Industrial strategy: the story so far

Since Theresa May became Prime Minister, one of the distinctions she has carefully drawn with the recent past has been her willingness to be activist in finding solutions to the UK’s long standing problems with productivity, regional disparities and skills deficits, whilst at the same time keeping her powder dry for a blitz on corporate tax and regulation should the EU drive too hard a deal over Brexit.

On 23 January, the Secretary of State, Greg Clark MP announced the Government’s consultation on an industrial strategy.  This green paper sets out a 10-point plan, with proposals including pledges to invest in science, research and innovation, develop skills, upgrade infrastructure and cultivate world-leading sectors.

The Autumn Statement’s biggest increase in public spending on research and development since 1979 was reconfirmed, as was, yet again, the £2.3bn housing infrastructure fund.

Much of the business and policy lobby welcomed it with faint praise – some form of strategy is better than none, but, for a number of commentators, there was little new in the way of money, ideas or analysis. One manufacturing trade association head said: “On closer investigation we appear to be recapping existing programmes and funding streams and therefore its likely effectiveness in generating new growth in the economy must be questioned. That said business has to work with what it is given and so better for business to have a long term industrial strategy than not.”

The Economist sniffed: “The strategy looks rather thin. It talks of improving technical education and of boosting the participation of British exporters at international trade fairs; unobjectionable stuff, but hardly revolutionary……Even after the publication of the industrial strategy, Mrs May remains in need of a flagship domestic policy.”

However, a number of organisations, including the CBI and the TUC, gave the document a more generous welcome as being a fair start to an important debate.

The document is relevant in general terms to project management, but contains little in terms of specifics at this point, which is reasonable considering it is explicitly designed to kick off a debate.

The key points of the overall document are: we need more of the right skills in the UK; London and the regions are too far apart economically; the UK needs to be more productive; and the government can do more to help certain sectors and create new institutions to encourage skills and technology.

Here are some of the issues in the consultation of more direct interest to the project community.

1. The Government wants to use Brexit to become unashamedly British in its annual £268 billion spending on procurement, which currently has to be opened up on equal terms to all EU member states.

The strategy consultation says: “The government is building on good practice adopted in major infrastructure programmes, such as Crossrail, by encouraging those buying goods and services to take account of social and economic factors when designing their procurements. This should help UK-based suppliers compete effectively for government contracts, encourage innovative solutions and maximise the positive impact of public procurement on strengthening the economy,”

The document goes on to say that UK suppliers should be given a head start when bids are assessed: “We are going further by ensuring that all major government procurement projects are structured in a way that supports productivity improvements, so that UK-based suppliers are in the best position to compete for contracts throughout the supply chain. To do this, we are extending the ‘balanced scorecard’ approach recently developed by the Cabinet Office across all major construction, infrastructure and capital investment projects over £10 million.”

2. On infrastructure, the document is relatively limited to what was already announced in the Autumn Statement.

Mark Wallace pointed out on conservativehome.com that “The emphasis seems to be on broadband, 5G mobile networks and improved transport – all welcome, but all subject to the pitfalls that previous governments have experienced…..We can all agree that future upgrades are a good idea, but we’re yet to see exactly how the Government intends to fix the problems with the infrastructure that we already have.”

From the opposite side of the political spectrum, the TUC said: “When it comes to infrastructure, the government is making the right noises. … But Britain’s level of investment is feeble compared to our major competitors. And even after the Autumn Statement announcements, but Britain’s public investment is still set to be lower than in the last Parliament.”

In anticipation of the consultation being launched, Ipsos Mori interviewed 114 board members at the top 500 UK companies by turnover and found that only a third thought new industrial policies would encourage growth. Infrastructure had the greatest support. So the lack of emphasis on infrastructure in the strategy is a little disappointing, although to be fair the Government had majored on this significantly in the Autumn Statement.

3. The Northern Powerhouse is still in the frame.

The 11 Northern Local Enterprise Partnerships received £556 million, helping projects like the Goole Intermodal Terminal and a conference centre and hotel scheme in Blackpool. Greater Manchester will get £130.1m, Liverpool City Region £72m and Lancashire £69.8m.

