The UK’s industrial strategy should be updated to reflect the challenges of the past three years, experts have said.
First published in 2017, the Industrial Strategy is the UK government’s plan to boost productivity and earning power in the UK through investment in “skills, industries and infrastructure”.
It sets out four Grand Challenges “to put the United Kingdom at the forefront of the industries of the future”: AI and the data economy, clean growth, future of mobility and ageing society.
However, in light of the ongoing pandemic and the UK’s imminent departure from the European Union, some are calling for the industrial strategy to be updated.
The Department for Business, Energy and Industrial Strategy recently said that it was seeking to review the current industrial strategy in order to assess whether it needs to be updated, launching an inquiry into whether it is fit for purpose. It recently wrote to FTSE 350 firms requesting their input.
Today, the Business, Energy and Industrial Strategy Committee heard evidence from experts from across industry on the industrial strategy and encouraging post-pandemic economic growth.
One of the key areas of the strategy is a focus on clean growth, with the aim of the UK “leading the world in thedevelopment, manufacture and use of low carbon technologies”.
“We’re still a long way from a strategy that’s going to get us to net-zero”
Guy Newey, strategy and performance director of the Energy Systems Catapult told the committee that the strategy needs to do more to provide a clear roadmap to net-zero, the UK’s target of becomming carbon-neutral by 2050:
“While the industrial strategy set out the importance of clean growth and made lots of the steps to do that, we’re still a long way from a strategy that’s going to get us to net-zero.”
“The way I see the industrial strategy is kind of as an umbrella approach to this. The very fact that the government was prepared to have an industrial strategy after years of avoiding that question is a big thing…saying that clean growth is one of the pillars of industrial strategy is important, but it’s not going to get to to invest in different training in the skills and supply chain. That comes down to detailed policy, detailed support or regulation.”
“The industrial strategy sends a good signal [the government] is obviously spending significant money. How does that turn into real tough decisions on the ground about incentives and regulation.”
“There’s still a huge amount of detail missing there”
Another of the grand challenges laid out in the strategy relates to data and the data economy, with a focus on innovation-friendly regulation, attracting talent and developing skills.
However, Anthony Walker, deputy CEO of Tech UK, said that in some areas, the strategy lacks the necessary detail.
“As a sector we spent a long time arguing the need for an industrial strategy, and the fact that we have one at all is really significant and important. The thing that we want most is a long-term cross party support for the the very concept of an industrial strategy. The reason is it really does help businesses to understand both the ambition and purpose of government in relation to the economy,” he said.
“The industrial strategy itself is very valuable and certainly something that we want to build on. A lot depends on the documents that come in and support the industrial strategy and the areas of more detail that sit underneath it. I think it’s fair to say that landscape is a bit patchy.
“One of the things that we really welcome in the industrial strategy is the commitment to 2.4% of GDP going to R&D investment and we’ve had the R&D roadmap but in many ways we would view the R&D roadmap as a roadmap to a roadmap as it were. There’s still a huge amount of detail missing there.”
Digitisation in the economy
With the strategy published three years ago under Theresa May’s government, Walker believes that it needs updating to fully reflect the role of digitisation in the economy.
“I think it is the right time to review and refresh the document that we’ve got. If you think of what’s happened in the last three years we’ve had two general elections, a change of government, left the EU, a global pandemic and we’ve also had some significant geopolitical shifts that have some quite profound impacts on global supply chains so the macrocontext has changed quite a lot,” he said.
“Our critique of the industrial strategy from a technology perspective is we still think it’s a bit too siloed and in that respect almost a little bit 20th Century rather than 21st Century in that we still don’t think it quite recognises quite the extent to which digitisation is driving change globally. The process of digitisation is a horizontal process. It’s happening right across sectors, right across the economy, public sector, private sector and so on. Whereas the industrial strategy to us still feels a bit more vertical rather than horizontal with the strong focus on the sector deals in particular. Whereas when we look at where innovation happens we believe very firmly that innovation happens at the intersection between knowledge and specialisation. So the intersection between the sectors. We think that more could be done to look at those intersections.”
Peter Ellingworth, chief executive of the Association of British Healthcare Industries added that the strategy must be backed by funding and other areas of government.
“We do need to think about new challenges. We need the rest of government and the other policies to recognise that the industrial strategy is important and the other policies should align behind it,” he said. “There is no point whatsoever in creating a life sciences industrial strategy that focuses on health and the industry and then we don’t support it with the right funding when it comes to a crisis.”
Nick Owen, co-chair at the Professional and Business Services Council echoed this, saying that in the context of the pandemic, a focus on investment in tech infrastructure and skills are needed more than ever.
“I think it was very well-structured to start with but a lot of events have happened since that was launched in terms of Brexit, new government etc. and it does need revisiting and revitalising I think,” he said.
“Most of the grand challenges are still true. Those were trends that people could see three years ago coming and if there’s one thing we know about pandemics is what they do is they just accelerate trends that are already in progress. Most of the things are more needed now. The most obvious that might need more attention is the horizontal theme of digitisation. Most businesses and most walks of life have really understood more about how to enhance their productivity and how they use technology in their lives and in their work, and there’s more that needs to be done on this in terms of infrastructure and skills in particular.”