Industrial Strategy
Building a Britain fit for the future Industrial Strategy White Paper
Contents
2 Foreword from the Prime Minister 04 Foreword from the Secretary of State 06 Introduction 08 Grand Challenges 30 Ideas 56 People 92 Infrastructure 126 Business Environment 162 Places 214 Conclusion: Britain and the world 240 Industrial Strategy White Paper Foreword from the Prime Minister
Over the last seven years, we have made huge progress in restoring our public finances and rescuing our economy from the brink of bankruptcy. Thanks to the sacrifices of the British people, the deficit is now down two-thirds since 2010, the unemployment rate is at its lowest in over 40 years and we have had 19 continuous quarters of economic growth. We should take enormous pride in That is why one of my first actions these achievements and the difference as Prime Minister was to begin the they are making for many families and development of a modern Industrial businesses in our country. But at the Strategy that would help businesses to same time, we must also recognise create high quality, well paid jobs right there are some communities which across the country. This document is have struggled to keep pace with a vital step in delivering that vision. changes in the global economy and as a More than just a set of announcements, result not fully shared in the prosperity it heralds a new approach to how that growth has delivered. government and business can work For me it is not enough to see growth together to shape a stronger, fairer in the national economy if your economy. At its heart it epitomises my local economy is shrinking. It is not belief in a strong and strategic state ambitious enough to have record jobs that intervenes decisively wherever it growth, unless those jobs are secure can make a difference. It is rooted in and delivering real growth in wages. the conviction that a successful free- And we are not fulfilling Britain’s market economy must be built on firm potential if, despite having scientists foundations: the skills of its workers, the and universities renowned the world quality of the infrastructure, and a fair over, we cannot turn their ideas into and predictable business environment. the products and services on which the And where these are missing it takes industries of the future will be built. energy and partnership between government and the private sector to address the problems.
4 That is exactly what this Industrial Strategy aims to do. It will help young people develop the skills they need to do the high-paid, high-skilled jobs of the future. It backs our country for the long- term: creating the conditions where successful businesses can emerge and grow, and helping them to invest in the future of our nation. And it identifies the industries that are of strategic value to our economy and works to create a partnership between government and industry to nurture them. In doing so, it will help propel Britain to global leadership of the industries of the future - from artificial intelligence and big data to clean energy and self-driving vehicles. Two centuries ago it was our industrial revolution which led the world. Thirty years ago, it was our bold, pro-market reforms which set an example for The Prime Minister others to follow. Today, our ambition is just as high. As we leave the European Union and forge a new path for ourselves, so we will build a Britain fit for the future and fulfil the mission that I set on my first day as Prime Minister: to make our United Kingdom a country that truly works for everyone.
5 Industrial Strategy White Paper Foreword from the Secretary of State
We are at one of the most important, exciting and challenging times in the history of global enterprise. Powered by new technologies, the way More decisions about our economic we live our lives as workers, citizens and future will be in our own hands, consumers is being transformed across and it is vital that we take them. the world. In our Industrial Strategy we set out Britain is extraordinarily well-placed how we will build on our strengths, to benefit from this new industrial extend them into the future and revolution. We are an open enterprising capitalise on the opportunities economy, built on invention, innovation before us. and competition. Our universities and A serious strategy must also address research institutions are among the the weaknesses that keep us from best in the world. We have a deserved achieving our full potential. reputation for being a dependable and confident place to do business, For all the excellence of our world- with high standards, respected beating companies, the high calibre institutions, and the reliable rule of of our workforce and the prosperity law. We have achieved near historic of many areas, we have businesses, levels of employment. We are a people and places whose level of crossing point for the world because productivity is well below what of our geographic position, the English can be achieved. language, our strong ties, our openness By improving productivity while to ideas and our vibrant culture. We keeping employment high, we can have many industries - from financial earn more – raising living standards, services to advanced manufacturing, providing funds to support our public from the life sciences to the creative services and improving the quality of industries – which are world leading. life for all our citizens. To benefit from the opportunities So this Industrial Strategy deliberately before us, we need to prepare to seize strengthens the five foundations them. This would be needed at any of productivity: ideas, people, time, and Britain’s decision to leave infrastructure, business environment the European Union makes it even and places. more important.
6 As well as setting a path to improved productivity, our Industrial Strategy sets out four areas where Britain can lead the global technological revolution. These four Grand Challenges – in artificial intelligence and big data; clean growth; the future of mobility; and meeting the needs of an ageing society – have been identified on the advice of the our leading scientists and technologists. They will be supported by investment from the Industrial Strategy Challenge Fund and matched by commercial investment. Our Industrial Strategy will inform decisions now, and in the future. Other countries have benefited from establishing policies and institutions which endure. That is our aim. Through the consultation on our Green Paper, Rt Hon Greg Clark MP over 2,000 organisations from all parts of the United Kingdom have Secretary of State for Business, helped shape this strategy. Energy and Industrial Strategy That partnership with innovators, inventors, job creators, local leaders, the devolved administrations, workers and consumers will continue as we work together to make our country fit for the future.
7 Industrial Strategy White Paper
Introduction
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9 IndustrialOverview: Strategy We White will Paper create an economy that boosts productivity and earning power throughout the UK
Our five foundations align to our vision for a transformed economy
Ideas the world’s most innovative economy
People good jobs and greater earning power for all
5 Infrastructure foundations of a major upgrade to the UK’s infrastructure productivity
Business environment the best place to start and grow a business
Places prosperous communities across the UK
We will set Grand Challenges to put the United Kingdom at the forefront of the industries of the future:
AI & Data Economy Clean Growth We will put the UK at the forefront We will maximise the advantages of the artificial intelligence and for UK industry from the global data revolution shift to clean growth
Future of Mobility Ageing Society We will become a world We will harness the power of leader in the way people, goods innovation to help meet the needs and services move of an ageing society 10 Key policies include:
Ideas Business Environment `` Raise total research and development `` Launch and roll-out Sector Deals – (R&D) investment to 2.4 per cent of partnerships between government GDP by 2027 and industry aiming to increase sector `` Increase the rate of R&D tax credit productivity. The first Sector Deals are to 12 per cent in life sciences, construction, artificial intelligence and the automotive sector `` Invest £725m in new Industrial Strategy Challenge Fund programmes to capture `` Drive over £20bn of investment the value of innovation in innovative and high potential businesses, including through People establishing a new £2.5bn Investment `` Establish a technical education system Fund, incubated in the British that rivals the best in the world to Business Bank stand alongside our world-class higher `` Launch a review of the actions that education system could be most effective in improving the `` Invest an additional £406m in maths, productivity and growth of small and digital and technical education, helping medium-sized businesses, including how to address the shortage of science, to address what has been called the technology, engineering and maths ‘long tail’ of lower productivity firms (STEM) skills Places `` Create a new National Retraining Scheme that supports people to re-skill, `` Agree Local Industrial Strategies that beginning with a £64m investment for build on local strengths and deliver on economic opportunities digital and construction training `` Create a new Transforming Cities Infrastructure fund that will provide £1.7bn for `` Increase the National Productivity intra-city transport. This will fund Investment Fund to £31bn, supporting projects that drive productivity by investments in transport, housing and improving connections within digital infrastructure city regions `` Support electric vehicles through `` Provide £42m to pilot a Teacher £400m charging infrastructure Development Premium. This will test investment and an extra £100m to the impact of a £1000 budget for extend the plug-in car grant high-quality professional development `` Boost our digital infrastructure for teachers working in areas that with over £1bn of public investment, have fallen behind including £176m for 5G and £200m for local areas to encourage roll out of full-fibre networks
We will ensure our Industrial Strategy will endure by creating an independent Industrial Strategy Council that will assess our progress and make recommendations to the government.
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Technological innovations are transforming how we live and work
The challenge for the future
The United Kingdom is a successful, competitive, open economy. We have many strengths on which people in our society is growing. The we can build, and some weaknesses way we generate and use energy is we need to address. As we leave the changing rapidly. European Union we need to raise The Industrial Strategy sets out how our game at home and on the world we are building a Britain fit for the stage. This can be done if we seize the future – how we will help businesses opportunities of the years ahead – and create better, higher-paying jobs in it is essential if the British people are every part of the United Kingdom with to enjoy prosperous lives with fulfilling investment in the skills, industries and work and high quality public services. infrastructure of the future. It ensures At the same time, the world is changing that our country and its citizens in fundamental ways. Technological can embrace and benefit from the innovations are transforming how we opportunity of technological change. live and work. The proportion of older
12 Our vision is for: It is also a strategy that recognises and `` the world’s most innovative economy respects the devolution settlements of Scotland, Wales and Northern Ireland. `` good jobs and greater earning With many of the policies that can power for all drive productivity being devolved, it `` a major upgrade to the UK’s is a strategy that necessarily brings infrastructure our work together with that of the devolved administrations as we work `` the best place to start and grow in partnership to get the best possible a business outcome for every part of the UK. `` prosperous communities across The strategy set out in this paper is the the UK work of many people, businesses, local To achieve this, we must ensure leaders and institutions. It builds on every part of our country realises its nearly 2,000 formal responses to the full potential. We are taking action public consultation on our Green Paper, now, including making the biggest Building our Industrial Strategy1, from ever increase in public investment in all types of organisation, sectors of the research and development, establishing economy, groups of businesses and a new fund to drive productivity by individuals – and many thousands of improving connections within city contributions through our programme regions, and agreeing Sector Deals of engagement throughout the UK over which will drive transformation in the last 10 months. investment and productivity across the economy. This Industrial Strategy is for the long term. It provides a policy framework against which major private and public sector investment decisions can be made with confidence. It is a strategy that is being implemented with, not just for, British enterprise – with the full involvement of innovators, investors, job creators, workers and consumers in England, Scotland, Wales and Northern Ireland.
13 Industrial Strategy White Paper Our approach
Our consultation reinforced the importance of five foundations of productivity – the essential attributes of every successful economy. These are Ideas, People, Through this process we have also Infrastructure, Business Environment identified Grand Challenges which we and Places. Our focus on them will set for the UK government and responds to the detailed feedback to wider economy. These are in response the Green Paper. to global forces that will shape our Our five foundations align to our rapidly changing future, and which the vision for a transformed economy – a UK must embrace to ensure we harness transformation that is already taking all the opportunities they present. The place and will accelerate over the Grand Challenges commit to: course of the coming decades: `` put the UK at the forefront of the . artificial intelligence and data revolution; Our five foundations `` maximise the advantages for UK industry of the global Ideas shift to clean growth; the world’s most innovative economy `` become a world leader in shaping the future of mobility; and People `` harness the power of innovation good jobs and greater to help meet the needs of an earning power for all ageing society. Infrastructure Our foundations and Grand Challenges a major upgrade to the UK’s are set out in the sections that follow. infrastructure This strategy also refers to a number of policies that will be added to over time Business Environment to support the foundations and drive the best place to start and the UK’s transformation. grow a business Places prosperous communities across the UK
14 We will: Ideas `` support electric vehicles through £400m charging infrastructure `` raise total research and development investment and an extra £100m to (R&D) investment to 2.4 per cent of extend the plug-in car grant; GDP by 2027; `` boost our digital infrastructure with `` increase the rate of R&D tax credit over £1bn of public investment, to 12 per cent; including £176m for 5G and £200m `` invest £725m in new Industrial for local areas to encourage roll out Strategy Challenge Fund programmes of full-fibre networks; to capture the value of innovation; Business Environment People `` launch and roll-out Sector Deals – `` establish a technical education system partnerships between government that rivals the best in the world to and industry aiming to increase sector stand alongside our world-class higher productivity. The first Sector Deals education system; are in life sciences, construction, artificial intelligence and the `` invest an additional £406m in maths, automotive sector; digital and technical education, helping to address the shortage of `` drive over £20bn of investment science, technology, engineering and in innovative and high potential maths (STEM) skills; businesses, including through establishing a new £2.5bn Investment `` create a new National Retraining Fund, incubated in the British Scheme that supports people Business Bank; to re-skill, beginning with a £64m investment for digital and `` launch a review of the actions that construction training; could be most effective in improving the productivity and growth of Infrastructure small and medium-sized businesses, `` increase the National Productivity including how to address what has Investment Fund to £31bn, supporting been called the ‘long tail’ of lower investments in transport, housing and productivity firms; digital infrastructure;
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Places `` agree Local Industrial Strategies that These policies, alongside the many build on local strengths and deliver on others set out in this document, are the economic opportunities; first strategic actions of a long-term `` create a new Transforming Cities fund approach to transform our levels of that will provide £1.7bn for intra-city productivity and our earning power transport. This will fund projects as a nation, as businesses, as places, that drive productivity by improving and as individuals. We are ready to connections within city regions; and be judged on our performance in implementing them. `` provide £42m to pilot a Teacher Development Premium. This will test the impact of a £1000 budget for high-quality professional development for teachers working in areas that have fallen behind.
We will agree Local Industrial Strategies that identify and build on strengths across the country
16 Building on our strengths
The UK is a fundamentally strong economy, with widely admired institutions and some of the world’s leading businesses and universities. We have some of the highest Our flexible labour market, high levels employment rates in Europe2. We are of employment and competitive a location of choice for businesses at environment – with high standards and the cutting edge of innovation and a dependable rule of law – make us a technology, attracting more overseas great place to do business. investment in R&D than many major countries, including Germany, France and China3.
UK inward investment compared to other countries
Inward foreign direct investment
2016 2007 A s $400 US on s s $300 rati ng in Island UK ede rg e m a Ko erland a D billions nada th
$200 li lgiu h Vi Chin ra Ca US Ne is a y Hong Be it azil st yman Island ngapor
$100 Russian F Si Br Br Ital Au Ca Indi $0
Source: United Nations Conference on Trade and Development (2017)World Investment Report 2017
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We are ranked seventh globally in the The UK also contains some of the World Bank’s Ease of Doing Business world’s most attractive places to Index4. Our strengths are many and live, work, invest and be entertained. diverse: from our scientific and financial London is a world-leading hub for prowess to the vitality of our cultural financial services, creative industries, and artistic life. tech businesses and more; a global We have many creative and innovative city which continues to be a magnet businesses and we are strong in for international businesses and talent. key sectors, from automotive and In recent years the UK’s ‘Core Cities’, including Birmingham, Manchester and aerospace to food and drink and 7 creative industries. We have millions Glasgow , have seen their economies of jobs in financial, professional and transformed, while many smaller cities business services, which are also our and towns such as Milton Keynes, country’s biggest exporters5. We are Oxford and Cambridge have been at the cutting edge of technologies hotspots for job creation. We must such as satellites and synthetic promote growth through fostering biology. Countries are keen to invest clusters and connectivity across cities, in our education and learn from our towns and surrounding areas. discoveries in health care. The UK ranks in the top five in the Global Innovation Index6. We need to make the most of these strengths so that we can be at the forefront of emerging technologies and industries in the years ahead.
18 Addressing our weaknesses
For all these strengths, we have an urgent need to improve. In recent decades we have not made the most of our export potential, invested too little, and have not nurtured some of the skills we need. Too many of the UK’s cities outside weaknesses in the UK economy that we the capital underperform against are determined, unflinchingly, the national average. We cannot to correct. tackle our problems unless we openly In particular, Britain’s productivity acknowledge them and accept we has long lagged behind that of our all share the responsibility for competitors8. At a time of astonishing addressing them. technological advance, output per hour Our analysis and the responses to our worked in the British economy has been Green Paper point to some important weak since the financial crisis9.
Rising wages depend on growing productivity
Hourly earnings and output per hour, index: 1993=100
150 140 130 120 110 100 90 80 70 60 Hourly earnings Output per hour 50 1975 1980 1985 1990 1995 2000 2005 2010 2015
Source: Data based on analysis of ONS national accounts and ASHE data (courtesy of Professor Paul Gregg, the University of Bath). *Hourly earnings is defined as mean compensation per employee hour.
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We are proud of our flexible labour we have some of the most productive market that has delivered jobs for businesses, people and places in millions and we have achieved near the world but also a ‘long tail’ of record employment rates10, but this underperformance. Britain’s top must now be accompanied by the businesses are among the most sustained higher productivity that is admired in the world, but if the long the essential requirement for higher tail of lower productivity persists, wages. Unless we improve productivity it will hold back UK growth, wages while holding on to high employment, and living standards11. we cannot raise living standards and By addressing the disparities we can quality of life for all our citizens. improve our overall productivity and Our relatively weak productivity earning power. performance is, to a significant degree, a problem of composition:
Taking action now
These are challenges that have been recognised by previous governments - we can learn from their successes as well as try to avoid their mistakes. We successfully rebuilt our automotive speed of technological change and industry by deliberately attracting the convergence of technologies investment from abroad, notably from present enormous opportunities. Japan and more recently from India We are a nimble economy and we and continental Europe. can move quickly to take advantage The initiatives of previous governments of innovations. We also have smart such as the advanced manufacturing consumers who reward entrepreneurs strategies, the Eight Great developing new products and services. Technologies, and the Catapult network We know that the earliest adopters of have all contributed to our international new technologies are able to reap the reputation. These are strengths we greatest rewards in terms of additional can draw on and they present further jobs and increased revenue. opportunities to improve productivity and create good new jobs. The very
20 UK productivity relative to other G7 countries
GDP per hour worked, 2016, index: UK=100
Germany France US y
tr Italy un
Co UK Canada Japan
40 50 60 70 80 90 100 110 120 130 140
Source: ONS (2017) International Comparisons of Labour Productivity.
The role of government
We have learned from previous attempts at industrial strategy – what has worked, and what has not. It is important to have a clear But governments have a responsibility understanding of what a government that extends beyond promoting can and cannot do. We believe competition. We have to work in the power of the competitive systematically through the factors market - competition, open financial responsible for higher productivity and markets, and the profit motive are earning power – the five foundations of the foundations of the success of the Ideas, People, Infrastructure, Business UK. Indeed the best way to improve Environment and Places that are central productivity is to increase exposure to this White Paper. to competition.
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Governments in successful economies or academic player can take alone. have recognised their strategic The modern nation state is the most power and leadership role, allowing powerful means we have of pooling them to coordinate and convene risk. We are willing to take these risks, efforts to develop and disseminate which means accepting not all will new technologies and industries. work out successfully. An industrial Individuals, businesses and researchers strategy that avoids risk is no are motivated by ambitious missions industrial strategy at all. – global and national challenges that We have studied previous attempts need to be tackled by breaking down at industrial strategy, which have had traditional barriers and finding new successes as well as failures. One lesson ways of doing things. From sequencing is that governments cannot do this the human genome and tackling Aids on their own, instructing and planning to hosting the 2012 Olympics, we have but never listening or consulting. So seen successive governments identify our Industrial Strategy is a partnership ambitious missions that drive new with businesses, workers, universities endeavours. and colleges, local government and Governments can make long-term the devolved administrations where we investment that no single commercial work together to achieve our goals.
From sequencing the human genome to hosting the London 2012 Olympic and Paralympic Games, we have seen successive governments identify ambitious missions that drive new endeavours
22 Grand Challenges
It is not enough just to look at the economy we have. We must make preparations for the economy we need to become. We need to be acutely aware and around the world, and in which the take advantage of the world-changing UK – if we muster our forces across trends which will shape Britain in the sectors – has the opportunity to play decades ahead. This is where the a leading global role. government must provide the strategic These Grand Challenges are an leadership set out above to support the invitation to business, academia development of new technologies and and civil society to work together to position the UK at the forefront of the innovate and develop new technologies industries of the future. and industries in areas of strategic In this Industrial Strategy we propose a importance to our country. We set them number of Grand Challenges. These are out in more detail in the next chapter. developments in technology that are set to transform industries and societies
Following extensive consultation during the consultation for our Green Paper, our four Grand Challenges will be:
putting the UK at the forefront being a world leader in shaping of the artificial intelligence the future of mobility; and and data revolution; harnessing the power maximising the advantages of innovation to help meet the for UK industry from the needs of an ageing society. global shift to clean growth;
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Global Britain
The decision to leave the European Union was not a decision to retreat from the world. In fact we need to embrace it – to trade The government believes it is more not less. We must remain an open, overwhelmingly in our mutual interest liberal market economy. There are to agree a comprehensive and opportunities to be gained upon leaving ambitious UK-EU economic partnership the EU. The opportunity to become that enables the most free and more protectionist is not one of them. frictionless trade possible with minimal Britain’s future has to be one of free disruption to business. We should be trade with the whole world, including optimistic and ambitious about what with the rest of Europe. we can achieve, as we share the same The EU accounts for the largest beliefs in free trade, rigorous and fair proportion of UK trade12. The size competition, strong consumer rights and proximity of the EU single market and high standards. and our close connections with it There will, inevitably, be uncertainty mean the EU will always be a major while we determine the precise nature trading partner. of our future trading arrangement with
Britain’s future has to be one of free trade
24 the EU. To minimise this, we are seeking We aim to put in place mechanisms to agree an implementation period, of to improve trading relations and remove around two years, to allow business barriers affecting UK businesses, and time to adapt to the new arrangements. we will work closely with the devolved This will ensure that no one has to go administrations as we forge new and through two sets of changes, and will deeper trade relationships around allow businesses to make decisions the world. once there is greater certainty about Our Industrial Strategy will be flexible the final outcome. to take account of developments in Our Industrial Strategy is designed negotiations between the UK and the to place us at the forefront in finding EU or changes in the global economy. solutions to both UK and global While our Industrial Strategy will emerging trends and challenges. As adapt, we will always be consistent in set out in our paper Preparing for maintaining the principles of an open Our Future Trade Policy13, we will economy and fair competition that reach out to old friends and new creates the conditions for businesses allies in expanding access to markets, to thrive. supporting our businesses to export, and welcoming investment and collaboration from emerging and established partners from across the globe. The International Monetary Fund projects that above 80 per cent of world growth is likely to come from outside the EU in the near future14; we need to be ready for the opportunities such growth will bring. We are in discussions with a number of countries about future options, including full Free Trade Agreements. But Free Trade Agreements are not the only tools at our disposal.
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Wales’s Sêr Cymru programme is designed to attract the highest calibre candidates to work in research groups in Welsh universities, such as Cardiff
Partnership with the devolved administrations
The truly generational challenges and opportunities to which our Industrial Strategy responds apply throughout the UK. In addressing these issues we recognise Our Union offers a unique opportunity. and respect the devolution settlement The UK government and the devolved and the empowerment it has offered administrations can each learn from the people of Scotland, Wales and each other in areas of common interest. Northern Ireland. There are important For example, Scotland has made great aspects of the five foundations of strides in energy efficiency and has Ideas, People, Infrastructure, Business one of the most effective systems for Environment, and Places that are translating advances in life sciences associated with policies that are into improved patient care. Wales’s devolved, and we are committed to Sêr Cymru programme is attracting working in partnership across all four leading scientific talent matched to its nations to reach the best possible innovation strengths. Northern Ireland outcome for every part of the UK. is fostering a burgeoning cybersecurity business and research community.
26 Devolution has never meant that the These publications reflect ambitious UK government does not exist to serve thinking for each economy and identify the people and the economies of the priorities that align fundamentally with devolved nations. This is exemplified the five foundations of this Industrial in the funding we provide throughout Strategy, whether in Scotland’s focus the UK to support innovation on innovation and entrepreneurship excellence, and next generation digital or Northern Ireland’s emphasis on infrastructure to connect urban and inclusive growth. rural communities, and in the promotion In our Green Paper we committed of our national strengths as part of the to working with the devolved GREAT campaign. administrations as part of ministerial We also know that it is collaboration forums. This joint working has proven between our governments that results valuable, and as we implement our in some of the most powerful actions long-term strategy we will recommit taken within the devolved nations. The to that partnership, seeking to tackle six City Deals agreed in Scotland and our shared opportunities with a focus Wales are testament to the impact on: addressing our shared Grand that partnerships within the devolved Challenges; making Sector Deals work nations can achieve. These deals for businesses across the UK; ensuring have yielded ambitious investments that our institutions collaborate for driven by priorities identified by maximum impact; and working together communities themselves, with a £1.6bn on priorities for places. UK government investment bringing forward more than £3bn in funding from other partners. And we remain committed to further ambitious City and Growth Deals across Wales, Northern Ireland and Scotland. The Scottish Government and the previous Northern Ireland Executive have also recently published industrial and economic strategies and the Welsh Government is to do the same in the coming weeks.
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A strategy for the long term, with benefits now
The responses to the consultation showed us that people and business want confidence that our Industrial Strategy will endure – that it is a framework they can use for decision making and that it can be expected to last. The best way to secure this is for To support evaluation and further the strategy to command the widest understanding of the economy, we aim possible support. We must earn this to make the UK the best understood through the quality of the decisions we major economy. We will be developing take and by sharing the evidence on a joint programme of work with the which they are based. Yet commitment Office for National Statistics, academics must not mean inflexibility – we need and other stakeholders that will identify systems that adjust to new evidence the gaps in our evidence base. The UK and new challenges. government also stands ready to work One key to this is data. Governments with the devolved administrations, must practise what they preach about where appropriate, to ensure the the opportunities of the data revolution. strongest possible data is held and That means being innovative in how used across the UK; in particular as we we collect and analyse economic data. continue to transfer powers from the
28 UK to the Scottish Parliament in line The real test of a successful strategy with the Scotland Act 2016. We want to is the consequences it has for the make more micro-level data available lives of our fellow citizens. That must so people can study and understand mean more good jobs and better our economy. This will enable us to pay. We are committed to high improve significantly how we identify quality jobs for all UK citizens: that strengths and weaknesses in specific is why we will be responding to and parts of the country. It will provide a building on the recommendations shared evidence base on which we of the Matthew Taylor Review to can build our Industrial Strategy. ensure that employment rights We must have the right reporting are protected and workers can mechanisms in place to ensure we benefit from new technology. achieve our ambitions. The Economy By addressing these challenges we will and Industrial Strategy Cabinet be able to achieve the central objective Committee, chaired by the Prime of our Industrial Strategy – to improve Minister, will remain responsible for living standards and economic growth our strategic vision and for driving across the country. This strategy is delivery across government. our long-term plan to ensure that We will create an independent Industrial people in all parts of the UK are able Strategy Council that will develop to lead fulfilling and prosperous lives, measures to assess and evaluate and that we can all make the most our Industrial Strategy and make of the opportunities that lie ahead. recommendations to the government. The Council will have access to relevant government data and will be funded to commission specific evaluation projects as appropriate. It will be drawn from leading business men and women, investors, economists and academics from across the UK.
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Grand Challenges
30 The fourth industrial revolution is of a scale, speed and complexity that is unprecedented
31 Industrial Strategy White Paper Grand Challenges
We will set Grand Challenges to put the United Kingdom at the forefront of the industries of the future. The world is undergoing a technological present. We must also embrace the revolution. Artificial intelligence (AI) technological advances that improve will transform the way we live and productivity across many sectors, as work, from the way we diagnose and well as the quality of our everyday lives. treat cancer to the security of online A truly strategic government must do transactions. This fourth industrial more than just fix the foundations: it revolution is of a scale, speed and must also plan for a rapidly changing complexity that is unprecedented. The future, look to shape new markets and first industrial revolution mechanised industries, and build the UK’s competitive production using water and steam advantage. The public and private power; the second created mass sector must work with universities, production using electric power; the researches and civil society to put the third automated production using UK at the forefront of these revolutions, electronics and information technology. breaking down conventional barriers This fourth revolution is characterised within and between business sectors by a fusion of technologies that is and academic disciplines. This is what blurring the lines between the physical, the Grand Challenges will achieve. digital and biological worlds15. It will disrupt nearly every sector in every History shows governments around country, creating new opportunities the world have taken advantage of and challenges for people, places and global challenges. In the 1970s, the businesses to which we must respond. UK government was instrumental in developing the North Sea oil and gas This is not the only seismic global change industry. More recently, thanks to to which the UK needs to respond. tailored public support, the UK has built We owe it to ourselves and future the largest off-shore wind capacity of generations to lower carbon emissions any country16 and developed world and move towards cleaner growth; we class gene sequencing technologies. are facing a fundamental demographic shift as our population ages; and we are Overseas, Germany’s Industrie 4.017 is on the cusp of a profound shift in how an example of a government helping we move people, goods and services prepare the country to take advantage around our towns, cities and countryside. of major trends, while in the United States the Defense Advanced Research We need to make the most of the global Projects Agency (DARPA) and other market opportunities these changes
32 public research institutions We must continue to have played a significant role support a broad range in developing the technologies of key capabilities and behind the internet and emerging technologies. smartphone, spurring the We also need to be clear ‘A truly strategic growth of entire new markets. where our distinctive government must Other countries are already do more than just advantages lie. We will build fix the foundations: looking to capitalise upon the on our existing strengths, it must also plan for fourth industrial revolution. from cybersecurity, machine a rapidly changing future.’ Japan, for example, has learning, microelectronics deliberate strategies to design and composite prepare for and to embrace compound chip technology these transformational to biotechnologies and life changes in technology. sciences such as genetics The ability to meet our and cell therapies. At the Grand Challenges rests same time we must develop on broad capabilities. The new strengths in emerging DARPA programme has been sectors. We must do this effective because it is part of as a partnership between a much wider research and businesses, scientists, development (R&D) effort. investors, educators and Our capacity to act nimbly policy makers to take and effectively depends full advantage of the on maintaining capacities transformational potential across a wide range of of these trends to improve technologies and disciplines. people’s lives, their work and We can engage now with the the nation’s productivity. challenge of AI because of This partnership must be previous investments in high UK-wide, embracing our four performance computing. nations. The UK government Similarly, we can rise to the needs to work in collaboration challenge of an ageing society with the governments and because we have already businesses of Scotland, Wales invested in resources such as and Northern Ireland. Just as the UK Biobank, which tracks we committed in the Green the health information of Paper to holding ministerial 500,000 volunteers18, and we forums with each devolved have a lead in understanding administration, we will work the interaction between together to rise to each of genes and environment. the Grand Challenges.
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We will build on our strengths, including in cybersecurity machine learning, microelectronics design and composite compound chip technology
What are the Grand Challenges?
We have taken evidence from our Green `` harness the power of innovation Paper consultation, and worked with to help meet the needs of an scientific leaders – the Government ageing society. Office for Science, UK Research and We must not expect that every Innovation (the Research Councils and individual action will bring guaranteed Innovate UK), the Council for Science or immediate success. Through inviting and Technology and the national competing proposals and ideas, the academies – to identify four Grand government will identify, support and Challenges. We will: fund a range of promising projects. `` put the UK at the forefront of the We must not let a fear of failure make artificial intelligence and data us unimaginative or risk averse. The revolution; government must be willing to back `` maximise the advantages for UK a broad portfolio of risky initiatives industry from the global shift to rather than be constrained by the clean growth; possibility of individual failures. `` become a world leader in shaping To respond to the Grand Challenges, the future of mobility; and business, academia, civil society and
34 the government must work We will also direct the together, bringing their government’s convening expertise and entrepreneurial power, promote exports spirit, to drive us all towards and inward investments, success. By setting out and build consumer trust ‘Business, strategic visions and a in new technologies. Where academia, civil positive role for government appropriate, teams will society and the government must we hope to attract the develop ‘missions’ to tackle engage together, engagement of some of the Grand Challenges. They bringing their the brightest minds from involve tackling specific expertise and across the private and public problems, such as reducing entrepreneurial spirit, to drive us all sectors. For each Grand carbon emissions by a given towards success.’ Challenge, we will ask leading percentage over a specific figures from industry and year period19, using well academia to act as expert defined and concrete goals advisors, led by a ‘Business to allow progress to be Champion’. Working monitored and assessed, alongside ministers, these and the option to change figures will be responsible for course when appropriate. engaging a diverse range of Progress on each Grand industry voices and raising Challenge will be regularly the profile of the challenge. reviewed to ensure that They will advise on how to policies are having the make the most of the global desired impact, we are opportunity it presents and focusing on the correct review how we can work issues, and we are together to respond to it – aware of any changes such as improving supply in the UK’s advantage and increasing demand over other countries. in nascent markets, and ensuring that innovations In the next section we set can diffuse and scale. We out some early priorities will look to appoint Business for each of the four Grand Champions and external Challenges. These will be advisers in early 2018. developed in more detail with the Grand Challenge We will ensure that the teams over the coming government makes the months including setting most of all its policy levers missions where appropriate. to achieve success. Levers include regulations, funding and Sector Deals.
35 Industrial Strategy White Paper
SecondHands is a research project led by Ocado Technology that aims to design a collaborative robot that can offer help to maintenance technicians working in Ocado’s highly automated grocery warehouses
Growing the AI & Data-Driven Economy
We will put the UK at the forefront of the AI and data revolution. Artificial intelligence and machine Embedding AI across the UK will create learning are general purpose thousands of good quality jobs and technologies already starting to drive economic growth. A recent study transform the global economy. They can found digital technologies including AI be seen as new industries in their own created a net total of 80,000 new jobs right, but they are also transforming annually across a population similar to business models across many sectors the UK20. By one estimate, AI could add as they deploy vast datasets to identify £232bn to the UK economy by 203021. better ways of doing complex tasks – We start from a position of strength. from helping doctors diagnose medical The UK is already a world leader conditions more effectively to allowing in AI, with the building blocks to people to communicate across the make significant advances. We globe using instantaneous speech have some of the best research recognition and translation software. institutions in the world and
36 globally-recognised As with previous capability in AI-related revolutionary technologies, disciplines, including maths, these changes cannot computer science, ethics be resisted and it would and linguistics. We have be irresponsible to fail ‘Embedding AI substantial datasets in to prepare. Meeting our across the UK will public institutions where Grand Challenge means create thousands of good quality jobs AI can be explored safely maximising the opportunities and drive economic and securely. We have created by AI and advanced growth. AI could great strengths in the data technologies, and add £232bn to the underpinning technologies, responding to the potential economy by 2030.’ from ARM’s microchips impacts on society. It to the microcomputers is a call for businesses, of Raspberry Pi. UK research institutions and the innovators push boundaries government to work together in robotics and the throughout the UK to invest internet of things. These in these technologies, strengths are the result encourage their adoption of academic excellence, and set standards in secure, research ingenuity, smart trusted use of data. business decisions, and investment by previous governments of different political persuasions.