4. The Government is proposing new “sector deals.”

These involve companies proposing specific plans for their own industries that will "address sector-specific challenges and opportunities." Five main sectors have been named – the creative industries, life sciences, ultra-low emission vehicles, digital technology in manufacturing, and nuclear. This support will not be in the form of funding but in improving training and skills, allowing deregulation if necessary, enabling more opportunities to use new technology, using existing funding more effectively, helping to encourage international trade following Brexit and supporting the creation of new institutions.

Paul Everitt, chief executive of the aerospace trade body ADS said: “Sector specific industrial strategies are already helping UK aerospace to increase investment in R&T, improve productivity and compete more effectively in tough global markets.”

Mark Wallace summed up that this approach is now being extended: “Government is effectively challenging any industry that wants to to get together and produce a business plan for how ministers could assist it – through deregulation, new infrastructure, better education, and so on.”

5. Technical skills get a strong emphasis in the consultation.

£170m will go towards new technical colleges for 16 to 24-year-olds, as well as a research institution to develop on battery technology, energy storage and grid technology for the forthcoming industry of electric powered vehicles.

Thousands of technical qualifications, many of which the Government regards as low quality, will be replaced with 15 core technical “routes” designed to meet the needs of industry. A new Ucas-style system of searching and applying for technical courses may be introduced. The Government will also look into encouraging lifelong learning, particularly in areas where industries are changing or in decline, including whether to introduce maintenance loans for higher technical education.

This reform of technical education is not going to be easy. As Dr Franz Buscha, from the Centre for Employment Research at Westminster Business School, observed: “The creation of a new system of technical education is not a new idea and is something that has eluded UK governments for decades. The primary culprit for this has been [lack of] consistency and continued support for such a policy.” Indeed, since the early 1980s, the further education sector has endured 28 major pieces of legislation and 48 secretaries of state.

It is in the area of skills where a number of commentators immediately found conspicuous holes in the green paper, even though the document is stridently pro-STEM (science, technology, engineering, maths): “math” occurs 27 times in the text. These commentators focused on the way the document focuses relatively narrowly on technical further education to the detriment of other forms of education and training, and will likely be pressing the Government to take a more rounded view in the eventual Strategy

Professor Ewart Keep, Director of Oxford University’s Centre on Skills, Knowledge & Organisational Performance, remarked: “The Industrial Strategy’s announcements on skills mainly cover things that we already knew the government was committed to – vocational pathways, Institutes of Technology, and investigating a revival of sub-degree provision. There is little that is new here in terms of policy and the extra funding to support what has been announced is quite limited. The biggest disappointment, however, is how little the strategy has to say about how skills can support workplace innovation; or how we might improve the utilisation of existing skills and thereby boost productivity in the vast bulk of workplaces.”

The TUC, whilst generally sympathetic to the document, lamented “the absence of any proposals to help workers use their skills more effectively at work”.

Dr Tony Strike, director of strategy, planning and change at the University of Sheffield, said: “The focus on basic skills for those who do not go to university is disappointing. For this strategy to be successful, it is key for a society to communicate advanced vocational training as something valuable. Advanced vocational learning can only deliver the skills industry needs if placed alongside and made inseparable from cutting-edge research in each sector so the future capabilities come together.”

And the Institution of Engineering and Technology said: “The industrial strategy will only be successful if it is a sustained, long-term approach bringing together all government departments, which means we are missing an additional area of focus: education.”

Next steps

The Department for Business, Energy and Industrial Strategy says:

The green paper sets out how we propose to build our industrial strategy. It is not intended to be the last word, but to start a consultation. We hope anyone with an interest will respond. We welcome your comments as part of a broad discussion on the approach and ideas we have set out, in order to make the industrial strategy effective in delivering an economy that works for everyone.

You can respond to industrial.strategy@beis.gov.uk, or write to the following postal address:

Industrial Strategy Team
Department for Business, Energy and Industrial Strategy
1 Victoria Street
London SW1H 0ET

 

Julian Smith is Head of External Affairs at the Association for Project Management and writes in a personal capacity.