengthening government-to government relationships to realise new export opportunities.
3) UKEF will introduce a new guarantee to banks designed to increase liquidity in the supply chain.
The wider industrial community and the larger representative and membership bodies that operate in the industrial sector were generally positive in their responses to the strategy and there is considerable optimism that should the strategy be realised the Government will be a long way towards meeting their Vision. However, like all strategies, there is also a widely felt urgency to begin execution of the objectives rather than just articulating bright ideas. This view was especially expressed by the CBI and its membership, as was their support for “the creation of an independent council with teeth to monitor progress.” There is also considerable support amongst most stakeholders for the need to address a wider range of industries other than the old favourites such as Aerospace and Automotive.
As mentioned above, the direct impact of this strategy upon companies such as BFPA members who operate further down the supply chain, is less easy to predict suffice to say that if the Tier One companies are successful there will be a positive shake-down effect throughout industry.
An old Confusion saying states; “Study the past if you would define the future.” Let us hope that the Government has studied the historical evidence closely in determining this new strategy. Post-Brexit, UK Manufacturing will not be very resilient to failure.
Chris Buxton – BFPA CEO
November 2017