Government’s Industrial Strategy ‘weakened’ by ignoring Brexit, say MPs

SUMMARY:

The Science and Technology Committee has said that the government’s Industrial Strategy should be updated to reflect the challenge presented by Brexit.

The government’s Industrial Strategy has been weakened by the fact that it ignores the opportunities and risks posed by the UK’s exit from the European Union, MPs on the Science and Technology Committee have said.

The report out today claims that ignoring Brexit could render the Strategy either under-ambitious or over-ambitious, depending on the outcome of the negotiations, and the Committee has called for it to be updated.

After much delay, at the beginning of the year Prime Minister Theresa May finally unveiled the government’s plans for an effective Industrial Strategy. Whilst still at the Green Paper stage and open to consultation, the Strategy focused on creating world leading sectors (including digital), improving productivity, investing in infrastructure, developing skills and investing in science and research.

MPs on the Business, Energy and Industrial Strategy Committee have already criticised the Strategy in their first review of the document, where they pointed to a lack of focus on cross-government execution, a lack of targets to measure success against and a poor understanding of what the new ‘sector deals’ will look like.

Whilst the Science and Technology Committee’s report is more positive about the Strategy’s commitment to funding and the aim of improving the STEM skills gap in the UK, it said that Brexit should not be ignored.

Stephen Metcalfe MP, Chair of the Science and Technology Committee, said:

We agreed our committee report on the same day that the Prime Minister triggered Article 50. Brexit will present opportunities and risks for our economy and for the science and innovation that supports it. A regulatory regime that is well-crafted and tuned to our post-Brexit international research and trading relationships—both with Europe and globally—will be essential.

The Government has an opportunity to do more to strengthen the links between the industrial strategy and Brexit as the Exit negotiations now get under way. That will be vitally important for keeping the Government’s industrial strategy relevant and hooked-up to the opportunities presented by the evolving Brexit negotiations.

Ignorance is bliss

The result of the EU referendum last June has thrown the government into chaos, following the triggering of Article 50 last month. Departments’ resources have been cut in recent years, following prolonged austerity measures, and there is concern that with all of the attention on Brexit, key government strategies could fall by the wayside.

For example, reports this week suggested that hundreds of government outsourcing contracts could be up for automatic renewal because of the focus on Brexit, which is counter to the Cabinet Office’s procurement guidelines and the Government Digital Service’s strategy on transformation.

The Science and Technology Committee’s report adds to this concern, as it highlights the fact that the Industrial Strategy ignores that Brexit could greatly impact its implementation. The report notes:

There is a weakness in the industrial strategy in that it could give more room for discussing or even acknowledging its links with Brexit. The industrial strategy must be configured to shape our Exit negotiations, but equally those negotiations will affect what can be achieved through the industrial strategy as well as how the different measures envisaged should be prioritised and re-prioritised. A regulatory regime that is well-crafted and relevant to our post-Brexit international research and trading relationships will be vital for a successful industrial strategy.

While the possible post-Brexit scenarios are perhaps inevitably too difficult to map out at this stage, the Government must address the links between the industrial strategy and Brexit as the exit negotiations get under way and as the strategy evolves in what we hope will be dynamic document.

The Committee’s report argues that ignoring Brexit makes it difficult to set a yardstick for judging the eventual success of the Strategy, particularly with regards to how the UK’s new research and trading relationships with other countries turn out.

MPs on the Committee want the Industrial Strategy to become a “dynamic document” and for it to be updated as Brexit negotiations get underway.

The report also calls on the Prime Minister to offer a commitment to EU researchers working in the UK, that they will be able to continue studying and working in the UK after an exit from the EU – if it is in fact serious about boosting STEM skills. The report states:

While increasing the STEM skills of our children and students will help meet the needs of the workplace in future, it is also important to make use of existing STEM skills wherever they can be found, including from overseas. We reiterate our earlier call for the Government to give a firm commitment to EU researchers working and studying in the UK that they will continue to have a secure position here post-Brexit.

Funding and skills

The Industrial Strategy promised an addition £2 billion a year of funding for research, which has been welcomed by the Committee as a valuable contribution to maintaining the UK’s status as a world-leading destination for science.

However, the report adds that it would like this to be a “down payment” on further funding.

Stephen Metcalfe MP, Chair of the Science and Technology Committee, said:

The Government has significantly increased science funding, which will put us in a better position post-Brexit to attract skilled researchers and collaborative science projects. I want the Government to see that as an initial investment towards meeting a target—for the UK to be spending 3% of GDP on R&D—that our Committee has repeatedly pushed for.”

While it is too soon to know whether Brexit will end up bringing less or more inward science investment to the UK in the long-term, the Government should be ready to make good any net shortfall in the short-term with further funding for science.

The 2017 Spring Budget also announced a £500 million investment in technical education, creating so-called T’ level for 16–19 year olds to be introduced from autumn 2019. Formal training hours for 16–19 year olds will also increase by 50% and students will be able to undertake industry work-placements.The Budget also announced a commitment of up to £300 million “to further develop the UK’s research talent”, including creating 1,000 PhDs across STEM areas.

Increasing the UK’s STEM skills gap is a key priority for the government, as it faces increased global competition from other more competitive countries that have invested in digital, science and technology skills.

However, the Committee adds that continuing reforms will need to be evidence based, to reflect not just what employers need but also the evidence on what initiatives are most effective in increasing and sustaining young people’s interest in science.

My take

These strategies and initiatives should be closely tied to the government’s Brexit strategy (whatever that is), instead of ignoring the fact that an exit from the EU is going to have an impact. If the Brexit negotiations and the government’s other key strategies operate in isolation, with no consideration for each other, that could spell a recipe for the UK’s economy down the line.

Chair of the Science and Technology Committee, Stephen Metcalfe MP, will be speaking at the upcoming Think. AI for Public Sector 2017 event in London. Click the link below for further details. 

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