'Industrial strategy' relates to coordinating a wide range of economic policies to achieve particular objectives, which need not be purely economic.
The government published the industrial strategy White Paper, Building a Britain fit for the future, on 27 November 2017.
Key points of the industrial strategy
The government has identified five foundations of productivity which are "the essential attributes of every successful economy". These are:
- Ideas (R&D, innovation)
- People (skills and education)
- Infrastructure (broadband, energy, transport)
- Business environment (support for specific sectors and SMEs)
- Places (tackling regional disparities)
The policies in the industrial strategy are categorised according to which foundation they support and are summarised below.
Improving the Five Foundation will enable to UK to tackle a series of Grand Challenges that the government has identified which will help the UK "take advantage of global changes, improve people's lives and the country's productivity."
The Grand Challenges are
- AI and the data revolution (how to embed and maximise the advantages of AI and data)
- Clean growth (low carbon technologies across the economy)
- Mobility (low carbon transport, automation, infrastructure)
- Aging society (healthcare and labour market challenges)
These partnerships between government and industry help industries to overcome specific issues that they face. These partnerships will involve industry councils which meet regularly to identify issues and decide how to tackle them. The councils include industry leaders and government representatives.
This model has been used successfully in the automotive, creative and aerospace industries for several years.
Five sector deals have been announced so far (some of which already have sector partnerships with government). Other sector deals will be announced in the new year. The theory behind the details is outlined in a policy paper from BEIS. The five sectors deals are:
The Government will create an independent Industrial Strategy Council to assess progress and make recommendations to the government.
Key industrial policies
- R&D investment raised to 2.4% of GDP by 2027 (including £12.5 billion more public R&D investment by 2021/22)
- R&D tax credit increased from 11% to 12% in January 2018
- £725 million over four years invested in Wave 2 of the Industrial Strategy Challenge Fund. This competitive funding programme will address themes related to the Grand Challenges.
- New technical education system as recommended in the Skills Plan, including 'T Levels' (emphasising technical skills) and apprenticeships
- Invest £400 million in maths, digital and technical education
- Create a National Retraining Scheme by the end of the Parliament, including £64 million investment for digital and construction retraining
- Increase ethnic minority employment and employment of disabled people. Support carers into work.
- National Productivity Investment Fund increased to £31 billion by 2022/23 to develop transport, housing and digital (of which £24 billion already allocated)
- Electric vehicle infrastructure (such as charging points and car grants) investment increased by £100 million
- Digital infrastructure investment in 5G, rural broadband and data accessibility.
- Sector deals to help sectors overcome problems specific to their industry
- Fund more high potential businesses though the British Business Bank, including through the Investment Fund
- Increase productivity in SMEs by analysing the reasons for variable rates of productivity.
- Local Industrial Strategies to deliver economic growth across the UK, helping to develop high growth clusters where appropriate
- Transforming Cities Fund to develop transport links between cities
- Pilot a Teacher Development Premium that will help develop high-quality teachers in areas with lower performing schools.