ICAS reaction to the Prime Minister’s industrial strategy

Canary Warf

30 January 2017

The Prime Minister has launched proposals for a new modern industrial strategy for the UK. The strategy comprises 10 key strategic pillars, each of which is analysed below.

Pillar 1. Investing in science, research and innovation

“This has always been crucial but arguably never more so, at a time when advances in technology are happening at a faster rate than ever before.

“The Green Paper identifies that the ‘UK makes less use of robotics and automation than most other countries in Western Europe.’ But it does not examine the next logical step. Will the natural increase in the use of robots and other technological advances result in increased productivity at the cost of reducing the number of people employed?”

James Barbour, Director, Policy Leadership

Read more about what pillar 1 means for industry.

Pillar 2. Developing skills

"This is fundamental, to ensure that the right skills are available within the economy. However, this is a policy that successive UK Governments have been pursuing – with questionable success.

"The focus on boosting STEM is welcomed, but this was already something the Government had been seeking to do. Building a new system of technical education to benefit young people who do not go to university is essential.

"In many regards this is a 'Back to the Future' type policy where in the past, school leavers regularly left school to undertake more practical job-based training whether in employment or not. There is a real need to ensure that there are opportunities for school leavers to benefit from such practical-based training – aligned with the skills needs of the economy."

Anton Colella, Chief Executive of ICAS

Read more about what pillar 2 means for industry.

Pillar 3. Upgrading infrastructure

"As the Government highlights, progress has already been made in relation to upgrading infrastructure.

"There is also a need to ensure that the devolved administrations and local authorities are properly joined up on developments, such as extending HS2 to Scotland and smaller scale local projects.

"Of course, all major infrastructure projects need to be subject to appropriate cost/benefit analysis and environmental impacts need to be considered – but the UK seems notoriously slow at getting big or future-proofing infrastructure off the ground. Could this process be better streamlined?"

David Wood, Executive Director, Policy Leadership

Read more about what pillar 3 means for industry.

Pillar 4. Supporting businesses to start and grow

"The strategy highlights that, although the UK ranks third in the world for start-ups, it is ranked only 13th for the number of businesses that scale up successfully (according to OECD research). It is positive that the government has recognised this anomaly.

"The Government acknowledges that 'One part of the challenge is about improving access to finance for businesses looking to grow.'

"We welcome the Government’s admission that local economic growth strategies should focus not only on high-growth scale-ups, but also on those with more moderate ambitions."

David Wood, Executive Director, Policy Leadership

Pillar 5. Improving procurement

"The Government initiative to use its own procurement to achieve its policy objectives to encourage innovation and small business growth – and to ensure that all Government suppliers sign up to the Prompt Payment Code – is welcomed.

"As a big purchaser, the Government can exert huge influence through its supply change to change behaviour, such as payment practices, across the business sector."

James Barbour, Director, Policy Leadership

Pillar 6. Encouraging trade and inward investment policy

"To date, the UK has been good at attracting foreign direct investment. The question is the extent to which our membership of the EU and the Single Market was a factor in this. That said, many of the benefits of locating a business in the UK will remain – though we should maybe be more vociferous about our comparative advantages.

"We need to seek to avoid imposing unnecessary red tape on business – and we should avoid frequent and unpredictable changes to the tax system which could deter foreign investment. There needs to be a sensible balance between reducing rates and counterbalancing changes which may have detrimental results."  

Anton Colella, Chief Executive of ICAS

Pillar 7. Delivering affordable energy and clean growth

"It is essential that all countries take responsibility to ensure the sustainability of the planet, and commit collectively to reducing carbon dioxide output. Now is not the time, as seems to be happening in the US, to backtrack on such policies, and it is important that the UK leads the way on this.

"Tackling the 'trilemma' of stability of supply, affordability and reducing greenhouse gases is an ongoing challenge and recent Government decisions have given mixed signals on this. We are encouraged, though, that this key objective has been highlighted – covering innovation in saving energy usage as well as low carbon generation."

David Wood, Executive Director, Policy Leadership

Pillar 8. Cultivating world-leading sectors

"The proposal to do 'sector deals' to transform industry sectors, is welcome, though this appears to rely on sector leaders’ proactivity to develop proposals where Government can help.

"The Government is clearly willing to support strong leadership in specific sectors, and to encourage increased productivity wherever possible."

Anton Colella, Chief Executive of ICAS

Pillar 9. Driving growth across the whole country

"We support the establishment of Ministerial Forums on Industrial Strategy with each of the devolved administrations. We believe that it is absolutely key that representatives of each devolved administration develop plans, jointly, with the UK Government to support all areas of the UK, and to align closely our economic plans and strategies."

James Barbour, Director, Policy Leadership

Pillar 10. Creating the right institutions to bring together sectors and places

"The UK needs to bring together best practice from across all its regions. This will ensure that we have an industrial strategy that really promotes the UK as a place in which to do business. This will require greater co-ordination amongst all the devolved regions, to allow us to learn from each other as to what works best and to maximise the benefit for us all.

"We would, however, advise caution on the creation of new institutions, or the extension of existing ones.  We need to make sure that there is a good cost-benefit analysis and that we don’t increase unnecessary layers of bureaucracy."

James Barbour, Director, Policy Leadership

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