UK’s Industrial Strategy aims to foster tech skills and home-grown innovation

Profile picture for user ddpreez By Derek du Preez January 23, 2017
Summary:
The Industrial Strategy is at the consultation stage and the UK government is calling on industry to provide feedback on its plans.

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The UK government has finally released some greater detail around its proposed Industrial Strategy, in the form of a green paper that is calling on industry and persons of interest to provide feedback on the potential plans.

Labour MPs have been lamenting the delay of the strategy for months, and it seems that they will have to wait a bit longer for the final edition.

The end result is mixed. Whilst we have a clearer idea of the direction of Prime Minister Theresa May’s vision for an ‘Industrial Britain’ - because the paper released today is effectively a consultation, the new commitments announced by the government aren’t enough to provide us with a full picture.

That being said, the framework for the Industrial Strategy we have today, as it stands, does place a strong emphasis on the right things. There is plenty of recognition in the paper that we need more tech talent, that the UK needs to figure out how to commercialise its R&D and innovation, how it can help scale its start-ups, that smarter investments in infrastructure are needed and that the government can do more to improve its procurement practices.

However, we’ve been here before many a time. And although the commitments laid out today do give us some indication of future direction, but they can’t be the full picture. There isn’t enough detail yet, given that this consultation is only just launching.

But the key takeaways are: there isn't enough of the right skills in the UK; there is too much disparity between London and the regions; the UK needs to be more productive in its work; and that the government can do more to promote certain sectors and can create new institutions to promote areas of interest.

The challenges

The green paper goes into detail about the current challenges facing the UK. Brexit aside, there is particular concern about the UK’s productivity, which the government states is below par compared to other countries. The report notes:

If we want to see faster growth in wages, sustained over the long term and experienced across the country, the UK needs to address the productivity gap with other leading countries. While the proportion of people in work is at a record high, we still produce less for every hour we work than our competitors.

Improving productivity does not mean making people work harder. It means helping them to work smarter – producing more value for each hour of their time and thereby increasing their earning power. This is how economies grow and how living standards improve.

The differences hidden beneath the UK’s headline rate of productivity are also of great significance. Our country has significant disparities in economic performance. The productivity gap between different parts of the country has been widening for decades, and it is these differences that ultimately impact on how much people earn.

And it is the government’s ‘ten pillars’ that hope to aim to address this productivity gap. Yesterday we outlined them as the following:

1. Investing in science, research and innovation. The government wants to become a more “innovative economy”.
2. Developing skills, ensuring that everyone has the basic skills needed in a modern economic. A new system of technical education will be built, boosting STEM skills and digital skills.
3. Upgrading infrastructure. The government said it must ‘upgrade its standards of performance on digital’, as well as transport, energy etc.
4. Supporting businesses to start and grow, ensuring access to finance and management skills.
5. Improving procurement. The report will state that the government must use strategic procurement to drive innovation and enable the development of UK supply chains.
6. Encourage trade and inward investment policy.
7. Delivering affordable energy and clean growth.
8. Cultivating world-leading sectors.
9. Driving growth across the whole country, whether that means investing in key infrastructure projects, increasing skill levels, or backing local innovation.
10. Creating the right institutions to bring together sectors and places.

New Commitments

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The green paper itself is quite lengthy (132 pages) and so if you’re interested in the full view, it’s worth taking a look at the document as a whole. However, we’ve tried to pick out the most interesting bits for those interested in technology and digital - particularly looking at the new commitments made by the government.

