Green Paper January 2017 Contents Foreword .................................................................................................................................... 3 Introduction ............................................................................................................................... 5 How to respond to this Green Paper ................................................................................ 8 Summary ..................................................................................................................................10 Investing in science, research and innovation ............................................................25 Developing skills ...................................................................................................................37 Upgrading infrastructure ....................................................................................................51 Supporting businesses to start and grow ....................................................................61 Improving procurement ......................................................................................................71 Encouraging trade and inward investment ..................................................................79 Delivering affordable energy and clean growth ..........................................................89 Cultivating world-leading sectors ...................................................................................97 Driving growth across the whole country .................................................................. 107 Creating the right institutions to bring together sectors and places ............... 119 Questions for consultation.............................................................................................. 127 References ........................................................................................................................... 130 3 Building our Industrial Strategy Foreword from the Prime Minister Last summer’s referendum Underpinning this strategy is a new approach to government, not just stepping back and was not simply a vote to leave leaving business to get on with the job, but the European Union, it was an stepping up to a new, active role that backs instruction to the Government business and ensures more people in all corners of the country share in the benefits to change the way our country of its success. This active government will works – and the people for build on Britain’s strategic strengths and whom it works – forever. tackle our underlying weaknesses, like low productivity. This is vital because if we want to increase our overall prosperity, if we want So our Plan for Britain is not just a plan more people to share in that prosperity, if we to leave the EU, but a plan to shape a want higher real wages, and if we want more new future for the kind of country we will opportunities for young people to get on – be when we have left. It is a plan to build we have to raise our productivity. a stronger, fairer Britain that works for everyone, not just the privileged few. It is a Through this new approach we will move plan for a nation that stands tall in the world beyond short-term thinking to focus on the and is set up to succeed in the long term. big decisions that will deliver long-term, And it is a plan for a country in which future sustainable success – and we will seize the generations have the chance to do better opportunities of Brexit to build a brighter than their parents and grandparents today. future for all. That is why our modern industrial strategy In doing so, we will deliver the change we is a critical part of our plan for post-Brexit need – the change people voted for in June Britain. It will help to deliver a stronger – by making post-Brexit Britain an even economy and a fairer society – where wealth stronger, fairer and more successful country and opportunity are spread across every than it is today. A country that really does community in our United Kingdom, not just work for everyone. the most prosperous places in London and the South East. It will help our young people to develop the skills they need to do the high-paid, high-skilled jobs of the future. And it will back Britain for the long term: creating the conditions where successful businesses can emerge and grow, and backing them to invest in the long-term future of Britain. 4 Building our Industrial Strategy 5 Building our Industrial Strategy Greg Clark Introduction from the Secretary of State for Business, Energy Secretary of State and Industrial Strategy This is a hugely important We have businesses, research institutions and cultural achievements at the very moment for the United Kingdom. forefront of global excellence. A moment when we must And for all these reasons, we attract prepare a new strategy to investment and talented individuals from earn a prosperous living in around the world. the years ahead. But there are challenges that the UK must face up to, now and in the years ahead. Leaving the European Union allows – and The first is to build on our strengths and requires – us to make long-term decisions extend excellence into the future. about our economic future. British excellence in key technologies, We will, of course, be ambitious in the professions, research disciplines and upcoming negotiations and will secure the institutions provides us with crucial best possible access for businesses to trade competitive advantages. But we cannot with and operate in the European market. take them for granted. We aim for a smooth and orderly exit that works for the UK and for the EU. If other countries invest more in research and development, and we do not, then we While the terms of trade with other cannot expect to keep, let alone extend, our economies is important, so is the technological lead in key sectors – or the competitiveness of our own economy. world-beating performance of our That is why the Government is committed to universities. The same goes for our record a modern industrial strategy. Its objective is as Europe’s leading destination for inward to improve living standards and economic investment or our position as a centre of growth by increasing productivity and international finance. Our competitors driving growth across the whole country. are not standing still. They are upgrading This is part of our Plan for Britain – our infrastructure networks and reforming vision for a country that is stronger, fairer, systems of governance. Therefore we too more united and more outward-looking than must strive for improvement. ever before. In industrial sectors – from automotive and We start from a position of considerable aerospace to financial and professional strength. We are the fifth biggest economy services and the creative industries – the in the world, despite having the 22nd UK has built a global reputation. But the highest population1. We have achieved competition for new investment is fierce and higher levels of employment than ever unending. The conditions that have allowed before in our history – in fact 2.7 million UK investment destinations to succeed more people in work than in 2010. include the availability of supportive 6 Building our Industrial Strategy research programmes, relevant skills in local It is worth noting that many of the most labour markets and capable supply chains. important companies in the world today However, for continuing success, these did not even exist 25 years ago. Unlike in foundations must be maintained the past, industrial strategy must be about and strengthened. creating the right conditions for new and growing enterprise to thrive, not protecting The second challenge is to ensure that every the position of incumbents. place meets its potential by working to close the gap between our best performing A modern British industrial strategy must companies, industries, places and people make this country a fertile ground for new and those which are less productive. businesses and new industries which will challenge and in some cases displace the Britain is one of the most centralised companies and industries of today. countries in the world, but this has not led to places being uniformly prosperous. For The UK has benefitted greatly from its open all the global excellence of the UK’s best economy: pro-competition rules, flexible companies, industries and places we have labour markets, less intrusive regulation too many who lie far behind the leaders. and a favourable taxation regime have That is why, on average, workers in France, all made this country an excellent place Germany and the United States produce to do business. But there is much more around as much in four days as UK workers that can be done. For example, while the do in five2. It is also why despite having the UK has had a strong record of scientific most prosperous local economy in Northern and technological discovery, we have Europe – in central London – we also have had a weaker record in translating these twelve of the twenty poorest among our discoveries into new businesses. And for closest neighbours3. all the advantages of having such a deeply specialised and globally successful financial For all the progress of more people going to industry, many growing businesses report university than ever before, too many people that they struggle to access the patient do not have the education and skills they capital needed to help them grow from need to be able to command a good wage. fledgling firms