Industrial strategy set out to boost productivity in UK

In an attempt to boost weakened productivity in the UK, the government has laid out an Industrial Strategy aimed at setting out a long term plan for the British economy.

UK industrial strategy: productivity
Business Secretary Greg Clark has launched the government’s Industrial Strategy, setting out a long-term vision for how Britain can build on its economic strengths, address its productivity performance, embrace technological change and boost the earning power of people across the UK.

Innovation in the UK

With the aim of making the UK the world’s most innovative nation by 2030, the government has committed to investing a further £725 million over the next 3 years in the Industrial Strategy Challenge Fund (ISCF) to respond to some of the greatest global challenges and the opportunities faced by the UK.This will include £170 million to transform the construction sector and help create affordable places to live and work that are safer, healthier and use less energy, and up to £210 million to improve early diagnosis of illnesses and develop precision medicine for patients across the UK.The government has previously committed £1 billion to the first wave of Industrial Strategy Challenge Fund projects, including investing £246 million in next generation battery technology and £86 million in robotics hubs across the UK.

R&D and technology at centre of plan

Last week the Prime Minister announced an ambition to increase the level of investment in research and development (R&D), rising from 1.7 per cent to 2.4 per cent of GDP by 2027. This could mean around £80 billion of additional investment in advanced technology in the next decade, helping to transform whole sectors, create new industries, and support innovation across the country.The white paper also confirms government will be pressing ahead with a series of Sector Deals, with construction, life sciences, automotive and AI the first to benefit from these new strategic and long-term partnerships with government, backed by private sector co-investment. Work will continue with other sectors on transformative sector deals.Ahead of the signing of the Life Sciences Sector Deal, due in the next few weeks, the government has confirmed today that world-leading life sciences company MSD is set to make a major investment into the UK economy with the opening of a new state-of-the-art UK hub, helping ensure innovative research into future treatments for patients and pioneering medicines are completed in Britain.In the strategy, the government has identified four Grand Challenges; global trends that will shape our rapidly changing future and which the UK must embrace to ensure we harness all the opportunities they bring.

The four challenges are:

  • Artificial intelligence – to put the UK at the forefront of the artificial intelligence and data revolution
  • Clean growth –maximise the advantages for UK industry from the global shift to clean growth
  • Ageing society –harness the power of innovation to help meet the needs of an ageing society
  • Future of mobility – to become a world leader in the way people, goods and services move

Businesses and academia invited to engage the government

Each Grand Challenge represents an open invitation to business, academia and civil society to work and engage with the government to innovate, develop new technologies and ensure the UK seizes these global opportunities.Business Secretary Greg Clark said, “The way we earn and live our lives as workers, citizens and consumers is being transformed by new technologies.“The UK is well-placed to benefit from this new industrial revolution and we start from a position of significant strength. We have a thriving research and science base and are home to a wide range of innovative sectors, from advanced manufacturing and life sciences, to fintech and creative industries.“The Industrial Strategy is an unashamedly ambitious vision for the future of our country, laying out how we tackle our productivity challenge, earn our way in the future, and improve living standards across the country.“The white paper follows extensive engagement by government with industry, academia and business bodies who submitted almost 2,000 responses to the green paper consultation earlier in 2017.“The strategy unveiled today reflects this engagement, with a new and unique partnership between government, academia and industry, supported by policies that are committed to making the UK economy more productive and giving it a competitive edge in the future and abroad.”
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Five foundations of productivity in the UK

The white paper focuses on the five foundations of productivity – ideas, people, infrastructure, business environment and places – with a clear and complementary vision for each.Each foundation is supported by a range of policies designed to provide businesses with certainty and reassurance that the UK will continue to have a competitive edge, including:
  • Raising total R&D investment to 2.4 per cent of GDP by 2027
  • Increasing the rate of R&D tax credit to 12 per cent
  • Investing £725 million in new Industrial Strategy Challenge Fund programmes to capture the value of innovation

People

  • establish a technical education system that rivals the best in the world to stand alongside our world-class higher education system
  • invest an additional £406 million in maths, digital and technical education, helping to address the shortage of science, technology, engineering and maths (STEM) skills
  • create a new National Retraining Scheme that supports people to re-skill, beginning with a £64 million investment for digital and construction training

Infrastructure

  • Increasing the National Productivity Investment Fund to £31 billion, supporting investments in transport, housing and digital infrastructure
  • Supporting electric vehicles through £400 million charging infrastructure investment and an extra £100 million to extend the plug-in car grant
  • Boosting digital infrastructure with over £1 billion of public investment, including £176 million for 5G and £200 million for local areas to encourage roll out of full-fibre networks.