The AI and data-driven economy
Artificial intelligence: technologies with the ability to perform tasks that would otherwise require human intelligence, such as visual perception, speech recognition, and language translation Machine learning: a type of AI that allows computers to learn rapidly from large datasets without being explicitly programmed Data-driven economy: a digitally connected economy that realises significant value from connected, large- scale data that can be rapidly analysed by technology to generate insights and innovation
37 Industrial Strategy White Paper
Global venture capital investment in artifi cial intelligence
Cumulative average growth rate (CAGR), 2010-2016 £2.5
£2.0 57% CAGR £1.5
£1.0 GBP billions
£0.5
£0.0 2010 2011 2012 2013 2014 2015 2016
Source: Hall, W. and Pesenti, J. (2017) Growing the Artificial Intelligence Industry in the UK. Growth is cumulative average growth rate 2010 to 2016
We must ensure that Britain is among to develop innovative uses of AI and the first countries to ensure that advanced analytic technologies through everyone benefits from this revolution. the Industrial Strategy Challenge Fund*. An early response to this challenge is For example, through the Industrial the Artificial Intelligence Sector Deal, Strategy ‘Next generation of services’ responding to the review by Professor project we will invest in developing Dame Wendy Hall and Jérôme Pesenti, applications of AI and data-driven Growing the AI Industry in the UK22. innovation for service sectors; and, through the ‘Data to early diagnostics In consultation with a range of and precision medicine’ programme people with expertise in this area, we will invest to enhance the power of we have identified four priorities for health data to diagnose life-changing this Grand Challenge: diseases at the earliest possible stage We will make the UK a global and develop precision treatments centre for artificial intelligence to cure them. and data-driven innovation * All wave 2 programmes are subject to final We will build on our world-class business case, when further details on research by working with industry funding will be made available
38 We will also support with industry to explore how businesses with regulation best to train cross-discipline that stimulates and facilitates professionals to apply AI in innovation. Building on their specialist areas, for the ‘sandbox’ approaches example through conversion ‘We will build on that the Financial Conduct courses and continuing our world-class Authority and Ofgem, the professional development. research by working with industry to energy regulator, have We will support develop innovative successfully implemented, uses of AI and we are establishing a sectors to boost their advanced analytic £10m Regulators’ Pioneer productivity through technologies artificial intelligence through the Fund to support UK Industrial Strategy regulators to develop and data analytic Challenge Fund.’ innovative approaches to technologies emerging technologies. A major source of We will foster, attract and productivity improvements retain the best and brightest comes from making the most research talent. The Alan of AI and machine learning Turing Institute will become across the economy. We the national research are working with industry centre for AI, supporting to establish an industry-led new Turing Fellowships. AI Council that can take We will invest £45m to a leadership role across support additional PhDs in sectors. The AI Council AI and related disciplines, will be supported by a new increasing numbers by at government Office for AI. least 200 extra places a In partnership with industry year by 2020-21, aiming to and academia, these bodies expand the numbers in UK will champion research and universities year-on-year innovation, stimulate demand into the next decade. and accelerate uptake across all sectors of the economy. We will also develop people’s The office, working with the skills to keep up with the AI Council, will lead work to speed of technological increase awareness of the change by supporting advantages of advanced data universities and businesses analytic technologies and to develop an industry- promote greater diversity funded masters programme, in the AI workforce. with an initial scale of over 200 places. We will also work
39 Industrial Strategy White Paper
To support rapid adoption of AI The UK will take an international technologies at scale, the Office for leadership role by investing £9m AI will work initially with six priority in a new Centre for Data Ethics business sectors: cybersecurity; life and Innovation. This world-first sciences; construction; manufacturing; advisory body will review the existing energy; and agricultural technology. governance landscape and advise the The office will work in partnership government on how we can enable and with the new GovTech Catalyst to ensure ethical, safe and innovative uses ensure the public sector can benefit of data, including AI. This will include from these technologies. It will also engaging with industry to explore collaborate with partners to promote establishing data trusts to facilitate adoption, for example through the easy and secure sharing of data. We Digital Catapult’s ‘Machine Learning will consult widely in due course on Garage’ programme launching in the detailed remit for this new centre. January. This programme will provide We will also strengthen overall data low-cost access to high quality machine security, reinforcing the UK’s position learning computation power for start- as a global centre for cybersecurity. We ups, and support businesses of all will develop detailed recommendations sizes with expertise on cost-effective over the next six months. machine learning computation. As the global market expands, we We will help people develop the will increase our export support for skills needed for jobs of the future AI and data businesses. The Global AI and data analytics will change jobs Entrepreneur Programme will look and businesses, and we want people to increase its focus on attracting to be able to capitalise on these AI and data-led businesses to opportunities. Our Industrial Strategy establish headquarters in the UK. builds on our work to develop people’s skills, investing an additional £406m We will lead the world in safe and in maths, digital and technical skills ethical use of data and artificial in England. This includes investing intelligence giving confidence and £84m over the next five years to clarity to citizens and business deliver a comprehensive programme AI and data are already creating to improve the teaching of computing enormous opportunities for us to and drive up participation in computer understand more about everything, science. We will up-skill 8,000 from our health to what we like to computer science teachers and work buy. But it is vital that we remove with industry to set up a new National barriers to innovation and ensure Centre for Computing Education. that data is used in a way that is both safe and fair to individuals.
40 We will also promote a new We also need to build an adult digital skills entitlement evidence base about how to support basic training and technological change may our new National Retraining affect different sectors, Scheme will help people groups and places. Building ‘AI and data are re-skill and up-skill as the on the work of Skills Advisory already creating economy changes, including Panels and local Digital Skills enormous opportunities for us as a result of automation. Partnerships in England, the to understand more This scheme will be informed government and industry will about everything, by career learning pilots, explore how data analytics from our health to which are testing barriers to can be used to improve what we like to buy.’ adults engaging in learning, our understanding of and the National Retraining employer demand for skills. Partnership. Initially it will focus on priority skills, including digital. As a first step, we will invest £30m to test the use of AI and innovative education technology (edtech) in online digital skills courses.
One of the many applications of AI and data analytics technologies is to enable more efficient use of energy and resources. For example, intelligent algorithms applied to data on atmospheric conditions and soil moisture could dramatically reduce the amount of water needed for agriculture. Actions to support our first Grand Challenge will complement the second challenge we have identified – maximising the advantages to UK industry of the global shift to clean growth.
41 Industrial Strategy White Paper
Clean Growth
We will maximise the advantages for UK industry from the global shift to clean growth – through leading the world in the development, manufacture and use of low carbon technologies, systems and services that cost less than high carbon alternatives. The move to cleaner economic growth economy. The Paris Agreement of 2015 – through low carbon technologies and commits countries to revolutionising the efficient use of resources – is one power, transport, heating and cooling, of the greatest industrial opportunities industrial processes and agriculture. of our time. By one estimate, the UK’s The effect of these changes will be clean economy could grow at four times felt by businesses throughout the rate of GDP23. Whole new industries the economy, and will involve the will be created and existing industries reallocation of trillions of pounds of transformed as we move towards a public and private finance towards low carbon, more resource-efficient the pursuit of cleaner growth.
Shift of global investment towards the clean economy
Stowe Global Coal Index and global green bonds issuance
8000 160
6000 120 Billion US
4000 80 D 2000 40
0 0 2011 2012 2013 2014 2015 2016 2017 Stowe Global Coal Index Global green bond issuance
Source: Climate Bonds Initiative (2017); Stowe Global Indexes. *2017 green bond issuance is estimated. The Coal Index takes the last data of each month from Jan 11 to Oct 17
42 The UK has been at the than 40 per cent24 since forefront of encouraging the 1990, while our economy ‘The move to world to move towards clean has grown by two thirds25. cleaner economic growth – through growth. We are determined Our recently-published low carbon to play a leading role in Clean Growth Strategy26 technologies providing the technologies, sets out our ambitious and the efficient innovations, goods and proposals for continuing use of resources – is one of the services of this future. We this progress through the greatest industrial want to support our strong 2020s. We have world- opportunities of automotive, aerospace and leading capabilities in areas our time.’ construction industries including electric vehicle to increase their share of manufacture, offshore wind, global markets as they shift smart energy systems, to clean energy sources sustainable construction, and efficient new materials. precision agriculture and We want UK businesses to green finance. With business, lead the development of academia, the government new markets in areas such and civil society working as smart energy systems together, we can do more. and the ‘bio-economy’ We will aim to maximise UK – the use of renewable businesses’ share of the biological resources from global markets as they are land and sea to produce transformed by the shift food, materials and energy. to clean growth, and make We also want everyone to our country one of the best feel the benefits of clean places in the world to develop growth, so we will work to and sell clean technologies. create a future where our We will increase our support cities benefit from cleaner for innovation so that the air, our businesses from costs of clean technologies, enhanced resource security systems and services are and our countryside from reduced across all sectors, regenerated natural capital. and we will collaborate The UK is already one of the on international initiatives most successful countries such as Mission Innovation at growing our economy – a global partnership for while reducing emissions. We clean energy research and have cut emissions by more development – to bring
43 Industrial Strategy White Paper The UK has been at the forefront of the global move towards clean growth, with projects such as the Blyth wind farm in the north east of England
4444 the best minds together demand. We will launch to accelerate progress. a new Industrial Strategy We will align our policies, ‘Prospering from the energy regulations, taxes and revolution’ programme investments to grow the to develop world-leading ‘Our long-term markets for these new local smart energy systems goals are to make innovations so that they are that deliver cheaper and clean technologies cost less than successfully commercialised cleaner energy across power, high carbon in the UK. Our long-term heating and transport, alternatives, and goals are to make clean while creating high value for UK businesses technologies cost less than jobs and export capabilities. to take the lead in supplying them to high carbon alternatives, Our world-leading Smart global markets.’ and for UK businesses to Systems and Flexibility Plan27 take the lead in supplying will build on the rollout of them to global markets. smart meters to grow the We will take action to markets for these systems establish and extend UK and technologies in the UK. leadership in the following We will continue to work early priority areas: closely with the nuclear and offshore wind industries We will develop smart to further drive down the systems for cheap costs of clean power, while and clean energy building UK supply chains. across power, heating We will also continue to and transport explore the long-term options for clean heating Smart systems transform and the many potential uses our ability to use clean of low carbon hydrogen. energy cost-effectively, and so will be in high demand We will transform globally. We are good at construction techniques designing such systems. A to dramatically national electricity grid was improve efficiency a great British technical achievement. Now we A rapidly urbanising world are setting ourselves the needs buildings that can be challenge of remodelling it so constructed and operated it can handle many different more efficiently. Our sources of clean energy, new Industrial Strategy and use new technologies ‘Transforming Construction’ to store energy and manage programme will take full
45 Industrial Strategy White Paper
We will grow the markets for innovative farming technologies and techniques such as the use of drones
advantage of new technologies to We will make our energy- provide safer, healthier and more intensive industries competitive affordable places to live and work that in the clean economy use dramatically less energy to build Global markets for clean and efficient and run. It will ensure UK businesses industrial fuels, processes and materials develop world-leading capabilities in are growing rapidly. We are investing integrating construction, digital energy £162m in innovation for low carbon and efficiency technologies – the industry, and developing a new strategy kind of system integration at which for the bio-economy. We will work with the UK excels. We have launched industry to stimulate further market a call for evidence on additional investment in clean and efficient measures to build a market for energy technologies and process, including efficiency among homeowners. through all manufacturing Sector This will incentivise greater private Deals, and through developing a investment in household and new scheme to support investment commercial building energy efficiency, in industrial energy efficiency. to grow the markets for these types This scheme will help large businesses of buildings and technologies. install measures that will cut their energy use and bills, as well as improve their productivity. This will build on the 2050 Decarbonisation Action Plans that we have agreed with seven of the most energy-intensive sectors.
46 We will put the UK at devolved administrations the forefront of the over future arrangements. global move to high- Our work will develop in efficiency agriculture line with the outcome of those discussions. ‘We are investing Rising global demand for £162m in innovation food and water is increasing We will make the UK for low-carbon the need for agriculture the global standard- industry, and also that produces more from developing a new setter for finance that strategy for the less. Our new ‘Transforming supports clean growth bio-economy.’ food production: from farm to fork’ programme will We will extend the UK’s put the UK at the forefront global leadership in green of advanced sustainable finance – building on our agriculture. Over the world-leading financial sector coming years,as we replace – working with industry the Common Agricultural through our new Green Policy, we will increase the Finance Taskforce. incentives for investment We are now working with in sustainable agriculture, the British Standards helping to grow the markets Institution and the City of for innovative technologies London’s Green Finance and techniques. With Initiative to develop the powers set to return from world’s first green financial the EU, the UK government management standards. is in discussions with the
We use an enormous amount of energy to move people and goods from place to place: around 40 per cent of the UK’s total final energy use28. Developing UK leadership in low carbon transport is therefore a shared priority with our Future of Mobility Grand Challenge. We will invest in innovation to develop clean technologies across road, rail, aviation and maritime transport.
47 Industrial Strategy White Paper
The Future of Mobility
We will become a world leader in shaping the future of mobility. We are on the cusp of a profound ‘mobility as a service’, are challenging change in how we move people, goods our assumptions about how we travel. and services around our towns, cities These technologies can transform and countryside. This is driven by public transport. The UK’s road extraordinary innovation in engineering, and rail network could dramatically technology and business models. reduce carbon emissions and other Significant investments are being made pollutants, congestion could be in the electrification and automation of reduced through higher-density use road vehicles, in the modernisation of of road space enabled by automated rail services to deliver higher capacity, vehicles, and mobility could be speed and connectivity, and in the available when we want it, where development of autonomous aerial and we want it and how we want it. marine transport. New market entrants and new business models, such as ride-hailing services, ride sharing and
UK electric car ownership has increased rapidly since 2010
New electric car registrations
40 New registrations (LHS) 1.5% % of total new cars (RHS) 30 s 1.0% 20
Thousand 0.5% 10
0 0.0% 2010 2011 2012 2013 2014 2015 2016
Source: Department for Transport (2017) Vehicles statistics. *Electric car includes plug-in hybrids, 100% electric, range extended electric and fuel cell electric cars
48 The government wants to see fully self-driving cars on the UK roads by 2021
‘New market entrants and new business models, such as ride-hailing services, ride sharing and mobility as a service, are challenging our assumptions about how we travel.’
We have significant strengths As the UK has the highest in many of the most relevant percentage of the population areas of research and living in urban areas in the development, including OECD we are well placed artificial intelligence and to contribute to these complex vehicle engineering. challenges of urbanisation29. We have dynamic businesses We will build on the developing new mobility innovative work of the solutions, and innovative, Office for Low Emission strong and diverse Vehicles, the Centre for automotive, rail, maritime Connected and Autonomous and aviation sectors. We Vehicles and the Transport have a long history of Catapult to look across the bringing transport innovation road transport system for to the world. We also have opportunities to improve strengthening leadership customers’ experience, drive at a local level, with mayors efficiency and enable people in English cities and City to move around more freely. Deal Boards in Scotland and We will work with a full range Wales actively pursuing new of stakeholders across the ways to address the complex UK to deliver this challenge. transport needs of our cities.
49 Industrial Strategy White Paper
We have identified four early priorities: We will seize the opportunities and address the challenges of We will establish a flexible moving from hydrocarbon to regulatory framework to zero emission vehicles encourage new modes of transport and new business models For zero emission vehicles to become universal the right framework is needed. Mobility has always depended on Building on the work of the Faraday standards. Our regulatory environment Battery Institute and the Office for Low must evolve with the times to support Emission Vehicles programme, we have the emergence of new technologies and announced a package to support the new business models. We will ensure transition to zero emission vehicles. we continue to have one of the most open environments in the world for This includes a new £400m Charging transport innovation and new services Infrastructure Investment Fund by undertaking a thorough regulatory (£200m from the government to review of all relevant legislation. be matched by private investors); £100m new funding for the plug- The government wants to see fully in car grant; £40m R&D funding self-driving cars, without a human (matched by industry) for new charging operator, on UK roads by 2021. We will technologies including on-street and therefore make world-leading changes wireless projects; and a commitment to the regulatory framework, including that the government will lead the updating our code of practice for way, making 25 per cent of all cars in testing automated vehicles to allow the central government department developers to apply to test their vehicles fleet ultra-low emission by 2022. nationwide without a human safety operator and carrying out a project Building on these commitments, in with the Law Commission to set out the coming months we will publish a proposals for a long-term regulatory strategy on government support for framework for self-driving vehicles. the transition to zero emission road transport, ensuring the UK continues to be a world leader in the development, manufacture and use of these vehicles.
50 We will prepare for a the 5G Testbeds and Trials future of new mobility programme for an initial services, increased trial, starting in 2018, of 5G autonomy, journey- applications and deployment sharing and a blurring on roads, including helping ‘We will ensure we of the distinctions to test how we can maximise continue to have future productivity benefits one of the most between private and open environments public transport from self-driving cars. in the world for transport The future mobility We will explore ways to innovation and marketplace is likely to use data to accelerate new services by operate differently to development of new undertaking a thorough regulatory the transport system of mobility services review.’ today. We will consult with and enable the more industry and others on the effective operation of government’s role to support our transport system this, and publish a Future We will continue to invest of Urban Mobility strategy in R&D and testbed within the next 12 months. infrastructure for The National Infrastructure connected and autonomous Commission (NIC) will also vehicles. We will explore launch a new innovation how simulated digital prize to determine how environments can support future roadbuilding should and accelerate development adapt to supporting self- of self-driving technology driving cars, with the West through an R&D competition Midlands, a UK centre of to be launched by the expertise on connected Centre for Connected and and autonomous vehicles, Autonomous Vehicles, being a key testing location the first R&D competition for the best entries. We will of its kind in Europe. also be investing £5m from
One of the main groups benefiting from this revolution is older people who may no longer be able to drive or have other difficulties with mobility. Our fourth challenge is focused on meeting the particular needs of an ageing society.
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Ageing Society
We will harness the power of innovation to help meet the needs of an ageing society. The UK population is ageing, as it is The prospect of longer lives will across the industrialised world. We require people to plan their careers are living longer than ever before; we and retirement differently. Ageing have historically lower birth rates; a populations will create new demands large cohort of people – the so-called for technologies, products and services, ‘baby boomers’ born after the Second including new care technologies, World War – are reaching retirement30. new housing models and innovative One in three children born in the UK savings products for retirement. We today can expect to live to 10031. have an obligation to help our older citizens lead independent, fulfilled lives, continuing to contribute to society.
By 2046 almost 1 in 4 people will be 65 years old and over
UK population and proportion of population aged 65 and over
40% 80
30% 24.8% 60 Millions
20% 14.2% 40 10%
0% 20 1976 1986 1996 2006 2016 2026 2036 2046 UK population (RHS) Aged 65 or over (%, LHS)
Source: ONS (2017) “Population estimates” *2016-based population projections are used
52 Ageing populations will create new demands for technologies, products and services
‘One in three children born in the UK today can expect to live to 100. The prospect of longer lives will require people to plan their careers and retirement differently.’
Innovation in age-related for age-related products products and services can and services. Older people make a significant difference will be able to lead fuller, to UK productivity and more independent lives, individuals’ wellbeing, and increasingly supported by will find a growing global smart home technologies, market. Ageing also presents wearable devices and tech- significant challenges to the enabled health and care economy, including greater services. British businesses caring demands on those of will have redesigned jobs working age and increased and workplaces to better health and social care costs. use their older workers’ Without action, an ageing experience, enabling population could reduce the individuals to keep active size of our workforce and and stay in work. Workers lead to lower productivity. will have more flexibility If we succeed, we will create to help balance their work an economy which works for with caring responsibilities. everyone, regardless of age. Younger generations will be A new generation of British able to plan for their longer businesses will be thriving in careers with confidence. the growing global market
53 Industrial Strategy White Paper
Many countries are grappling with this to identify barriers to the development challenge, most notably Japan. There and diffusion of new products. are some distinctive British opportunities which build on our strengths. These We will support sectors to adapt to include powerful health datasets in the a changing and ageing workforce NHS, world-leading design institutes, As people lead longer, healthier lives, the artificial intelligence research they will need to save and work for community, a strong life sciences longer to ensure they have a secure sector and the financial services retirement. With an ageing workforce industry. Making the most of these and fewer people entering the labour advantages could turn the ageing market from education and training, challenge into a global opportunity. employers will need a more flexible We will take action to and extend UK labour market that can accommodate leadership in four early priority areas: older workers. The government will continue to build on the Fuller Working We will support new products Lives Strategy and has already and services for the growing appointed a Business Champion global population of older people, specifically for older workers. This meeting important social needs signals our commitment to work with and realising the business employers to promote the benefits opportunity for the UK of older workers to employers across England – in terms of their strategic Globally, there are likely to be two approach and practical advice. We billion people over the age of 60 by will also encourage industries to 205032. UK businesses must take lead in adapting their workplaces advantage of markets created by this to the requirements of an ageing rise in older consumers. Doing this workforce. To help realise the potential could also improve people’s quality of in the labour market, including life. Through a forthcoming Industrial amongst women, older workers, Strategy ‘Healthy Ageing’ programme carers and disabled people, we will we will invest in innovation to help work with business to make flexible older people maintain their chosen working a reality for all employees lifestyle, and stay independent for across Britain and to inform the longer. We will explore opportunities evaluation of the Right to Request to work with UK businesses to Flexible Working regulations. encourage emerging consumer markets, and the development of We will leverage our health data innovative products and services to improve health outcomes and that support people throughout their UK leadership in life sciences working life and into retirement. This The NHS generates powerful datasets could include new finance products or that could be harnessed in a safe, partnering with the retail tech sector fair and secure manner to develop
54 new tools to diagnose We will support care and treat illness earlier. In providers to adapt response to Professor Sir their business models John Bell’s life sciences to changing demands, 33 review , the government encouraging new models of ‘There are some will be working to develop a care to develop and flourish distinctive British number of regional Digital opportunities which build on our Innovation Hubs. These The government’s forthcoming Green Paper on care and strengths… Making hubs will support the use of the most of these data for research purposes support in England will respond advantages could within the strict parameters to the wide challenges facing turn the ageing the social care sector, setting challenge into a set by the National Data global opportunity.‘ Guardian. Health and social out proposals for long-term, care are devolved but the sustainable reform. The technological challenges and Industrial Strategy can play benefits can be supported a role in supporting the and seized across the UK. care sector to adapt for the Through the Industrial future. We will support the Strategy ‘Data to early care sector to innovate and diagnostics and precision develop new business models, medicine’ programme, including by making better we will invest to continue use of emerging technology to explore the application through the Industrial Strategy of data for better, more Challenge Fund. We will also innovative health and care. encourage care businesses to access the opportunities provided by the strengthened Growth Hub network.
Next Steps
What we have outlined here not guaranteed. But trying is just the start. Over the to tackle them is not just months ahead we want to worthwhile, it is essential. If we work in partnership with can rise to these challenges businesses, universities, we will have equipped researchers and civil society our country for a future on these Grand Challenges. that is not just prosperous All four are ambitious – and but also socially and they are difficult. Success is environmentally responsible.
55 Industrial Strategy White Paper
Ideas
56 Our ability to innovate – to develop new ideas and deploy them - is one of Britain’s historic strengths
57 Industrial Strategy White Paper Ideas
To be the world’s most innovative economy Our ability to innovate – to develop Through our Industrial Strategy, Britain new ideas and deploy them – is one of will take a leading role in a new industrial Britain’s great historic strengths, from revolution as significant as the last. We the jet engine and the bagless vacuum to will drive change through the biggest MRI scanners and the World Wide Web. increase in public investment in R&D in We are a global leader in science and our history. We will ensure the UK is the research: top in measures of research best place for innovators, and through excellence and home to four of the top our Grand Challenges we will drive 10 universities in the world. partnerships between the best minds in science and business throughout Britain. We need to do more to ensure our excellence in discovery translates into its application in industrial and commercial practices, and so into Key policies include: increased productivity. The government and the private sector need to invest `` Raising total R&D investment to more in research and development 2.4 per cent of GDP by 2027 (R&D). We need to be better at turning exciting ideas into strong commercial `` Increasing the rate of R&D tax products and services. And we must credit to 12 per cent do more to grow innovation strengths `` Investing £725m in new Industrial in every part of the UK, as well as Strategy Challenge Fund maintaining our position as a global programmes to capture the value leader in science and innovation. of innovation
58 Innovation is about new ideas, Our ability to innovate – to new ways of doing things, develop new ideas and deploy new products and services, them – is one of Britain’s new technologies and new historic strengths. We are a business models. It can come nation of innovators: from Sir from radical transformation Frank Whittle’s jet engine to or incremental improvements; Sir Tim Berners-Lee’s World from within a business or Wide Web; from Sir James from a new insurgent; from Dyson’s bagless vacuum a major scientific advance or cleaner to the automatic ‘We will drive the application of a known kettle of Russell Hobbs. The change through the biggest increase in technology in a new process. UK is rated one of the most public investment Our ideas are crucial to the innovative countries in the in research and productivity improvements world – an ‘innovation leader’ development in our that boost our earning power. in the 2017 European history.’
The UK research base across research fi elds
UK fi eld-weighted citation impact across research fi elds Clinical sciences Humanities Health & medical 2.0 sciences 1.5 1.0 Biological Business 0.5 sciences 0.0 Social Environmental sciences sciences
Engineering Mathematics Physical sciences
2006 2010 2014 World Average (=1.0)
Source: Elsevier (2017) “International comparative performance of the UK Research Base 2016”. A field-weighted citation impact of 1.0 represents world average
59 Industrial Strategy White Paper
Over half of UK firms are innovating. Of those firms: 51% used new business practices.
38% used 36% new methods introduced of organising new products. their work.
25% 30% changed their innovated in marketing concepts their processes. or strategies.
Based on UK Innovation Survey Data 2015. Survey only includes enterprises with 10+ employees
Innovation Scoreboard and 23 per cent advertising, architecture and insurance. above the EU average performance34. We have a lively and thriving start-up We are recognised as a global leader in environment. We produce and attract science and research, top in measures some of the most talented people in of research excellence35 and home the world and draw in proportionally to four of the top ten universities in more internationally mobile R&D the world36. We punch above our than other large countries37. weight in delivering high-quality, While we score well on measures of impactful and diverse research work. research and innovation, we need We have leading-edge research and to do more to ensure this translates development (R&D) in many sectors into improvements in earning power. and industries, including but not According to the UK Innovation Survey, limited to life sciences, aerospace, just over half of our businesses are automotive, technology, energy and classed as innovative38, meaning there the creative industries. We also have is significant potential to raise our game. world-class service sectors including There are four key challenges that in law, accounting, financial services, this Industrial Strategy will address.
60 Our first challenge is that the latest data shows that neither the government nor the UK’s strength in research the private sector is investing is being challenged by enough in R&D. This holds emerging economies45. back the productivity of R&D is an example of public both public services and spending stimulating rather business. It means the UK than displacing private risks losing out in the race to spending: economies develop the technologies and with high levels of public ‘R&D is an example innovations that will shape investment in R&D also the businesses and markets of public spending typically have high levels stimulating rather of the future. We invest less of private investment46. than displacing in R&D than most of our In the UK every £1 of private spending… In the UK every £1 of competitors – 1.7 per cent of public investment on R&D GDP compared to 2.8 per public investment on attracts around £1.40 of R&D attracts around cent in the United States and private investment47. £1.40 in private 2.9 per cent in Germany39. investment.’ Our second challenge is Even after allowing for the improving our ability to turn structure of our economy exciting ideas into commercial – which is dominated by products and services and services rather than the capture their maximum value. traditionally R&D-intensive Our world-class science and sectors like manufacturing – research does not always we still invest comparatively 40 feed through to world-leading little . Business investment home-grown businesses. in R&D in the UK is relatively 41 There have been major low . R&D performed in breakthroughs made in UK businesses is concentrated universities and research in a small number of big labs bought up by global businesses and in a small businesses – from magnetic number of sectors such as resonance imaging in the pharmaceuticals, motor 42 1970s, lithium-ion batteries vehicles and technology . in the 1980s, monoclonal Indeed, just over three antibodies in the 1990s and quarters of private R&D genetic sequencing in the investment in the UK is driven 43 last decade. All of these by 400 businesses . Fewer of are pioneering UK ideas our small and medium-sized being developed elsewhere enterprises (SMEs) introduce or bought by businesses new products and processes from overseas. Within R&D, than their European 44 the ‘D’ for development competitors . Furthermore, needs a particular boost.
61 Industrial Strategy White Paper
Much of our innovation tends to be in in university departments and public areas such as software and branding, research organisations to investments including marketing and advertising48, from leading businesses. We need to which often require less patient capital capitalise on these strengths and foster to fund them. We are good at low-cost the local ecosystems that can support innovation and flexible start-ups but the innovation and sustained growth. long and patient process of getting a new The Science and Innovation Audits49 – led technology to market is difficult. As a by consortia of business, universities result many of our innovative businesses and Local Enterprise Partnerships are nimble, flexible and imaginative in England and relevant agencies in but do not grow to be substantial, big the devolved nations – are revealing or strong. There are exceptions, but in distinct local and regional strengths and general British businesses’ R&D tends opportunities for collaboration across to favour quick routes to market, rather the UK. But they are also exposing the than long development times, and barriers an area can face in building selling businesses to growing them. its strengths into an ecosystem that Our third challenge is to build research attracts investment and talent – such and innovation excellence across the UK. as access to skills or knowledge and the There is world class R&D and innovation capacity of businesses to innovate. across the UK, from excellent research
UK’s spending on research and development compared to other countries
Gross domestic expenditure on R&D by source of fi nancing as a proportion of GDP, 2015 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 L L L L L E E E T T T P C X X K K R R R D U A A A A N N N N CD IS L IT IR FI IS R LV ES BE ES CZ LU PR NZ FR SV JP CH CH AU PO DE NL TU US SV GR GB KD CA DN ME SW NOR HUN OE Non-government fi nanced Government fi nanced
Source: OECD (2017) “OECD Economic Surveys: United Kingdom 2017”. *2014 data for France, Ireland, Italy, Portugal and OECD aggregate. 2013 data for Belgium, Israel, Luxembourg and Sweden. Non-government financed includes finance from higher education, which may be partly government-financed; and from the rest of the world, which may include foreign and supranational government finance
62 Our fourth challenge is to We must ensure we remain ensure the UK remains a connected to other leading world leader in global science international sources of ideas and innovation collaboration. and have the capacity to A total of 17 per cent of UK absorb the advances they are R&D investment is financed making, working closely with from abroad50 and half the devolved nations to make of UK R&D performed in the most of strengths and business was by overseas- opportunities across the UK. owned businesses51. We need to make strategic ‘By 2030 we want the choices to maximise our UK to be the most innovative country international collaborations in the world: a home of total UK to support UK priorities and to the most dynamic R&D the Grand Challenges. businesses at the 17% investment cutting edge of new is financed from abroad If we address all this together technologies and we will be stronger not just processes.’ in R&D and wider innovation, Half of all UK research but in maximising the publications in 2014 were productivity and earning internationally co-authored power benefits for businesses – a share that has increased and people throughout the every year since 2010 – country. By 2030 we want the with these articles tending UK to be the most innovative to score more highly on country in the world: a excellence and impact52. home to the most dynamic This demonstrates that businesses at the cutting international collaboration is edge of new technologies vital to our continued success. and processes, and which But UK leadership is being supports all businesses to challenged by emerging adopt new ways of working economies and competition to help them prosper. This grows for research talent means investing in R&D and private investment. and the skills needed in a For us to remain a leading changing work environment R&D nation, we will need to maximise the rewards to capitalise on our strong and benefits innovation can reputation and continue to bring to everyone in the UK. attract the top talent from around the world, including from EU member states.
63 Industrial Strategy White Paper A nation of innovators
2004 Discovery and isolation of a single free-standing atomic layer of carbon (graphene) at Manchester University
1978 First successful birth of a child after IVF treatment
1967 Sir Godfrey Hounsfield conceives the idea for the CT Scanner
1926 John Logie Baird was the first to transmit moving pictures
1880 Joseph Swan started manufacturing and selling light bulbs
1843 Ada Lovelace created one of the firstcomputer programmes
1825 George Stephenson invents the passenger railway
1668 Sir Isaac Newton invented the reflecting telescope
64 2011 Saturn Bioponics develop the world’s first three-dimensional crop growing system
2012 Susannah Clarke revolutionised joint replacements by using 3D printed technology allowing personalised joint replacement with fewer complications
2013 Surrey Satellite Technology’s S-band radar system, NovaSAR, which revolutionises navigation and surveillance communications wins an Innovation award from the Institution of Engineering and Technology (IET) 2015 Oxford Nanopore launch MinION a portable DNA sequencing USB device for on-the-go RNA/DNA sequencing which can be used to monitor viruses like Ebola or trace antibiotic resistance without the need for large scale computing infrastructure 2015 DeepMind’s AlphaGo defeats the reigning Go European Champion becoming the first programme to defeat a professional player, giving us deeper understanding of the power and flexibility of machine learning 2016 Double Negative wins its third Academy Award for its pioneering visual effects work on sci-fi psychological thriller Ex Machina 2017 Richard Henderson awarded the Nobel Chemistry Prize for developing cryo- electron microscopy for the high- resolution structure determination of biomolecules in solution
65 Industrial Strategy White Paper
Our Grand Challenges will be driven by R&D in artificial intelligence and data-driven technology, clean growth, adapting to an ageing society and future mobility
Our approach
Investing in R&D to transform our economy. For the UK to become the most We could see a dramatic change innovative country in the world we in the use of R&D by industry, need a generational increase in public with our businesses creating the and private R&D investment. In this next generation of technologies to strategy we commit to reach 2.4 revolutionise productivity in all sectors per cent of GDP investment in R&D from construction and agriculture by 2027 and to reach 3 per cent of to manufacturing and the creative GDP in the longer term, placing us in industries. This will raise the standard the top quartile of OECD countries. of living and establish UK leadership If we meet this target we will in global markets. The UK will lead transform our economy. It could the way in the R&D driving our Grand increase public and private R&D Challenges: in artificial intelligence and investment by as much as £80bn over data-driven technology, clean growth, the next 10 years, with much wider the ageing society and mobility. benefits across the UK economy.
