May opens doors to industry
Many Conservatives thought that Margaret Thatcher had buried industrial strategy for all time. Under Tony Blair, the free market approach continued. But from the moment Theresa May created the Department for Business, Employment and Industrial Strategy, intervention was back in vogue. Today’s Green Paper underlines its centrality to the May Government’s domestic agenda.
Why does this matter politically?
While economic considerations underpin the Green Paper, wider political concerns are also apparent. The prospect of a Labour collapse gives May the opportunity to secure a bigger mandate at the next election by winning seats, particularly in the Midlands and North, where the Tories have traditionally been weak.
Demonstrating that the government is committed to delivering economic growth across the country is essential if May is to realise that ambition and the industrial strategy is central to her political narrative. Driving that from behind the scenes has been May’s co-joint Chief of Staff, Nick Timothy, whose Birmingham upbringing informs his commitment to regional economic growth.
On a broader level, the Industrial Strategy must also be viewed through the prism of May’s Brexit strategy. The Industrial Strategy is intended to be concrete evidence of how the UK will be more competitive in a post-Brexit world.
Continuity and change
While the renewed emphasis on an interventionist industrial strategy represents a break from the recent past, there are nonetheless certain aspects of today’s Green Paper that mark a continuation with previous policy.
Existing Sector Councils retain their importance where ministers and business leaders will identify industry priorities, potential funding areas, skills gaps and fruitful areas where the UK can commercialise research. This will sit alongside the UK’s existing network of Catapult Centres. From an organisational point of view, ministers view this relationship as an important part of telling the Government’s story so business will need to consider how they can influence the thinking of the Sector Councils representing their industry. The desire for a root and branch review of sector strategy does give new impetus to executing a fresh plan if the institutional elements remain unchanged.
What about industries where there isn’t a sector strategy?
In a change of tack, the Government has given hope to businesses overlooked in the past. An ‘Open Door’ challenge will allow sectors to seek a ‘Sector Deal’ if they can collaborate. Part of the criteria focuses on training and skills, addressing regulatory reform, promoting new technology, reviewing the effectiveness of funding and market access issues with other countries. This is a clear break with previous ministerial thinking and underlines how a proactive approach can see sectors muscle in on industrial strategy if ministers believe that it aligns with the Government’s broad objectives.
Indeed, of all the cross-cutting themes announced today there is an acknowledgment that the Government wishes to help new sectors, especially where business can highlight the disruptive nature of their impact on markets. There is clearly an eagerness for emerging sectors to challenge assumptions about where Government should step in.
The Government’s broad objectives
This is why the Green Paper’s ‘ten pillars’ that underpin the strategy should not be overlooked. They are arguably more important than the headlines generated by the focus on sectors essential for UK economic growth. To engage effectively business should take into account the following cross-cutting themes:
- Investing in science, research and innovation: how can the UK commercialise research?
- Developing skills: how are skills gaps filled?
- Upgrading infrastructure: which infrastructure should be prioritized and in what regions?
- Supporting businesses to start and grow: how is long term investment sustained?
- Improving procurement: how can supply chains benefit?
- Encouraging trade and inward investment policy: which areas can boost productivity?
- Affordable energy and clean growth: what developments will deliver a low-carbon economy?
- Cultivating world-leading sectors: which new sectors can challenge incumbent industries?
- Driving growth across the whole country: what are the specific needs of regional economies?
- Creating the right institutions to bring together sectors and places: can organizational reform encourage economic growth
Issues where there is a new focus
While large swathes of today’s Green Paper re-visits previous industrial strategy policy, it is worth noting the emphasis on supporting technical education. Previous Government’s may have seen this as part of their education policy, but there is a clear determination from Downing Street and BEIS to deliver tangible results, especially in areas where traditional industries have declined. The political reward is obvious for May if the Tories continue to appeal to disaffected Labour voters.
The other area given strong emphasis is the desire to support new and emerging technologies. The following are all cited as important: clean energy technologies; robotics and artificial intelligence; satellites and space technologies; leading-edge healthcare and medicine; manufacturing processes and materials of the future; bioscience and biotechnology; quantum technologies; and transformative digital technologies.
Part of the Government’s focus on technology will be the Industrial Strategy Challenge Fund which the PM recently announced in a speech at the CBI. This will back priority technologies where the UK can take a global lead in these markets. Officials have leant heavily on the experience of the US DARPA (Defence Advanced Research Projects) programme which supports and backs emerging technologies in order to overcome capability challenges and bring them to market.
Where businesses can engage in the Industrial Strategy Challenge Fund, it will strengthen relationships with BEIS. The onus will be on business to identify the research areas with potential for future economic growth, albeit robotics, clean energy and biotech are all cited as important. Further announcements are expected in time for the Budget.
How should business engage?
Access will not be a problem for businesses who participate in the official process. The Green Paper asks a series of questions which will feed into a more prescriptive White Paper. Ministers will be open to clear ‘asks’ from industry but they can’t come with an unrealistic price tag considering public spending constraints nor can they cut across other important policy commitments, Brexit being a case in point. Participating in the five sectoral strategies that have been identified or calling for a new ‘Sector Deal’ provides great scope to engage.
Alongside specific policy asks business will need to consider how to think about the following:
- Influencing the priorities of Sector Councils
- Potential collaboration with Catapult Centres
- Engaging in the distinct needs of regional economies
- Identifying where skills gaps need to be closed
- Explaining the potential impact on UK supply chains
- Promoting emerging technology
- The use of ‘Big Data’ and the prospect of greater interaction between technologies
Overall, those businesses that have a clear sense of where their sector will be in ten years’ time will stand the best chance of grabbing ministerial attention. Government wants a positive vision of the future, one that is ultimately tangible to voters