The Department for Business, Energy and Industrial Strategy (BEIS) has announced a new industrial strategy, which includes an additional £725m investment in a challenge fund to encourage innovation, and a series of announcements about infrastructure, skills and business environment developments
The white paper also includes a pledge to raise total R&D investment to 2.4% of GDP by 2027 and to increase the rate of R&D tax credit to 12%.
The £725m committed to the industrial strategy challenge fund over the next three years includes £170m 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 £210m to improve early diagnosis of illnesses and develop precision medicine for patients across the UK.
The government has previously committed £1bn to the first wave of industrial strategy challenge fund projects, which included investing £246m in next generation battery technology and £86m in robotics hubs across the UK.
The white paper also confirms government will be pressing ahead with a series of sector deals, starting with construction, life sciences, automotive and artificial intelligence (AI).
Ahead of the signing of the life sciences sector deal, due in the next few weeks, the government has confirmed that pharmaceutical company MSD is set to make a significant investment in a new UK hub, supporting a total of 950 jobs in high-skilled and high-value research roles.
The strategy includes building up the UK’s technical education system, with an additional £406m to address the shortage of science, technology, engineering and maths (STEM) skills, along with a new national retraining scheme that supports people to re-skill, beginning with a £64m investment for digital and construction training.
There is to be a new transforming cities fund that will provide £1.7bn for intra-city transport; this will fund projects that drive productivity by improving connections within city regions.
The government is providing £42m to pilot a teacher development premium to test the impact of a £1,000 budget for high-quality professional development for teachers working in areas that have fallen behind.
In addition, the industrial strategy highlights an increase in the National Productivity Investment Fund to £31bn; support for electric vehicles and digital infrastructure, and a new £2.5bn investment fund, incubated in the British Business Bank.
The government is also to launch 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
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.
Prime minister Theresa May said: ‘As we leave the EU and forge a new path for ourselves, we need to focus on building a better future for our country and all the people who live in it. With the Budget last week, and our industrial strategy in the years ahead, we will build a Britain fit for the future.’
In the strategy, the government has identified what it calls four ‘grand challenges’, which are global trends it says will shape the future. These are AI, clean growth, ageing society and the future of mobility.
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 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.
Stephen Martin, director general of the Institute of Directors, said: ‘The industrial strategy identifies the key challenges that the UK economy will need to overcome if businesses are to remain competitive in an increasingly global race.
‘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.’
The UK’s industrial strategy is here.
Report by Pat Sweet