66 Our vision for a knowledge- 2021/22, raising total led economy is underpinned public investment in R&D by world-leading research, to approximately £12.5bn world-class facilities and in that year alone. This international collaborations investment will see public that push scientific frontiers R&D spending increase as and attract the brightest a share of GDP every year. talents, from Nobel Prize It means that we will have winners to ambitious raised public investment in graduate students. R&D from around £9.5bn ‘Our vision for ‘Innovation clusters’ will last year (2016/17) to around a knowledge- led economy is form and grow around our £12.5bn in 2021/22. underpinned by universities and research world-leading organisations, bringing research, world- together world-class class facilities and international research, business expertise £12.5bn collaborations that and entrepreneurial drive. public investment in push scientific frontiers and attract These clusters can create R&D in 2021/22 alone thousands of skilled jobs the brightest talents.’ in R&D, innovation and wider sectors, driven by This is an extra £7bn over the growth in science, five years – the biggest ever technology, engineering increase in public funding and maths (STEM) skills led of R&D. We will invest by new teachers and more strategically in technologies doctorates. These skilled and ideas closer to market people and businesses to drive UK competitiveness, must be located throughout while also continuing to fund the UK, growing research the curiosity-driven research and innovation strengths that is fundamental to the throughout England, as quality of our work and well as in Scotland, Wales ensures our place as a world- and Northern Ireland. leading knowledge economy. Increasing investment in We will work with industry R&D to 2.4 per cent of GDP in the coming months to in a decade is ambitious develop a roadmap for and will require concerted meeting this target. This effort by the government will provide a framework to and business. As a first step drive business investment we will invest an additional in R&D and focus on key £2.3bn over what was sectors, technologies previously planned in
67 Industrial Strategy White Paper and clusters, including by optimising research and innovation to support government investment to drive private the Industrial Strategy programme investment in R&D and considering and the Grand Challenges. Support further opportunities to improve the will range from Knowledge Transfer business environment, including access Partnerships and PhD programmes, to finance, regulatory frameworks, and with strong and flexible links to intellectual property. This will maximise industry, to prestigious awards that the impact of public investment in support rising stars and the top talent science and innovation to support from both the UK and overseas. businesses to invest more and drive `` We will work with our leading outputs to realise our commitment to universities, research institutes invest 2.4 per cent of GDP in R&D. and UK Research and Innovation There are measures we can take to increase global investors’ R&D now to help achieve this target: activities taking place in the UK. ``We will invest a further £725m Of the world’s 2,500 top R&D in a second wave of the Industrial investors, just 50 businesses are responsible for 40 per cent of Strategy Challenge programme 53 across the UK to respond to some private sector investment globally . of the greatest global challenges If we could attract an additional and opportunities – from climate five per cent of R&D from these top 50, UK-based R&D would change to automation. This will 54 bring together world-class UK increase by around a third . research with business investment `` We will work with UKRI to develop a to develop the technologies new competitive Strategic Priorities and industries of the future and Fund, which builds on the vision of ensure we capture the value of a ‘common fund’ set out in Sir Paul these innovations to our economy. Nurse’s review55. This will support Further details of this investment high quality R&D priorities which are outlined in the next section. would otherwise be missed – multi- ``We will invest £300m over the next disciplinary and inter-disciplinary three years in world-class talent programmes identified by researchers including in priority areas aligned and businesses at the cutting edge with the Industrial Strategy, such of research and innovation. We will as artificial intelligence, to enhance set out further details in due course. our skilled workforce and attract UK Research and Innovation strategy private sector R&D investment. will deliver a real-terms increase in This investment will focus on council budgets of approximately collaboration and the flow of people 20 per cent between 2015/16 and between industry and academia and 2019/20. We will also increase interdisciplinary and cutting-edge support for Quality-Related research
68 through Research England. ``We will make it easier This recognises the vital to finance innovation by importance of providing increasing the resources underpinning funding for government agencies for our world-leading that promote and fund universities to invest in the innovation like Innovate excellence and impact of UK – our world leading their research and ensure innovation agency that the sustainability of our supports businesses across research infrastructure. the UK to collaborate ‘If we could attract and innovate – and the an additional five `` We will improve the per cent of research UK tax system to British Business Bank. As and development support innovation. The detailed in the Business from these top 50 research and government will increase Environment chapter, we will increase the funding development the rate of the R&D investors, UK-based expenditure credit for of the British Business R&D would increase large businesses from 11 Bank and create a new by around a third.‘ per cent to 12 per cent investment fund to ensure from 1 January 2018. To the best knowledge- provide businesses with intensive, high-growth the confidence to make businesses get access R&D investment decisions, to the venture capital the government will also they need to scale up introduce a new Advanced and become world- Clearance Service for beating businesses. R&D expenditure credit `` We are also allocating claims. More widely, the a further £44m of government will work grant funding to enable with small and medium Innovate UK to fund sized businesses, and £150m of responsive those developing new and grant competitions in emerging technologies, 2017/18. This will allow it to ensure that they can to support hundreds more access the maximum high-growth businesses, amount of support from collaborations and R&D tax credits, and will industries to innovate and launch a campaign to raise compete in future global awareness in these sectors. markets.
69 Industrial Strategy White Paper
In addition, Innovate UK will pilot ``We will improve public procurement new ways of financing innovation: as an important source of finance - £50m Innovation Loans pilot for innovative businesses that does over the next two years to target not dilute their equity and gives an the most promising projects in endorsement for others to invest. The viable businesses on the cusp United States is particularly effective of commercialisation, but not at promoting innovation in this way yet ready to access loans from through its Small Business Innovation commercial lenders; and Research programme. David Connell, an expert on technology exploitation - an Investment Accelerator pilot programmes, has reviewed the UK’s to bring in seed equity alongside Small Business Research Initiative grant funding by matching the (SBRI) programme. Informed by most innovative early stage this review, and recognising the businesses with investors. This will value of the programme, we will attract and bring forward private refocus the SBRI to increase its capital alongside public funding. impact for innovative businesses, Both pilots will be evaluated to aligning it with Grand Challenges assess their success and determine and building capability in the public if they can be scaled up in future. sector to drive productivity by adopting SBRI solutions. As a first ``We will develop an agile approach to step, this month we announced regulation that promotes innovation, a new GovTech Catalyst with a the growth of new sectors, and GovTech Fund of up to £20m over innovative market entrants while three years, which will use SBRI to ensuring effective protections for support tech firms to provide the citizens and the environment. An government with innovative solutions example is establishing a clear for more efficient public services. framework for autonomous vehicles and, through our Digital Charter, building agreement on the ethical and effective use of new technologies and data. This will build on successful, innovative approaches to regulation (like regulatory sandboxes) trialled by the Financial Conduct Authority and Ofgem.
70 The Trusted Data Exchange used by Belfast City Council.
‘We will develop an agile approach to regulation that promotes innovation, the growth of new sectors, and innovative market Case Study: the growth of ‘nquiringminds’ entrants.’
Innovative start-up and open datasets to ‘nquiringminds’ took optimise the collection an idea from concept of business rates. SBRI to product with SBRI played a pivotal role in support, and tested it the company’s growth with Belfast City Council. from a start-up with a The Trusted Data novel idea to a 12-person Exchange (TDX) provides business with plans for analytics and secure continued growth. data-sharing, powered by Stable SBRI funding over artificial intelligence, that several years enabled the allows users to share data company to build a skilled sets, maximising the ability team, create intellectual to analyse and generate assets and, importantly, insight. ‘nquiringminds’ to test a new product in and Belfast City Council a real-world environment used the TDX with internal and enter a new market.
71 Industrial Strategy White Paper
UK Research and Innovation (UKRI) will join up the funding landscape for science, research and innovation and help to translate excellent research into better business outcomes
Capturing the value of ideas
If the UK is to be the most innovative country in the world, we need to be able to capture the value from our science, research and creativity and support innovations that drive our productivity. There is no single path to innovation. collaboration and the flow of knowledge Successful products and services between research and industry, come from a range of sources – from accelerating the path to market. businesses developing new products In order to capture more value from and universities creating businesses our ideas and innovations, we are to the lone inventor commercialising creating UK Research and Innovation, an idea. The government will do which will invest around £8bn per more to address some of the annum by 2020 in the highest-quality frictions in the system to support research and innovation across the UK.
72 This new organisation will manufacture batteries ensure the UK maintains for the electrification of its world-leading position vehicles and efficient in research and innovation. use of renewable energy; Bringing together the seven artificial intelligence research councils, Innovate and robotic systems for UK and the funding element extreme environments like of the Higher Education nuclear and space; future Funding Council for England satellites; and technologies (HEFCE), UK Research for medicine manufacture. ‘We are creating and Innovation will join By bringing together key UK Research and Innovation, which up the funding landscape players, and focusing on the will invest around for science, research and big innovation challenges £8bn per annum innovation and help translate facing the UK, the Industrial by 2020 in the excellent research into Strategy Challenge Fund will highest-quality research and better business outcomes. maximise the value of the innovation across We are investing in strategic new ideas being developed. the UK.’ innovation challenges To support UK priorities through the ambitious in key areas of innovation new Industrial Strategy we will invest a further Challenge Fund, which £725m in the Industrial will help deliver the Grand Strategy Challenge Challenges and support Fund over the next four sector productivity including years. We are announcing through Sector Deals. The six Industrial Strategy Industrial Strategy Challenge Challenges in Wave 2 aligned Fund brings together world- with our Grand Challenges class UK research with and Sector Deals and two business investment to Pioneer Challenges to build develop the technologies industry engagement and that will transform existing readiness for future funding. industries and create entirely new ones. We announced £1bn of investment in Wave 1 across the UK – focused on areas of strategic importance to the UK, including: the Faraday Battery Challenge to design, develop and
73 Industrial Strategy White Paper
The next Industrial Strategy Challenge Fund programmes are:
Clean Growth
`` Transforming construction, up `` Prospering from the energy to £170m – The way we create revolution* – Around 80 per cent of our buildings has not changed global energy use still comes from substantially in 40 years and fossil fuels56 . To preserve a safe and needs a drastic overhaul if it is to stable climate, this has to change deliver the buildings that the UK fast. Countries all over the world needs. Construction is currently are moving to renewable energy, expensive and too many buildings with investment more than doubling waste energy. We need to transform over the last decade57. But for the construction so that we can create majority of our energy to be clean affordable places to live and work and affordable, we need much more that are, safer, healthier and use intelligent systems. Smart systems less energy. By taking a lead in the can link energy supply, storage and UK, we can increase our ability to use, and join up power, heating and export. Global demand for efficient transport to increase efficiency buildings is rising rapidly, driven dramatically. By developing these by the pressures of urbanisation, world-leading systems in the UK, affordability, and the need to we can cut bills while creating cut emissions. high value jobs for the future.
* All wave 2 programmes are subject to final business case when further details on funding will be made available.
74 Clean Growth
‘Smart systems can link energy supply, storage and use, and join up power, heating and transport to increase efficiency dramatically.’
`` Transforming food ` `By using precision production – The world technologies we can make will need 60 per cent that a reality: transform more food by 2050 to food production whilst allow us to feed 9 billion reducing emissions, people, while demand pollution, waste and soil for water is expected to erosion. By putting the rise by 20 per cent in the UK at the forefront of this agriculture sector alone58. global revolution in farming, For this to be possible, we will deliver benefits to the way we produce farmers, the environment our food needs to be and consumers whilst significantly more driving growth, jobs efficient and sustainable. and exports.
75 Industrial Strategy White Paper
AI and data
`` Audience of the future, up to `` Next generation services, up £33m– Immersive technologies to £20m– Services account such as virtual, augmented and for almost 80 per cent of the UK mixed reality are changing how we economy60. As technologies like experience the world around us – artificial intelligence and data from entertainment and art to shops analytics become ubiquitous, we and classrooms. The challenge need to ensure UK service sectors is to bring creative businesses, are primed. Pioneer funding will researchers and technologists help service industries to identify together to create striking new how the application of these experiences that are accessible to technologies can transform their the general public. This can create operations. This will help to set UK the next generation of products, service industries at the forefront services and experiences that will of developing and using innovation. capture the world’s attention and position the UK as the global leader in immersive technologies.
76 Ageing Society
‘Services account for almost 80 per cent of the UK economy. `` Data to early diagnosis `` Healthy ageing* – By As technologies like artificial intelligence and precision medicine, 2040, one in eight and data analytics up to £210m – There people in the UK will become ubiquitous, are fatal diseases that be aged over 75 – an we need to ensure take years to develop increase from one in service sectors are primed.’ before they present 12 today59. Staying symptoms. Developing active, productive and effective treatments – independent is important such as for pancreatic to our increasing cancer which develops on numbers of older average 14 years before people. The challenge symptoms present - is to innovate, so older becomes progressively people’s aspirations are harder. The challenge is met and so better, more to combine the wealth effective care supports of data created by UK an independent lifestyle researchers with real as they age. By working world evidence from together, the government our health service. That and industry can address will allow industry to the challenges of ageing create new products and whilst capturing a services that will diagnose growing global market. diseases earlier and help clinicians choose the best treatment for individual patients. This will save lives and set the UK at the forefront of a growing global market in diagnostics.
77 Industrial Strategy White Paper
UK Space Agency is studying how machines can support humans to make the exploration of the universe more efficient
We will invest in pioneer funding for We will run a third wave of Industrial quantum technologies, up to £20m*, Strategy Challenge Fund programmes, recognising the impact this could with UK Research and Innovation have across a number of challenge launching an expression of interest areas. A new set of products from for potential challenges next year. medical devices to sensors and safer Alongside the Industrial Strategy communication systems may be Challenge Fund, we are also improving possible using the emerging physical the incentives, processes and skills science known as quantum technology. that support the flow of knowledge The potential is huge but still largely in and ideas around society and, the lab environment. Pioneer funding building on the Dowling Review61, will bring new disruptive businesses increase opportunities for research together with existing businesses commercialisation. Universities work to understand how this emerging with businesses in many different ways technology can be turned into products to exchange ideas – from licensing that will underpin industry in the future.
78 intellectual property and the value of research by creating spin-outs to increasing significantly collaborative R&D, contract the importance of research and consultancy. ‘impact’ in the Research To capture this diversity Excellence Framework fully we are asking UK (REF), raising it from 20 per Research and Innovation to cent to 25 per cent in the develop a new Knowledge next assessment round. Exchange Framework. This Emerging findings from ‘We are also framework will benchmark independent research how well universities are improving the into commercialisation incentives, processes doing at fostering knowledge of university intellectual and skills that sharing and research property highlight support the flow of commercialisation. It will knowledge and ideas the improvements in around society.’ sit alongside the Research university practices and Excellence Framework and commercialisation outcomes the Teaching Excellence in recent years. The research and Student Outcomes also suggests that university Framework, providing technology transfer a holistic view of how offices sometimes lack the universities are delivering resources and skills to fully their threefold mission develop commercialisation of generating knowledge opportunities, particularly through research, in institutions that have transmitting knowledge historically undertaken through teaching, and less of this activity. We will translating knowledge into increase funding that practical uses through supports universities knowledge exchange. and businesses working The development of the together to innovate and Knowledge Exchange commercialise research. Framework will build on Key to this is the Higher the work of the McMillan 62 Education Innovation Review , and will capture Funding (HEIF) in England, the rich network of which enables universities collaborations between to engage with businesses universities and businesses. and improve the commercial In parallel the higher skills of their staff. HEIF education funding bodies has deepened universities’ are changing the incentives relationships with business.63 and rewards for capturing
79 Industrial Strategy White Paper
Universities earn £1.1bn from their collaborations with business
Income of higher education institutions from knowledge exchange activities with businesses £163 million £507 million IP income Contract research licenses & sale of shares Fundamental or applied in spin-outs research to meet the specifi c needs of £149 million external partners Continuing professional development and continuing education
£123 million Facilities & equipment related services £196 million e. g. equipment sharing Consultancy Work and advice for clients, but without the creating of new knowledge
Source: HESA (2017) “Higher Education Business and Community Interaction Survey 2015/16”. *Includes both publicly and non-publicly funded higher education institutions
University patents, licence income and address the needs of local innovative industrial collaboration are increasing64, businesses and contribute to regional and there is scope – and demand development, including collaboration from business – to do more. We have with their Local Enterprise Partnership. announced an increase of £40m a The UK has a range of public research year to HEIF and will now commit to organisations that bridge the gap reaching a total of £250m a year between business, academia and by 2020-21, as recommended in 65 the public sector, bringing together the Witty Review . The increased the best people in their fields to support will align with the needs of the work side-by-side on later-stage Industrial Strategy and will result in research and development and consequential funding for the devolved transform high potential ideas into administrations. We expect universities new products and services. to continue to use HEIF to help
80 Higher Education Innovation Funding
Higher Education to increase productivity Innovation Funding (HEIF) and economic growth - supports knowledge-based including by using HEIF interactions between to establish a business universities and colleges engagement and and the wider world. support facility at the Universities use HEIF to University’s 3M Buckley ‘The UK has a range of public research respond to business needs Innovation Centre; organisations that and to local opportunities. `` Imperial College will be [bring] together the Recent examples include: best people in their forming stakeholder fields to work side- `` HEIF is supporting groups for SMEs around by-side on later-stage the University of specific topics – making research.’ Central Lancashire’s it easier to access Centre for Small and Imperial’s expertise. It will Medium Enterprises run a proof of concept Development, which fund to help researchers is delivering almost advance projects £10m worth of business with clear translation support projects and is potential; and set to reach almost 1,000 ``T h e Connecting SMEs in the region; Capability Fund is `` The Royal College of Art supporting groups of is using HEIF to support universities to work its InnovationRCA together to meet a range programme, which has of business needs. The incubated and spun-out first round of funding has 39 start-ups, employing supported: productivity- over 500 people, over building in the east of the last nine years; England; helping SMEs `` The University of to scale up in the south Huddersfield is of England; developing working with partners, an investment fund for including the Leeds university spin-outs in City Region Local the north of England; and Enterprise Partnership, developing new therapies for age-related diseases.
81 Industrial Strategy White Paper
Through the work of Innovate UK, It has established a strong track record the government has expanded this of helping UK manufacturing businesses part of the innovation ecosystem, of all sizes connect better with their establishing a network of ‘Catapult customers and supply chains and boost centres’ to commercialise new their competitiveness by applying and emerging technologies. new technologies that enable faster An independent review of the Catapult and cheaper production of products network66 has recently concluded. and components. Its work is not only It sets out that Catapults are an anchoring production in the UK, it is important and successful part of also helping to re-shore manufacturing the UK’s innovation ecosystem, and lost to other countries and winning the that they can drive innovation and high value inward investment projects economic benefit in the UK. As well that create jobs and local growth. as highlighting the success of the We want Catapults to play a growing best-performers, the review has also role in UK innovation. We will use found that improvements should be this review to improve the strategies, made to the network to increase its governance and performance performance and economic impact. management of Catapults, and to The High-Value Manufacturing agree long-term funding for them Catapult is a particular success story. to ensure they can deliver better Since inception in 2012 it has tripled outcomes for the Industrial Strategy. the impact of government spending We will be putting in place £178m – generating £655m of additional of interim funding to allow them income from industry by working with to continue their work and will over 3,000 businesses every year to agree long-term funding for the bring new technology to market. network early next year. For those Catapults where most improvement is needed, we will ask UK Research and Innovation to run a 12-week process to develop their plans.
82 A technician trialling a new access system for offshore wind turbines on the 7MW Offshore Renewable Energy Catapult Levenmouth Demonstration Turbine, Scotland
‘Our High Value Manufacturing Catapult has established a strong track record of helping UK businesses of all sizes connect better with their customers and supply chains.’
Case Study: Offshore Renewable Energy Catapult supporting innovation in offshore wind energy
The Offshore Renewable longer design is currently Energy Catapult is being tested at the supporting Edinburgh- Offshore Renewable based small business Energy Catapult’s test ACT Blade to develop centre at Blyth. an entirely new form of The design has the offshore wind blade, based potential to not only around its highly advanced reduce the cost of energy and proven sail-rig and extend the lifetime technology. of the UK’s onshore wind Using UK expertise in fleet, but also establish composites and high- novel manufacturing tech textiles, ACT Blade’s processes in the UK. innovative lighter and
83 Industrial Strategy White Paper
The iconic Rocket Tower at the National Space Centre in Leicester is home to Blue Streak and Thor Able rockets
Building innovation excellence across the country
As evidenced above, innovation is a highly collaborative activity. It flourishes in clusters and through networks. Our universities and colleges are central Exeter with the combined research to world-class innovation clusters. strengths of the university and the Met Research clusters from Cambridge to Office, and Loughborough University’s Glasgow attract inward investment from science and enterprise park68. There businesses looking to access knowledge are other universities with distinctive and talent, bringing a positive impact research strengths – Leicester for to the wider local economy in terms space, the University of East Anglia of jobs and infrastructure investment. for agri-science, Abertay for video We are fortunate that our leading games, and precision optics at Glyndwr. research-intensive universities are There is potential for these and other spread across the country. There are excellent universities to develop and substantial established and emerging scale up local innovation clusters research clusters across the UK – such which will deliver local growth. as life sciences in the north west and Evidence shows that innovation drives Cambridge’s Laboratory of Molecular productivity and that interventions work Biology67, environmental sciences in
84 best where they support through UK Research and existing strengths and Innovation as a competitive collaborations69. Building on fund for collaborative bids. the Science and Innovation The government and UK Audits70, we are launching Research and Innovation will a new competitive £115m evaluate these in 2021 to see Strength in Places Fund how they are working and to support areas to build consider further scaling up. on their science and The UK also has some ‘We are launching innovation strengths and of the best research develop stronger local a new competitive laboratories in the world – £115m Strength networks. The fund will from the National Physical in Places Fund to support collaborative Laboratory, which helps to support areas to build on their science and programmes based on set global measurement research and innovation innovation strengths standards that support and develop stronger excellence in places right trade and innovation, to local networks.’ across the UK which can the UK Met Office with its demonstrate a strong world-renowned climate impact on local productivity and weather modelling and enhance collaboration examining climate change between universities, and our resilience to extreme research organisations, weather events. In our Green businesses, local government paper we committed to and Local Enterprise reviewing whether there is Partnerships in England more that can be done to and relevant agencies in leverage such laboratories the devolved nations. to drive local productivity. The fund will identify and Following the review, led support areas of emerging by Professor Dame Julia R&D strength that are Goodfellow, we are setting driving business clusters an expectation of all labs and it will build on the in receipt of significant regional economic impact of public funding to support existing institutions including local economic growth. universities, research The review identified several institutes, Innovation and gaps to building sustained Knowledge Centres and partnerships between labs Catapults and will link to and local businesses and Local Industrial Strategies. we will explore mechanisms This will be delivered to overcome these.
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Science & Innovation Audit Themes
1 Edinburgh and South East 13 Oxfordshire Transformative Scotland City Region Technologies Digital technology and Data-Driven Quantum computers; autonomous Innovation vehicles; digital health; and space and satellites 2 Sheffield City Region and Lancashire 14 Cyber Resilience Alliance High value manufacturing Cybersecurity 3 Greater Manchester and 15 Maximising the Marine Economy East Cheshire of the Highlands & Islands Health Innovation and Advanced Aquaculture, wave and tidal energy Materials and marine biotechnology 4 Midlands Engine 16 North West Nuclear Arc Advanced Manufacturing; Digital Consortium Technologies and Data; and New nuclear technology Systems Integration 17 North West Coastal Arc 5 South West England and Eco-Innovation Partnership South East Wales Low carbon energy and Advanced Engineering and eco-innovation Digital Innovation 18 Northern Powerhouse Chemicals 6 Enabling Technologies in and Processing Science Scotland’s Central Belt Chemicals High value manufacturing 19 Northern Powerhouse in Health 7 Bioeconomy of the North Research of England Medical Agri-tech and industrial 20 The South Wales Crucible biotechnology Steel innovation; smart 8 East of England manufacturing; health informatics; Life sciences and agri-tech and agri-tech 9 Innovation South 21 Upstream Space Digital enabling technologies Space infrastructure and technology 10 Leeds City Region Medical technology Precision Medicine Innovation in 22 Scotland 11 Liverpool City Region+ Infection; Materials Chemistry; and Precision medicine High Performance Computing 23 Applied Digital Technologies Digital capability 12 OffShore Renewable Energy Offshore energy and sustainable 24 Sustainable Airports ocean technologies 25 The Knowledge Quarter Biomedical; heritage; digital publishing; and data science
86 ‘Science and Innovation Audits help local organisations map their research and innovation strengths, 15 and identify areas of potential global competitive advantage.’
6 1 22 12
23 18 21 17 16 10 7 3 2 11 19
8 21 4 14 21 13 20 24 25 5 9 21
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The first major project of the UK-US Science and Technology Agreement is UK investment in the Long Baseline Neutrino Facility and Deep Underground Neutrino Experiment
International Collaboration
Research and innovation are global endeavours and talented and experienced people in these fields are internationally mobile. Businesses have talent scouts around We have doubled the number of the world to spot opportunities in the available visas in the Tier 1 (Exceptional most creative clusters, and investment Talent) route available to those who tends to follow talent. The UK has are already recognised as global the second largest bilateral flow of leaders or who show considerable scientists71 and we want the UK to be promise in their fields. This recognises a magnet for world-class talent. We the importance of supporting those will increase the number of scientists working in the digital technology, working in the UK and enable leading science, arts and creative sectors, and scientists from around the world to work ensures that the UK can continue to here. We will continue to recruit and welcome international talent to work retain the best talent and ensure the in these key emerging and innovative UK remains a world-leader in science industries. The government is also and innovation through our Rutherford changing immigration rules to enable Fund. The Fund is investing £118m over world-leading scientists and researchers four years (from 2017/18) in fellowships endorsed under the Tier 1 route to for early-career to senior researchers. apply for settlement after three years
88 and to make it quicker for This will be complementary highly-skilled students to to the existing Official apply to work in the UK Development Assistance after finishing their degrees. budget, which supports We are relaxing the labour projects that benefit market test to allow UK developing countries. We Research and Innovation and have already strengthened other select organisations key partnerships to sponsor researchers, with pioneering new making it easier to hire collaborations through: ‘The UK has the international researchers second largest `` the first formal bilateral flow of and members of established science and technology scientists and we research teams. The National agreement with the want the UK to be a Academies are considering magnet for world- United States, signed class talent.’ how they can encourage in September, with a UK top global research talent contribution worth £65m to come to the UK through to collaborate on projects the Research and Innovation exploring some of the Talent scheme within Tier most important questions 1 of the visa system. in science and advance We also want the UK to be our understanding of the partner of choice for the origin and structure science and innovation. of the universe; and Approximately one in five ``replicating this model businesses are engaged 72 with other countries in collaboration . Global – for example, we are collaborations are crucial developing a joint in meeting the Grand Science, Technology Challenges. We will launch a and Innovation Strategy new International Research with China to expand and and Innovation Strategy in deepen our collaboration. early 2018 in partnership Through programmes like with UK Research and the Newton-Bhabha Funds, Innovation and a £110m and the UK India Education fund for International Research Initiative, we Collaborations to enhance continue to build and the UK’s excellence in sustain the UK’s science, research and innovation research and innovation through global engagement. partnership with India.
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The Square Kilometre Array links Jodrell Bank in Cheshire with a network of radio telescopes in South Africa and Australia
The UK will also take on the annual infrastructure. This is exemplified by chairmanship of the EUREKA our leading role in the Square Kilometre intergovernmental organisation in July Array, linking Jodrell Bank in Cheshire 2018, which will enable us to guide the with a network of radio telescopes in strategic direction of the organisation South Africa and Australia. It will handle to enhance further our global a flow of data greater than the current presence. EUREKA helps SMEs across flow of all data across the internet and Europe and globally to collaborate on provides important opportunities for bringing innovative ideas to market. commercial development. Similarly, our Our research collaboration is leading position in Mission Innovation – supported by our substantial a 23-country partnership to accelerate commitment to developing countries, clean energy innovation by doubling and by our leadership of wider global investment in targeted research initiatives. We can develop shared and development – brings together research programmes around a our commitments to clean growth, global challenge and also use shared raising investment in research and development, and global engagement.
90 Some of our closest cooperation. We would relationships and welcome the chance to collaborations are with discuss possible options EU member states. The for our future involvement UK has already worked in the EU framework collaboratively with our programmes as part of this partners to shape the EU agreement. The UK wants Research and Innovation to continue to take part in Framework programmes, those specific policies and which are based on programmes which are ‘Our leading excellence and global impact greatly to the UK and the position in Mission Innovation... and aim to accelerate the EU’s joint advantage, such as brings together exchange of ideas, talent those that promote science, our commitments and getting innovation education and culture. to clean growth, to market. EU and UK raising investment Higher education is devolved in research and businesses and universities to Scotland, Wales and development and have collaborated on a range Northern Ireland. The global engagement.’ of projects, from faster devolved administrations Ebola testing and cleaning and their agencies have a up industrial processes to close relationship with the the use of solar power. The institutions in each nation UK is a leader in attracting and deep knowledge of and retaining the best the many opportunities for global researchers. international collaboration Through the EU Horizon within them. We want to 2020 we have received work with the devolved 20 per cent of all awarded nations – governments European Research Council and institutions both – in (ERC) grants73; we are a seizing opportunities to ‘top five’ collaboration collaborate internationally. partner for all member states in the Horizon 2020 programme74; and we have attracted €3.6bn to date for our innovative businesses and universities.75 The UK has signalled its desire to seek a far-reaching science and innovation agreement with the EU that establishes a framework for future
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People
92 As the economy adapts to the future, we will aim for everyone to access and enjoy good work
93 Industrial Strategy White Paper People
To generate good jobs and greater earning power for all. The United Kingdom has one of the We will put technical education on the most successful labour markets in the same footing as our academic system, world. Our employment rate is at a near with apprenticeships and qualifications historic high – one of the fastest post- such as T levels. We will continue to recession rates relative to other major support teaching in our schools, flexible economies76. It is underpinned by a career learning and other measures world-class higher education system, the to transform people’s life chances. first choice of students and researchers around the world. Employers are ever more closely involved in the system, and we are committed to delivering three Key policies include: million apprenticeship starts by 2020. But we still face challenges in `` Establish a technical meeting our business needs for education system that rivals talent, skills and labour. In the past, the best in the world, to stand we have given insufficient attention alongside our world-class higher to technical education. We do not education system; have enough people skilled in science, `` Invest an additional £406m technology, engineering and maths. in maths, digital and technical We need to narrow disparities education, helping to address between communities in skills and the shortage of science, education and remove barriers faced technology, engineering and by workers from under-represented maths (STEM) skills groups in realising their potential. `` Create a new National Retraining We will ensure that everyone can Scheme that supports people to improve their skills throughout their re-skill, beginning with a £64m lives, increasing their earning power investment for digital and opportunities for better jobs. We and construction training will equip citizens for jobs shaped by next generation technology. As the economy adapts, we want everyone to access and enjoy good work.
94 We recognise that people, We have a world-class and the skills they have, higher education system are a key driver of that remains the second productivity. Having the most popular destination for right skills increases people’s study by overseas students earning power. Investing after the United States79. in our people across their lifetimes is fundamental to our shared success, from strong foundations for 3 million children and young people apprenticeship starts ‘We will create a in schools and relevant, by 2020 country where high quality education and everyone can improve their skills training in our further and We have an effective at all stages of their higher education systems lives, to boost their labour market too. British earning power and to career-long learning businesses are good at and enabling employers to the opportunity for creating jobs – our flexible better jobs.’ invest in their workforce. labour market makes it easy As our Industrial Strategy for people to participate in Green Paper set out, we the workforce in a way that are building on significant fits with their preferences strengths and improvements and circumstances and meet in our education system the needs of our businesses in England. We have an and the economy. We are additional 1.8 million children increasing the rates of in good and outstanding labour market participation schools compared to 201077. among under-represented It has been estimated that groups80 and the gender half of all UK 17 year olds pay gap is now at a record will participate in higher low for people working full- education by the age of 3078. time81. Partly as a result of We are involving employers its flexibility, Britain’s labour ever more closely in the market has performed well in education system, and we the decade since the financial are committed to delivering crash, and our employment three million apprenticeship is at a near historic high starts by 2020. rate of 75 per cent82.