Business environment

  • Launching and roll-out Sector Deals – partnerships between government and industry aiming to increase sector productivity; the first Sector Deals are in life sciences, construction, artificial intelligence and the automotive sector
  • Driving over £20 billion of investment in innovative and high potential businesses, including through establishing a new £2.5 billion Investment Fund, incubated in the British Business Bank
  • Launching a review of the actions that could be most effective in improving productivity and growth of small and medium-sized businesses, including how to address what has been called the ‘long tail’ of lower productivity firms

Places

  • Agreeing local industrial strategies that build on local strengths and deliver on economic opportunities
  • Creating a new transforming cities fund that will provide £1.7 billion for intra-city transport; this will fund projects that drive productivity by improving connections within city regions
  • Providing £42 million to pilot a Teacher Development Premium; this will test the impact of a £1,000 budget for high-quality professional development for teachers working in areas that have fallen behind
To ensure that the government is held to account on its progress in meeting the ambitions set out in the strategy, an Independent Industrial Strategy Council will be launched in 2018 to make recommendations to government on how it measures success.

Clean energy in the modern age

Juergen Maier, CEO Siemens UK, said, “By working in strong partnership with national and local government, we have created a very positive example of Industrial Strategy in action for the off-shore wind industry in the Humber which is creating a new and vibrant local economy.“Through today’s Industrial Strategy announcement we are optimistic that through greater investment in R&D, and especially through the application of advanced industrial digital technologies like AI and robotics, we can support many more new and existing manufacturing industries – raising productivity and creating thousands of new highly skilled and well paid jobs.”The Industrial Strategy identifies the challenges that the UK economy will need to overcome if businesses are to remain competitive in an increasingly global race said Stephen Martin, Director General of the Institute of Directors.Mr Martin added, “It also takes some important steps in starting the flow of public investment to overcome these hurdles. We hope it will become the cornerstone of a long-term vision of post-Brexit Britain, one that promotes innovation and the free flow of ideas.“It is particularly welcome to see how the government has acknowledged the calls from industry to take a more broad-based approach to addressing questions around skills, infrastructure and research to support our future economy. We hope this will continue as these plans are taken forward.”

Does the plan do enough for productivity?

Responding to the Government's Industrial Strategy, Ben Willmott, head of public policy at the CIPD, the professional body for HR and people development said, “The Government is right to set the goal of creating a modern Industrial Strategy to help businesses create high quality, well paid jobs right across the country.“However, the level of investment and ambition announced today, particularly relating to skills and how they are used in the workplace, is inadequate given the scale of the productivity challenge facing the UK. “The plans set out today are too exclusive to have the impact required, with the sector deals focusing on important but narrow high tech and construction sectors that together account for less than 15 per cent of UK employment."On skills, there is nothing in the strategy that addresses the UK’s chronic under investment in adult skills and life-long learning, with the focus mainly on education policy and the supply of skilled labour for the future in niche sectors, while the National Retraining Scheme seems primarily focused on the use of educational technology for students in two small sectors.“We support plans to reform technical education, however it is important the Government urgently reviews how the apprenticeship levy is operating to make it more flexible and responsive to employers’ skills needs given the recent big fall in apprenticeship starts.“At a regional level, we need to see much more investment being directed to local skills challenges, particularly in terms of support for small businesses to boost their management capability. This is an issue that will hopefully receive greater focus in the review of SME productivity the Government has announced.”For related news and features, visit our Enterprise section. Look out for the launch of 2018's Relocate Awards, entries open in January. Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online DirectoryClick to get to the Relocate Global Online Directory  

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