The Prime Minister, Theresa May, resurrected this term early in her premiership and indeed expanded the remit of the Business Department to cover Energy and Industrial Strategy – now the Department for Business, Energy and Industrial Strategy. But as yet, the Government has not made it clear on exactly what it means by Industrial Strategy.
At the CBI annual conference Mrs May told us, ‘It is not about propping up failing industries or picking winners, but creating the conditions where winners can emerge and grow. It is about backing those winners all the way to encourage them to invest in the long-term future of Britain, and about delivering jobs and economic growth to every community and corner of the country’. While this statement makes it very clear about the economic growth mission that her government wants it does not yet give any indication of how the industrial strategy will support that.
What an industrial strategy can do is to frame how growth can be achieved and the direction of travel towards that goal. Achieving consensus on this will not be easy. There are already powerful lobby groups at work – the science lobby pushing for more money for academic research, sector groups (e.g.: automotive) looking for more support for their industry, regional groups asking for greater devolution and infrastructure funding – and within government it is far from clear that there is consensus between the Treasury and BEIS, let alone across the larger Departments.
Linking economic growth and industrial strategy has to be a partnership between government and industry (including regions and workers). If proposals do not encourage business to take longer term strategic investment decisions, the industrial strategy will not work. So what are emerging as the key elements in formulating an industrial strategy for the UK?
A national industrial strategy should provide a link between macro-economic policies and the business strategies at the level of the firm and needs to address issues such as customer needs/market structures, product and service development, manufacturing and distribution, availability of financial and human resources, use of global science and technology, competition and regulation
An industrial strategy requires a cross-government approach that ensures that policies across government are aligned with the strategy and support is at the highest level; policies will need to be agreed on issues that cut across areas such as skills, financial support, and procurement
The industrial Strategy should identify and promote the big cross-sector challenges facing the government which could lead to significant new business opportunities; there are many of these, for example, in health/social care or in the defence/cyber security area
Targeted actions on skills development to prepare for future opportunities but also to re-train workers in declining industries; business has an obligation for long term investment in the country’s workforce to avoid sudden shocks like the closure of the Tata Steel Port Talbot facility
Tougher oversight of foreign direct investments can ensure the UK gains longer term; foreign inward investment can be beneficial to the UK but only if it adds value through new resources/capabilities or new revenue growth opportunities
What does success looks like and, in particular, what are the key milestones which will show whether plans are on track or need adaptation?
The R&D Society will be expanding on these topics over the coming months with thought-leadership papers and focussed events.