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We are reforming functional skills qualifications to improve their quality and levels of employer recognition. Image: Automotive manufacturing at the Advanced Propulsion Centre in Coventry
The UK’s employment performance compared to other countries
Employment rate 2005-2016
74%
72%
70%
68% ntage e 66% Perc 64%
62% UK G7 OECD EU28 60% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: OECD (2017) “Employment Outlook 2017”. *Employment rate is as a per cent of working- age population working (aged 15-64)
96 Time and again, businesses reported a shortage choose to locate in the of STEM graduates as UK rather than elsewhere being a key barrier in because of the flexible labour recruiting appropriate market and the fact that we staff86. Jobs in science, have many well educated research, engineering and and trained workers. technology are expected `` As well as strengths, to rise at double the rate of other occupations we have important 87 challenges. Firstly, we between now and 2023 need to improve the and the majority of jobs quality and reputation of on the Home Office our technical education. Shortage Occupation List For too long, technical are in either STEM-related roles or industries88. education has not had the ‘Time and again, prestige that it has enjoyed We know, too, that the businesses choose in other countries. The pipeline of students to locate in the UK rather than system can be complex studying STEM-related elsewhere because and confusing, not always courses narrows as it of the flexible labour meeting the needs of reaches higher levels. Of market and the fact individuals or those of the 16 year olds who have that we have many well educated and employers and the wider achieved an A*-C grade trained workers.’ economy. The existence of in GCSE maths, fewer domestic skills shortages than a quarter continue to has meant that migrant study maths after age 16 . labour has been required Although there has been to help plug the gap83. a 20 per cent increase in entries to maths A levels `` Secondly, we need 90 to tackle particular since 2010 , less than a shortages of STEM skills. third of students studying These skills are important STEM related A levels go on for a range of industries to gain a STEM degree, and from manufacturing to a significant proportion of STEM graduates do not go the arts. The number of 91 STEM undergraduates has into STEM occupations . been increasing over the last few years84, but there remains unmet demand from employers85. 40 per cent of employers
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Will we create a country where everyone can improve their skills at all stages of their lives
There is also significant regional outcomes vary at every phase. For variation in uptake of STEM subjects, example, 73 per cent of children in including maths. In Reading in early years learning in the south 2016, 57 per cent of students who east of England meet the expected achieved A*-C at 15 went on to study standard across early learning goals, maths at level 3; in Barnsley it was compared to only 66 per cent in 10 per cent92. And we know girls are the West Midlands and north west less likely to choose STEM subjects of England95. Almost 90 per cent of than their male counterparts93. London’s secondary schools are good `` Thirdly, we need to tackle or outstanding, compared to just 67 per cent of schools in the north east entrenched regional disparities in 96 education and skill levels. According of England . The entry rates to higher to research by the Confederation education for 18 year olds are 40 per cent in London, but only 29 per of British Industry, disparities in 97 education and skills are the biggest cent in the north east of England . drivers of regional variation in productivity94. Regional education
98 `` Fourthly, we need to skills to take advantage ensure that everyone, of new technologies and no matter what their the means to help those background or level of who are affected by skill, has an opportunity technological change. to enter into and progress at work and through the education and training system. Barriers that prevent under-represented 20% groups from realising increase in entries to their full potential need maths A levels since 2010 to be broken down. For example, women, who account for just under `` Employers, individuals ‘We are determined half of all employees in and the government all to ensure that we the UK, are more likely have a role to play to help have both the skills to take advantage to be in ‘low-paid, low- people develop the right skilled’ work98. And as of new technologies skills so they are able to and the means technological change work with, and alongside, to help people transforms the jobs and the new technologies. who are affected skills that our businesses by technological These groups will need change.’ require, we need to make to work together to sure that people have create opportunities for the opportunity to learn people to pursue higher and train throughout earnings over the longer their working lives. At the term and support the moment, our problem growth of a high-wage, is not unemployment high-skilled economy. caused by technology, it is low earning power caused by, among other reasons, a failure to use technology. Through our Industrial Strategy, we are determined to ensure that we have both the
99 Industrial Strategy White Paper Our approach
We start by building on our strengths. The UK has one of the most accomplished higher education systems in the world. Higher education plays a significant real-life projects and resources to help role in bringing benefits for the UK students understand the practical economy, particularly in the provision relevance of their courses. Employers of higher-level skills that are needed by value the skills of graduates100 and employers both nationally and within data continues to show the benefit local areas. There are many examples of a higher education qualification of higher education institutions (equating to more than £100,000 on and local employers collaborating average over the course of a person’s to target specific skills needs99. working life, up to £170,000 for a These businesses are involved in co- man and £250,000 for a woman101). development of curricula and providing
We will create 15 new technical education routes designed through rigorous labour market analysis and in partnership with employers
100 In the run-up to the financial easier for new, high quality crisis, the up-skilling of the providers to offer higher UK’s workforce accounted education. By encouraging for around 20 per cent of innovation and a focus on total labour productivity student outcomes, the OfS growth102. Research predicts will drive improvements in around 1.8 million new jobs productivity and support the will be created between wider economic needs of the 2014 and 2024, and 70 per country. This will increase cent of them will be in the the number of work-ready occupations most likely graduates, including in STEM, ‘Around 1.8 million to employ graduates103. and promote innovative new jobs will be created between To ensure that higher ways of learning, such as that being delivered by 2014 and 2024, education is responsive and 70 per cent of to employer and industry New Model in Technology them will be in the needs – and to students’ and Engineering (NMiTE) in occupations most Herefordshire and the Dyson likely to employ employment expectations graduates.‘ – the Higher Education Institute of Engineering and and Research Act, passed Technology in Wiltshire. earlier this year, will put in Furthermore, our place a modern regulatory commitment to conducting framework through the a major review of funding creation of a new regulator, across tertiary education will the Office for Students ensure a joined-up system (OfS). The OfS, which will that works for everyone. be established in January Education and training 2018, will address employer are devolved to Scotland, and student needs and Wales and Northern Ireland. expectations in the short, While our approach on medium and long term these issues applies to – considering the skills England, this is a shared gaps that exist today, and priority among all nations anticipating the demands of the United Kingdom. of the future economy. It will make the sector more dynamic and make it
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Delivering a world-class technical education system
Technical excellence has historically not been valued as highly as academic success and standards have been lower. We want our technical education system to be as prestigious as higher education in this country, and for it to rival the best systems in the world. We Over £500m are undertaking a major programme annual backing for new T levels of reform based on the findings of the independent panel led by Lord Sainsbury104. In the Skills Plan105 we Training hours for committed to creating 15 new technical 16-19 year-old T education routes, designed through level students to rigorous labour market analysis increase by over 50% and in partnership with employers. Apprenticeships and new T levels will be based on the same set of high We have recently published our T standards for occupational competency, level action plan, setting out the designed by employers, and students implementation timetable and will have opportunities to move announcing the first T levels to be between academic and technical routes. taught from 2020 (digital, construction 106 New T levels will be backed by over and education and childcare) . The £500m annually by the time the plan also sets out the vital role that programme is rolled out fully. This will employers will play in the reforms: ensure we can increase by over 50 per we have convened T level Panels cent the number of hours training for (made up of employers, industry 16-19 year-old T level students, including professionals and education experts) a high-quality work placement – putting across the six routes for delivery in our technical education system on 2020 and 2021, and further panels will a par with the best in the world. We be convened across the remaining five will also update school and college T level routes for delivery in 2022. performance measures to ensure that students can make an informed choice between technical or academic education in time for the introduction of the first T levels, recognising them as equally valued routes.
102 We will also invest up to To ensure there is excellent £20m between 2018/19 quality provision for those and 2019/20 to help further progressing from the new education colleges develop T levels and other full-time the skills of their staff to education, and for those deliver the new technical in the workforce looking to qualifications. We will also up-skill or retrain, we want host a major Skills Summit to address the needs of with leading employers and students and employers publish a public consultation more effectively, and we on the detailed design and will undertake a review delivery of T levels before into higher level technical ‘We want our the end of the year. education at levels 4 and 5. technical education We have already announced This review will consider system to be as prestigious as higher government support for the the supply of, and demand education in this creation of new Institutes of for, quality higher-level country, and for it to Technology. These institutes classroom-based technical rival the best systems will increase the provision education, responding to in the world.’ of higher-level technical the recommendations of education across the country Lord Sainsbury’s review. and we will launch a call for proposals to establish the first of these shortly. The institutes will sit alongside our four flagship employer- led National Colleges, which are delivering high-quality skills training for the digital, creative, nuclear and high speed rail sectors.
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Driving up the study of maths
Sir Adrian Smith’s review of maths education for 16-18 year olds in England, published in July, found a strong demand for mathematical and quantitative skills in the labour market at all levels107. It also identified a consistent under- Improving the take up of maths supply reflecting the low take up qualifications and the quality of maths among 16-18 year olds of maths teaching across the in England, and low achievement education system is one of the relative to other developed countries. most significant interventions that It set out a strong case for raising government can make to tackle participation and improving both basic STEM skills shortages and secure and advanced maths skills: adults with wider benefits for the economy109. basic numeracy skills earn higher wages Demand is clearly growing. For and are more likely to be employed example, the UK’s world-class creative than those who fail to master basic industries, which cover film, TV and quantitative skills. Higher levels of video games, are growing at twice the achievement in maths are associated rate of the economy as a whole and with higher earnings for individuals are heavily reliant on STEM skills110. and higher productivity. Strong quantitative skills are increasingly We have already taken some early important as an underpinning for actions in response to the Smith all forms of STEM study, but also Review. This includes a level 3 Maths for highly-skilled employment Support Programme, which will outside core STEM disciplines. As build on the momentum created by the Smith review points out, learned the Further Maths and Core Maths societies argue that students across Support Programmes, and work with the sciences, social sciences and schools and colleges to improve maths humanities need significant quantitative education by sharing best practice skills, and these should be a central and working to increase participation component of their education. and attainment in maths among 16- 18 year olds. The programme will Maths should not be perceived as work to deliver focused intervention an exceptional talent; it is a basic targeted to those who need it most. skill that can be mastered with the right teaching and approach, as shown by OECD evidence from successful models such as Singapore, Switzerland and Denmark108.
104 We are also focused on We will also invest £40m expanding the capacity for to establish Further maths teaching. We offer Education Centres generous financial incentives of Excellence across for those training to teach the country to build priority subjects such as teaching capacity and maths, and last year we spread best practice. trained more maths teachers We are also reforming than in any of the previous functional skills qualifications four years. To incentivise to improve their quality recruitment to initial teacher and levels of employer training and ensure we recognition, and will continue ‘Adults with basic retain as many teachers as to monitor and review the numeracy skills earn possible, we are piloting new current policy which requires higher wages and style bursaries in maths. are more likely to be students without a GCSE employed than those Around 30 per cent of young standard pass in maths and who fail to master people do not currently English at 16 to continue to basic quantitative achieve a GCSE standard study towards this aim. skills.’ pass aged 16, and of these, We are seeing growth only around 17.5 per cent in the new core maths achieve a good standard 111 qualifications introduced in of maths by the age of 19 . 2014, which are designed In these crucial years, the to prepare students for the basic maths gap widens mathematical demands of compared to high performing 112 university study, employment countries . England remains and life. These have been unusual among advanced endorsed by a large number countries in that the study of universities, including of maths is not universal 114 113 many in the Russell Group . for all students beyond 16 . We have funded 145 early To tackle this, we will test adopter schools and innovative approaches to colleges to begin teaching improve outcomes in basic the new qualifications. maths for those aged 16 and over, through a £8.5m pilot.
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We offer generous financial incentives for those training to teach priority subjects such as maths, and last year we trained more maths teachers than in any of the previous four years
There were almost 3,000 entries in maths or further maths at AS/A level the first year (2016)115, and this grew or core maths. This will to 5,361 entries in 2017116. To deepen help education providers to the understanding of the gender support more students aged 16 disparity in STEM subject choices and over to study maths. at ages 16 to 19, we will explore how We also recognise that universities are to improve the accessibility and an important influence on students’ transparency of data published on choices. In response to Sir Adrian STEM, by institution and subject. Smith’s recommendations, we are We need to go further on maths. working with institutions such as Building on Sir Adrian Smith’s the Royal Society and the British recommendation to make core Academy to encourage universities maths available to all students on and employers to signal the value of level 3 pathways, we will incentivise level 3 maths qualifications for entry education institutions to offer maths to undergraduate courses that have a by providing a £600 premium to significant quantitative element, and existing per pupil funding rates for the value for a wide range of job roles. each additional student who takes These investments will begin to meet
106 the demand for coveted students who are able to go STEM skills, as well as close on to higher levels of STEM the advanced maths gap that study, and because basic exists between our education maths skills have a proven system and the best in value in their own right. The other developed countries. £42m Teaching for Mastery maths programme is being This ambition must also be 120 built on a foundation of good received positively and basic maths skills. A good will reach half of all primary level of numeracy supports schools by 2020. We are the achievement of further delivering this through a qualifications, contributing network of 35 maths hubs, to better employment, outstanding and inspirational higher wages and further schools and colleges, and backed by an additional opportunities to up-skill117. ‘We need to boost Getting more young people £6m to put maths hubs in the number of people to this level also widens the areas of need. We will now reaching a good standard by the pool of students capable of invest £27m in the further expansion of Teaching for end of compulsory studying advanced maths education to and other STEM subjects. Mastery maths programme strengthen our However, our basic maths to reach 11,000 primary economy, widen prosperity and performance is middling118; and secondary schools in total by 2023. compete with the and regional variations top international mean that some parts of the We will work with top maths education systems.’ country have fallen behind119, universities to expand the contributing to lower specialist maths school productivity. We need to model pioneered by Exeter boost the number of people University and King’s College reaching a good standard London. We are providing by the end of compulsory £350,000 annual funding education to strengthen for every maths school to our economy, widen deliver the specialist maths prosperity, and compete school model, including with the top international extensive outreach work education systems. with schools and teachers We will take action to ensure to ensure all students have that more students leave the chance to achieve their education at age 18 with a mathematical potential. basic level of numeracy – both to build the pipeline of
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The New Model in Technology & Engineering in Hereford aims to become the first new ‘greenfield’ university in the UK for 30 years
Case Study: The New Model in Technology & Engineering
In October, the government engineers, including the target of a announced up to £15m in funding 50/50 gender split and recruiting for a new engineering university graduates from non-traditional in Hereford. The New Model backgrounds. It will also offer in Technology & Engineering accelerated degrees, meaning (NMiTE) aims to become the first students can graduate in two years. new ‘greenfield’ university in the Courses will be co-created with UK for 30 years, addressing the employers, with mandatory work growing need for engineering placements of 6-12 months talent in sectors such as advanced before graduation. manufacturing, artificial intelligence NMiTE will take its first cohort and cybersecurity. of students in September 2020, NMiTE is taking a radical approach with development cohorts in to training the next generation of 2018 and 2019.
108 Driving up digital skills
Alongside this comprehensive programme to support the study of maths, the government will work to boost the supply of digital skills across the economy. Digital skills are vital for The new standards across both STEM and non-STEM all 15 routes are designed specific jobs, with demand by industry, enabling growing. This is evidenced businesses to reflect the by Tech City UK research, knowledge and skills they which shows that highly need, such as digital skills. skilled and highly paid digital We are taking forward jobs grew at twice the rate of the recommendations ‘Highly skilled and highly paid digital non-digital jobs between 2011 from the Shadbolt Review jobs grew at twice and 2015121. We will introduce of Computer Science the rate of non-digital a new entitlement for adults Degree Accreditation and jobs between 2011 who lack core digital skills to Graduate Employability123 and 2015.’ access specified basic digital with stakeholders. We are skills training free of charge. focusing on ways to increase This will mirror the approach the number of students who taken for adult literacy and undertake work experience numeracy training. As set to develop their professional out in our Digital Strategy122, skills and ways of accrediting we intend that everyone has work experience in degrees. the opportunity to increase To bring together real- their digital capability. world cyber expertise and We are already taking action educational experience we on a number of fronts, from have announced the launch the introduction of the first of a new £20m Cyber digital T level (as one of Discovery programme – a the first of the technical four-year study programme education pathways in for the next generation of September 2020) to the cybersecurity professionals. development of digital We expect the programme apprenticeships, including to reach nearly 6,000 degree apprenticeships. participants by 2021.
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But we need to go further. In 2014 secondary school - and working with we broke new ground by introducing industry to set up a new National Centre a new, more rigorous computing for Computing Education to produce curriculum in England for pupils aged training material and support schools. 5-16, including coding and the basics We are also investing £20m in a new of programming. However, some Institute of Coding, which will be formed teachers find it challenging to deliver through a consortium of universities this new curriculum, and that this is and employers. The new institute will sit limiting the number of students taking alongside Ada, the National College for computer science qualifications and 124 Digital Skills, and work with employers the quality of teaching they receive . and businesses to deliver higher level The government will invest £84m digital skills. New digital platforms will over the next five years to deliver expand the reach of STEM Ambassador a comprehensive programme to and CREST Awards programmes to improve the teaching of computing increase young people’s engagement and drive up participation in with STEM subjects. A new digital computer science, with a particular platform for the CREST Awards will help focus on girls. Measures include double the number of students taking up-skilling 8,000 computer science part in CREST Awards across the UK teachers - enough for one in every
We have recently announced a new £20 million Cyber Discovery programme – a four-year study programme for the next generation of cybersecurity professionals
110 from 30,000 to 60,000 by This range of interventions March 2019, with a particular – spanning primary, focus on reaching groups secondary and tertiary that are currently under- education, and addressing represented in STEM. basic, intermediate and We will target immediate higher levels of study – will shortages in digital skills, achieve a big expansion in giving individuals the skills the depth and breadth of they need to progress in our workforce’s STEM skills. work through the new National Retraining Scheme, set out later in this chapter.
‘We will target immediate shortages in digital skills, giving individuals the skills Case Study: 2018 Year of Engineering they need to progress in work through the new National The Year of Engineering We are working with Retraining Scheme.’ is a government-led hundreds of organisations campaign that will bring from the industry, who the world of engineering have signed up to lead directly to children and exciting events and young people. It will activities to inspire celebrate the UK’s proud young people from all engineering heritage and backgrounds, showing seek to ensure we have them, their parents and the skilled engineering teachers the opportunities workforce we need for that a career in tomorrow. It will raise the engineering can bring. profile of engineering and alter perceptions of what it is to be an engineer today, working across a range of key areas in construction, transport, chemicals, biomedical and the software industry.
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Investing in skills to support growth and opportunity across the country
Tackling regional differences in skills and educational attainment is vital if we are to boost earning power across the whole country. In England, the government Areas programme and our targeted has three roles to play. establishment of new maths hubs in Firstly, to ensure that the national under-achieving areas. These recognise system works across the country, that different areas and regions often making a real difference in areas of face particular challenges, as well as most need. Our investment in technical opportunities, and that these need education and T levels, for example, tailored approaches to meet them. will have the greatest impact in Thirdly, to help ensure that the areas where more students go on to necessary connections and capacity technical than academic education. are in place at local level to link skills Secondly, to address the specific provision with economic need. needs of local areas through additional action, such as our Opportunity
We are growing our successful maths hubs and setting up a new network of English hubs
112 There are a variety of growing our successful institutions at local level with maths hubs and setting valuable contributions to up a new network of make to skills development, English hubs in areas of as set out in the Places weak early development chapter. We need to ensure in language and literacy. they work together to deliver There are some parts of the best possible outcomes the country that suffer for their community and for from even more acute the local economy, as part of disadvantage and have even Local Industrial Strategies. greater need. We will support ‘The £280m Recent reforms in education these places through our Strategic School Improvement Fund and skills have improved £72m Opportunity Areas will provide high educational outcomes for programme, which will target quality, evidence- many children. But the intensive support through based support to government recognises discrete interventions in schools across England.‘ that it needs to act to 12 areas. As well as being ensure the benefits of these priority areas for our reforms reach every part national programmes, the of the country. The first areas will benefit from stage is to design system- support from national wide policies to effectively businesses, the Education support the weakest areas. Endowment Foundation That is why the new national and the Careers Enterprise funding formula ensures Company, co-ordinated by that schools with the local Partnership Boards. most challenging intakes This concentration of attract the most funding. resources will allow us to trial The £280m Strategic innovative new approaches, School Improvement Fund which can in turn be scaled will provide high quality, up to improve performance evidence-based support in the wider system. to schools across England. We also know that improving We also need to extend the quality of teaching and our school improvement leadership in a school is a infrastructure to the places significant driver of school that need it most. We are
113 Industrial Strategy White Paper performance, so we want to focus Key to this local influence will be the particular effort on addressing this introduction of Skills Advisory Panels, vital engine of educational attainment which will be rolled out shortly, and at a crucial stage in young people’s integrated into Mayoral Combined development. We are already providing Authorities and Local Enterprise over £30m in tailored support to Partnerships to inform the analysis that secure more great teachers in the feeds into Local Industrial Strategies. schools that struggle the most with As set out in the Places chapter, recruitment and retention and will these strategies will bring together pilot a student loan reimbursement local actors including businesses and programme to help attract and retain education providers to determine teachers in the subjects and areas of local growth priorities. Skills Advisory the country that need them most. Panels will produce rigorous analysis However, we believe a significant of the current and future supply and further intervention is needed to demand for skills and help areas form achieve the level of change required a clearer understanding of their skills on this vital issue. That is why we requirements. They will have real, will invest £42m to pilot a Teacher meaningful influence over the provision Development Premium, as described of education and training for those over in more detail in the ‘Places’ chapter. the age of 16, and work with Mayoral This will test the impact of a £1,000 Combined Authorities and Local budget for high quality professional Enterprise Partnerships to establish development for teachers in areas of the best way to ensure that influence is the country that have fallen behind. effective, and to inform careers advice and guidance. Skills Advisory Panel Finally, the government has a role to analysis will be structured around the play in ensuring that the connections 15 new technical education routes; and capacity exist in local areas and education and training providers will regions to link educational institutions need to take account of this analysis with labour markets. Devolution of when planning T level offers. As well budgets and control within England as supporting the creation of new plays its part, and we will devolve Institutes of Technology across all the adult education budget to regions to deliver higher level mayoral areas in 2019. This will help technical education, we will also mayors to ensure learners can gain promote local Digital Skills Partnerships the skills that local businesses need. that will increase collaboration between But devolution is only a part of the public, private and charity sector solution in England, with productive organisations and help address local partnership working and meaningful digital skills needs in more targeted local influence equally important in and innovative ways. ensuring the supply of skills to an area.
114 Creating opportunities for all throughout life
As automation and digitalisation change the nature of jobs and the skills required to do them, and as working lives become longer, it is vital our education system allows people to learn and train throughout their lives. That is why the government degree programme in two committed to building the years, by introducing new best programme of learning tuition fee arrangements and training for people in to widen student choice for work and returning to work. these degree programmes. For some, this will mean The OfS also has powers ‘We will pilot a keeping their skills current to monitor and report on student loan in fast-moving sectors. For arrangements reimbursement others, it will mean refreshing for students transferring programme to help their skills after a period out from one course or attract and retain teachers in the of the labour market. And institution to another – subjects and areas of for others still, it will mean increasing students’ ability the country that need training in order to transition to transfer or return to them most.’ or develop their skills as their study should a change in sector changes in response circumstance have required to technological shifts. them to take a break from Key parts of this programme their original course. We are in place already. We are improving funding for are implementing a range part-time students, with of measures in England to maintenance loan support make it as easy as possible available from 2018/19 for all to undertake higher- first degrees and graduates level study, including the undertaking a second introduction of post-graduate degree in a STEM subject. masters and doctoral loans We want all young people from 2016/17 and 2018/19 to realise their potential, respectively. Financial and we have made progress barriers to the provision of in boosting the number accelerated degrees are of disadvantaged young being reduced for higher people who go to university. education providers that wish to offer a three-year
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We recently launched the first Career Learning Pilot – the £10m Flexible Learning Fund – to test accessible ways of delivering learning to adults
Young people from disadvantaged This includes requiring universities backgrounds were 43 per cent more to publish student participation and likely to go to university in 2016 than progression data broken down by in 2009, and applications from those gender, ethnicity and socio-economic from such backgrounds are at record background. This greater transparency levels125. But we need to do even more will prompt further action and build to widen participation for those from on what has already been achieved. disadvantaged and under-represented The government is committed to groups looking to re-skill and up-skill. conducting a major review of funding The Higher Education and Research across tertiary education to ensure Act 2017 has introduced a number a joined-up system that works for of measures aimed at supporting everyone. As current and significant more students from all backgrounds reforms move into implementation, this to participate in higher education review will look at how we can ensure and to support their success. The that the education system for those primary aim of the OfS will be to aged 18 years and over is accessible to ensure that the higher education all and is supported by a funding system system in England is delivering that provides value for money and positive outcomes for students.
116 works for both students and and oversee implementation taxpayers, incentivises choice of the scheme. and competition across the The National Retraining sector, and encourages the Scheme will be informed development of the skills by £40m announced in that we need as a country. the Spring Budget to test The government is innovative approaches to committed to supporting helping adults up-skill and adults to secure meaningful re-skill. The pilots will help and productive employment, us learn more about how and equipping them with to support and incentivise the skills they need to adults to learn skills that maximise their earning will help them, their local potential. This is core to economies and national our Industrial Strategy as productivity. We have ‘Young people from we seek to take advantage already launched a Flexible disadvantaged of the opportunities from Learning Fund, making backgrounds were 43 per cent more likely longer working lives, available up to £10m to to go to university in automation of low skilled support projects that design 2016 than in 2009, labour and changes to and test flexible, accessible and applications from the labour market. such backgrounds ways of delivering learning are at record levels.’ To drive up adult learning to working adults with low or and retraining, we will intermediate skills. Further introduce an ambitious pilots testing other barriers National Retraining Scheme to adults’ learning will be in England by the end of announced in due course. this Parliament. It will give Starting next year, the individuals – particularly National Retraining Scheme those hardest to reach – the will initially target skills skills they need to thrive and shortages in key sectors, support employers to adapt ensuring that we can as the economy changes. develop much-needed A high level advisory group digital and construction – the National Retraining skills. A total of £30m will Partnership – will bring be invested to test the use together the government, of artificial intelligence businesses and workers, and innovative education through the Confederation technology (edtech) in online of British Industry and the digital skills courses so that Trades Union Congress, to students can benefit from set the strategic direction this emerging technology.
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Matthew Taylor Review
The world of work is changing rapidly. We accept Matthew Taylor’s It is becoming more flexible and recommendation that the government more connected. Advances such should identify a set of measures as remote access technology mean against which to assess job quality and people unable to be in an office eight success. We are starting a dialogue hours a day can still participate in with experts – including worker work. This year we have seen more representative bodies such as the women active in the labour market Trades Union Congress, organisations than ever before, and more people like the Chartered Institute for with disabilities are able to use their Personnel and Development talents in the workplace, supporting and business bodies such as the and sharing in the economic Confederation of British Industry – to prosperity of the country126. develop a common set of principles We are determined that the UK and measures. This conversation will should be among the first countries begin with the aspects that we believe to identify the best way to ensure are foundational: overall worker everyone benefits from this satisfaction; good pay; participation technological revolution. That is and progression; wellbeing, safety why Matthew Taylor, Chief Executive and security; and voice of the Royal Society of Arts, was and autonomy. commissioned by the Prime Minister Sector Deals provide a further to undertake a review of modern opportunity for employers to promote employment. His report, published in good work and boost productivity. The July 2017127, outlined an ambition for right approach will vary from sector all work in the UK economy to be fair to sector. Delivering better quality and decent, and for employers to offer jobs could involve a commitment opportunities that give individuals to better employment relations realistic scope to develop and and contracts that fosters both progress. The government shares that flexibility and security. It could mean ambition for ‘good work’. The Business on-the-job training or the provision Secretary will take on the role of of high quality apprenticeships to promoting the delivery of better help people progress in work. quality jobs in the British economy. The changing world of work means that what represents ‘good work’ to one person might be different for someone else.
118 We will provide £34m We will publish a to expand innovative comprehensive careers construction training strategy shortly that will programmes across set out plans to improve the country, including a the quality and coverage of programme in the West careers advice for people Midlands, focused on of all ages. The strategy will supporting the country’s build on the current work housing needs and building of the Careers Enterprise upon existing good practice. Company and employers Action on construction to increase encounters and digital is just the first between businesses and step. Further ahead, and young people and the supported by the National National Careers Service, to improve the quality and Retraining Partnership, we ‘We will provide will be engaging with sectors coverage of careers advice £34m to expand and Skills Advisory Panels in schools and colleges, and innovative construction training in England to develop future give people the information they need to access training programmes across policy. We will also continue the country, including to support Unionlearn, an throughout their working a programme in organisation of the Trades lives. It will be based on the West Midlands, focused on Union Congress, to help evidence, both in this country and internationally, supporting the embed a culture of learning country’s housing throughout working lives. which identifies the most needs and building effective practices to support upon existing good The government must also people of all ages and in practice.‘ do more to help people all areas, including those of all ages navigate our who are hardest to reach. labour market. People need access to the information, advice and guidance that will help them make choices as they progress through the education system and their careers.
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Apprenticeships are a vital UK-wide From April 2018, we plan to allow vehicle for employer investment in levy-paying employers in England to their workforce, enabling employers transfer up to 10 per cent of their funds to develop the skills and behaviours to another employer, including within that they need, as well as offering their supply chain. The government opportunities for those already in will continue to work with employers work and those entering it for the on how the apprenticeship levy can be first time. We introduced a new spent, so that the levy works effectively Apprenticeship Levy in April 2017 to and flexibly for industry, and supports reverse the established trend in the UK productivity across the country. of low employer investment in skills. We want everyone to have an In 2020 levy contributions in England opportunity to realise the lifetime are expected to take apprenticeship benefits that come from undertaking investment to double what was spent 128 an apprenticeship. We are delivering in 2010 . Apprenticeships funding, the recommendations of the Maynard raised through the levy, is managed Taskforce129 to improve access to by the Scottish government, Welsh apprenticeships for people with government and Northern Ireland learning difficulties and/or disabilities. Executive as skills is a devolved matter.
120 We are making over more likely to outperform £60m available to support their rivals131, yet female apprenticeship take up employment continues to by young people and be below that of men and poorer families from the difference in the amount disadvantaged areas and of years women and men setting ambitious goals to spend in full time work is increase the proportion of the biggest driver of the 18 apprenticeships started by per cent gender pay gap132. people of black and minority In mid-2017, just under half ethnic backgrounds or with of working-age disabled a learning difficulty and/or people were in employment, disability by 20 per cent compared with 81 per cent by 2020. of working-age non-disabled people133. OECD projections We also need to do more ‘Businesses that have to address the under- show that by 2030, if the diverse, inclusive representation of other share of women working workplaces recognise this brings improved groups in our labour market reached the same level as for men, annual growth rates in productivity. For and support employees to example, offering stay in work. Our economy is GDP per capita would rise by flexible working can missing out on the untapped 0.5 percentage points in the enable employers to UK. The boost to economic reach a wider talent potential this represents pool.’ for employers. Work keeps growth would be even higher if women’s working people healthy, mentally 134 and physically. It enables hours increased too . people to be economically Businesses that independent, and gives more have diverse, inclusive choices and opportunities workplaces recognise to fulfil other ambitions in this brings improved life. The McGregor-Smith productivity. For example, Review put the potential offering flexible working can benefit to the UK economy enable employers to reach from full representation a wider talent pool, both of black and minority male and female, including ethnic workers, through returners, older workers improved participation and and people with disabilities. progression, at £24bn a Creating a workplace which year130. Organisations with is truly flexible can improve the highest levels of gender productivity. diversity are 15 per cent
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Our Industrial Strategy Grand higher retention of mothers in work136. Challenges on Ageing and growing the To tackle some of the barriers women Artificial Intelligence & Data-driven face at work we introduced landmark Economy set out early actions. legislation in April 2017, which requires We are already taking steps to all large employers in Britain to report encourage wider participation in the on their gender pay gap. Although black and minority ethnic employment labour market. For working parents of 137 three and four year olds in England, is at a record high , we know there is more we can do. We are taking action we have doubled free childcare from 138 September 2017135. Emerging evidence through the Race Disparity Audit in shows that parents are able to work hotspots that require extra work to help more hours, with some indication of those from black and minority ethnic backgrounds into the workplace.
United Kingdom employment for men and women and the gender pay gap
Employment rate by gender and gender pay gap
22% 80% 21% 75% 20% p
rate 19% 70% y ga pa ment 18%
oy 65%
pl 17% Gender Em 60% 16%
50% 15% 2013 2014 2015 2016 Male Female Gender pay gap
Source: ONS (2017) “Labour Market Statistics time series dataset and ONS (2017) Annual Survey of Hours and Earnings: 2017 provisional results”. *Gender pay gap is defined as the difference between men’s and women’s hourly earnings as a percentage of men’s earnings. Full-time workers only
122 We will also publish shortly workers and allied health a plan for improving professionals in England, social mobility in England, and those who wish to which will set out how the become civil servants in education system will expand England and Scotland. equality of opportunity. We are also working with Further steps include: employers and other ``working with business business groups to increase to develop an action plan opportunities within the to make flexible working private sector across a reality for all employees the UK. This includes across Britain and to inform commissioning Women the evaluation of the Right Returners and Timewise to Request Flexible Working to produce best practice guidance and working with Regulations. More than ‘More than twenty twenty million employees the Women’s Business million employees now have the right to Council to develop a toolkit now have the right for employers; and to request flexible request flexible working, working, which is which is helping parents ``publishing plans shortly helping parents and and others to balance work to achieve our ambition others to balance with other responsibilities. to see one million more work with other responsibilities.’ The government will work disabled people in with employers to help employment in the UK understand and promote by 2027. We will also help practices that enable those with mental health employees to realise conditions in England to the potential of those enter, progress and remain who can benefit from in work as part of our more flexible working; response to the recently published Stevenson- `` supporting people to 139 return to work after time Farmer review . out for caring, with £5m funding announced in the spring 2017 Budget. Four new public sector programmes are refreshing the skills and experience of returning teachers, social
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Case study: PwC – reporting on black and minority ethnic pay and bonus gaps
PwC has become one of the first Analysis of the data showed that, organisations to publicly report its while PwC pays its employees black and minority ethnic pay and equally for doing equivalent jobs, bonus gaps. Kevin Ellis, chairman the pay gap in PwC was driven and senior partner at PwC, has set by a greater proportion of black out the ambition: ‘We are hoping and minority ethnic staff in junior that by reporting our black and administrative roles and fewer in minority ethnic pay and bonus senior management. Through gaps we can shine the spotlight taking steps to understand its on ethnicity in the workplace workforce, PwC has been able to and encourage organisations to implement new approaches that take action. In our experience, aim to retain its junior black publishing pay data adds a level and minority ethnic talent and of public accountability that starts improve rates of progression to conversations and drives change’. senior management levels.
124 Global skills and talent
The actions and approaches that we have set out in this chapter will be more critical as we exit the European Union and look to improve the levels of skills of our workforce to meet the opportunities and challenges ahead. We want to continue to be To ensure that our labour an attractive destination for market remains competitive, the world’s most talented the Migration Advisory and innovative people and Committee has recently the UK will continue to undertaken a wide-ranging remain a global, outward consultation to form a ‘We want to continue looking nation and home to UK-wide view of our skills to be an attractive the brightest and best. Our needs140, ensuring our destination for the thriving and flexible labour future migration system world’s most talented market continues to attract supports our Industrial and innovative people and the UK... international businesses Strategy. We will consider will remain a home and investment, enabling the Migration Advisory to the brightest and businesses to respond and Committee’s forthcoming the best.’ adapt to economic change. conclusions carefully.