Here are some of the key takeaways:

• The government has asked Chief Scientific Adviser Sir Mark Walport to review the case for a new research institution to act as a focal point for work on battery technology, energy storage and grid technology.
• New independent research on approaches to ‘commercialisation’ in different institutions will be carried out, including how they approach licensing intellectual property and taking equity in spin-outs.
• A new challenge price programme will be launched, with the hope that it can help harness the potential of the UK’s home-grown inventors and stimulate user-led innovation.
• The government is reviewing how to maximise the incentives created by the Intellectual Property system to stimulate collaborative innovation and licensing opportunities
• £170 million of capital funding has been committed to create new Institutes of Technology, which will deliver higher technical education in STEM subjects and aim to meet the needs of employers in local areas.
• The government will explore new approaches to encourage lifelong learning, with the hope that adults would consider changing careers to industries demanding certain skills.
• The report also states that the government will “cement” the UK’s position as a go-to destination for the development of autonomous vehicle technology by establishing a new testing ecosystem using both controlled and real-world environments. The location of the coordinating hub for this project will be announced in the Spring.
• The use of data - such as that held by HMRC and Companies House - could be used to identify scale-up businesses and be made available to local public and private sector organisations to better identify, target and evaluate their support to scale-up businesses more effectively.
• The government wants to support the development of B2B ratings and feedback platforms to make it easier for SMEs to determine the quality of business advise and support services provided to them by other firms.
• To improve procurement across the public sector, the government will roll out the “balanced scorecard” approach recently developed by the Cabinet Office across all major central government construction, infrastructure and capital investment projects over £10 million. The scorecard helps procurers to consider the project requirements and needs, with criteria such as cost balanced against social, economic and environmental considerations.
• The report also states that it will trial different aspects of designing and gathering supplier feedback in public sector procurement. Ratings and feedback is something that has been discussed since the very early days of G-Cloud.
• Using HMRC data and behavioural insights experts to improve targeting of potential exporters.
• Juergen Maier, CEO of Siemens UK, will undertake a review of industrial digitalisation to consider how UK industry can benefit from the accelerated adoption of digital technology across advanced manufacturing.
• The government will propose new funding streams to back the clusters of innovative businesses across the country. It is hoped that these could support and develop world-class research and innovation strengths in local economies, and provide commercialisation funding to allow universities to work more with local businesses.

My take

As I noted above, this is a lengthy green paper and there are plenty of things in it that I haven’t covered here

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- including commitments that have previously been made by the government (such as the £740 million to support the roll-out of fibre broadband). And there are plenty of things that the government *isn’t* yet committing to, as it’s still at the consultation stage. There are lots of ‘we are looking into’ and ‘we are considering’.

However, the general ideas aren’t bad. The UK needs to invest in skills, in innovation and create regional hubs of excellence outside of London. But we’ve heard all this before. This is by no means the first time that the government has spoken about STEM skills, about intellectual property, about productivity gaps, or about commercialising research.

All of these things have been toyed with many a time over the past few years. If the government is to make a success of this, it needs to commit to a plan for the above challenge areas and stick to it (as well as apply the funding).

Emma Norris from the Institute for Government sums it up nicely in a break-down of her ‘seven ways for the industrial strategy to succeed’, where she states:

One of the traps for any government strategy is to draw a circle around an existing, disparate set of policies rather than articulate a clear mission or goal. One of the pillars – investment in technical education – is a repetition of existing policy to reorganise further education around 15 core technical routes, announced last year after the Sainsbury Review. Similarly, much of the material on infrastructure is repetition of announcements in the Autumn Statement.

The strategy needs to be more than a drawing together of good but unconnected policies though: it needs to be built around a clear mission. The green paper starts that process but as it is developed, we want to see more detail on how the Government proposes to balance the twin objectives of raising productivity and making sure that growth is more evenly distributed.

This is the third industrial strategy the country will have seen in the last decade. On top of this, the institutions used to support industrial strategy – regional governance and bodies used to bring government and industry together – keep changing. Yet industrial policy, like education and skills policy, needs to have the certainty of a much longer timeframe. It cannot thrive if it changes every few years. Given this, Theresa May is right to include ‘institutions’ as a pillar. But the machinery she puts in place needs to stay there for the long term.

Image credit - new skills, 3D rendering, blue street sign © Argus - Fotolia.com.

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