NEWS
UK POLICY Industrial Strategy KATHRYN ROBERTS
The industrial strategy white paper, published in November 2017, sets out the government’s plans to strengthen the UK economy. Central to its vision are proposals to raise the country’s level of productivity through investment in R&D, infrastructure and skills. The policy document came days after
the Office for Budget Responsibility (OBR) announced ‘an aggressive downgrade of its UK growth forecast’. The OBR concluded that the slowdown in growth of productivity – the value that each worker produces – since the financial crisis will persist for several more years. Currently, the UK’s productivity lags behind Germany, France, US and Italy. The industrial strategy is structured
around five ‘foundations’ of productivity: ideas, people, infrastructure, business environment, and places. Four ‘Grand Challenges’ are identified that are expected to transform societies: artificial intelligence and big data; clean industrial growth through low carbon and clean energy technologies; meeting the needs of an ageing society, including care demands; and changes in mobility, such as the electric car and self-driving cars.
The government intends to support these challenges through the Industrial Strategy Challenge Fund (ISCF); £725m is ear-marked for the ISCF over the next four years. This money includes £170m for the construction sector – to build affordable and ‘smart’ energy- saving housing and work places, and up to £210m to improve early diagnosis of illnesses and develop precision medicine for patients. The ISCF investment is in addition to the previous £1bn allocated to the fund, £246m of which is for next-generation battery technology and £86m for robotics hubs across the UK. Four new ‘sector deals’ in
construction, life sciences, automotive, and artificial intelligence will also receive support from the ISCF. These partnerships between government and industry, of which there are expected to be more, aim to encourage private investment and boost
employment, skills and productivity in these areas. Major life sciences company MSD endorsed the government’s support for the life sciences by announcing it is establishing a new state-of-the-art research facility in London. The UK Discovery Centre, which aims to create 150 new research roles and employ 800 staff, will become a centre of excellence and MSD’s UK headquarters. The white paper finds that neither
government nor the private sector is investing enough in R&D to stay ahead of the technological innovations expected to shape the markets of the future. The UK currently invests 1.7% of GDP in R&D, compared with 2.8% in the US and 2.9% in Germany. Over the next 10 years, there will be an increase in total R&D spend to 2.4% of GDP, which equates to around £80bn of additional investment. In addition, the rate of R&D tax credit will increase by 1% to 12%. Mark Tighe, CEO of R&D tax specialist
Catax, comments: ‘The industry was looking for a rise of 4% in R&D tax relief to 15%. Instead, it’s stuck with a raise of 1%. This might look good on paper as it’s actually a 9% rise in the rate of relief overall, but this isn’t change on a scale that will supercharge the potential in our economy as many would wish. The message is positive, but yet again ministers are talking about R&D as if it’s all just about cutting-edge firms when the majority of companies that could benefit belong to more traditional industries.’
A major upgrade of the country’s
infrastructure is promised. There will be an increase in the National Productivity Fund from £23bn to £31bn over the next five years to support transport (£4.9bn), housing (£11.6bn) and a digital infrastructure (£740m). Another £400m is earmarked for the charging infrastructure for electric vehicles, with an additional £100m to extend the plug-in car grant. Over £1bn will be invested in digital infrastructure, including £176m for 5G and £200m for roll- out of full-fibre networks
Business, Energy and Industrial Strategy Secretary Greg Clark
across the country. The government also recognises the
need to build a technical education system that is as prestigious as the UK’s current world-class Higher Education system. An additional £406m is promised to maths, digital and technical education to address the shortage of skills in these areas. Of this investment, £84m is for computer science education, which includes up-skilling 8000 computer science teachers and a new National Centre for Computing Education to produce training materials and support schools. There was a mixed response from business and industry, though many welcomed the government’s structured approach as a positive start. Steve Elliott, Chief Executive of the Chemical Industries Association (CIA), comments: ‘While it would have been nice to see more mention of the work of the chemical industry, I am encouraged that the five foundations plus the four grand challenges all demand chemical industry solutions. The opportunity for us is now much clearer in a structured government approach. I also welcome the increased commitment to R&D expenditure and am encouraged by the sector deal proposal that we are helping to build through the Chemistry Growth Partnership.’
10 | 2017
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