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Infrastructure
126 The OECD ranks the UK as one of the best places to start and grow a business
127 Industrial Strategy White Paper Infrastructure
A major upgrade to the UK’s infrastructure. Infrastructure is the essential We will build a Britain that lives on underpinning of our lives and the digital frontier, with full-fibre work, and having modern and broadband, new 5G networks and accessible infrastructure throughout smart technologies. We will create the country is essential to our a new high speed rail network future growth and prosperity. that connects people to jobs and Much of this investment is, by its opportunities, regenerate our stations nature, large scale and long term, and airports, and progressively upgrade and one of the most significant our road network. And we will improve ways the government can influence people’s lives where they live and the economy – from our transport work, with high quality housing and and housing through to the roll-out clean, affordable energy. Providing the of digital networks. Our National right infrastructure in the right places Infrastructure and Construction boosts the earning power of people, Pipeline is worth around £600bn and communities and our businesses. public infrastructure investment will have doubled in a decade by 2022/23. Key policies include: We must make sure our infrastructure choices not only provide the basics for the economy, they must actively `` Increase the National Productivity support our long-term productivity, Investment Fund to £31bn, providing greater certainty and supporting investments in clear strategic direction. Our transport, housing and digital investment decisions need to be more infrastructure geographically balanced and include `` Support electric vehicles through more local voices. We can improve £400m charging infrastructure how we link up people and markets to investment and an extra £100m to attract investment, and we must be extend the plug-in car grant more forward-looking in respect of significant global economic trends. `` Boost our digital infrastructure with over £1bn of public Through our Industrial Strategy, investment, including £176m the country’s economic geography for 5G and £200m for local will be transformed by a surge of areas to encourage roll out of infrastructure investment heralding full-fibre networks a new technological era.
128 The availability of high The way we make these quality infrastructure is investments influences essential for our lives and the pattern of industrial work, and our future growth development across the and prosperity. Efficient country, and the speed of transport systems bring a emergence and adoption wide range of work within of new technologies and people’s reach, and bring business models. Just as our goods from suppliers market structures can be to markets. Clean and designed to favour innovation affordable energy holds or incumbents, so can our down the cost of living and choice of investments. the cost of doing business. Similarly, decisions on Digital infrastructure physical infrastructure can allows us to lead modern widen or narrow geographic lives and to do business divisions in wealth and in the technologies and productivity, and determine industries of the future. whether we lead or lag with Providing the right respect to technological infrastructure in the right developments. Our Industrial ‘Our National places boosts the earning Strategy is an important Infrastructure power of our businesses, opportunity to consider and Construction people and places. these decisions strategically, Pipeline is worth ensuring that our approach around £600bn and Our investments in public infrastructure infrastructure, and our to infrastructure not only investment will have decisions on procurement, provides the basics for doubled in a decade by 2022/23.’ are among the government’s the economy, but also most significant interventions actively supports our long- in the economy. They term national interests. are large-scale – our In many important respects National Infrastructure and we have a strong track Construction Pipeline is record and we will continue worth around £600bn of to promote the UK’s public and private investment, strengths as a destination and we spend 14 per cent for capital investment. In of GDP on public sector 2016, the UK had the most procurement each year141 attractive environment for – and they are long-term, infrastructure investment shaping the evolution of the when compared to 25 economy over decades. international competitors142.
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At least 95 per cent of UK premises will have access to superfast broadband by the end of 2017
National Productivity Investment Fund: £31bn until 2022/23
Allocations to date:
Transport Housing Digital Research and £4.9bn £11.5bn £0.7bn Development £7.1bn
Costs are presented on a UK basis. Further allocations will be made at future fiscal events.
130 We have established the programmes, as too narrow National Infrastructure an assessment of costs Commission to advise and benefits can preclude us on investment. important opportunities. The government has We have also heard calls for improved coverage for digital our investments to be more infrastructure. 95 per cent geographically balanced, of premises will have access and more forward-looking to superfast broadband by in respect of significant the end of 2017; 99 per cent global economic trends. have indoor voice coverage; The devolved administrations and 96 per cent have indoor 143 in Scotland, Wales and 4G data coverage . Our Northern Ireland have cities are embracing new responsibility for aspects technology, illustrated by of their own regional Swansea exploring the development and physical potential for 5G technology infrastructure. Each has as part of its City Deal. responsibility for water, Meanwhile, investments in waste, flood defences and clean energy infrastructure road transport. With narrow ‘Our cities are embracing new have helped to cut exceptions Northern Ireland technology, carbon emissions by 42 also has responsibility for illustrated by per cent since 1990144, energy and all other forms Swansea exploring while the economy has of transport infrastructure, the potential for 5G 145 technology as part of grown by two thirds . and Scotland their internal its City Deal.’ However, there are rail infrastructure. The UK opportunities for government is responsible improvement, and specific for digital infrastructure challenges that an Industrial and telecommunications Strategy allows us to throughout the country. address. Throughout our The devolution settlement Green Paper consultation, has never been a barrier to stakeholders have shared best practice and emphasised the importance where appropriate we will of considering a broad continue to collaborate with range of objectives when our partners in each nation. designing major investment
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We will invest to increase UK competitiveness in relation to long-term global economic changes, such as the shift to clean growth
Our approach
We are committed to increasing our investment in infrastructure, while providing greater certainty and a clear long-term direction. The National Productivity Investment We will: Fund will be extended to 2022/23 and i nvest in ways that support all the increased from £23bn to £31bn, with objectives of the Industrial Strategy: investment targeted at areas that can increasing innovation, developing have the biggest impact on productivity. skills, growing business, and driving This includes £4.9bn for transport, productivity and earning power in £11.6bn for housing and £740m for urban and rural places across the UK; digital infrastructure. Public investment in economic infrastructure will have t ake greater account of disparities in doubled in a decade by 2022/23. This productivity and economic opportunity investment will be delivered through a between different places, ensuring strengthened institutional framework, our investments drive growth with longer-term budgets, the advice of across all regions of the UK; and the National Infrastructure Commission, i nvest to increase UK competitiveness an increased focus on effective delivery in relation to long-term global of projects in departments, and five- economic changes, such as the year capital investment programmes shift to clean growth. These will be for road, rail, water and flooding. positive choices that enable the UK We will take a more strategic approach economy to flourish in the context to our investment and design of relevant of these transformational changes. markets, focusing on three principles.
132 Investing to support the objectives of the Industrial Strategy
The essential role played by infrastructure means our investment decisions can have transformational effects on places, businesses and society. We will maximise the Grand Challenges – to contribution that such what extent the investment investments can make to can support the success of growth and productivity by our Grand Challenges on strengthening consideration artificial intelligence and of broad strategic outcomes data, clean growth, the at the earliest stage of policy future of mobility and the and programme design, needs of an ageing society; and then carrying them Ideas – how the through all subsequent investment can support parts of the design and the development and ‘We will embed procurement process. commercialisation of Industrial Strategy To deliver this, we will new smart technologies, objectives in the strategic design embed Industrial Strategy infrastructure and ideas; stage of major objectives in the strategic People – whether the investments. We will review different design stage of major investment can support investments. We will review methodologies and the development of skills promote the adoption different methodologies within the UK workforce; of best practice.’ and promote the adoption of best practice. We will Business environment – develop this approach, how investments can best including through the support supply chains, forthcoming Transforming and the exporting of Infrastructure Performance goods and services; and programme, to consider how Places – how the our investment programmes investment can act can be designed to support to reduce regional our Industrial Strategy productivity differences, objectives, such as: and boost earning power across the UK.
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An early example is the National innovation. We will improve our Shipbuilding Strategy146, where we have digital procurement platforms to begun work to understand how UK make it easier for suppliers to do shipbuilding can maximise prosperity business with the government, for for the UK and its constituent nations example through implementation of and regions. The forthcoming the Crown Marketplace purchasing Transforming Infrastructure platform. We will explore how to build Performance programme and Transport on our pilot to collect feedback from Infrastructure Efficiency Strategy, along purchasers – which may help highlight with the Transport Infrastructure Skills the quality on offer from smaller, less Strategy will support the increase in well-known businesses in addition innovation, skills, businesses growth to larger, more established brands. and earning power, and ensure these We will align the Small Business interests inform decision-making. Research Initiative (SBRI) with the They will help the government Industrial Strategy Grand Challenges, and its agencies in building long- and introduce a GovTech Catalyst term collaborations with industry, with a GovTech Fund of up to £20m reducing procurement transaction over three years, which will use SBRI costs, maximising innovation, and to help government departments exploiting digital technologies such as procure innovative solutions. the adoption of off-site construction As a general principle, we will aim techniques and smart infrastructure. for resilience as well as efficiency – We have already improved our the resilience of our infrastructure approach to procurement through the systems and the wider environments ‘balanced scorecard’, which requires within which they operate. This is procurers to consider relevant social important both for avoiding disruptions and economic objectives, such as caused by shocks, such as flooding skills development, diverse supply and drought, and for supporting chains and sustainability, alongside sustainable growth in our economy cost-effectiveness. We will embed this and population over the long term. approach on all major construction and W e are setting high standards in capital investment projects. We are cyber and climate change resilience boosting procurement standards by for our projects across the UK, extending the Commercial Capability which will give us greater security Development Programme to arm’s- and protection from natural risks, length bodies and will improve our and can be the basis for a successful procurement tools to make public industry exporting these services. sector contracts more accessible for Resilience is proposed as a key small and medium-sized enterprises performance measure within the (SMEs) and to further incentivise
134 National Infrastructure enabled new, flood- Commission’s assessments. resilient student nurse ` W e will work not just to accommodation to be built. preserve, but to enhance W e are developing a our natural capital – the air, National Policy Statement water, soil and ecosystems for water resources to that support all forms of life ensure that businesses – since this is an essential and households in England basis for economic growth can continue to rely on and productivity over the high quality water supplies long term. In England, our in the future. This will 25-year Environment Plan be complemented by will set out an ambitious more ambitious demand approach to ensure that and environmental all aspects of natural management. capital are taken into account in our approach to infrastructure and other major investment decisions, while each of the ‘We are setting high devolved administrations standards in cyber take forward their own and climate change resilience for our work to secure and support projects across the the UK’s natural capital. UK, which will give us greater security W e are investing £2.6bn and protection from to better protect the natural risks.’ nation from flooding, including more than 1,500 flood defence schemes, which will protect 7,500 households and provide £30bn in economic benefits147. These projects, such as the River Hull waterfront, act as a catalyst for regeneration. A £4.3m flood alleviation scheme in Selly Park North in Birmingham
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Case Study: Heathrow Logistics Hubs
Heathrow Airport has invested The proposed logistics hubs will more than £11bn in the last decade ensure that people from across the including building the new Terminal UK benefit from the expansion of 2 and Terminal 5. It is one of Britain’s the airport. By inviting other major biggest infrastructure clients infrastructure clients into the process spending more than £1.5bn annually there is the potential for them to with 1,200 suppliers from around benefit, and together offer long- the UK. term custom through a succession of projects, supporting investment in Heathrow has recently set out the offsite manufacturing facilities and procurement strategy that it intends employment around the country. to follow. It has long-listed 65 sites across the UK in the running to be By considering its procurement selected as a Logistics Hub for the strategy at the earliest stage, potential expansion of the airport. Heathrow has shown how it can both Four locations will eventually affordably and sustainably spread the be selected to pre-assemble potential benefits of expansion across components of the expanded the UK whilst securing the capacity airport before transporting them in required to deliver the programme. consolidated loads to Heathrow.
136 Invest in infrastructure to drive growth across the UK
In our more strategic approach to infrastructure investment, a priority will be to strengthen growth and accelerate the creation of economic opportunities throughout the UK. Well-targeted investment investments in less productive can drive economic parts of the UK. The toolkit development, particularly will ensure that the dynamic when implemented as part benefits of investment are of a wider programme of considered more strategically interventions to address by improving the focus, the unique circumstances quality and transparency of each area. However, an of ‘rebalancing’ evidence in approach based solely on strategic business cases – and static analysis can favour applying it more consistently. investment in places where We would like to consider with development has already the devolved administrations ‘Transport investment must happened, and overlook how this approach might in seek to create a long-term benefits that turn work across the UK. more reliable, less infrastructure can bring to a congested and better More broadly, as set out in connected transport place. Cost-benefit analysis the Transport Investment will remain central to decision network to build Strategy148, transport a stronger, more making, complemented by investment must seek to balanced economy.’ our approach to strategic create a more reliable, programme design, less congested and better referenced previously, which connected transport network; will make use of broad-based to build a stronger, more and dynamic assessment balanced economy by techniques that reflect the full enhancing productivity and potential for infrastructure responding to local growth to support local economies. priorities; to enhance our Transport is particularly global competitiveness important to supporting by making the UK a local growth, in both urban more attractive place to and rural communities. trade and invest; and to Our Rebalancing Toolkit support the creation of will provide a framework to new housing. In addition, support high value transport we will fund a new Major
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Road Network to improve connectivity England’s Economic Heartland to by targeting funding at strategically improve prioritisation of local projects important local authority ‘A’ roads. as they work towards statutory The Transforming Cities Fund will status. This includes by providing provide £1.7bn for projects that improve £6m to support the development and connectivity, reduce congestion delivery of rail and motorway projects and utilise new mobility services in the Midlands Connect strategy. and technology. It will transform Our transformational projects, such as local productivity in city regions, for High Speed 2, will offer opportunities example, by linking the towns around for local development across their our cities to city centres, and to each routes. £300m will be invested to other. Half of this funding will be ensure High Speed 2 infrastructure allocated through a competition for can accommodate future Northern transport projects in cities, with the Powerhouse and Midlands rail services. remainder allocated to the six combined This will enable faster services between authorities with elected metro mayors. cities in the north, including Liverpool and We will continue to strengthen local Manchester, Sheffield, Leeds and York, decision making on infrastructure. and from these cities to the East Midlands We will make the most of places’ and London. This will realise benefits strengths through our Local Industrial across the UK for decades to come. Strategies and City Deals, and we will Respondents to our Green Paper lend local authorities in England up to consultation highlighted the importance £1bn at a discounted interest rate to of housing to the economic success of support local, high-value infrastructure our cities and regions. As detailed in projects through the Public Works the Places chapter, we have announced Loan Board, with corresponding shares a comprehensive policy package that available to local authorities in Scotland will raise housing supply by the end and Wales. As respondents to our of this Parliament to its highest level Green Paper consultation proposed, since the 1970s, on track to reach the establishment of Sub-National 300,000 per year. This will be achieved Transport Bodies, the development of through £15.3bn of new financial Combined Authorities, enhancement support for housing over the next five of Local Enterprise Partnerships and years, taking total support to £44bn the introduction of Local Industrial over the period, as well as planning Strategies will further strengthen the reforms to make more land available for capabilities of communities to identify housing, and better use of underused their infrastructure needs and to work land in our cities and towns. Housing with central government to deliver developments require appropriate them. Transport for the North will infrastructure so we are increasing become a statutory body in April 2018, the Housing Infrastructure Fund to and the government will continue £5bn to provide the right conditions to work with Midlands Connect and for more house-building to take place.
138 To improve the productivity study will be published of construction, the in spring 2019 and will Transforming Infrastructure look at urban congestion, Performance programme decarbonisation and how will use the power of to harness the potential government spending to help of new technologies. drive the adoption of modern We have the third largest methods of construction. aviation network in the This will build on the world150 and are developing commitment made by five a new Aviation Strategy to government departments build on our strengths to to adopt a presumption in create a safe, secure and favour of offsite construction sustainable aviation sector by 2019 across suitable for a global, outward-looking capital programmes Britain. We are also making where this represents progress towards delivering best value for money. much-needed new airport This will bring together capacity in the south east. government and industry We have announced that a to facilitate implementation new Northwest Runway at of the Construction Sector ‘The Transforming Heathrow is our preferred Cities Fund will Deal, including £170m scheme for increasing provide £1.7bn for projects that improve of investment through airport capacity. We will the Industrial Strategy connectivity, reduce consider all responses to the congestion and utilise programme, Transforming public consultations before new mobility services Construction, which will deciding on the next steps. and technology.‘ support innovation and skills in the sector. As technology evolves, low cost access to space offers Our international gateways an exciting opportunity connect people and for the UK to thrive in the markets and attract inward commercial space age. We investment, keeping the are working with industry UK globally competitive. to grow our share of the Our ports handle 95 149 global space market from per cent of UK freight , 6.5 per cent to 10 per cent and we have asked the by 2030. To achieve this, National Infrastructure businesses must be able Commission to undertake to pursue new commercial a study on the future of opportunities from the UK. freight infrastructure. The
139 Industrial Strategy White Paper
Case Study: How HS2 will help to deliver our Industrial Strategy
High Speed 2 is an example of an infrastructure project that can deliver the wider ambitions of our Industrial Strategy. The project will establish a High Speed Rail network from London to Leeds and Manchester, with construction continuing until 2033. This provides a long-term opportunity to contribute to growth and productivity throughout the UK, and to support each foundation of our Industrial Strategy: Ideas People ```HS2 is working with i3P to enable `` 25,000 jobs will be supported collaboration between clients, in the construction of HS2, including government and the supply chain up to 2,000 new apprenticeships. on strategic collaborative innovation 70 per cent of these jobs will be opportunities152. outside London. ``The UK Rail Research and Innovation `` More than 3,000 permanent jobs Network will enable collaboration will be created by the operation between the rail industry, and maintenance of HS2. universities, small and medium-sized business (SMEs), and infrastructure owners to deliver innovations for both HS2 and the existing network.
140 `` Those shortlisted to ``It will make it easier for bid for the £2.75bn businesses throughout rolling stock contract Britain to access should illustrate how international markets by they will support the bringing our city regions HS2 strategic goals and closer to airports. objectives, including the Places creation of employment ``The government has opportunities and provided funding for investment in workforce communities to maximise education and skills. the wider economic `` HS2 has supported benefits of HS2 in their the development and areas. Work between opening of the National local authorities, Local College for High Speed Enterprise Partnerships Rail. 1,000 people will and other local train at the college stakeholders, Network each year. Rail and the government has been key to Business Environment ‘25,000 jobs will developing these plans. be supported in the ``Around 60 per cent of ```For example, the Greater construction of HS2, contracts within the Manchester Combined including up to 2,000 supply chain are expected new apprenticeships. Authority recognises the 70 per cent of these to be awarded to SMEs, opportunity HS2 brings jobs will be outside with suppliers required in making Manchester a London.’ to advertise subcontract more attractive business opportunities to further location. It estimates boost SME accessibility. that up to 180,000 new ``It will increase the jobs will be created by ability for start-up 2040153, adding £1.3bn to businesses outside the region’s economy154. London to connect with international investors, venture capitalists and mentors in the capital, giving them the reliability and accessibility they need to develop long- term relationships.
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We will support this, subject to business and supportive regulatory environment case through a £50m programme to for these activities, and several sites enable new satellite launch services in England, Wales and Scotland have and low gravity spaceflights from UK so far come forward with spaceport spaceports, building on £99m that plans. UK spaceports could access we are already investing to build the a global market for launching small National Satellite Test Facility. These satellites worth £10bn over 10 years151, investments will give the UK end-to- and offer low gravity flights to advance end capability in the building, testing cutting-edge science. The UK Space and launch of small satellites, boosting Agency will help industry to develop our economy and inspiring the next new technologies, infrastructure and generation of scientists and engineers. services, establishing the UK as a world We are already legislating to enable a safe leading destination for space launch.
Increasing competitiveness in the face of major global economic forces
We will invest to increase the UK’s competitiveness in transformative parts of the global economy. The shift to clean growth and the spread deploying the major interventions of the of digital technology are particularly Industrial Strategy – in innovation, skills, significant, as our infrastructure decisions business and local growth, trade and in these areas are already shaping the investment – in support of this goal. evolution of markets and encouraging the emergence of new technologies. These trends will affect the way we live, The UK’s clean work and travel, and will disrupt business economy could grow models and markets across multiple at four times the sectors over coming decades. We will 4x rate of GDP invest in infrastructure that enables the country to flourish and maximises Innovation in clean growth will be economic opportunities, supporting our important for low cost, low carbon Industrial Strategy Grand Challenges. infrastructure systems, as well as Clean Growth for realising industrial opportunities. We will increase support for clean As our Clean Growth Grand Challenge growth innovation by making this a outlines, we want to maximise the strategic priority for the Industrial advantages for UK industry of the Strategy Challenge Fund. global shift to clean growth. We will position the UK as a world leader,
142 The clean economy’s growing share of global markets
A. Clean power investment as share of global power investment
2012-2016
2017-2040 (projected)
0% 20% 40% 80%
B. Share of global construction with more than 60% green projects 2015
2018 (expected) ‘UK spaceports could access a global market for launching 0% 10% 20% 30% 40% small satellites worth £10bn over 10 years, and offer low gravity flights to advance C. Global market share of electric vehicles cutting edge science.’
2015
2040 (projected)
0% 20% 40% 60%
Sources: A: Frankfurt School - UNEP Collaborating Centre (2017) Global Trends in Renewable Energy Investment 2017, Bloomberg New Energy Finance (2017), New Energy Outlook 2017 B: Dodge Data & Analytics (2016) “World green building trends 2016: developing markets accelerate global green growth” C: Bloomberg New Energy Finance (2017) “New Energy Outlook 2017”
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This will build on the more than market design, taxation and £2.5bn of government investment regulation. We will also aim to in low carbon innovation by 2021 set accelerate private investment out in the Clean Growth Strategy. In and promote market growth. addition to the Faraday Challenge for battery technology, we are now announcing three new Industrial Strategy programmes in Clean Growth £100bn across energy, construction and of annual exports could be supported agriculture. We will continue to build by the UK’s clean economy by 2030 our international partnerships in clean growth research and innovation: the UK is a proud member of Mission Our approach is to undertake a Innovation – a global initiative that aims comprehensive package of measures to reinvigorate and accelerate the global to promote the uptake of zero emission clean energy revolution. And we will vehicles. We have announced a further strengthen support to commercialise £100m for the plug-in car grant to new clean technologies through incentivise the purchase of battery our investments in patient capital, electric vehicles, and we are committing beginning with a new equity fund for to 25 per cent of the cars in central which we will provide up to £20m. government department fleets being electric by 2022. We are announcing We will use all the government tools an additional £200m of public available to support innovation in investment, to be matched by private a low carbon economy including investment to create a new £400m
144 Charging Infrastructure Many of our stakeholders Investment Fund, and we will have called on us to take a regulate to support further ‘whole systems approach’ expansion of the charging to the decarbonisation infrastructure network. of energy infrastructure After the Grenfell Review, systems. We agree with this we will update building principle, and will position regulations to mandate the UK as a leader in that all new residential clean and efficient power, developments must contain transport and heat through the enabling cabling for an integrated approach charge-points in the homes. to decarbonising these We will also provide £40m increasingly connected to support new technologies systems. We aim to for on-street and wireless implement our Smart charging. By acting in this Systems and Flexibility Plan way to strengthen the in full by 2022, enabling the growth of markets for clean electricity system technologies in the UK, we to work more flexibly and will support the development efficiently. The zero emission ‘We are announcing of the UK supply chains road transport strategy, to an additional £200m that will create jobs and be published in the coming of public investment, drive future exports. months, and work on the to be matched by options for the long-term private investment, We will promote overseas to create a new investment in the UK’s clean decarbonisation of heating £400m Charging economy and strengthen our will build on this. They will Infrastructure Investment Fund.’ support for UK exporters support the growth of through better identification markets for technologies that of overseas opportunities, create synergies between industry briefings, overseas systems, such as energy missions, pavilions at key storage, smart meters, international events and vehicle-to-grid charging campaigns for sectors and heat networks. and industries that are delivering clean growth. We will also promote the UK’s exceptional expertise through the Green is GREAT campaign to amplify the UK’s global reputation for excellence in this area.
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An important benefit of a cleaner with the most challenging pollution economy is cleaner air. We are problems to help individuals and determined to tackle air pollution businesses adapt as measures to and support affected areas, given improve air quality are implemented. the significant negative impact it has This new fund is in addition to the on public health, the economy and £255m provided to implement the the environment. We will provide Air Quality plan earlier this year, and £220m for a new Clean Air Fund that takes the total amount invested in will allow local authorities in England cleaner air since 2010 to £3.2bn.
Case Study: Smart Islands programme on the Isles of Scilly
Located in the Atlantic Ocean, 28 company and monitored through an miles from the mainland, the Isles of ‘internet of things’ platform. Energy Scilly face challenges in installing new audits, monitoring and training will be infrastructure, with high costs shared provided for free, young people will among a population of only 2,500 have the opportunity to undertake people. Taking on these challenges, internships and develop STEM skills, a new Smart Islands programme will and support will be provided to 10 use smart grid technology to improve supply chain businesses in the region energy provision, reduce costs and to develop new products and services support local growth. for the programme. As one of the first The Smart Islands programme of its kind, and a model that will be will aim to transform the islands’ scalable to other rural communities infrastructure, with its goals to provide and cities across the world, the 40 per cent of electricity using programme offers the potential to renewables, to cut electricity bills by build and export UK expertise. 40 per cent, and for 40 per cent of The programme is a partnership vehicles on the islands to be electric or between the public and private low carbon – all by 2025. sectors, including the council, Hitachi, The programme will pilot an integrated Moixa, PassivSystems, and other local smart energy system to improve partners. The Cornwall and Isles of energy efficiency and manage energy Scilly Local Enterprise Partnership has demand, incorporating new low agreed in principle to provide up to carbon and smart technologies, such £2.95m to support the programme, as electric vehicles. It will be operated funded through our Local Growth by a local community energy services Fund.
146 The dramatic reduction in the cost of offshore wind is an example of how business innovation can be supported through effective market design
Funding will start from Innovation and system ‘A new Smart Islands programme 2018, and will be allocated efficiency will be central will use smart grid competitively to local to this over the long term. technology to authorities in England with The dramatic reduction improve energy provision, reduce the worst pollution problems. in the cost of offshore costs and support More generally, we will wind is an example of how local growth.’ expect local areas in England business innovation can to consider clean energy and be supported through the economy-wide shift to effective market design. clean growth as important We will carefully consider elements in the development the findings of Professor and implementation of Dieter Helm’s review into Local Industrial Strategies. the cost of energy155, and As these transformational act on further opportunities changes in our energy for cost reduction in systems take place, we the power sector. will remain committed to minimising energy costs for households and businesses.
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Moving towards a regenerative circular economy
The economy exists within the r aising the resource productivity natural world, and cannot be of businesses, including through separated from it. Energy and the promotion of recycling and materials are essential contributions strong secondary materials markets to the production of goods and where products are designed with services, and a healthy society efficiency and recyclability in mind; depends on a healthy environment. w orking in partnership with food The Natural Capital Committee has businesses ‘from farm to fork’, advised that carefully planned and through the Courtauld Commitment targeted investments in natural to deliver a 20 per cent per capita capital – such as woodland planting, reduction in food waste by 2025; peatland restoration and wetland creation – can deliver significant s upporting innovative and economic growth, and generate highly-efficient precision agriculture returns of up to nine times the costs. through the Industrial Strategy programme: ‘Transforming food A linear ‘take, make, dispose’ production, from farm economy risks eroding the natural to fork’; capital central to its long-term a new Bioeconomy Strategy growth through resource depletion that will set out a framework for and environmental pollution. growth in the sector to develop We are committed to moving towards new low carbon bio-based a more circular economy – to raising products and processes; and productivity by using resources more c ontinually strengthening our efficiently, to increasing resilience policies in line with our national by contributing to a healthier ambitions of zero avoidable environment, and to supporting waste and a doubling of resource long-term growth by regenerating productivity by 2050, including our natural capital. Our measures through our 25-year Environment to achieve this will include: Plan and a new strategy for a n approach to infrastructure resources and waste. investment that aims to regenerate natural capital, as set out in this chapter;
148 In the more immediate We can also reduce costs term, energy efficiency and for the UK as a whole by reforms to the retail energy making intelligent use of market will provide the our oil and gas assets and opportunity to lower bills. expertise. While the move Up to £6bn could be saved towards clean growth is in 2030 through investment clear, oil and gas remains in cost effective energy one of the most productive saving technologies in the sectors of the UK economy, industrial and commercial supporting 200,000 jobs sector156. We will encourage directly and in the supply greater investment in energy chain157, and generating efficiency measures and £24bn in annual exports158. technologies, including by The emerging shale gas developing a new scheme industry offers the prospect to support investment in of creating jobs, enhancing industrial energy efficiency, the competitiveness of to help large businesses downstream sectors and install measures that will building up supply chains. cut their energy use and We are considering how to ‘We are committed bills, as we as improve implement our proposal to… raising their productivity. We are for a Shale Environmental productivity by developing a wider package Regulator. We will support using resources of measures to support the development of these more efficiently, to increasing resilience businesses to improve industries while recognising by contributing their energy productivity the devolved nature of to a healthier and increase their energy planning in the devolved environment and to efficiency by at least 20 nations, and will work supporting long- term growth by per cent by 2030, and will with the sector to explore regenerating our consult on this in 2018. We its potential contribution natural capital.’ have also launched calls to clean growth through for evidence on additional technologies such as carbon measures to build a market capture, use and storage, for energy efficiency and the hydrogen economy. among homeowners, and in ensuring the public sector leads by example in encouraging wider markets for energy efficiency.
149 Industrial Strategy White Paper
The circular economy replaces extraction and waste with restoration and regeneration. Products, components and materials are reused in ways that maintain their utility and value as they move through biological and technical cycles159.
Mining/materials manufacturing Biological materials Technical materials Farming/ collection
Parts manufacturer Restoration Product manufacturer Biochemical Recycle feedstock Service provider Refurbish/ remanufacture
Cascades Reuse/redistribute Biogas Maintenance
Anaerobic digestion/ Collection composting Extraction of Energy recovery biochemical feedback
Landfi ll
We will become a world leader in 5G, and provide reliable, high-speed connectivity to our towns, cities and rural areas
150 Digital The world is becoming to ensure there is increasingly digitalised, connectivity where people and digital connectivity has live, work, and travel. We are rapidly become an essential building on the success of requirement for the way our Superfast Broadband people live and do business. Programme, which will As well as providing improved provide 95 per cent of UK connectivity we have an premises with access to superfast broadband by opportunity to develop 161 digital technologies that we the end of this year . can export to the world. We are also taking steps to As we have set out in the facilitate the delivery of the Digital Strategy160, we are next generation of digital already taking action to connectivity, to bring about improve connectivity for UK faster and more reliable businesses and consumers connections throughout the and we are working with UK. We have announced industry and Ofcom, the an additional £385m for investments in digital ‘We are... taking communications regulator, steps to facilitate the delivery of the next generation of digital connectivity, United Kingdom mobile data traffi c to bring about faster and more reliable connections Total UK mobile data traffi c throughout the UK.’
120
100
80 millions
s, 60 te
by 40 Giga 20
0 2011 2012 2013 2014 2015 2016
Source: Ofcom (2016) “Connected Nations Report 2016”
151 Industrial Strategy White Paper
GATEway (Greenwich Automated Transport Environment) is an £8m research project, led by TRL, to understand how to overcome the technical, legal and societal challenges of implementing automated vehicles in an urban environment
Roll-out of super-fast and ultra-fast broadband in the UK compared to the rest of the G7
Availability of fi xed broadband networks by advertised speeds, 2015
=10Mbits/s 100% =30Mbits/s =100Mbits/s 80%
households 60% of 40%
20% Perc entage 0 UK Japan France Germany US Spain Italy
Source: Ofcom (2016) “The Communications Market Report: International”
152 infrastructure, taking total see £10m invested to create investment from the National facilities where the security Productivity Investment Fund of 5G networks can be to £740m, and total public tested and proven. A £5m investment to over £1bn. trial to test 5G applications Our ambitious 5G Strategy and deployment on roads in outlines the policies that will 2018, will help to test how put the UK at the forefront of we can maximise future the next generation of mobile productivity benefits from technology by creating the self-driving cars, building conditions for the market on the work already to develop and to deploy progressing on connected 5G in a timely and efficient and autonomous vehicle manner. An upgrade to our trials in the West Midlands. 5G Strategy will be published The National Infrastructure before the end of year. Commission will also launch a new innovation prize Fundamental to this success to determine how future is the 5G Testbeds and roadbuilding should adapt Trials Programme. The to support self-driving cars. programme will harness ‘The 5G Testbeds and To support the path to 5G, Trials Programme... areas where the UK has a will harness areas competitive advantage – such we will provide additional where the UK as in scientific research, government investment of has a competitive advantage – such as engineering talent and our up to £35m to fund a trial of technical and commercial in scientific research, rich variety of technology engineering talent businesses. It will help solutions to high-speed, and our rich variety deliver projects in phases, reliable connectivity on of technology businesses.‘ starting with an initial £25m the train via trackside competition for projects in infrastructure. This will different industry sectors. be used to upgrade the This builds on £16m of Network Rail test track in existing investment in the Melton Mowbray, install 5GUK test network facility trackside infrastructure – a world-leading project along the Trans-Pennine being delivered by three route between Manchester, universities to develop a Leeds and York, and support 5G test network facility. the rollout of full-fibre and 5G networks. It will build on We will invest a further existing projects, such as £160m in new 5G Project SWIFT (Superfast infrastructure. One of the Wi-Fi In-carriage-for Future first projects to benefit will Travel), a joint venture
153 Industrial Strategy White Paper between CISCO, Network Rail and Our ambition is for ten million premises Innovate UK that will facilitate a rail Wi-Fi to be connected to the ‘full-fibre’ trial between Glasgow and Edinburgh. network, with a clear path to national 5G deployment will require a boost coverage over the next decade. More in infrastructure investment and we investment in fibre and ultrafast will work with Ofcom to facilitate this. services is being supported by the In future, infrastructure sharing and Digital Infrastructure Investment neutral host models, where service Fund. This has accelerated roll-out by providers pay for access to networks increasing access to private finance owned and maintained by third-parties, for businesses involved – encouraging could become more widespread to new entrants to the market and support dense networks in connectivity unlocking over £1bn in investment. hotspots and to provide wide area We have made significant progress coverage in hard to reach areas. in helping to create the conditions for In addition to becoming a world leader in investment in full-fibre connectivity, 5G, we need to provide reliable full-fibre through our investments programmes, connectivity to our towns, cities and rural the introduction of a five year business areas. Only three per cent of the UK has rates relief for fibre infrastructure full-fibre coverage – where full-fibre can deployed from April 2017, and the connect directly to the premises with establishment of a Barrier Removal significantly enhanced data capacity – Task Force. To build on this, we will compared with 70 per cent or higher in undertake a review of telecoms market, Spain, Portugal, Japan and South Korea. to understand businesses’ incentives for investment in new digital infrastructure,
Digital rail technology will transform the railways, enabling trains to run more frequently, at lower cost and greater resilience
154 establishing a clear evidence investment in the UK’s future base to determine what, digital infrastructure. We will if any, additional policy also publish a Statement of interventions may be needed Strategic Priorities next year to deliver our objectives setting out our objectives in whilst promoting a stable relation to the widespread environment for investment. availability of fixed and It will take into account the mobile connectivity. expected developments in Full-fibre is the gold the regulation of the telecoms standard for fast and reliable market and will assess: broadband. We are investing t he barriers to investment £200m in the Local Full-fibre in digital infrastructure Networks Challenge Fund and next-generation to stimulate commercial digital connectivity, now telecoms network providers and over the coming to build more full-fibre decades including cost, connections to homes levels of demand, and and businesses across the market structures; UK. £10m of this has been h ow investment incentives allocated to pilots, including a ‘Our ambition is for vary between different £2m pilot voucher scheme in ten million premises Aberdeenshire, Bristol, Bath to be connected to areas of the UK and across the full-fibre network, different parts of the and north-east Somerset, with a clear path to telecoms market; and Coventry and Warwickshire, national coverage and West Yorkshire. The over the next what policy changes remaining £190m will be decade.’ the government should competitively allocated consider to encourage through a Challenge Fund, greater investment in new open to local areas, with digital infrastructure. These funding awarded to those may include encouraging areas that can best leverage greater competition, private sector investment other measures that can in building and extending increase the attractiveness local fibre networks. of investment through changes in the relative Digital technology will risks and returns, or direct transform our railways, government intervention. allowing more frequent, more reliable services, and we want A report, to be published in Britain to be at the forefront summer 2018, will identify of developing this technology. options for incentivising
155 Industrial Strategy White Paper
We have announced £5m to embed east and east London lines, alongside Digital Railway technology between funding to develop a Digital Railway Manchester and York. In addition, we will upgrade on the Moorgate branch. provide £84m for best-in-class, state- Network Rail will work with stakeholders of-the-art in-cab digital signalling across to develop a strategy to grow our a range of trains, and £5m to develop skills and expertise in Digital Rail. a Digital Railway upgrade on the south
Case study: Vodafone and CityFibre
The government’s ambition to Construction of the first phase of provide ten million premises with deployment to one million premises ‘full-fibre’ will require new ways is due to start in the first half of of funding and delivering network 2018 and will be largely complete infrastructure. A long-term strategic in 2021. The first towns and cities partnership between Vodafone and to benefit from the roll out will CityFibre is the market’s response be announced over the coming to this challenge. It will bring gigabit- months and the first customers capable full-fibre broadband to up connected towards the end of 2018. to five million homes and businesses by 2025, comprising 50 per cent of the government’s target.
