Will Britain’s new Industrial Strategy be a game changer?

The Government’s new industrial strategy heralds the kind of economy, and country, the Prime Minister Theresa May would like to lead.

For her, government must play a more activist role to address the sense of economic exclusion which has gripped Britain since the 2008 crash, and fuelled last year’s Brexit vote.

The strategy focusses on three pillars: building on the UK’s existing strengths in areas like automotive, financial and professional services; ensuring growth is more evenly spread across the country by tackling low productivity, skills and other barriers; and making the UK one of the most attractive places to start and grow a  do business. Antony Walker of techUK welcomed the move to drive innovation and boost productivity because “in tomorrow’s economy, every sector will be a tech sector.”

In terms of substance, the proposals expand on ideas put forward by Ministers over recent months. Many are key for the technology sector, and especially high growth businesses looking to scale up. They are summarised in this handy infographic, and many are key for the technology sector. However, important details over how some of the proposals will work in practice remain unclear. 

Developing skills at all levels

One of the biggest barriers for businesses is the lack of skills at all levels. The strategy promises comprehensive action, from building basic skills, to a new system of technical education and boosting STEM to address this. Many will regard this as a ‘no brainer’, and will be looking for further details at March’s Budget. Cautiously welcoming the proposals, Labour’s Clive Lewis noted the £170 million pledged for vocational education would “do little to plug the £1.15 billion” cut from the Adult Skills budget since 2010.

A strategic role for government procurement

The public sector spends £268 billion each year, much of this on technology and associated services. So the strategy will explore ways to use procurement in areas like defence and health to drive innovation, competition and investment in skills and supply chains. Countries like the US, France and Germany already do this, but suppliers will be concerned if they are suddenly burdened with additional costs.

Investing in science, research and innovation, and upgrading the UK’s infrastructure

Noting that the UK makes less use of robotics and automation than most other European countries, the strategy suggests a range of technologies, from smart energy to electric vehicles, space, health, and 5G to be championed and receive additional support. Upgrades will also be made to the UK’s digital, energy, transport, water and data infrastructure, as announced at the Autumn Statement, to support local growth. Although infrastructure spending will always be welcomed, questions remain over how sectors and projects will be chosen, the level of funding available, and if this will really make a difference.

Cultivating world leaders

Arguably the strategy’s most controversial element is the notion that government will champion key sectors and companies. Dr Sarah Main of the Campaign for Science and Engineering highlighted the risks of this approach. She warned the new system of sector deals, which are intended to encourage groups of businesses to self-organise and come forward with proposals to support their collective transformation and growth, must enable “industry to adapt to and embrace the innovations we cannot yet imagine”, instead of simply picking winners and protecting incumbents. 

Less controversially, the strategy highlights a need to encourage local clusters to form around existing education, research and business hubs. Meanwhile entrepreneurs, especially those outside London and the South East, should benefit from measures to provide wider access to finance, business support and mentoring.

A new dawn for British industry?

The strategy’s 138 pages contain much else of relevance, including ideas to ensure wider access to finance for startups, creating new local clusters to drive growth, corporate governance reform to encourage a longer-term investment culture and exploring whether dual-class share structures might help the UK nurture a future Google, Facebook or LinkedIn.

Those keen to make their voices heard and shape the UK’s future industrial landscape have until 17th April to submit their views on the plans. But companies of all kinds should consider how the government’s new more activist stance impacts both their future business plans and their wider corporate positioning.

Burhan Al-Gailani, Public Affairs