I welcome the Secretary of State for Business, Energy & Industrial Strategy’s comprehensive and clear industrial strategy. Here is his letter to MPs –
This is an important moment for the United Kingdom. As we prepare to leave the European Union, we must look forward and plan the long term policies and decisions that will shape how we earn a prosperous living in the years ahead.
Today’s Green Paper, “Building our Industrial Strategy”, is part of an open dialogue to develop this strategy as the enduring foundation of an economy that works for everyone.
We start from a position of considerable strength. We are the fifth biggest economy in the world, despite having the 22nd highest population. We have achieved higher levels of employment than ever before in our history – in fact 2.7 million more than in 2010. We have businesses, research institutions and cultural achievements at the very forefront of global excellence. And for all these reasons, we attract investment and talented individuals from around the world. But there are challenges that the UK must face up to, now and in the years ahead.
The first is to build on our strengths and extend excellence into the future.
Our excellence in key technologies, professions, research disciplines and institutions provides us with crucial competitive advantages. But we can’t take them for granted.
If other countries invest more in research and development, and we do not, then we cannot expect to keep, let alone extend, our technological lead in key sectors – or the world-beating performance of our universities. The same goes for our record as Europe’s leading destination for inward investment or our position as a centre of international finance. Our competitors are not standing still. They are upgrading infrastructure networks and reforming systems of governance. Therefore we too must strive for improvement.
In industrial sectors – from automotive and aerospace to financial and professional services and the creative industries – the UK has built a global reputation. But the competition for new investment is fierce and unending. The conditions that have allowed UK investment destinations to succeed include the availability of supportive research programmes, relevant skills in local labour markets and capable domestic supply chains. However, for continuing success, these foundations must be maintained and strengthened.
The second challenge is to ensure that every place meets its potential by working to close the gap between our best performing companies, industries, places and people and those which are less productive. The UK is one of the most centralised countries in the world, but this has not led to the country being uniformly prosperous. For all the global excellence of the UK’s best companies, industries, and places we have too many who lie far behind the leaders. That is why, on average, workers in France, Germany and the USA produce around as much in four days as UK workers do in five. It is also why despite having the most prosperous local economy in Northern Europe – in central London – we also have twelve of the twenty poorest among our closest neighbours.
For all the progress of more people going to university than ever before, too many people don’t have the education and skills they need to be able to command a good wage. We have more university graduates than the OECD average, but also more people with low levels of literacy and numeracy. We must address these long ‘tails’ of underperformance if we are to build a strong economy and ensure sustainable growth in living standards.
The third challenge is to make the UK one of the most competitive places in the world to found or to grow a business. It’s worth noting that many of the most important companies in the world today didn’t even exist 25 years ago. Unlike in the past, industrial strategy must be about creating the right conditions for new and growing enterprise to thrive, not protecting the position of incumbents.
A modern industrial strategy must make this country a fertile ground for new businesses and new industries which will challenge and in some cases displace the companies and industries of today.
To meet these challenges we’ve identified ten pillars around which our proposals are structured – ten areas of action to drive growth right across the economy and in every part of the country.
- Investing in science, research and innovation
- Developing skills
- Upgrading infrastructure
- Supporting businesses to start and grow
- Improving procurement
- Encouraging trade and inward investment
- Delivering affordable energy and clean growth
- Cultivating world-leading sectors
- Driving growth across the whole country
- Creating the right institutions to bring together sectors and places.
Across all of these areas, the Government is already taking strategic decisions to keep British industry on the front foot. For instance, the go ahead for major upgrades to our infrastructure such as Hinkley Point C, Heathrow and High Speed 2; and, in the Autumn Statement, the biggest increase in research and development spending since 1979.
Alongside today’s Green Paper we are launching a range of further measures. These include:
- a new approach to enabling existing and emerging sectors to grow through Sector Deals – with reviews taking place regarding life sciences, ultra-low emission vehicles, industrial digitalisation, nuclear and the creative industries;
- deciding on the priority challenges and technologies for the new Industrial Strategy Challenge Fund to focus on, and the other opportunities we can address using the £4.7 billion increase in research and development funding; and
- an overhaul of technical education, including £170 million of capital funding to set up institutes of technology to deliver education in science, technology, engineering and mathematics (STEM) subjects.
In a world containing so much uncertainty, public policy should aim to be a countervailing force for stability, not an additional source of unpredictability.
Whether in the public or private sector, investors need a stable policy framework against which they can make confident, long-term decisions. So our aim is to establish an industrial strategy for the long term.
To do that requires developing an enduring industrial strategy with, and not just for, the nations, communities and enterprises of the United Kingdom. That is why this is a Green Paper – a set of proposals for discussion and consideration, and an invitation to all to contribute collaboratively to their development.
I and my Ministerial team will be pleased to meet with you and other colleagues to hear your contributions and advice as we continue the development of this strategy.
THE RT HON GREG CLARK MP
Secretary of State for Business, Energy & Industrial Strategy