156 Data
Our country has world-class data, from the highest quality geospatial and climatic analysis to company information. We are committed to For example, we will explore making this data available to means of identifying innovators and businesses businesses with scale up throughout the UK to create potential, and encouraging products and services that them to access the support will transform our economy available to help them and society. We want the reach their potential. We UK to be the best place are working to harness data to start and run a digital from across the government business. Strengthening to identify those businesses public confidence in data, with greater propensity and giving greater clarity to successfully export, to business, will support and to provide them with measures to help the appropriate support. We will ‘We are committed to tech industry to flourish, report on progress next year. making our world- class data available reinforcing the UK’s position The UK has some of the to innovators as one of the world’s best geospatial data in the and businesses leading digital economies. throughout the UK world, much of it held by to create products We are working to public bodies. To make the and services that improve collaboration most of the value of this will transform our economy and on data sharing between data, support the growth society.’ agencies, for example, of the digital economy and between HM Revenue and consolidate the UK’s position Customs, the Department as the best place to start and for Business, Energy and grow a digital business, the Industrial Strategy, Local government will establish a Enterprise Partnerships new Geospatial Commission and Growth Hubs to to provide strategic oversight support the objectives of of the various public bodies the industrial strategy. that hold this data.
157 Industrial Strategy White Paper
Case study: Transport for London – Turning Data into Knowledge
For almost 10 years, Transport for T wo-way data - TfL receives London (TfL) has been releasing significant data from those it open and free data on timetables, shares with, gaining an better service status and disruption. This understanding of journeys in has created a market for developers London to improve operations; and to deliver more than 600 apps that igh-value job creation - It directly have revolutionised users’ journeys. supports around 500 jobs, with Deloitte estimates that the release of a further 230 indirect jobs in the open data by TfL is generating annual supply chain and wider economy economic benefits and savings of up that have also been created. to £130m for travellers, London and TfL itself163. Use of TfL’s open data The benefits are illustrated by provides the following benefits: Citymapper, which provides its users across 40 cities with a smart view S aved time for passengers - of how to travel to their destination. Greater certainty of when the Based on data generated by the next bus or Tube will arrive app, Citymapper have sought to is saving time equivalent to route public transport in a way £70m to £90m per year; which optimises user need and has Creating commercial opportunities been granted a six-month license for third party developers - to operate a weekend night bus Access to data has increased the route between London stations. contribution of developers to the London economy of between £12m and £15m per year;
158 To further boost the digital right will remove friction economy, the government and allow businesses and will work with Ordnance government to run more Survey (OS) and the new quickly, simply and securely Commission, by May 2018, – helping realise the potential to establish how to open of the UK’s digital economy up freely OS MasterMap and increasing productivity. data to UK-based small In support of our Grand businesses in particular, Challenge on data and under an Open Government artificial intelligence (AI), Licence or through an we are establishing a new alternative mechanism, Centre for Data Ethics and while maintaining the Innovation to enable and OS’s strategic strengths. ensure safe, ethical and We are providing £80m ground-breaking innovation over the next two years in AI and data-driven to support this work. technologies. The centre will work with government, regulators and industry, as well as across sectors and ‘Now is the right £80m applications, to ensure that time to harness the over the next two years our regulatory regime fully growing momentum around data-driven to support our work in data supports – and removes technologies, placing barriers to – the ethical and the UK at the cutting We are exploring how innovative use of data and AI. edge of trusted This will lay the foundations and innovative the government can best deployment of data.’ facilitate conditions for for AI adoption which could secure, trusted, personal benefit households across identity assurance in the UK by up to £2,300 per 164 the private sector. The year by 2030 , and ensure digital economy relies on that we maximise the positive trust to work effectively impact of these technologies – transactions can be on our economy and approved and paid for society. Now is the right with a digital signature; time to harness the growing property and goods can momentum around data- be transferred; entrance driven technologies, placing and access to resources or the UK at the cutting edge premises can be permitted of trusted and innovative or prevented. Getting this deployment of data.
159 Industrial Strategy White Paper Minimising business energy costs and raising resource productivity
Minimising business energy costs resolve, current compensation will remain in place in the meantime. The framework for achieving clean growth and affordable energy was We will encourage greater investment set out in the recent Clean Growth in energy efficiency measures and Strategy and sits at the heart of this technologies, including by developing Industrial Strategy. The government is a new scheme to support investment committed to minimising energy costs in industrial energy efficiency, to help for businesses, to ensure our economy large businesses install measures that remains strong and competitive. We will cut their energy use and bills, as recognise that our industrial electricity well as improving their productivity. costs are currently higher than those We will develop a package of measures of our competitors. We will act to to support businesses to further address this by taking steps to reduce improve their energy productivity costs both now and in the future. and will consult on this in 2018. Our goal is to enable business and Minimising costs in the short term industry to improve energy efficiency We already provide substantial by at least 20 per cent by 2030. compensation to eligible energy We are consulting on the design of intensive industries for the cumulative a new £18m programme to support costs of energy and climate policies, investment in the recovery and re- reducing the impact of these policies use of heat from industrial processes, on their electricity bills by up to around leading to lower bills, and potentially 80 per cent. We are moving from a new revenue streams for industry. system of compensation to one of exemption for some of these costs, Medium term to make the cost saving more direct Competition in contracts for clean and easier for industry to access. power generation is already driving We will consult on widening eligibility down costs: the costs of offshore wind for the exemption schemes for have fallen by half since 2015165. We energy intensive industries to address will carefully consider the findings of potential intra-sectoral competitive Professor Dieter Helm’s independent distortions, taking into consideration review into energy costs in the power the impact on consumer bills. As sector, and take further action to state aid considerations for the Feed- reduce costs where appropriate. in-Tariff scheme will take longer to
160 The Smart Systems and Flexibility Raising resource productivity Plan launched this year aims to save We will support businesses’ long- consumers and businesses up to £40bn term productivity through innovative cumulatively over coming decades. approaches to resource efficiency. We We will continue to update this to keep will position the UK as a world leader pace with developing technology. in sustainably maximising the value Longer term we extract from our resources, while minimising the negative impacts of Innovation is crucial to reducing their extraction, use and disposal. costs over the long-term. We will We will take further measures to invest over £2.5bn in low carbon strengthen the markets for secondary innovation by 2021 as set out in materials, and in 2018 we will publish the Clean Growth Strategy. a new resources and waste strategy We are investing up to £100m to support businesses inThe m axOEiCmDis raingnks the UK as one of the best to support innovation in low the economic benefits prof lamces g troea statertr a nd carbon industrial processes and resource productivity. Agsrow part a b ousfin thesiss technologies such as carbon work, we will work with industry to capture, use and storage, and explore options to introduce electronic electrification, and we will develop a tracking of waste. This will support the framework to support the long-term development of new markets for waste development of these processes. materials and improve the efficiency of We will explore further opportunities enforcement, creating a level playing to support innovation and cost field for the waste and resources sector reduction through the Industrial This will build on the foundations set Strategy Challenge Fund, through out in our 25 Year Environment Plan. the negotiation of Sector Deals, and through the implementation together with industry of the 2050 Decarbonisation Action Plans that we have agreed with seven of the most energy intensive industrial sectors.
161 Industrial Strategy White Paper
Business Environment
162 The availability of high quality infrastructure is essential for our lives, work and future growth and prosperity.
163 Industrial Strategy White Paper Business Environment
To be the best place to start and grow a business. The United Kingdom has a global Our managers are, on average, less reputation as a good place to do proficient than many competitors, and business. A new business starts up we should make better connections every 75 seconds, and we are home between high-performing businesses to five of the top 10 fastest-growing and their supply chains. businesses in Europe. People looking Our Industrial Strategy aims to make to grow or relocate a business come to Britain the best place to start and Britain confident in our high corporate grow a business, and a global draw for standards. The OECD ranks us as one innovators. We will drive productivity of the best places to start and grow a in businesses of all sizes by increasing business; we have the most competitive collaboration, building skills and tax rates and we are welcoming to ensuring everyone has the opportunity global talent and disruptive start-ups. of good work and high-paying jobs. We Our challenge is to improve how we will ensure the financial sector is better spread the best practice of our most connected to the rest of the economy, productive businesses. We are one of driving impactful investments. We the world’s great financial centres, yet will create a business environment growing businesses sometimes face equipped for the challenges and difficulty in accessing finance. opportunities of new technologies and ways of doing business.
Key policies include:
`` launch 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 `` drive over £20bn of investment in innovative and high potential businesses, including through establishing a new £2.5bn Investment Fund, incubated in the British Business Bank. `` a review of what actions could be most effective in improving productivity of SMEs, including how to address the ‘long tail’ of less productive businesses.
164 Britain’s prosperity is nationalising, subsidising, founded on being an open, protecting and directing liberal free-trading economy large parts of the economy. in which new businesses This modern Industrial can be created easily; Strategy, learning the lessons existing businesses can of the past and drawing on attract investment from our the detailed, wide-ranging world-class financial system response to our Green Paper, and investors can act with charts a different approach. confidence in the quality of The role of the government our corporate standards. is not to pick favourites and The British business subsidise or protect them; environment is one of the rather, it is to ensure that the most admired globally as British business environment one of the best places to is shaped by competition and start, locate and grow a contestability in which the business166. A new business best businesses of all sizes starts in Britain every 75 can thrive. No incumbent seconds. We are home to – however large and ‘A new business some of the biggest, most longstanding – should feel starts up in Britain respected businesses, immune from this challenge. every 75 seconds, including half of the top 10 Anyone with a good idea and we are home fastest-growing businesses and the entrepreneurial to... half of the top 167 10 fastest-growing in Europe . The first ambition to make it a reality businesses in foundation of our Industrial should see the UK as the Europe.’ Strategy is to maintain best place to do business. and enhance the business Most of the interventions set environment that is so out in this paper apply across essential to the UK’s success. the whole economy, and to In the past, industrial a wide range of businesses. strategy came to be associated with attempts by the government to control business through
165 Industrial Strategy White Paper
The UK’s record in creating new businesses compared to other countries
Percentage change in the number of new businesses created between 2007 and 2015 UK France Sweden Netherlands Norway Canada Denmark Portugal New Zealand Russia Finland USA Australia Germany Iceland Spain Belgium Italy -40% -30% -20% -10% 0% 10% 20% 30%
Source: OECD (2016) “Entrepreneurship at a Glance 2016”
A significant improvement in our level We must build on our strengths, of technical skills, the upgrading of our as exemplified by sectors such as infrastructure, investing in research and automotive, aerospace, financial development (R&D) and realising the and professional services, creative full potential of communities are long- industries and life sciences. Their term commitments to all businesses, success has often been enhanced current and future. Some sectors through collaboration – by businesses, that will shape our lives in the years the government, research institutions, ahead have not yet been created; they universities and colleges – to align will come with future technologies policies, enhance investments and and entrepreneurial endeavours. create sector-wide institutions.
166 Building on our strengths
We are ranked as one of the best places in the world to start and grow a business168
Over 1,100 businesses start every day in Britain - or one every 75 seconds169
We are now home to half of the top 10 fastest growing companies in Europe170
‘Britain’s prosperity is founded on being an open, liberal free- The number one destination trading economy in which new businesses in Europe for inward can be created easily.’ investment171
The UK ranks in the Global fifth Innovation Index172
167 Industrial Strategy White Paper
Over the last decade successive Our national approach to the business governments have developed a environment must be mirrored partnership approach to working at local level so that our cities, with sectors. This is exemplified by towns and counties can attract and the Office of Life Sciences, and the cultivate successful businesses. creation of the jointly-funded Advanced For most of the last century, Britain Propulsion Centre and Aerospace experienced a shift in power from our Technology Institute. We want to build cities, towns and counties towards on past successes and to ensure we the capital. The tide has started to are working effectively with existing turn through City Deals, Growth and emerging sectors; helping to Deals, Devolution Deals and creating identify where specific interventions Mayoral Combined Authorities. Power can help raise productivity. is beginning to shift from Whitehall. Local Enterprise Partnerships in England have provided a platform for local leaders and businesses to shape is the UK policies for their area. Our Green Paper 19% corporation tax rate consultation made clear the enthusiasm for increased local decision making. The role for communities throughout We will ensure that this approach is the country in driving productivity is available to other sectors. No sectoral a major component of our Industrial initiatives should be a strategy for Strategy. Enhancing the business incumbency, and we will openly environment locally is a key objective encourage future businesses in our push for further devolution. as well as existing players. Our City In enhancing our business environment Deals, which give powers to help a nationally and locally, there are a region support economic growth, create number of components that the jobs or invest in local projects, have consultation on the Green Paper done much to bring people together revealed to be of particular importance. – from Aberdeen and the Tees Valley to the West Midlands and Cambridge – over the last six years. Our proposal in the Green Paper for Sector Deals met with an extraordinary and positive response.
168 Access to finance
Britain is well-placed as The government’s Patient one of the world’s great Capital Review consultation financial centres, with estimated that if the UK access to a deep pool had the same level of of capital and domestic investment as the US, total and overseas investors venture capital investment attracted to our reputation in UK businesses would as a rigorous jurisdiction. be £4bn more per year173. However, we have not made There is also evidence of the most of this advantage in extreme regional disparities, providing access to finance with over 70 per cent of for growing businesses. investment in 2016 made in the south east174.
Diffusion of good practice
Britain’s relatively poor One is greater access to recent record in productivity management skills. Studies is not uniform. We have suggest that the average UK some of the world’s most manager is less proficient productive businesses, but than many overseas research shows that we have competitors177, while ‘Our City Deals, which give powers to help an unusually ‘long tail’ of management skills could a region support underperforming businesses, account for a quarter of the economic growth, pulling the average down. productivity gap between the create jobs or invest UK and the US178. Another in local projects, have We are not as good done much to bring as other countries at is the availability of advice people together.’ spreading the best practice and mentoring for growing of our top performers. businesses, such as closer relationships between The Bank of England has high performers and their carried out extensive work176 supply chains to drive to understand the key more effective practice. factors for improvement.
169 Industrial Strategy White Paper
Productivity distribution by business size
Distribution of real business-level GVA per worker by business size bands 2.5%
2.0% on ti 1.5% ribu
st 1.0% Di 0.5%
0% -10 0 10 20 30 40 50 60 70 80 90 100 Productivity, GVA per worker 1-9 empl. 10-49 empl. 50-249 empl. 250+ empl.
Source: ONS (2017) Understanding firms in the bottom 10% of the labour productivity distribution in Great Britain *Businesses can have negative levels of value added per worker in specific periods when they report larger values of purchases than their total turnover. Includes all firms covered by the Annual Business Survey and excludes financial and insurance activities and real estate activities
Productivity gap between the UK’s frontier and non-frontier businesses
Productivity gap between the UK’s frontier and non-frontier businesses
£400
s £300
£200 Thousand £100
£0 2002 2004 2006 2008 2010 2012 2014 Total Frontier Non-frontier
Source: Haldane, A (2017) “Productivity puzzles” speech, London School of Economics, 20 March. *Frontier defined as top 5% of businesses by GVA per worker in a given year
170 Tackling our productivity challenge
‘Imagine [if] productivity growth in the second, third and fourth quartiles of the distribution of UK firms’ productivity could be boosted to match the productivity of the quartile above. That sounds ambitious but achievable. Arithmetically, that would deliver a boost to aggregate UK productivity of around 13 per cent, taking the UK to within 90-95 per cent of German and French levels of productivity respectively’175. Andrew Haldane, chief economist at the Bank of England.
Some of the biggest opportunities for raising productivity come in sectors of the economy that have lower average productivity levels, but where many people work and which are vital to our economy. We will work closely with sectors such as hospitality, retail and tourism on each of the foundations of productivity in order to be able to progressively drive up the earning power of people employed in these industries and enhancing our national productivity. ‘We are not as good as other countries at spreading the Parts of the UK economy is lowest in the G7179. Many best practice of our top performers. are unusual in having UK businesses, including One [factor] is underdeveloped domestic large listed businesses, are greater access to supply chains. not investing as much as management skills.’ Fixed capital investment is our competitors’ businesses another factor important to in skills, technology productivity growth. and equipment. The UK’s investment rate
171 Industrial Strategy White Paper
Fixed capital investment in the UK compared to other G7 countries
Fixed Capital Investment as a percentage of GDP for G7 countries 25%
23%
20%
18%
15%
13% 2005 2007 2009 2011 2013 2015 2017
Japan US Canada France Germany G7 Avg Italy UK
SourSource:ce: OEOECDCD (2(2017)017) “Q“Quarterlyuarterly NaNationaltional AAccountsccounts 202017”17”.. FiFixedxed CapCapitalital InInvestmentvestment isis gr grossoss fi fixedxed capitalcapital foformationrmation
Entrepreneurship and scale-ups
Whilst some small businesses are We have a great record on start-ups: happy to stay small, and are a valued over 40 businesses are created in part of the economy, many have Britain every hour and research found the opportunity to improve their that the UK ranks third amongst productivity. Entrepreneurs are adding OECD countries for start-ups181. This to the millions of small and medium is supported by a tax environment sized businesses throughout Britain that that rewards entrepreneurship. But as make a very significant contribution to the Patient Capital Review identified, our country through taxes, employing we could do better in the longer-term people and through the value of the process of building up successful goods and services they provide. businesses to reach large-scale and as However, it is right to give attention to the Scale-Up Taskforce has highlighted, the ambitious, high potential small and more can be done to increase the medium sized businesses that are so number of businesses that achieve critical to jobs and productivity180. their full potential.
172 Case study: Scale-Up Champion and Scale-Up Taskforce
In the Industrial Strategy ``better use of government Green Paper we and privately held announced the Business business data to identify Minister Margot James MP and target growing as the Scale-Up Champion businesses when they and established the Scale- need additional support; Up Taskforce, co-chaired ``enhanced leadership and by entrepreneur Sahar management capability Hashemi. The taskforce and access to talent; was set up to explore what ``greater awareness, and more the government, more take up, of equity working alongside the finance and capital to private sector, can do to help founders invest in help businesses scale up. business growth; and Supporting the ``improved access to development of the markets; through Industrial Strategy, the international trade, Scale-Up Taskforce opportunities prioritised four areas: for government procurement and better supply chain support. ‘Entrepreneurs are adding to the millions of small and medium sized businesses We need to make it easier of new businesses. As throughout for businesses of any size, discussed in the Ideas Britain that make a very significant in any location, to access chapter, there is potential contribution to our finance. More opportunities for universities to generate country.’ to operate in an environment even greater economic with advice and challenge, value from research, for especially from other example through intellectual entrepreneurial business property licensing and spin people, can help businesses out businesses. We need succeed initially and through to make sure universities their stages of development. have the resources and And we know that skills to commercialise universities and colleges have opportunities and attract more scope to be both the the investment required. originators and propagators
173 Industrial Strategy White Paper
Exports
Being an open, outward-facing our businesses can access markets economy can drive up competition. and bring in the returns. Businesses Exports and imports amounted to that export account for 60 per cent of 58 per cent of GDP in 2016, with UK the UK’s annual productivity growth183, exports valued at nearly £550bn182. deliver stronger employment growth As we leave the European Union and and pay higher wages than those that negotiate new trade deals, we should don’t. build on our strong record and ensure
Case Study: DigitalGenius – A cutting-edge AI company on an export journey
DigitalGenius brings practical huge increase in messaging volume applications of artificial intelligence from social media channels. Agents (AI) into the customer service are supported by the AI to provide operations of some major global more efficient, better service for the businesses. Its customer service customer, while the AI learns from platform combines the best of human every interaction. and machine intelligence, enabling A focus on exports has been a key businesses to live up to and exceed part of the company’s business rising consumer expectations. The plan from the start - and with the platform automates and increases support of government, has enabled the quality and efficiency of customer DigitalGenius to grow from 20 to support across communication 60 employees in one year, building channels like email, chat, social media software that is currently powering and mobile messaging. over 30 contact centres around the One of DigitalGenius’s main clients world. is a major airline company, who has used the platform to help customer service agents to cope with the
174 The competitive and regulatory environment
Government policy and the such as our proposals for regulatory environment can corporate governance and be pivotal to a good business mergers. This is done with environment. According to respected institutions such the World Bank, the UK is as the Bank of England and the seventh best country the Takeover Panel. in the world to do business, New technologies, new ways and a leader among major 184 of doing business and new economies in the EU . industries often require Our tax rates are an agile but dependable competitive. Since 2010, regulatory system to support the UK corporation tax them. Autonomous vehicles, rate has been reduced for example, raise important from 28 per cent to 19 per questions of the insurance cent, the lowest overall rate liabilities and road traffic among G20 countries. It is regulations needed if the easy to start a new business, technology is to be deployed and our competition policy properly. Investors in peer- is geared to ensuring that to-peer lending and many almost all sectors are subject fintech applications are more to positive competitive likely to trust large sums of ‘Businesses that forces. Where competition money to jurisdictions with export account is inadequate, economic up-to-date and effective anti- for 60 per cent of the UK’s annual regulators promote entry fraud regimes. productivity growth, and simulate competitive The right business deliver stronger pressure. employment growth environment demands a and pay higher wages The integrity of UK law regulatory system responsive than those that and the impartiality of our to not only today’s economy do not.’ professional bodies are prime but to the future economy reasons why businesses as well. We are committed throughout the world choose to this aim. to locate or conduct their business in this country. We continue to review and refresh our standards to lead and reflect social change,
175 Industrial Strategy White Paper
We are determined to have the right the British Chambers of Commerce support for small businesses. Smaller and the Institute of Directors, to set up businesses, without the clout of the first Small Business Commissioner. scale, can suffer disproportionally The Commissioner’s remit includes from heavy-handed regulation helping small businesses on payment and bureaucratic excess. They can issues, dispute resolution and sourcing also find themselves exposed to advice. Alongside sector-specific detrimental behaviours – intentional or support, such as the Groceries Code otherwise – by larger businesses that Adjudicator and the Pubs Code are their suppliers and customers. Adjudicator, we are committed to In recognition of this, the government providing assistance for smaller has worked with small business businesses in asserting themselves representative organisations, including amid the larger players in the economy. the Federation of Small Businesses,
Good work
High standards in the business If we are to embrace the new ways of environment also apply to people’s working that technological advances working conditions. Workers in Britain offer, it is essential that our workforce should expect to be treated well: highly should be confident that they will not productive employers not only pay their be mistreated. That is why the Prime workforce well, but also invest in their Minister asked Matthew Taylor, the staff through training and development, Chief Executive of the Royal Society of good terms and conditions and Arts, to examine the opportunities and opportunities to participate in risks around modern working practices. the way the business is run. The commissioning of the Matthew We should be proud of the way our Taylor review – and our intention to act flexible labour market has created on its recommendations – makes the UK more jobs than ever before, and that one of the first countries in the world the experience of work for most to examine how to ensure everyone people is positive and empowering. benefits from the technological The National Minimum Wage and revolution. We should look to take up National Living Wage have provided the opportunity this change brings to help to people on lower wages. When our working lives – for work that is fair tax levels and tax credits are taken and decent, with realistic scope for into account, average take home pay development and fulfilment. We start by for families with a member in full- setting out our ambition for good work time employment is higher in the UK in the ‘People’ section of this paper. than the rest of the G7 nations185.
176 The role of government
The business environment the commitments of we seek – to be the best our Industrial Strategy. place for businesses to start This means businesses and grow, that encourages should expect consistent, better productivity and strategic action from supports higher wages government to secure and good work for all – clear long-term objectives involves an active role and ensure policies in for the government. different areas are not at Alongside its responsibility odds, but align properly for regulation and taxation, to give mutual support. the public sector provides An active government or funds many of the will also be alert to new foundations of productivity opportunities to advance our – including education, Industrial Strategy, and agile vocational training, transport enough to seize them when and other infrastructure, and they appear. An example is some scientific research. in attracting investments Its procurement of around from multinational and £270bn a year of goods, foreign businesses – where works and services, from major decisions require pharmaceuticals to IT, strong government ‘Highly productive has a major impact on engagement, as illustrated employers not only the private sector186. in bringing Japanese car pay their workforce makers to the UK in the well, but also invest in their staff 1980s to the great benefit through training and of our economy. We have development, good no qualms about seeking terms and conditions £270bn to establish and maintain and opportunities to of public sector procured participate in the way positive relationships the business is run.’ goods, works and services with interested investors, has a major impact on the be they UK or overseas private sector businesses, and continually promoting, reviewing and refreshing our offer as a The government must place to do business. use its powers and make its decisions recognising
177 Industrial Strategy White Paper
Ensuring that firms can access finance is essential to their investment, growth and success
A strong theme to responses to our We are determined to create in the Green Paper was that businesses government the most effective should be able to deal with the champion and partner of business in government without having to navigate the developed world – an ambition different approaches by different which demands changes in organisation government departments. Every part of and practice. government should be encouraging and offering partnership. Businesses should feel they have a positive relationship with officials and ministers who listen to, understand and assist them.
178 Our approach
Our ambition to make the UK the best place to start and grow a business requires us to safeguard the things we do that already contribute to our success, and to act where necessary to make us even more attractive. We will drive up productivity; our future reforms can be provide more opportunities captured in this paper. We for better, higher paying are committed to continuous jobs; and shape our business improvement on the path environment to take on the set out in this strategy, and challenges and opportunities as befits its emphasis on of new technologies and innovation, we will pilot some new ways of doing business, reforms locally. This allows a especially as we leave the EU. wide range of innovation to Our Industrial Strategy is for be tested, and the lessons to the long term, and not all be learned and applied.
Acting on our commitments
‘We are determined To support high-growth unlock a total of £7.5bn to create in the government the most innovative businesses to investment, ensuring effective champion achieve their potential, we businesses can get access and partner of have launched an action to the capital they need to business in the world plan to drive over £20bn scale up and become world – an ambition which demands changes of investment into these leaders; in organisation and businesses over the next ``significantly expanding the practice.’ 10 years by: support that innovative ``establishing a new £2.5bn knowledge-intensive investment fund incubated businesses can receive in the British Business Bank through the Enterprise to be floated or sold once it Investment Scheme (EIS) has established a sufficient and Venture Capital Trusts track record. The fund, (VCTs) while introducing a through co-investment test to reduce the scope for with the private sector, will and redirect low risk
179 Industrial Strategy White Paper
` `investments, together unlocking over national security missions; and £7bn of new investment; ``continuing to work with industry ``seeding a series of private sector fund and regulators to introduce better of funds of scale, with a first wave of and more transparent reporting by investment of up to £500m, delivered listed businesses on how their capital through the British Business Bank, allocation decisions affect their unlocking double this investment productivity and by promoting more in private capital. Up to two further long-term investor stewardship. We waves will be launched, attracting a will also take forward commitments total of up to £4bn of investment; announced recently following our ``backing first-time and emerging Corporate Governance Reform Green fund managers through the British Paper, including measures to better Business Bank’s established align executive pay with long-term Enterprise Capital Fund programme, company performance supporting at least £1.5bn of new And we will promote investment investment; and in all parts of the country by: ``backing overseas investment in UK ``launching a commercial investment venture capital, expected to drive £1bn programme run by the British Business of investment. Bank to support developing clusters of We will also support long-term business angels outside London; investment by: `` identifying ways to tackle barriers ``giving pension funds confidence that faced by female-led businesses in they can invest in assets supporting accessing venture capital through new innovative businesses as part of a behavioural research commissioned by diverse portfolio. With over £2tn in the British Business Bank; and UK pension funds, small changes `` rolling out a network of British in investment have the potential to Business Bank regional managers by transform the supply of capital to autumn 2018 to ensure businesses innovative businesses; across the UK know how to access ``changing the qualifying rules in sources of investment. The network Entrepreneurs’ Relief to remove will cover England, Scotland, Wales the disincentive to accept external and Northern Ireland, with managers investment and consulting on the responding to a region’s particular detailed implementation of that needs and acting as convenors to change; improve collaboration, sharing of expertise and the creation of networks `` launching a National Security of private and public partners. Strategic Investment Fund of up to £85m to invest in advanced technologies that contribute to our
180 We will also support To increase the diffusion businesses to get access to of best practice so that debt finance by extending small and medium-sized the British Business enterprises (SMEs) have Bank’s Enterprise Finance the tools to become more Guarantee to March productive, we will: 2022 and expanding the trial innovative approaches programme to support to driving up the adoption up to £500m of loans a of modern business year. We will also work with practices. Through the businesses, lenders, insurers, new Business Basics the British Business Bank Programme, we will work and the Intellectual Property closely with Innovate UK, Office to overcome the Be the Business, and local barriers facing high growth, areas, including mayors, intellectual property-rich leading businesses and businesses. trade associations, to test and encourage SMEs to adopt technologies and practices such as new £20bn accountancy software or investment into high performance management growth, innovative systems. We will work businesses over ten years with Be the Business to explore improving ‘We will promote productivity through investment in all enhancing management parts of the country £2.5bn practices and improving by launching investment fund to be a commercial skills. This will build on their incubated in the British investment research capability and programme run by Business Bank dissemination of evidence. the British Business Bank to support developing clusters outside London.’
181 Industrial Strategy White Paper
Case Study: The Productivity Leadership Group and Be the Business
In July 2015 some of Britain’s most Alongside this, the PLG has also senior business leaders came developed a pioneering programme, together to form the Productivity Productivity through People. Through Leadership Group (PLG). Their aim this, large businesses (such as BAE was to identify practical steps to Systems, GlaxoSmithKline, John raise productivity among British Lewis Partnership, Rolls-Royce and businesses. At Autumn Statement Siemens) reach out to SMEs in their 2016, the government announced supply chain, inviting them to a up to £13m funding over three years 12-month co-funded development to support the group’s work, which programme. This is driven by focuses on improving productivity business schools in the region and through the diffusion of best practice aims to improve SME skills to boost - including management practices their productivity. Productivity and technology. through People will be scaled a In July 2017, PLG launched the ‘Be cross a number of regions over the the Business’ campaign. This aims next year. to help businesses across the UK To learn more about Be the Business, benchmark their current level of see: www.bethebusiness.com productivity, access best practice advice and improve through structured management training.
