24 October 2017

Is the UK ready for a modern industrial strategy?

The Government is pushing ahead with its plans to boost growth and productivity through a new industrial strategy but how easy will it be to deliver this at a local and regional level?

By Alison McGregor

CEO HSBC Scotland

The Government's Industrial Strategy, part of its broader 'Plan for Britain', seized on the EU Referendum and Brexit as a mandate for change. The Strategy's objective is to improve living standards and economic growth by increasing productivity and driving growth across the UK. It highlights three key challenges facing the UK:

  • Pace and extent of investment in R&D and infrastructure
  • The productivity gap
  • Maintaining the UK as a competitive place to do business.

Integration into existing frameworks

Whilst broadly welcomed as a positive step and one that's long overdue, questions remain around how the Industrial Strategy will integrate into the pre-existing frameworks that will ultimately deliver change. Striking a balance between national strategy and local delivery will be key to its success and must be a priority for government.

A UK-wide industrial strategy should offer responsibility and accountability to local institutions, governments and business organisations to deliver that change, creating a strategy we can all get behind long-term.

It's a sentiment echoed in the introduction to the Government's green paper from the Secretary of State for Business, Energy and Industrial Strategy. He talks about 'an approach which endures', and policies that are 'stable and predictable', calling on 'the devolved administrations, as well as local councils and mayors', businesspeople and investors to participate in the development of an Industrial Strategy for modern Britain.

The Strategy's objective is to improve living standards and economic growth by increasing productivity and driving growth across the UK.

Strategy drivers

The green paper also sets out 10 pillars, identified as the key drivers for the strategy overall:

  1. Investing in science, research and innovation – a historic inability to commercialise innovation threatens the UK's competitiveness. Challenges around the level of funding into R&D (1.7 per cent compared to the OECD average of 2.4 per cent) and regional gaps are to be addressed.
  2. Developing skills – plans to tackle the skills gap through greater emphasis on technical education and skills retention.
  3. Upgrading infrastructure – with the UK rated the second lowest for transport infrastructure amongst the G7, the National Productivity Investment Fund aims to focus on boosting physical and digital infrastructure across the UK.
  4. Supporting businesses to start and grow – addressing the challenges of entrepreneurship and scaling up through long-term investment.
  5. Improving procurement – examining how strategic procurement can drive innovation and the creation of new technology businesses.
  6. Encouraging trade and inward investment – opening up new markets and supporting competition and long-term growth.
  7. Delivering affordable energy and clean growth – building a resource-efficient economy.
  8. Cultivating world-leading sectors – supporting proposals to transform sectors through 'sector deals' that promote productivity and competitiveness.
  9. Driving growth across the whole country – addressing economic imbalances through streamlined decentralised governance.
  10. Creating the right institutions to bring together sectors and places – creating business-led institutions to deliver consistent policy1.

The CBI has long-called for a joined up strategy. Is this the answer? It's certainly a starting point and, as the policy evolves, we will hopefully understand more about its intentions, scope and how success will be measured. Much remains to be seen about how current UK policies will fit with this overarching strategy and what tensions that may create, but at least for now we have a plan.

As the policy evolves, we will hopefully understand more about its intentions, scope and how success will be measured.

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