BEIS Committee calls on UK Government to improve industrial policy

A COMMITTEE for the UK’s Department for Business Energy and Industrial Strategy (BEIS) says Government has failed to set out its approach to industrial policy after scrapping the UK’s Industrial Strategy. In a published report, the committee recommends next steps.

The Industrial Strategy, announced in 2017, aimed to boost industry and take advantage of global challenges and technological change. The UK Government has decided to replace the strategy with the Plan for Growth and related strategies. It also disbanded the Industrial Strategy Council (ISC), which was created as a commitment in the Industrial Strategy White Paper. The independent council was charged with evaluating the Government’s progress in delivering the strategy’s aims and its economic impacts.

The recent report by the BEIS Committee covers findings of an inquiry into the Industrial Strategy which set out to examine whether the strategy was fit for purpose and focussed on the right sectors, issues, and policy areas. This was part of a super-inquiry into post-pandemic economic growth. Appointed by the House of Commons, the BEIS Committee examines administration, policy, and spending of the BEIS.

The committee’s report criticises the decision to abolish the ISC, which offered a valuable resource that supported effective policymaking and established means to measure the success of Government’s policy. The loss of the ISC also means that Government has lost the opportunity to learn from past experience, says the BEIS Committee. Highlighting the lack of convincing rationale for scrapping the council, it advises that Government reverse its decision.

Included in the publication of the 2021 budget, Build Back Better: Our Plan for Growth outlines the Government’s plan to support economic growth by investing in infrastructure and innovation, and improving skills. Darren Jones, Chair of the BEIS Committee, said the plan is “nothing more than a list of existing commitments, many of which are hopelessly delayed”.

The report acknowledges shortfalls of the previously in-place Industrial Strategy. According to BEIS Committee, the strategy was overly complicated, under-financed, and under-resourced. It also lacked clarity regarding its fundamental ambition and, the committee adds, that it failed to achieve its outcomes due to a lack of leadership. The Industrial Strategy was also too far removed from the daily concerns of businesses, making it difficult to incorporate into decision-making.

The BEIS Committee says that to enable the success of the Plan for Growth, Government has to demonstrate that it is genuinely strategic, and that it builds on the mission-oriented principles of the 2017 strategy and has, at its core, locally-developed and agreed industrial plans.

Based on the inquiry into the Industrial Strategy, the committee developed recommendations to help Government set out industrial policy, including a call to clarify who is leading this policy in the UK. It says that these recommendations remain applicable to Plan for Growth.

Additional recommendations include that the Government should:

• commit to co-producing industrial policy with devolved governments and regional and local leaders;
• set out how to improve coordination of relevant policies across Departments and ensure a strategic, long-term approach to industrial policy within Government;
• establish which features and policies from the 2017 Industrial Strategy will be retained, including clarifying the future of Grand Challenges and missions and their applicability to policy; and
• commit to publishing industrial policy metrics and report on those metrics on an annual basis at local and national level.

The report also addresses funding issues, including those concerning the Industrial Strategy Challenge Fund (ISCF) of the national funding agency UK Research and Innovation (UKRI). According to the BEIS Committee, the fund is too small and increasingly focussed on larger businesses in specific regions. The committee recommends that UKRI establishes a plan of action aimed at ensuring that the ISCF stimulates innovation and helps to better serve small- to medium-sized enterprises.

The BEIS Committee also addresses sector deals, local industrial strategies, R&D and innovation, the Advanced Research Invention Agency (ARIA), and the role of public procurement. ARIA, announced earlier this year, was created to fund high-risk, high-reward research.

Correction

This story was edited on 16 August to correct the organisation responsible for the published report. Originally it said Business Energy and Industrial Strategy (BEIS) instead of BEIS Committee.