``ensure all businesses have access to a connecting businesses to the best local Growth Hub. Over the last three support available from the private years, we have established and tested and public sectors. We will also work Growth Hubs in every Local Enterprise with Local Enterprise Partnerships, Partnership area in England. We will Growth Hubs, universities and the build on this programme, providing private sector to support high potential continued funding to enable Growth businesses to scale up. Hubs to bring public and private We will launch a review of what actions sector partners together, such as UK could be most effective in improving Research and Innovation, the British productivity and growth of SMEs, Business Bank, Tech Nation, investors and universities. We want Growth including how to address what has been Hubs to carry on building their reach, called ‘long tail’ of lower productivity developing peer-to-peer networks, firms. This will include reviewing the
182 evidence and evaluating the value manufacturing in the role of digital services, data UK we will: and information in the take up ``launch a new Supply of effective business advice Chain Competitiveness and support services. We programme that will target will announce the policies areas where key businesses we intend to take forward need to improve to match following this review in the best in Europe and Autumn 2018. beyond, supporting training We will also work with and enhanced business partners to pilot and evaluate processes. the role that customer ``encourage industry leaders feedback and online ratings and the best performing marketplaces could play in sectors to improve further making it easier for SMEs to by adopting best practice assess the quality of advice. as exemplified by the This will start in the first half automotive sector. The of 2018. automotive sector intends Manufacturing is crucial to to commit to increasing the economy, providing 10 local content to 50 per cent per cent of the UK’s GVA187, by 2022, from 44 per cent, generating around 50 per as part of their proposed cent of our exports188 and Automotive Sector Deal. accounting for 70 per cent of We will support 189 ‘The automotive business-led R&D . However, businesses to access advanced manufacturing sector intends to international markets, commit to increasing supply chains are highly driving up exports by: local content from complex, with components 44 per cent to 50 per sometimes crossing borders ``working with business cent by 2022, as part to undertake a review of of their proposed several times. Our departure Automotive Sector from the EU, and any export strategy, reporting Deal.’ resulting trade arrangements, in spring 2018. The review, will create challenges and as well as the GREAT Britain opportunities for the supply campaign, will ensure the chain and many firms are government has the right recognising the benefits of financial, practical and local supply chains. promotional support in place for new and existing To boost our supply chains, exporters to sell overseas. secure internationally mobile The review will convene investment and anchor high expertise from across
183 Industrial Strategy White Paper
``government and the private sector, `` building on the new UK Export Finance including: (UKEF) initiatives, which work with - better support for medium and larger partner banks to help businesses fulfil businesses to access new markets overseas contracts. UKEF will introduce and export more; a new guarantee to banks designed to increase liquidity in the supply chain. - identifying smaller businesses with This will improve exporters’ access to the potential to succeed and grow as capital and enable their suppliers to exporters; fulfil new orders. UKEF will also launch - better signposting to online and local a targeted campaign to promote the sources of information, and access to support they offer to exporters and finance; overseas buyers, as part of the wider GREAT campaign; - working with the private sector to ensure all businesses receive high `` bringing together businesses of all quality export advice; and sizes to bid for global infrastructure contracts as a single ‘Team UK’ - s trengthening government-to- consortium, with the potential for government relationships to realise support from UK Export Finance and new export opportunities. through supply chain fairs. We are ``establishing a network of nine UK considering other ways to support Trade Commissioners, each developing British consortia, including expanding a regional trade plan covering export the approach to other sectors; promotion, investment and trade policy;
The Impact of Greater Manchester Business Growth Hub
Since 2011, ...and since 2013 it has achieved Business Growth Hub has... the following outcomes across its ten Local Authorities:
Built a network of over 17,052 jobs 34,000 businesses 1,254 start-up Offered intensive, face- loans to-face support to over 8,600 businesses £267m boost to the local economy
184 Case Study: Monster Group (UK) – A High Growth business and graduate of Goldman Sachs 10,000 Small Businesses UK programme
Established in 2007, November 2015, Rana Monster Group (UK) is an purchased a 90,000 online retailer based in square foot warehouse in York, selling a wide range North Lincolnshire to run of products from popcorn alongside her premises makers to shelving units. in York, allowing her Through Goldman Sachs to drastically increase 10,000 Small Businesses the business’ product UK, CEO Rana Harvey offerings. She also set re-evaluated the business’ up a research and R&D processes and strategy. centre in York, resulting By applying tools learned in more efficient product on the programme, development and she reduced her order increasing the company’s processing time from 29 competitiveness in the minutes to less than two market. minutes. As part of the Reflecting on her revitalised strategy, Rana experience, Rana said, rebranded her business “I had never dreamed from ‘Dazzling Dummies’ of developing an R&D ‘[We will establish] to ‘Monster Group (UK)’, site before I started a network of nine UK Trade embracing a more diverse on the 10,000 Small product range. Commissioners, each Businesses programme – I developing a regional Since Rana graduated was focused on driving trade plan covering from Goldman Sachs international sales. The export promotion, investment and trade 10,000 Small Businesses strategy and operations policy.’ UK in 2012, the businesses’ management modules revenues increased by changed all of that”. over 330 per cent. In
185 Industrial Strategy White Paper
We will support businesses to access international markets, drive up exports and improve productivity Image: Port of Felixstowe
`` piloting intensive export growth `` continuing to develop the great.gov.uk support for potential scale-ups platform ensuring it meets the needs and particularly ambitious medium of more UK businesses. The platform sized businesses. This includes co- already provides export opportunities, investment to access commercial connections and overseas buyers, on- export support services, with each boarding onto e-commerce websites eligible business offered a grant on and attracts inward investors. a 50:50 match funded basis. We will work with Local Enterprise Partnership And we will help UK businesses to Growth Hubs to ensure joined up and grow internationally through investing easily accessible export and business overseas. The government is evaluating growth advice; through pilots a suite of products and services to support businesses investing internationally, both through market entry and expansions.
186 Already, UKEF has launched ``publishing a review of the an updated Overseas existing competition regime Investment Insurance product by April 2019, to make sure which can help to manage risk it is working as effectively for UK businesses. as it can to support an As discussed above, our enterprise economy; and; competition, legal and `` publishing a Consumer regulatory frameworks Green Paper that tackles are fundamental to our areas where markets are economic success. We have not working for consumers a reputation for a world- and businesses leading competition regime and our consumer protection framework encourages engaged, active consumers who drive high standards. We will build on this reputation, including by: `` providing the Competition and Markets Authority (CMA) with an extra £2.8m a year, so it can take on more cases against businesses that are acting unfairly, and will allow the ‘We will pilot intensive export CMA to use more of the growth support for fines it collects to meet the potential scale-ups legal costs of defending its and particularly decisions. The government ambitious medium sized businesses.’ will ensure the UK has the effective competition system it needs after the UK has left the EU; `` encouraging the CMA to identify, prioritise and tackle inadequate competition in low-productivity sectors that have an important impact on growth;
187 Industrial Strategy White Paper
Strengthening partnerships with industry: The Food and Drink Sector
The UK has a thriving, world- The opportunities – and challenges renowned food and drink sector, for food and drink raised by exiting with products in demand across the the EU are significant. To address this, globe, from Scotch Whisky to cheese, we are committing to establishing confectionery and premium seafood. a new partnership between The sector plays a key part in all local government and the whole food economies and devolved nations. It chain, working with industry leaders is the largest manufacturing sector from agriculture, food and drink in the UK and the wider food chain manufacturing, retail, hospitality and contributes £112bn GVA and employs logistics. This new Food and Drink one in eight people across the Sector Council will lead the work to UK. The enduring strength of the secure the UK’s position as a global sector is built on strong agricultural leader in sustainable, affordable, safe and manufacturing foundations. and high-quality food and drink. An The sector is at the cutting edge early task for this sector council will of innovation and world class be to build on emerging proposals science from new technologies for a sector deal in food and drink that raise agricultural productivity manufacturing, including support to and resilience while reducing transform exports and capitalise on environmental impact, to innovation its unique innovation opportunities that prolongs shelf life, helping to in sustainable agriculture and food reduce food waste. manufacturing.
We must also make sure that regulation To ensure a fair landscape for business, is as simple as possible for businesses. we will go further on reforming business In England, we will continue to support rates. On top of the major reforms to businesses to comply with regulation at business rates announced at Budget a local level. All businesses choosing to 2016, worth approximately £9bn by the set up a Primary Authority partnership end of this Parliament, we will improve will have access to assured advice, with the fairness of the system and provide a support from Growth Hubs. We will further £2.3bn of support to businesses support Local Enterprise Partnerships in over the next five years. translating and co-ordinating regulatory frameworks that focus on local business needs, simplifying the way regulation is delivered.
188 ‘All businesses choosing to set up a Primary Authority partnership will have access to assured advice with support from Growth Hubs.’
The UK has a thriving, world-renowned food and drink sector with products such as Scotch Whisky, in demand around the globe
189 Industrial Strategy White Paper
This additional support includes bringing We will attract investments from forward to 1 April 2018 the planned multinational and foreign businesses switch in indexation from RPI to CPI and and make the most of the opportunity legislating retrospectively to address the this presents not only to create so-called ‘staircase tax’. thousands of well paid jobs across Recognising the importance many the UK, but to drive up skills, increase consumers and workers place on the investment in R&D and stimulate new social contribution of businesses, we technologies and ways of working. These have also established the Inclusive companies drive up both their own Economy Partnership to address some productivity and wider domestic supply of the biggest challenges that face our chains. We will: society, encouraging collaborations ``build on our recent successes and between business and civil society, learn from international peers. We will enhancing the UK’s reputation as a work to target and support businesses global hub for social investment. to base high value investments and We will also take significant steps to operations in the UK, particularly as we advance the role of government and leave the European Union; address the points raised in the Green `` work with local partners to target Paper consultation. investments with the greatest We will: economic potential. We will identify what support is needed to attract ``make it easier for businesses to get these companies, improving the ease, the information they need online by cost, speed and ultimately the value improving the way the government of bringing investment to the UK. We provides key information and support will change our primary measure of to business, alongside continued performance from the total number of investment in the national Business projects coming to the UK, commonly Support Helpline; and used in international indices, to focus `` make the government more on delivering projects that offer the UK streamlined, responsive and focused the greatest economic impact; on delivering the highest value deals. To assist this, we will expand our existing account management approach, including the Strategic Relationship Management programme to offer a single point of contact, coordinating HMG support, to a broader range of companies.
190 `` look to increase the level of `` we will explore how best to R&D and innovation projects support multinational firms and high paid jobs coming in locating their global and to the UK. Of the world’s European headquarters 2,500 top R&D investors, in the UK, if it can be just 50 companies are demonstrated that locating responsible for 40 per cent their headquarters here of private sector investment would create the positive globally190. We will work with economic impact we would our leading universities, look for in all investments. research institutes and UK Research and Innovation to increase the proportion of R&D activity in these leading companies that takes place in the UK. UK-based R&D would increase by around a third if we attracted an additional five per cent of funding from the world’s top 50 R&D investors; `` we will also increase the rate of R&D tax credits for large firms (R&D Expenditure Credit) from ‘We will attract 11 per cent to 12 per cent investments [from from 1 January 2018 and abroad] and make the most of the provide businesses with opportunity this the confidence to make presents... to drive R&D investment decisions up skills, increase through a new Advanced investment in R&D and stimulate new Clearance Service for R&D technologies and credit claims; and ways of working.’
191 Industrial Strategy White Paper
Rolls Royce Trent XWB engine production in Derby Sector Deals
Partnerships between the government and industry on sector- specific issues can create significant opportunities to boost productivity, employment, innovation and skills. We know that these partnerships can In our Green Paper we suggested that work – from our experience of decade- we could build on this successful model long partnerships such as the Auto of collaborative working, where specific Council and the Office for Life Sciences sectors could come together under to more recent collaborations including clear leadership and make a compelling tourism, creative industries, space and case to negotiate a Sector Deal with the professional and business services. government to boost the earning power and productivity of that sector.
192 The response to our the model, with some already suggestion of Sector Deals showing tangible results. has been emphatic, not only Four of these discussions in endorsing the concept but have concluded successfully in generating a wide range with transformative Sector of proposals. Of course there Deals. We are announcing is no requirement for any Sector Deals with life sector to have a deal and sciences, construction, no deadline for concluding artificial intelligence and the one but in recent months automotive sector, with the we have begun negotiations creative industries, industrial with some sectors about digitalisation and a number potential deals. These of other sectors in advanced discussions have reinforced discussions. the enormous potential of
Building on success: our partnership with the aerospace sector
The UK government is commitment to aerospace backing the aerospace research and development sector and its strengths and the Aerospace in productivity and Technology Institute, innovation to secure a providing a decade of ‘The response to our suggestion of share of the growing global certainty. This gives Sector Deals has market. The Aerospace industry confidence been emphatic, not Growth Partnership (AGP), to invest for the long only in endorsing a strategic partnership term, bringing the total the concept but in generating a wide between the government commitment to nearly range of proposals.’ and industry, is focused £4bn by 2026191. Such on helping shape and government-sector influence a business partnership supports environment that tackles technological innovation, barriers to growth, boosts promotes competitiveness, exports and grows high and anchors key value jobs for the UK manufacturers such as aerospace sector. Airbus, Rolls-Royce and In 2016, the government GKN in the UK. extended a funding
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Life Sciences Sector Deal
The government and the life sciences sector have agreed to a transformative, multi-billion pound Sector Deal, ensuring that the UK remains at the forefront of innovation in this sector. The Sector Deal will help ensure new and medium-sized business sector, pioneering treatments and medical major health charities such as the technologies are produced in the UK, Wellcome Trust and Cancer Research improving patient lives and driving UK, and the globally-admired NHS. economic growth. The deal involves The Sector Deal builds on the Life substantial investment from private Sciences Industrial Strategy, which and charitable sectors and significant Professor Sir John Bell led on behalf of commitments in research and the sector. Published in August 2017, it development from the government. provided a vision where industry, the The life sciences sector is highly government, the NHS and charities productive and export focused, can all contribute to make the UK an generating £64bn of turnover and attractive location for businesses to employing more than 233,000 invest and for patients to benefit. It is scientists and staff192. The UK is home the first in a series of deals we intend to world-leading businesses such as to agree with the sector to realise this GSK and AstraZeneca, a strong small vision.
194 What is in the deal? Reinforcing the UK Health Advanced Science offer Research Programme Following a long-term The Health Advanced collaboration, Novo Nordisk Research Programme this year has invested £115m (HARP) is an ambitious in a diabetes research shared endeavour, with the innovation centre in Oxford. aim of finding solutions Other new investments will be to the major healthcare announced as a result of this challenges of the next 20 deal, including: years while also creating new UK industries; it is one MSD is announcing its that all parties, in particular commitment to establish a charities, are committed to state of the art life sciences developing further in the discovery research facility coming months and years in the UK, focused on early to realise fully its potential. bioscience discovery and This deal contains significant entrepreneurial innovation. concrete commitments that The new UK Discovery will lay the foundations of Centre is anticipated to the Life Sciences Industrial accommodate 950 staff. Strategy’s vision for HARP, ‘The Life Sciences QIAGEN, a leading provider including investment from the sector is highly of molecular testing solutions Industrial Strategy Challenge productive and export focused, that enable valuable insights fund into an early diagnostics generating £64 to be gained from any challenge. billion of turnover biological sample, will partner and employing Manufacturing more than 223,000 with Health Innovation scientists and staff.’ Manchester to develop a The deal is committed genomics and diagnostics to growing life sciences campus. This will attract manufacturing which, as companies from across the a major source of exports, world to the north west makes a significant of England. QIAGEN also contribution to the UK plans to expand its existing economy. operations in Manchester and this, alongside the genomics campus, has the potential to create 800 skilled jobs.
195 Industrial Strategy White Paper
Data on input from multiple stakeholders including the academic sector, the life In response to the Life Sciences sciences industry, the charity sector and Industrial Strategy, the government patients. will be working to develop a number of regional Digital Innovation Hubs that NHS Collaboration support the use of data for research purposes within the legal framework and This deal restates the commitment meet the strict parameters for sharing by the government for the NHS and data and the security standards set out industry to collaborate closely, an by the National Data Guardian. They invaluable feature of the UK life sciences will create controlled environments for landscape. real-world clinical studies, the application Skills of novel clinical trial methodology, and the comprehensive evaluation of new The government is committed to giving innovations so that patients can benefit UK businesses the workforce they from scientific breakthroughs much need to flourish while reinforcing the faster. NHS England, NHS Digital and employer-led principles of the recent Health Data Research UK will lead the reforms to technical education. delivery of this programme, drawing
The Construction Sector Deal will help build the houses, schools, hospitals, and major transport projects we need
196 Infrastructure and Clusters This deal is committed projects. Further regional to helping life sciences approaches, including in clusters flourish, such as the north of England via the the Oxford-Milton Keynes- Northern Health Science Cambridge corridor where Alliance, are expected for the government is investing further phases of the deal. in housing and infrastructure Construction Sector Deal
The government and the construction sector, through the Construction Leadership Council and with the leadership of Andrew Wolstenholme, have agreed a Sector Deal to transform the productivity of the sector benefiting the wider economy. Construction is one of the What is in the deal? largest sectors in the UK The deal, the first of a series economy – with a turnover we intend to negotiate with of £370bn194, contributing the construction sector, £138bn in value added to contains commitments to the UK economy195 and ‘Construction is one work collaboratively in three employing 3.1 million people of the largest sectors key areas: (9 per cent of the total UK in the economy - with a turnover 196 workforce) . The deal Procuring for Value of £370bn, and will substantially boost In the months ahead the employing 3.1 million people.‘ the sector’s productivity, sector and the government through greater investment in will work to ensure innovation and skills, creating construction projects across new and well-paid jobs the public and private sectors and maximising its export are procured and built based potential. This will also reduce on their whole life value, the environmental impact, rather than just initial capital improve the efficiency and cost. The sector will aim reduce whole life cost of new to develop a procurement projects and buildings to help standard and work with the build the houses, schools, Infrastructure and Projects hospitals and major transport Authority to develop cost and projects we need.
197 Industrial Strategy White Paper performance benchmarks for assets million more by the end of 2022 are and contractors and monitor outcomes commercialised as quickly as possible. including increased housing capacity, Skills for the Future productivity and pre-manufactured value among other initiatives. The construction sector, with support from the government, will work closely Industry-led Innovation in the coming months to drive increased A joint commitment to invest in a investment in skills development, whilst transformative programme which adopting a more strategic and co- brings together the construction, ordinated approach to recruitment, and digital technology, manufacturing, equipping workers with the skills that materials and energy sectors to they will need for the future. This will be develop and commercialise digital and achieved through a joint commitment to offsite manufacturing technologies. implement reforms to the Construction This will accelerate change in the Industry Training Board to make it more infrastructure and construction sector, strategic and industry led, and to enable ensuring new technologies that can the sector to make best use of funding help deliver the government’s planned from the Apprenticeship Levy. investments in infrastructure and our 2015 commitment to deliver a million homes by the end of 2020 and half a
198 Artificial Intelligence Sector Deal
The government and the artificial intelligence (AI) sector have agreed a Sector Deal to boost the UK’s global position as a leader in developing AI technologies. Taking immediate, tangible The deal will establish actions to advance our AI an enduring partnership and Data-Driven Economy between industry, academia Grand Challenge, this deal and the government through will anchor the UK as the the UK Artificial Intelligence go-to destination for AI Council, where all partners innovation and investment. will work together to promote AI’s extraordinary potential the safe, fair application is already well known: by of this technology. The one estimate it could add deal contains mutual £232bn to the UK economy commitments to encourage by 2030197. The UK is a the responsible sharing of recognised world leader in data to develop new value, developing AI: Deepmind, and to ensure that the Babylon and Swiftkey – which UK produces and retains was backed by Innovate UK the best global talent. – are all globally renowned What is in the deal? ‘[The AI Sector Deal] companies founded here. will anchor the UK as Realising the Potential the go-to destination The Sector Deal builds on the of Data for AI innovation and review by Professor Dame investment.’ Wendy Hall and Jérôme The deal recognises Pesenti, Growing the artificial the critical importance intelligence industry in of data availability, and the UK, which involved an its responsible use, to extensive range of business businesses at the forefront leaders, academics and of the development of research councils. The review AI applications. The made recommendations for government and industry will both the government and work together to establish industry, recognising the data trusts, an innovative role that the government approach to stimulating can play in creating the fair, safe and equitable data conditions to support sharing between parties. emerging sectors to grow.
199 Industrial Strategy White Paper
A Skilled and Diverse Workforce Coordination and Uptake To be global leaders in the application For the economy to realise the of AI, companies must attract the benefits of AI, the sector and the talent they need. We are committed government will coordinate action to working together to build and on solutions to shared challenges maintain the best AI workforce in and opportunities through an AI Europe, focusing on post graduate Council, a new government Office for level skills and above. We will invest Artificial Intelligence, an expansion £45m to support additional PhDs of Tech City UK to become Tech in AI and related disciplines, create Nation and a new GovTech Fund. a prestigious artificial intelligence fellowship programme and work together to develop an industry- funded masters programme.
Nissan Juke production line in Sunderland Automotive Sector Deal
This Sector Deal builds on the government’s long-standing partnership with the UK automotive sector. It ensures that the driven. The result is cleaner, UK continues to reap safer and less congested the benefits from the journeys. This Sector transition to ultra-low and Deal ensures the UK is at zero emission vehicles the cutting edge of these by continuing to build innovations through the the agile, innovative and Faraday Battery Challenge cost competitive supply and accelerating the chain needed to secure development of a world- internationally mobile leading connected and investment and anchor autonomous vehicle facilities. high value manufacturing Increasing the productivity in the UK. and competitiveness of UK The UK automotive sector suppliers, especially as new is a great success story. value chains emerge, is We are the third largest central to the deal and an European car producer industry-led productivity and have the highest improvement programme ‘We are the third productivity in Europe will be rolled out to target areas where UK suppliers largest European among major automotive car producer and producing nations198. The need to improve to match have the highest sector employs 159,000 the best in Europe. productivity in Europe amongst the people directly in vehicle What is in the deal? major automotive manufacturing, with an producing nations.’ The Sector Deal represents additional 238,000 in the the next step in the supply chain199, providing partnership between the highly skilled, well paid jobs government and industry, and increasing prosperity building on what we have across the country. already achieved together Tighter environmental and agreeing priorities to regulation and shifts in maximise opportunities consumer demand are in the transition to changing how cars are electric, connected and powered, while technology autonomous vehicles. is changing how they are
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Electrification Supply Chain The automotive sector is an area of The transition to ultra-low emission genuine competitive advantage to and CAV presents an opportunity to the UK and the sector is perfectly maximise the economic benefits to the placed to take advantage of emerging UK supply chain. The close partnership markets in ultra-low emission vehicles. of the government and the industry has The government, through the already led to significant improvements Advanced Propulsion Centre, is already in the competitiveness of the UK supporting the development of low supply chain in recent years, increasing carbon technologies that will form the the level of UK content in nationally produced vehicles from 36 per cent basis of future vehicle supply chains. 200 In order to maintain our position as in 2011 to 44 per cent in 2016 . a global leader, the government and Building on this, we are committing the industry have set out specific to rolling out an industry-led supplier actions to build on this work. improvement programme that will target areas where businesses need Connected & autonomous to improve to match the best in vehicles (CAV) Europe. The programme will provide The UK has an opportunity to assert bespoke training and enhanced global leadership in the demonstration business processes to help build the and deployment of CAV technologies, vertically-integrated supply chain capitalising on our position as a global we need in the UK to manufacture leader in research and development, the future generation of vehicles at and our competitive advantage of being volume. This will support the sectoral able to test anywhere in the UK today. ambition to increase the level of UK content in nationally produced Our support for CAV will be co- vehicles to 50 per cent by 2022. ordinated under the MERIDIAN hub, which will seek to convene UK industry around a set of long-term strategic priorities that require long-term investment to ensure we remain at the cutting edge of the industry.
202 Sector Deals in advanced discussions
The success of the Sector Deal approach is not just limited to the sectors where we have agreed deals; some of the most exciting business- led proposals have come from sectors where we are continuing our negotiations to meet their ambitions.
Creative Industries
The creative industries Innovation sector, which makes up Creative businesses are, over five per cent of the UK by their very nature, economy and employs more innovators. In recognition of than two million people, is this, we have committed to one of the fastest growing transformative investment and contributes £87bn of into pioneering immersive GVA 201. Deal discussions are technologies like virtual ongoing, building on the reality and augmented comprehensive review led reality through £33m by Sir Peter Bazalgette202 government investment which considered the needs ‘The creative from the Industrial Strategy of this diverse sector. The industries sector, Challenge Fund. We are also which makes up over deal is subject to final aligning our support for the five per cent of the agreement between the UK economy and innovative strengths of the government and the sector, employs more than sector behind the Bazalgette led in discussions by the two million people Review’s recommendations is one of the fastest Creative Industries Council to build creative clusters growing, contributing with critical input from £87bn.‘ across the UK – by funding the Creative Industries eight research partnerships Federation and others between universities and from across the sector, but business clusters, match significant progress has been funded by investment from made already across a wide universities, regions and range of potential areas the businesses involved. for agreement in the coming weeks.
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Creative Industries sector commitments
``Align private sector investment Creative Clusters competition, behind the Industrial Strategy with significant private sector Challenge Fund (ISCF) Immersive investment coming from the technologies programme. universities, regions and businesses `` Collaborate in the Arts and involved. Humanities Research Council
Government commitments
``Invest in immersive technologies, Research Council Creative Clusters such as virtual and augmented competition and investment. reality from the Industrial Strategy `` Establish a new national Creative Challenge Fund, allowing creative Industries Policy and Evidence businesses to develop the products, Centre to produce independent services and experiences of the evidence to boost understanding future. of the creative industries, including ``Support eight research partnerships how they are working together between creative businesses in clusters and across the wider of all sizes and universities with economy. significant commercial potential through the Arts and Humanities
Alongside the commitments to 1 (Exceptional Talent) visas for non- enhancing innovation in creative EEA migrants, which will also support industries, the government is also the creative industries to continue to making a number of other significant attract the best and brightest talent. commitments to the sector to support Ongoing areas for negotiation our ongoing negotiations. These include committing to extend support Ongoing discussions with a view to the UK Games Fund to 2020, a to agreeing a deal are focusing on proven approach to mentoring and how the government and sector can developing the games developers of the lift productivity and the growth of future and our recent commitment to creative clusters further, such as by increase the number of available Tier linking high-growth potential creative
204 businesses with investment increase exports and to opportunities in businesses ensure the talent pipeline with intellectual property. A creative businesses require further priority is exploring is in place. We are currently action to address access in consultation with the to the right finance so industry to define a three- creative businesses can year target for export growth scale up where demand is plus we are discussing not always met by supply, a range of measures because of well-recognised to attract, develop, and market failures, reflecting retain the talent it needs, that creative businesses including an industry-led deal in intangibles. Given careers strategy. We will the sector’s reliance on also explore opportunities intellectual property, the to work with the Institute government and industry for Apprenticeships to are discussing further joint prioritise apprenticeship action to strengthen the standards development copyright framework. for the creative industries Other areas featuring in areas where they are strongly in negotiations experiencing skills gaps and are how the government shortages. We expect the and industry can work Institute for Apprenticeships together to shape a creative to prioritise the development industries-focused trade of standards in sectors which are priorities for ‘Manufacturing strategy to significantly accounts for around the Industrial Strategy. 50 per cent of UK exports and 70 per cent of R&D. The Industrial Digitalisation and the Made productivity of the Smarter Review sector has increased four times faster than the rest of the economy.‘ The UK manufacturing faster than the rest of the sector makes a significant economy 206. But with the contribution to the UK potential for growth and to economy (£177bn GVA in build on the strength of our 2016)203. Manufacturing exports, the UK must not be accounts for over 50 per cent complacent; digital technology of UK exports 204 and over presents the sector with a 70 per cent of R&D 205. The huge opportunity to increase productivity of the sector productivity and growth as has increased four times well as create new markets.
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The application of digital technologies, leadership, adoption and innovation of such as artificial intelligence and digital technologies, can make the UK robotics, data analytics and additive a global leader in driving forward the manufacturing have already made fourth industrial revolution. The Review transformational improvements to describes how existing business support productivity where businesses have systems can be effectively co-ordinated exploited their potential, but the and how people across the country opportunity exists to go further. can access the training they need to The visionary and ambitious industry-led take advantage of the skilled jobs that Made Smarter review207 into industrial this transformation will generate. digitalisation, led by Professor Juergen On-going discussions between industry Maier, Chief Executive of Siemens UK, and the government on a Sector Deal are sets out the significant opportunities focused on how the ambitions set out in to be gained by the development Made Smarter can be realised. We are and adoption of these technologies discussing how we can build on existing across all UK manufacturing sectors. pilot activities, align programmes in areas The Review projects a substantial such as skills and R&D and coordinate increase in growth over the next of institutions, such as Catapults and decade complemented by a reduction research bodies to help realise the of CO2 emissions and an increase in opportunities Made Smarter highlights skilled jobs throughout the economy by for manufacturing across the UK. capitalising on industrial digitalisation. The recommendations in the review emphasise how a strong partnership between manufacturing businesses and the government and a focus on
Nuclear
The nuclear sector is integral to of ambitious proposals to increase increasing productivity and driving competitiveness and achieve greater growth across the country. Nuclear value at both national and regional levels. is a vital part of our energy mix, Industry-led proposals for a Nuclear providing low carbon power now and Sector Deal focus on how, working into the future. The safe and efficient with the government, substantial cost decommissioning of our nuclear legacy reductions can be achieved across the is an area of world-leading expertise. The UK’s new build and decommissioning nuclear sector, under the leadership of programmes. There are shared interests Lord Hutton, is in advanced discussions in improving productivity and the with the government on a range
206 opportunities to improve workforce needed for the the UK’s competitiveness, future, supporting a potential domestic capability and 100,000 jobs from Cumbria, export growth. The sector’s north Wales, Somerset, proposals cover the supply Essex and Suffolk208. chain, nuclear R&D and skills, Further details of our ongoing where the aim of the deal is discussions will be announced to help deliver the diverse in the coming weeks.
Working with other sectors
Since the publication of our A key expectation of these Green Paper, a large number criteria is that any proposals of industries have signalled align with our Industrial their interest in a Sector Strategy, including how Deal and we have been they might demonstrate the working with many of them commitment from certain in recent months. Some of sectors of the economy these have been particularly to meeting the Grand impressive in their level of Challenges we have set out ambition and innovation, in this document. We will but Sector Deals are not be speaking to all those required for every sector. sectors who have submitted To aid the development expressions of interest ‘Nuclear is a vital of any further proposals, over the months ahead part of our energy sectors should articulate and will be announcing that mix, providing low carbon power now how they meet the criteria we intend to proceed with and into the future. set out on the next page. some further Sector Deal The safe and efficient discussions in the New Year. decommissioning of our nuclear legacy is an area of world- leading expertise.‘
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Questions sectors should ask themselves as they develop their deal proposals
Is there clear leadership from the sector?
We have asked for deals to be commitments in the deal. The proposed by an identifiable sector’s leader or deal champion leader who can bring together an should generally be a single individual appropriately broad representation with sufficient authority in the of the sector. A key part of that industry to negotiate a deal’s content leadership will be in ensuring directly with government ministers appropriate and proportionate with the full backing of the sector arrangements to implement the they represent.
Does the Sector Deal represent the breadth of the sector?
A Sector Deal cannot be restricted We would also expect, where relevant, to incumbents; it must show how local authorities, Local Enterprise it will bring in new entrants and Partnerships, Prosperity Boards, challengers. Not every business development agencies (such as and relevant stakeholder needs Scottish Enterprise), other local to be represented in the deal, and business membership organisations the most ambitious businesses and universities to be involved where should not be held back by a lack of they have an interest in furthering the engagement from the less ambitious, success of a particular sector. but proposals should evidence how a broad range of businesses have been involved. This is likely to mean involving more businesses than are necessarily members of a relevant trade body.
208208 Does the proposal include a rigorous analysis of the comparative strengths and weaknesses of the sector?
Any proposals from a `` qualitative evidence sector should clearly set of the strengths and out a sector’s comparative weaknesses of the sector strengths and weaknesses including its reputation and its importance to the domestically and UK economy, drawing globally; on a broad and rigorous ``key international evidence base. Sectors competitor markets and should make reference to how the UK differentiates any overarching analysis itself; and that help make the case for a sector-specific initiative, ``the position and for example: importance of the sector alongside other ``quantitative studies of industries in its supply the sector including its chain contribution to UK GDP, ‘A Sector Deal cannot productivity per head, be restricted to incumbents: it must earnings per worker, show how it will bring jobs, exports, or level in new entrants and of investment; challengers.’
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Will the specific proposals have an impact on productivity, earning power or the availability of good work?
Deal proposals should have a and informed by the areas demonstrable and analytically themselves and consistent with rigorous impact on the productivity any local economic development and earning power of the sector. strategies (engagement with ``We expect credible analysis of local government, local economic the impact of any proposals to development bodies and local accompany each specific proposal membership organisations may showing expected increase in help to provide the analysis to GVA, employment or increases in demonstrate the impact on skilled workers, exports or specific particular places). investments (including foreign `` We would expect that any direct investment) resulting from proposals clearly demonstrate how the deal. Tangible commitments are a potential deal might positively likely to be the most convincing. impact on small- and medium-sized `` Where proposals have a enterprises. strong link to local economies `` We would expect proposals to in particular parts of the UK, demonstrate where they will lead to we would expect any analysis specific investments from industry. about their impact to be backed
Can the specific proposals be delivered?
Sector Deal proposals need to be On the government’s side we realistic and achievable. We are are committed to having an looking for evidence that industry honest conversation with sectors commitments can be delivered and about what we can deliver. While that clear governance arrangements avoiding prescription, there are will be set up. Any arrangements some guiding principles: should be proportionate to the scale ``Parliamentary time is at a of ambition of the deal itself and premium so proposals that require designed to ensure commitments legislation are likely to prove more will endure. To be credible, deal challenging than those that do not; proposals should include specific delivery plans covering each component of the proposal.
210 ``we will consider `` proposals that advocate reprioritising existing making changes to sources of government government policy where funding if there is a solid substantial reform is evidence base but there underway will need to be is no new government particularly compelling funding available for in their impact. Sector Deals; and
Is there a clear offer from the sector?
We will expect Sector would be most valuable Deals to include detailed from policymakers, the proposals on how they government will, naturally, can contribute to the have a collective view on success of the sector, the what we can offer and objectives of the Industrial expect in return. There Strategy (boosting earning will be other government power, productivity and expectations of the investment), the Grand commitments industry Challenges we set out in should be making in a this strategy and other deal which might include national objectives. evidence on how the ‘We will expect Sector These are deals – just sector will help deliver Deals to include detailed proposals as each sector will have against other stated national objectives. on how they can views about what they contribute to the can offer and what success of the sector, the objectives of the Industrial Strategy, the Grand Challenges and other national objectives.’
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New and innovative businesses such as CityMapper drive earning power across the economy and across the sectors in which they take root. CityMapper is trialling providing bus services to areas their data identified as being underserved by existing transport infrastructure.
