What is New Industrial Strategy White Paper?
The government’s new paper on “Industrial Strategy: Building a Britain fir for the future,” published today, was met with enthusiasm by business leaders but with disappointment from unions and opposition parties.
The paper, which outlines the challenges the UK would have to overcome to “remain competitive,” sought to answer the business leaders’ concerns, especially those relating to improving technical skills, new physical infrastructure and increased research spending.
The UK’s business organisation, the Confederation of British Industry (CBI), released a response to the government’s new industrial strategy, where it urges that such a strategy “must be the beginning of a strategic race, not a tactical sprint.” It welcomes the government’s announcement but it stresses how this needs to be well-thought and “consistent” so it lasts. Carolyn Fairbairn, CBI Director-General, said: “The CBI urges the Government to continue on this road, moving fast from strategy to action. Two important tests of success will be that all regions and nations have successful industrial strategies, and that it is supported and not harmed by Brexit. There must be no missed turns on the path to UK 2030”.
The Conservative politician, Baron Michael Heseltine, said last night that the best industrial strategy for the UK would be to “stop the Brexit initiative.” A well-respected businessman and former deputy prime minister, Heseltine said on BBC Radio 4’s Westminster Hour that the UK would boost growth and productivity if it stopped Brexit. His answer to the UK’s industrial strategy is quite simple: “There is no simple solution to that but the first and most obvious one is to stop the Brexit initiative. Our country is facing years of stagnation, and what is a principal cause of that? It’s that anyone who has got to take an investment decision today is saying, ‘Well how do I know what to invest in? What’s going to happen about Britain and its biggest market of Europe?’ and so they’re hesitating. Whether they’re British companies or overseas companies investing here, they’re hesitating. And as long as we have this Brexit shadow going over us, that will remain. And what do we get in the Budget? A £3bn bill in order to prepare for this Brexit disaster.”
Industrial strategy paper: What is it about?
Since 2016, Theresa May has promised to deliver “a proper industrial strategy” and the white paper is structured around four basic “challenges” relating to artificial intelligence, clean growth, ageing society and future mobility. In order to solve the UK’s productivity deficiencies, the paper looks at ideas, people, infrastructure, business environment and place.
• Raise total research and development investment to 2.4% of GDP by 2027.
• Increase the rate of research and development tax credit to 12%.
• Invest £725m in new industrial strategy challenge fund programmes.
• Technical education system.
• Invest £406m in maths, digital and technical education.
• Create a national retraining system to support people with a £64m investment on digital and construction training.
• National productivity fund to increase to £31bn to support transport, housing and digital infrastructure investments.
• £500m to be spent on electric vehicles and to extend the plug-in car grant.
• £1bn for digital infrastructure.
• Sector deals-partnerships between government and industry to increase productivity with the first deals in the life sciences, construction, artificial, intelligence and the automotive sector.
• £20bn to be invested in innovate businesses.
• Review actions that would improve productivity and growth of small and medium-sized businesses.
• Local industrial strategies to develop local strengths and increase economic opportunities.
• £1.7bn for intracity transport.
• £42m for a teacher development premium to test the impact of a £1000 budget for teachers’ professional development working in underdeveloped areas.
While the government’s ambitious plan to increase the UK’s growth and productivity is admirable and poses a “bold, new approach to the economy,” as Stephen Martin, director general of the Institute of Directors said, this has also been seen as a disappointing attempt using trite and overused ideas presenting them as new. Rebecca Long-Bailey, shadow business secretary argued that here was nothing in the white paper to give businesses certainty in the face of Brexit. As she said: “What detail there is concentrates on a few elite industries in which Britain already has an advantage, and will do nothing to help the millions of people who work in low productivity and low wage sectors such as retail, hospitality and social care.”
Sir Vince Cable, the Liberal Democrat leader also highlighted Brexit uncertainty. As he reiterated there is a “big cloud hanging over it [industrial strategy] now caused by the major uncertainties around Brexit,” and this, along with considering the ways such a strategy affects workers, has to be taken into account.