Launched on 27 November 2017 by the Business Secretary, Greg Clark, the new Industrial Strategy sets out a long term vision for how the country can build on its economic strengths, improve productivity, embrace technological change and boost the earning power of people across the UK. We take a look at what the Strategy says in terms of building on the UK’s strengths, as well as how it proposes to address the weaknesses that are holding back growth.
How was the Strategy developed?
The Green Paper, Building Our Industrial Strategy, was published for consultation in January 2017. The document sought views on how to build a strategy which addresses long-term economic challenges and can improve living standards, increase productivity and drive growth across the whole country. Around 2,000 responses were made to the consultation process, along with contributions from a programme of engagement throughout the UK over the last ten months. The views collected during the consultation and engagement programmes have fed through to the final version of the Industrial Strategy.
What does the Strategy say?
At over 250 pages, the Strategy is a lengthy document and it is structured around what are termed the five foundations of productivity and four Grand Challenges.
The Five Foundations of Productivity
The foundations identified align with the government’s vision for a transformed economy and are as follows:
1. Ideas: Becoming the world’s most innovative economy, with the aim of raising R&D investment to 2.4% of GDP by 2027. It currently stands at around 1.7%, below the EU average of 2.0%.
2. People: Providing good jobs and greater earning power for all, which includes creating a National Retraining Scheme that supports people to re-skill, beginning with digital and construction training.
3. Infrastructure: Achieving a major upgrade to the UK’s infrastructure, which includes increasing the National Productivity Fund to £31billion – covering transport, housing and digital. The Strategy notes the increased target of building 300,000 new homes per annum, whilst also acknowledging that respondents to the Green Paper consultation highlighted the importance of housing to the economic success of cities and regions.
4. Business Environment: Making the UK the best place to start and grow a business. This includes developing Sector Deals (partnerships between government and industry), the first of which are in life sciences, construction, artificial intelligence and the automotive sector.
5. Places: Creating prosperous communities across the UK, which includes agreeing local Industrial Strategies that build on local strengths.
The four Grand Challenges are intended to support Britain in leading the global technological revolution and have been identified on the advice of scientists and technologists. They will be supported by investment from the Industrial Strategy Challenge Fund (which provides funding and support to businesses and researchers), which is matched by commercial investment.
1. Growing AI and Data-Driven Economy: Making the UK a global centre for artificial intelligence and data-driven
2. Future of Mobility: The UK becomes a world leader in shaping the future of mobility, including in zero emission
3. Clean Growth: Maximising the advantages for UK industry from the global shift to clean growth. This includes the
aim of leading the world in the development, manufacture and use of low carbon technologies, systems and services
that cost less than high carbon alternatives.
4. Ageing Society: Harnessing the power of innovation in priority areas such as: supporting sectors to adapt to a changing workforce; and supporting new products and services for the growing global population of older people.
Overall thoughts on the Industrial Strategy
The Industrial Strategy certainly presents an ambitious long-term vision for the UK economy and it is hoped that it proves to be more successful than previous attempts (there have been three industrial strategies in the last 15 years). The fact that it recognises the importance of both economic and social factors when identifying the Five Foundations of Productivity and Four Grand Challenges is encouraging, which ties in closely with the whole devolution agenda and the aim of achieving more balanced growth across the country.
Significantly, the government has committed to creating an independent Industrial Strategy Council that will develop measures to assess and evaluate the Strategy over time. In theory, this should go some way to ensuring that we have an Industrial Strategy which is flexible enough to respond to the ever-changing global economic climate and puts the UK in a strong position to capture the resulting opportunities.
For more information please contact Associate & Economics Expert, Richard Cook email@example.com