Future Sectors
The success of our Industrial Strategy will also depend on our ability to keep up with the pace with new sectors and emerging businesses. New and innovative businesses drive artificial intelligence. This team earning power across the economy and will lead four reviews per year into across the sectors in which they take the highest potential fast-growing root – ensuring strong government sectors yet to establish an identity. engagement and support for these Previous reviews by the Challenger sectors will be critical to the endurance Business Programme have brought of this strategy. To do this, we will: together innovators in education, ``establish a new Future Sectors team law and insurance to understand that will lead work to grow the sectors their challenges and work with the that are developing and using the government to resolve them; technologies and business models ``launch ministerially-led reviews, of the future, such as robotics and starting with GovTech / regtech
212 (creating new ways emerging technologies to for citizens to engage promote future sectors. with public services, as This includes our £93m identified in the Digital commitment to fund Strategy, and including the challenges for the use use of Blockchain and AI of robotics in hazardous technologies) and quantum environments, £20m technologies. There will for AI to create next be an evidence-based generation services, long-term pipeline, subject and £20m to invest in to consultation with the the industrialisation of Prime Minister’s Council on quantum technologies; Science and Technology; `` work with businesses `` undertake Sector Deals to inform development with emerging and of an agile approach to disruptive industries where regulation that promotes there is a compelling and supports innovation, case to do so, beginning growth of new sectors with artificial intelligence. and the requirements of The collaboration with innovative market entrants government will drive – while ensuring effective growth in new sectors protections for citizens and such as robotics and the environment. We will autonomous systems also strengthen our horizon (including drones) and scanning, including through ‘New and innovative educational technologies a new Ministerial Working businesses drive (edtech) – where we are Group on Future Regulation earning power across the economy... We investing £30m to test the and support the new £10m will establish a new use of innovative edtech Regulators’ Pioneer Fund, Future Sectors and artificial intelligence in this will help regulators team that will lead online digital skills courses. to develop innovative work across sectors that are developing The government will use its approaches aimed at and using the convening power to bring getting new products and technologies and together entrepreneurs services to market; and business models of the future.’ and experts to explore ``work with the British Sector Deals with other Business Bank to ensure future sectors following businesses in future the outcome of the future sectors are given every sectors reviews (above); chance to access finance, `` launch the Industrial grow and thrive. Strategy Challenges using
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Places
214 The availability of high quality infrastructure is essential for our lives, work and future growth and prosperity.
215 Industrial Strategy White Paper Places
To have prosperous communities throughout the UK. The United Kingdom has a rich heritage We will also continue to build the with world-leading businesses located Northern Powerhouse and Midlands around the country. Our cities, towns Engine to help create prosperous and rural areas have competitive communities throughout the UK. advantages that will be essential to shaping our economic future. Yet many places are not realising Key policies include: their full potential. The UK has greater disparities in regional productivity `` Agree Local Industrial Strategies 209 than other European countries . This that build on local strengths affects people in their pay, their work and deliver on economic opportunities and their life chances. opportunities Every region in the UK has a role to play `` Create a new Transforming Cities in boosting the national economy. We fund that will provide £1.7bn for will build on the strong foundations of intra-city transport. This will fund our city, growth and devolution deals projects that drive productivity by and continue to work in partnership improving connections within city with local leaders to drive productivity. regions We will introduce Local Industrial Strategies and further strengthen local `` Provide £42m to pilot a Teacher leadership through Local Enterprise Development Premium. Partnerships and Mayoral Combined This will test the impact of a Authorities. £1000 budget for high-quality professional development for We will also introduce new policies to teachers working in areas that improve skills in all parts of the country, have fallen behind create more connected infrastructure, back innovation strengths, ensure land is available for housing growth, and strengthen our cultural assets. We are working with our partners in the devolved administrations to deliver ambitious plans for communities across Scotland, Wales and Northern Ireland.
216 The Industrial Strategy We recognise that different provides a national policy policies will be needed for framework against which different places. In some major public and private areas the constraining investments can be made issue may be housing or with confidence. It is land supply; in other parts grounded in sound fiscal of the country it may be policy alongside our future poor transport connections approach to ideas, people, or skills shortages. infrastructure and the Policies should therefore business environment. match local needs. Yet economic growth does Such an approach is essential not exist in the abstract. because the United Kingdom It happens in particular has greater disparities places. Cities, towns and in regional productivity rural areas have distinctive than in other European comparative advantages. countries211. However we are Our national framework confident that all our cities, will only be effective if it towns and rural areas in reflects and makes the the UK can increase their most of these economic prosperity if they have the opportunities and challenges. right policies and approach. Strong local economies around the world tend to have some key attributes. ‘Our cities, towns They have a good supply and rural areas of skilled labour; they are have competitive well connected and have advantages that will be essential land available for homes, to shaping our offices and factories; and economic future.’ they have rich innovation ecosystems, often built around a university. They have an attractive cultural environment210.
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Variation in performance across regions
Regional productivity
Source: ONS (2017) “Subregional Productivity: Labour Productivity.” Ordnance Survey Data © Crown Copyright 2017*NUTS3 statistical region classification
218 Large regional cities in own economic destinies and many other European national government too countries tend to be motors often took a one size fits all of growth of the regional approach. In recent years and national economy. the tide has started to turn. Economists identify this Since 2010, City, Growth and as a consequence of Devolution Deals have shifted agglomeration – bringing power and funding to local together labour, suppliers areas to enable them to take and consumers into bigger strategic decisions about markets – and a major local priorities. Collectively driver of productivity. Yet these bespoke deals have most English cities outside enabled places to develop London have not enjoyed long-term plans; strengthen the higher productivity local leadership through seen in similar communities directly elected city-region across Europe. This presents mayors and Local Enterprise an opportunity to make Partnerships; and have more better use of local assets. powers to create the right Places across the country conditions for prosperity. have strong and distinctive The Industrial Strategy builds commercial and industrial on these foundations and legacies. These economic goes further to strengthen successes were forged not by the performance of our order of central government cities, towns and rural but by the ambition and areas. It will allow national ingenuity of local business and local leaders to focus and civic leaders. As we their efforts where they will enter a new period of have the greatest economic technological revolution, impact. Through addressing ‘Since 2010, the our approach must be City, Growth and national and local barriers to Devolution Deals guided by the same spirit. growth we can help create have shifted power Yet during much of the last prosperous communities and funding to local areas to century the UK came to be throughout the UK. enable them to take one of the most centralised strategic decisions states in Europe212. Local about local businesses and civic leaders priorities.’ lacked the means to set their
219 Industrial Strategy White Paper
Leeds city centre
Our approach
The people best placed to drive forward local economies are those who live, work and do business in them. We need to harness this local insights spending from national schemes. to develop clear, long-term strategies Local Industrial Strategies will be for future growth – this approach is long-term, based on clear evidence, vital to successful local economies. and aligned to the national Industrial We will work in partnership with places Strategy. They will identify local to develop Local Industrial Strategies, strengths and challenges, future which will be developed locally and opportunities and the action needed agreed with the government. These to boost productivity, earning power strategies will help identify priorities and competitiveness. This might to improve skills, increase innovation include addressing skills issues, and enhance infrastructure and improving infrastructure, harnessing business growth. This will guide the the potential of world-class science and use of local funding streams and any innovation, supporting new high-value
220 businesses, or identifying We will prioritise areas with leading sectors to inform the potential to drive wider the development of deals. regional growth, focusing These strategies will on clusters of expertise and establish new ways of centres of economic activity. working between national Places in England with a and local leaders in both the Mayoral Combined Authority public and private sectors. will have a single strategy led Universities, colleges and by the mayor and supported other local institutions will by Local Enterprise be key, as will an approach Partnerships. For parts of the that is responsive to both country without a mayor, the local and global market development of the strategy conditions to provide greater will be led by the Local long-term certainty. Enterprise Partnership. We We will agree the first will also discuss the suitability Local Industrial Strategies of this approach with the by March 2019. devolved administrations.
Local leadership
Successful strategies We recognise that there require strong public and are different arrangements private leadership. We will for local government and continue to work with the business leadership at new city region mayors, a regional level in each combined authorities, of the devolved nations. local authorities and Local City and Growth Deals will ‘Local Industrial Enterprise Partnerships to continue to support growth Strategies will be drive growth in England. and create opportunities long-term, based We will continue to support across Scotland, Wales and on clear evidence, locally-driven partnerships, Northern Ireland, and we will and aligned to the national Industrial proposals and reforms, discuss further collaboration Strategy.’ with the aim of ensuring with each of the devolved that economic powers administrations. are exercised at the most We now have directly appropriate level and that elected mayors in place for decision-making is effective a number of our English city and clear. regions, covering a third of the English population.
221 Industrial Strategy White Paper
The government will make available Industrial Strategy. The government to Mayoral Combined Authorities a will provide a £243m allocation from £12m fund for 2018/19 and 2019/20 to the fund and will continue to work with boost the new mayors’ capacity and Transport for Greater Manchester to resources. explore future options. We have announced a deepening of We have agreed a ‘minded to’ the devolution deal with the West devolution deal with the North of Tyne Midlands Combined Authority, which authorities, which will be subject to the includes £6m for a housing delivery consent of local partners. This will see taskforce, £5m for a construction £600m of investment in the region skills training scheme and a £250m over a 30-year period and create a new allocation from the Transforming Cities mayor to be elected in 2019 with control Fund to be spent on local intra-city over economic levers including planning transport priorities. In addition, Greater and skills. Manchester and the government will work in partnership to develop a Local
Case Study: Local leadership of industrial regeneration in the Tees Valley
The government is working with substances left over from the SSI the Tees Valley mayor to support steel production processes and the regeneration of an extensive making the site attractive to private industrial area at Redcar by the South sector investment. A further £5m Tees Development Corporation. This was announced at the same time is the first Mayoral Development for the South Tees Development Corporation outside London Corporation to take forward its plan. and is promoting local economic The South Tees Development development and inward investment Corporation estimates the project on the south bank of the River Tees. could create 20,000 new jobs in The government announced £118m skilled sectors and contribute an at the Autumn Budget 2017 to additional £1bn per annum to the ensure the ongoing safe and secure local economy. This sustained management of the former SSI economic growth will benefit the steelworks, an integral part of the entire Tees Valley and demonstrates wider 4,500 acre development site. the importance of the powers This includes removing dangerous devolved to its mayor.
222 We remain firmly committed These will be driven by to Local Enterprise influential local leaders, Partnerships. From next acting as figureheads year, the Prime Minister will for their area’s economic chair a biannual ‘Council of success, and a clear Local Enterprise Partnership strategy for local and Chairs’. This will provide national partnership. an opportunity for Local We will agree and implement Enterprise Partnership appropriate structures for leaders to inform national holding Local Enterprise policy decisions. Partnerships to account. While Local Enterprise We will work with Local Partnerships across the Enterprise Partnerships country have played an to review overlapping important role in supporting geographies and ensure local growth, feedback people are clear as to who suggests that their is responsible for driving performance has varied213. growth in their area. We are reviewing the roles We recognise that in and responsibilities of Local order to deliver their role Enterprise Partnerships effectively, Local Enterprise and will bring forward Partnerships need reforms to leadership, financial support. We will governance, accountability, make additional financial financial reporting and resources available to Local geographical boundaries. Enterprise Partnerships We will work with Local that demonstrate Enterprise Partnerships ambitious levels of reform to set out a more clearly following the review. defined set of activities and ‘We have announced objectives in early 2018. a deepening of the devolution deal with the West Midlands Combined Authority, which includes £6m for a housing delivery taskforce, £5m for a construction skills training scheme and £250m from the Transforming Cities Fund.’
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Ceramics production in Stoke-on-Trent
Case Study: The ceramics cluster in Stoke-on-Trent
Businesses in Stoke-on-Trent have There is significant potential for a fresh vision for the ceramics growth: ceramics use ranges industry that has started to from electrical insulation for reverse a long-term trend of microchips and circuit boards to hip factory closures and job losses. replacements and heart valves. Traditional ceramics, such as table This partnership has developed an and giftware, have enjoyed significant ambitious proposal for an Advanced growth since 2009214. Partners Ceramics Campus that combines from industry, education and local technical innovation, creativity and government are now targeting a commercialisation with the skills greater share of the global market needed for the next generation of for innovative ceramics in industries engineers in the Midlands Engine ranging from digital to healthcare. and beyond. This demonstrates the potential to reimagine and reinvent local industries.
224 The right economic geography
We have already encouraged collaboration to address shared challenges over regional corridors in the Northern Powerhouse and Midlands Engine. Such regional approaches West Rural Productivity can help to deepen pools Commission to develop of skilled labour, drive proposals for rural growth. competition, and increase This collaboration also exists market access. There are across sectors. The Heart also policy benefits to of the South West Local working at scale, including Enterprise Partnership logistics and the promotion is working with Cumbria of the UK on the world stage. to develop proposals for We are expanding this the nuclear industry. approach across the country. We also recognise the need In the Cambridge–Milton to have policy flexibility Keynes–Oxford corridor we below the regional or Local have agreed an ambitious Enterprise Partnership programme of infrastructure, level. That could be to housing, business investment support innovation in and development. We economic clusters or to are also working with the ensure that inner city Thames Estuary 2050 boroughs, or small towns Growth Commission to and their rural hinterlands, develop a future vision are able to contribute to, and will explore options for and benefit from, wider ‘Regional approaches can help ambitious housing deals economic growth. to deepen pools of with local authorities in the Some towns face skilled labour, drive Thames Estuary region. competition, and particular challenges. We increase market Others are realising the will consider agreeing access.’ benefits. Four Local approaches with towns on Enterprise Partnerships how the government, local – Swindon and Wiltshire, councils, Local Enterprise Cornwall and the Isles of Partnerships and businesses Scilly, Heart of the South can work together to deliver West and Dorset – have come growth in that area. together through the South
225 Industrial Strategy White Paper
Towns should be able to demonstrate We are working with a range of that they can work collaboratively local partners to explore new with local business and civic leaders approaches, including on a pilot to develop innovative solutions Town Deal with Grimsby. and attract private investment.
Local Industrial Strategies will set out how local leaders and businesses will work together to deliver growth across the country (image: Grimsby)
Case Study: Driving growth in towns across the country
There are significant productivity private sector partners to revitalise differences within our regions as well the town centre, increase skill levels as between them. High growth city and create new jobs and housing. centres and clusters are often found Harlow in close proximity to areas of lower productivity. To support local leaders Designated a New Town in 1947, in addressing the challenges for their Harlow is undergoing a period of area, an in-depth understanding of the renewal. It is home to a new Enterprise barriers to growth is required, which Zone; located at the heart of the can only come from local partnership. London-Stansted-Cambridge corridor, benefits from excellent transport Grimsby links to these major centres; and has Grimsby is looking to a new economic been selected by the government future as it adapts to industrial change. as the location for Public Health There are strong prospects in the England’s new science hub. The energy industry – the Port of Grimsby government has also worked with is increasingly seen as a destination Harlow College to open a new of choice for offshore wind and Advanced Manufacturing Centre and operations maintenance – and in port- a base at Stansted Airport to train related logistics and manufacturing, local workers in the skills required. chemicals/petrochemicals and food Community leaders are working processing. The Greater Grimsby with the government to improve the Partnership Board is developing a business prospects of the town and new approach to regeneration that the earning power of residents. will be taken forward by public and
226 The most knowledge- We will work with local intensive jobs, industries and partners to develop a research are increasingly portfolio of High Potential concentrated in particular Opportunities around economic clusters215. This strategic supply chain gaps, ‘clustering effect’ gives rise places and clusters that are to additional benefits to attractive to investors and other associated sectors have economic potential, through higher employment but which are not widely and inward investment, such understood by businesses as as in Sheffield’s Advanced they do not have sufficient Manufacturing Innovation market information. We District. We will identify will provide targeted and work with a number promotion and support of emerging clusters to for investors to increase deepen their foundations, investment into the UK. identify and remove barriers to growth and strengthen supply chains.
Case Study: Advanced manufacturing in Sheffield City Region
The Sheffield City Region Manufacturing Catapult. is home to an advanced The park is undergoing manufacturing cluster rapid expansion, including with the University of high-profile investments Sheffield’s Advanced such as McLaren’s £50m ‘We will identify and Manufacturing Research manufacturing facility work with a number Centre (AMRC) as its core. and a £110m Rolls-Royce of emerging clusters to deepen their The AMRC is located on Advanced Blade Casting foundations, identify the Sheffield-Rotherham Facility. The recent Science and remove barriers border, benefiting from and Innovation Audit to growth and government backing made clear the wider strengthen supply chains.’ as part of the Sheffield opportunities for an City Region Enterprise innovation corridor that Zone and as a centre can maximise the benefits for the High Value of industry 4.0.
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East Devon
We will ensure that local areas The government remains committed continue to receive flexible funding to further business rates retention in for their local needs. Following the England and is working collaboratively UK’s departure from the European with local government on further Union, we will launch the UK Shared reforms: 100 per cent business rate Prosperity Fund. We intend to retention has been piloted in five consult next year on the precise parts of the country since April 2017, design and priorities for the fund. including Liverpool City Region, We have committed to guarantee Greater Manchester, the West Midlands, funding for any project signed while the West of England and Cornwall. we are in the EU, even if it continues Additional pilots will begin in April 2018. after we have left, so long as the project provides good value for money and aligns with domestic priorities.
228 Foundations of productivity
The success of our Industrial Strategy relies on credible Local Industrial Strategies and strengthened local leadership, supported by effective, locally-targeted national policies. People Education and skills We recognise that there are among the biggest are similar initiatives in determinants of local areas of England and the productivity216. Since 2010 devolved administrations, we have made important including the development strides in improving our of Regional Skills education and skills system. Assessments in Scotland Employers are more involved and the implementation of in shaping our skills system, Regional Skills Partnerships including in our ambition in Wales. Given the cross- for three million apprentices border nature of many to have started in the five employers, we will seek to years to 2020217. This is set use our continuing dialogue out in more detail in the with the devolved nations People chapter of this paper. to consider how we tackle Our challenge now is skills issues impacting these to ensure that these businesses and communities improvements are felt Our approach to addressing across the country, with challenges facing our opportunities available for education and skills ‘Since 2010 we have everyone wherever they system will focus on school made important live. There remain significant improvement across the strides in improving regional disparities in country. In London, 90 our education education and skills, per cent of secondary and skills system. Employers are more such as the disparities in schools are good or involved in shaping educational achievements outstanding, compared to our skills system, among young people218. just 67 per cent of schools including in our in the north east219. ambition for three Education and skills training million apprentices.’ are devolved to Scotland, Wales and Northern Ireland.
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Secondary school performance across England
Secondary School Ofsted rating, March 2017
London East of England South West South East England West Midlands East Midlands Yorks. & Humber North West North East
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Outstanding & good Requires improvementInadequate
Source: Ofsted inspection data 2017
Building on existing support, we We will work with Mayoral Combined will invest £42m to pilot a Teacher Authorities and Local Enterprise Development Premium. This will test Partnerships across all areas of the impact of a £1,000 budget for England to establish Skills Advisory high quality professional development Panels. These will enable mayors for teachers in areas of the country and Local Enterprise Partnerships that face the greatest challenge to support employers, education in driving pupil outcomes. providers and local government in We will also deliver reforms to identifying current and future local technical education to help places skills needs shaping the provision drive productivity across the and funding of post-age 16 education country. These reforms, set out in and training and careers guidance. the People section of this paper, will have positive and pronounced effect on places outside the south east, where uptake is considerably higher. But we will also need to do more to make sure local skills systems respond effectively to local needs.
230 Infrastructure
High quality infrastructure between and within cities is vital to local productivity. Commitments to projects like High Speed 2 will better connect our great cities. As set out in the infrastructure chapter, we will continue to enhance connections across regional corridors of economic growth This includes £300m We will invest more in funding to ensure High improving transport Speed 2 infrastructure can connections within city accommodate Northern regions. We will make Powerhouse and Midlands £1.7bn available through rail services. Transport for the Transforming Cities the North and Midlands Fund to support projects Connect are working up that drive productivity by the case for these services. improving connections This will enable faster within city regions. This will links between cities in the target projects that drive north, including Liverpool productivity by improving and Manchester, Sheffield, connections within city Leeds and York, and from regions. Half will be these cities to the East allocated on a per capita Midlands and London. To basis to the six combined support the delivery of the authorities with elected Midlands Connect Strategy, metro mayors, and half will the government will provide be allocated via competition. £2m to develop options to ‘We will make address key constraints on £1.7bn available the Coventry–Leamington through the rail corridor, and £4m for Transforming Cities Fund to support congestion measures. projects that drive productivity by improving connections within city regions.’
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Case Study: Cambridge-Milton Keynes-Oxford corridor
The corridor containing Cambridge, `` Local Enterprise Partnerships Milton Keynes and Oxford has the across the corridor, and potential to be the UK’s Silicon the Cambridgeshire and Valley. Two of its universities Peterborough Combined are consistently ranked in the Authority, are working to back world’s top four220, it competes the area’s world-class science for international high-tech and and innovation assets, as well science investment, and it contains as identifying and growing nationally significant industry new sectors and business. concentrations such as information `` The government is working on technology, life sciences, automotive a series of sector deals in life engineering and professional sciences, artificial intelligence services. Estimates by the National and construction with potential Infrastructure Commission (NIC) benefits for the corridor. suggest that, with the right actions, annual output of the corridor could `` The government will work with increase by £163bn per annum by local partners to build on the 2050 – approximately doubling the strong international profile of growth expected to happen without the corridor to boost inward government intervention221. investment and exports. In the Autumn Budget, the `` Building on the corridor’s government announced a vision for expertise in driverless vehicle the corridor to stimulate economic technologies, the government growth. This includes an ambition recently announced a £6.9m for one million homes by 2050, investment in a driverless vehicle starting with a housing deal with testing infrastructure scheme Oxfordshire comprising a government involving the Culham Science Park investment of up to £215m to fund in Oxfordshire and the Millbrook local infrastructure in return for up to proving ground in Bedfordshire. 100,000 homes in the area by 2031. `` Cambridge has been announced And the government is investing as one of eleven Tech Nation in the rail and road infrastructure regional hubs that will be needed to boost productivity across established outside London. the corridor and support the homes the area needs. In order to further stimulate economic growth:
232 As detailed in the over this period. This Infrastructure chapter, includes introducing planning we will adopt a more reforms that will ensure strategic approach to new more land is available for infrastructure investment housing, and that better use in order to drive growth is made of underused land across the country. Our in our cities and towns. ‘Rebalancing Toolkit’ will Being more responsive to mean that no decisions local needs is an important on significant investments part of the government’s are taken without due housing strategy. We will consideration being given to deliver bespoke housing the impact of investments deals with places where on local growth. housing demand is high. We will ensure that The government wants investments in infrastructure to support places with are consistent with our goals ambitious and innovative for cutting carbon emissions plans to build additional while growing the economy, homes where they are as set out in the Clean needed, and which will Growth Strategy. Our new support wider economic Local Energy Programme growth. We want to support will support areas to greater collaboration develop their capability and between councils, a more capacity to realise energy strategic approach to opportunities – such as planning housing and the Teesside Collective, a infrastructure, more grouping of multi-national innovation and high quality industrial companies, which design in new homes and are developing proposals creating the right conditions ‘Housing is vital for a cluster using carbon for new private investment. to the economic success of our capture, usage and storage. We have announced cities and regions. Housing is vital to the a housing deal with The government has made available economic success of our Oxfordshire to deliver £15.3bn of new cities and regions. The 100,000 homes by 2031 and financial support government has made a joint statutory spatial plan, for housing over available £15.3bn of new supported by government the next five years.’ financial support for housing investment of up to £215m over the next five years, for infrastructure, affordable bringing total support for housing and local capacity. housing to at least £44bn
233 Industrial Strategy White Paper
The deal also seeks to secure and Oxford corridor by 2050. We are create jobs across Oxfordshire. This in discussions with a number of ambitious rate of housing delivery other places around the country is consistent with the National about housing deals, including Infrastructure Commission’s Greater Manchester, Leeds, the West target of one million new homes Midlands and the west of England. in the Cambridge-Milton Keynes-
Ideas
As demonstrated by Science and exemplar is the success of Hull City of Innovation Audits, there are world- Culture this year. Next year we will see class science and innovation assets local economies across the Northern across the UK222. These range from Powerhouse benefit from the Great agricultural technology in the east of Exhibition of the North – a two-month England and advanced manufacturing showcase of the great innovation, in the Sheffield City Region to offshore design, and arts hosted in Newcastle renewable energy in north east and Gateshead. Building on the success England and neuroscience in Cardiff. of the Northern Cultural Regeneration There are research and institutional Fund and the recommendations strengths across the country on of the Bazalgette Review, we are which we can build in order to foster investing £2m in place-based cultural strong innovation ecosystems. development to continue to support the We will work with areas to identify role culture can play in regeneration. measures that can help to grow Cultural bodies can enhance the innovation ecosystems, using the attractiveness of places. Building evidence from the Science and on the legacy of the 2012 Olympics, Innovation Audits. To support this, part of the Queen Elizabeth Olympic we will create a new £115m per Park is being developed to locate annum Strength in Places Fund. the British Council. The government This will build on existing areas of has consulted on how Channel 4 excellence across the country, funding could increase its regional impact, collaborative programmes proposed including moving some or all of its by universities, local employers, Local staff outside London. The government Enterprise Partnerships and their is in discussions with Channel 4, and counterparts in the devolved nations. will set out next steps shortly. Investment in culture, sport and We will also use the relocation of heritage can contribute to positive arms’ length bodies and departmental economic and social outcomes223. An functions to support growth across
234 the UK. We will move jobs, Leeds by moving NHS Digital, including senior roles, out of alongside HM Revenue and London and the surrounding Customs, into a new hub of area to new hubs and 6,000 civil servants. We will specialist clusters across the be looking to move further UK between now and 2025. health functions to the city For example, we are building to build on this success. on the digital health cluster in
Case Study: Research laboratories and agri-tech innovation in Norwich
Norwich Research Park is companies on the site in a world-renowned centre the agricultural heartland of agri-tech research and of Norfolk. Research innovation with an annual is focused on the full research expenditure of range of agricultural over £230m. It brings innovation from ‘farm together 3,000 scientists, to fork’. The region’s researchers and clinicians credentials in relation to ‘We will create a in a range of leading translational research are new £115m per research institutions. also continuing to grow. annum Strength in These include the John The Quadram Institute is Places Fund. This Innes Centre, Quadram due to open fully in 2018 will build on existing areas of excellence Institute, Earlham Institute, and will offer outstanding across the country.’ Sainsbury Laboratory, genetic research on the University of East Anglia role microbiomes play in and Norfolk and Norwich human health and disease. University Hospital. This is already attracting There are also over 70 the attention of major food research-based business businesses worldwide.
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Belfast, Northern Ireland
Working across the UK
We are working with our partners in the devolved administrations to deliver ambitious plans for communities across Scotland, Wales and Northern Ireland. Since 2014 we have announced We intend to begin formal negotiations six City Deals across Scotland and towards a Growth Deal with north Wales that will involve up to £1.6bn Wales and will consider proposals for of UK government investment. We a mid-Wales deal, working alongside are committed to taking forward the Welsh government and local further deals in each nation. partners. With ambitious deals we In Scotland, we are making good have already agreed with the Cardiff progress towards City Deals for Stirling and Swansea regions this means that and Clackmannanshire and the Tay all regions of Wales have the potential Cities, and have announced that we to benefit from deal investment. will begin negotiations on a growth In Northern Ireland, we will open deal for the Scottish borderlands. negotiations for a Belfast City Deal In each of these, we will continue as part of our commitment to a to work alongside local partners comprehensive and ambitious set of and the Scottish government. city deals across Northern Ireland.
236 Our backing for economic administrations to review growth corridors extends inter-agency cooperation, across the devolved to identify opportunities nations. It includes support for improving both the for further cross-border coherence and impact of working between North government interventions Wales and Cheshire and and to improve awareness Warrington, and an interest of, and access to, in how proposals for a opportunities throughout mid-Wales growth deal the UK supply chain. could take account of the The reforms set out same. This is in addition to throughout this chapter, the benefits for the Bristol- with their unwavering Cardiff-Newport area that focus on communities, will arise from the abolition regions and networks, of tolls across the Severn are a new approach to Bridge by the end of 2018. economic growth in the Our support for economic UK. They will ensure clusters, culture and we lay the foundations innovation applies for strong, sustainable throughout the UK. We want growth in incomes that is to build on the innovative better shared across the approaches secured country. This is a critical through City and Growth moment for our cities Deals, supported by their and regions. As we make respective boards, and work choices for our economy with places within Scotland, in the coming years, our Wales and Northern Industrial Strategy will Ireland – and with our create new opportunities for partners in each devolved communities throughout the administration – to explore UK to shape their dynamic, ‘Since 2014 we Local Industrial Strategies prosperous futures. have announced six City Deals across that align with regional, Scotland and Wales national and UK priorities. that will involve up to £1.6bn in We are committed to UK government ensuring that the UK investment.’ government and the devolved administrations work effectively together. We therefore propose to work with the devolved
237 Industrial Strategy White Paper
The Oil and Gas Technology Centre in Aberdeen is an industry-led research organisation funding projects to help realise the full potential of the North Sea as a global centre for oil and gas innovation.
Case study: Deal investment across the UK
Six City Deals have already been its growing biopharmaceutical agreed across Scotland and Wales sector, improvements in digital since 2014. These deals – which infrastructure, local transport and leverage billions of pounds of the expansion of Aberdeen harbour. additional investment from partners It is also building on the work in the public and private sector – done by both the government and demonstrate that our partnership industry to support the oil and gas with the devolved administrations and industry by promoting innovation our collaboration with local partners and collaboration between industry can yield ambitious, large-scale plans players. driven by the priorities that places An excellent example of this is the identify for themselves. They show £180m investment in the Oil and Gas that the devolution settlement can be Technology Centre that opened in a major catalyst for economic growth. Aberdeen in February 2017. The new The Aberdeen City Region Deal centre is an industry-led research agreed in November 2016 is organisation, backed by both the UK worth more than £250m to the and Scottish governments which will regional economy in north east fund projects to help unlock the full Scotland. That deal is supporting potential of the UK North Sea and regional innovation in north east which aims to become the global Scotland’s food and drink sector, centre for oil and gas innovation.
238 Tata Steel, Port Talbot
Case Study: Innovation in steel across the UK
The UK has a good track sector and discuss a series record in steel innovation of proposals developed based on both strong since the publication of industrial heritage and Building our Industrial outstanding research Strategy. We will aim to and development. Our identify opportunities research strengths are for steel markets and spread as widely as Cardiff, build on these innovation Huddersfield, Cambridge assets across the UK. We and Warwick, while a Steel will continue to engage Science Centre forms part with industry, as well of the £1.3bn Swansea as with the unions, the Bay City Region Deal. The devolved administrations ‘Our research government has been and other partners to strengths are spread as widely working closely with the develop a commercially as Cardiff, steel industry to map the sustainable proposition in a Huddersfield, current capability of the competitive global market. Cambridge and Warwick, while a Steel Science Centre forms part of the £1.3bn Swansea Bay City Region Deal.’
239 Industrial Strategy White Paper
Conclusion
240 Britain and the world
We face a time of unprecedented economic change, powered by new technology. Now is the time for the United Kingdom to ensure we are well prepared to prosper. Our Industrial Strategy sets out our Our Grand Challenges will place vision for the future economy and our us in the vanguard of changes strategy to boost the productivity, transforming the world – which will earning power and quality of life of the shape our lives – and which must work British people. Our aim is that by 2030 for us all. Our Sector Deals will drive we will have transformed productivity up productivity through partnerships and earning power across the UK to between the government and industry become the world’s most innovative to boost investment and skills. Built on economy and the best place to start the five foundations, our strategy will and grow a business, with upgraded ensure that Britain is one of the most infrastructure and prosperous attractive places in the world to live, communities across the country. work and invest. Our strategy commits the government Our Industrial Strategy is taking to working with business, universities, action now. We have committed to the researchers and civic society over biggest ever increase in public and the years ahead to take advantage private investment in research and of the opportunities we have and development. Public infrastructure address those aspects we need to funding will have doubled in a decade improve. We build on Britain’s many by 2022/23 and through Local strengths. We will focus on reinforcing Industrial Strategies we will work with the foundations of productivity: ideas, local leaders to build the most dynamic people, infrastructure, our business economies. We are reforming our environment and places. technical education system to make it We know that reinforcing the as prestigious as our higher education foundations of productivity is necessary system, and we are supporting but not sufficient; we need to do more businesses across the country to boost to embrace the opportunities of the their exports and productivity. future. As an open and agile economy, built on innovation and enterprise, change can play to our strengths.
241241 Industrial Strategy White Paper
Partnership is at the heart of our Our strategy is also one that is avowedly approach. We are in discussions with international. We will stay true to our businesses, devolved administrations, tradition of being one of the world’s city regions and Local Enterprise most open economies – welcoming Partnerships about how we support investment from overseas, participating communities to thrive. The Grand in global supply chains, and buying and Challenges and Sector Deals will only selling goods and services from all over succeed with the active engagement the world – and to our obligations as of the best and brightest across the part of the international community. UK. We will continue to identify new Clean energy, for example, is not just an challenges and technologies as our economic opportunity; it is also a moral public spending on research and duty in addressing climate change. development grows substantially. The process of leaving the European Yet the world is changing fast. A Union inevitably entails some successful Industrial Strategy needs uncertainty as negotiations take place to combine agility with patience. We to determine our future economic need a clear and consistent direction, relationship. We want to have a policies and institutions that are trusted continuing deep partnership with the by business, investors, local leaders, EU that will not disrupt supply chains or universities and researchers, which impose barriers to our largest trading allow them to invest in a shared vision partner. We will not just respect the of the future. But we also need to be rights of European citizens living here; flexible to change. This is why it is so we will develop an approach through important that this Industrial Strategy which European citizens can continue will be continuously updated, informed to come here to work and contribute by evidence about how our economy to our economy. The UK and all of is changing and what it means for Europe benefit from our partnerships productivity, and the effectiveness of in research. We want that collaboration current policies. Our Industrial Strategy to continue on major science, research Council will ensure we have the right and technology initiatives. We are approach to measuring success. leaving the EU, but we are not What will not change is our leaving Europe. commitment to an open, liberal, modern economy, built on the core principles of competition, free trade and high regulatory standards.
242 We can also do more to embrace the The United Kingdom is, and will be, a opportunities, and so much emerging leading global economy. The ambition innovation, in the wider world. We must of our Industrial Strategy is to build do more to export and promote what a Britain fit for the future, a country we do to the world’s fastest-growing confident and outward-looking, as we economies, where there is a strong work together to increase productivity appetite not only for our goods but and earning power for everyone. our world-class services, from tourism and healthcare to professional and financial services, and for cultural collaboration too. We will be active participants in the international bodies setting standards and regulations especially in the emerging industries of the future such as artificial intelligence and data protection.
243 Industrial Strategy White Paper
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