It is a barely expanded model of an article revealed final week in Analysis Skilled – The most recent industrial technique has made selections
Final week’s Industrial Technique Coverage Paper is the newest chapter within the chequered historical past of UK Industrial Methods. For practically three many years after Thatcher’s ascent to energy, the UK’s technique was to not have an industrial technique, which was an idea related to money-losing supersonic airliners and automobiles with sq. steering wheels. However that standard knowledge has been challenged by a world monetary disaster and practically 20 years of financial stagnation, so after a lot of stops and begins during the last decade, a totally developed Industrial Technique has now arrived.
This technique is just not solely new – there are robust echoes of the 2017 technique from Theresa Might’s authorities, pushed by the then Enterprise Secretary Greg Clark. The 5 “important applied sciences” of the 2023 Science and Expertise Framework are preserved, and different interventions of the earlier authorities, like Funding Zones and Freeports, survive with solely minor rebranding. This continuity is to be welcomed.
The primary check of any technique is whether or not it makes selections. Right here I believe the alerts are optimistic. The Inexperienced Paper recognized 8 key sectors, however now 30 detailed sub-sectors, “frontier industries”, are recognized. This welcome diploma of granularity has been underpinned by an in depth methodology, evaluating each the financial potential of the frontier industries, and the diploma to which coverage can have an effect.
So, underneath the banner of Superior Manufacturing, aerospace and cars seem as anticipated, however maybe the inclusion of agri-tech is much less anticipated. Clear vitality industries embrace wind (onshore, offshore and floating), fission and fusion, however not photo voltaic. There’s extra deal with non-STEM-based sectors than in earlier methods, together with inventive, monetary providers {and professional} and enterprise providers. Unsurprisingly, given the present geopolitical scenario, defence is outstanding, however right here the ultimate checklist of frontier industries awaits the publication of a Defence Industrial Technique.
The geographical side of commercial technique is rather more outstanding on this technique than in predecessors. An evaluation of commercial clusters leans closely on the earlier authorities’s cluster map, in addition to accepting the significance of accelerating the productiveness of the UK’s underperforming second tier cities. However in figuring out these locations with current strengths within the technique’s precedence frontier industries, or with the potential for higher exploiting agglomeration economies, some locations gained’t make the lower. There might be gaps within the Industrial Technique map.
Discussions of commercial technique distinguish between “horizontal” interventions, that intention to enhance the enterprise surroundings with out discriminating between sectors, and “vertical” insurance policies specializing in specific sorts of trade. Right here, the alerts are that even the extra “horizontal” measures might be tilted in favour of the (roughly) 30 frontier industries.
Addressing the price of vitality is outstanding right here; the impact of the very value of vitality relative to abroad rivals on the viability of many UK industries has been a lot mentioned not too long ago. Maybe simply as essential as the price of vitality are the delays in making new grid connections for industrial electrical energy. Right here there might be troublesome selections too; if industrial vitality costs are lowered, another person must pay extra, whether or not that’s the home shopper, or the tax-payer. We’re paying for coverage selections made a decade (and longer) in the past, which resulted in an over-reliance on gasoline & an underinvested community.
Different “horizontal” interventions embrace commerce coverage, entry to finance, addressing regulation and eradicating planning limitations. Expertise and innovation are two areas the place the selection must be made about how a lot to direct coverage in direction of one’s chosen sectors.
The abilities part appears barely underpowered; it highlights abilities shortages within the precedence sectors, recognises that we’ve too many underqualified younger folks, and acknowledges that grownup and persevering with schooling has declined. However fixing these issues is laid on the door of Expertise England (and counterparts in devolved nations). An infographic makes a welcome assertion of the central position of universities in delivering an industrial technique, however with out recognising the strain the sector is underneath.
UK Authorities analysis and growth spending since 2012. Outturn: ONS Analysis and growth (R&D) expenditure by the UK authorities, 2023 Datasets. Allocations from CSR 2021 and CSR 2025 corrected for inflation utilizing GDP deflators, OBR March 2025 predictions for future years.
For innovation, it’s acceptable to recognise that authorities spending on R&D is now at a excessive degree – the final authorities did make vital will increase in R&D spending, and the latest spending evaluation locked these will increase in place in actual phrases. The query might be, to what extent, that R&D spending might be directed on the industrial technique precedence areas.
Right here the doc is unequivocal on the precept – analysis funding, together with that delivered by way of UKRI, might be pivoted in direction of the commercial technique priorities. Once more, the necessity to make selections is accepted. As extensively trailed, R&D funding might be extra rigorously sorted into three classes; primary curiosity-driven analysis, supply of presidency priorities, and supporting personal sector innovation-led progress. What stays to be determined are the relative measurement of those three buckets.
Will this industrial technique ship the financial progress that has been so missing for practically 20 years? I believe the 2 key necessities for achievement are real dedication throughout the entire of presidency, and consistency of objective over time, with a mechanism for monitoring progress and holding the federal government to account.
On the previous, there are encouraging indicators that the technique has the help of Treasury; along with its sponsor division, the Division of Enterprise and Commerce, the priorities of DSIT and DESNZ are clearly mirrored. However can the Dwelling Workplace may be persuaded that some expert immigration may be wanted? Does DfE recognise that universities are literally fairly an essential a part of the abilities system?
Most significantly, this technique in all probability wants a decade to make a major impression. It’s good that it is going to be supported and monitored by an Industrial Technique Council with statutory powers and supporting infrastructure. It might be even higher if it may generate the form of consensus that might enable it to outlive the inevitable political adjustments to come back.