Government outlines plan to make UK world’s most innovative nation

THE UK government has published its long-awaited Industrial Strategy as it seeks to boost industry and take advantage of global challenges and technological change.

The 255-page white paper outlines how the government aims to make the UK the world’s most innovative nation by 2030. Key among its plans are four “Grand Challenges”, including clean growth and AI, that the government wants industry to take advantage of as it seeks to put the UK at the forefront of the industries of the future.

Business champions

Beginning early next year, the government will bring together representatives from industry and academia to act as expert consultants led by a ‘Business Champion’ who will advise how the UK can make the most of each of the Grand Challenges. Ahead of outlining these plans, the government has set out some specific ambitions. On the clean growth challenge, it has committed to developing a new Bioeconomy Strategy for developing new low carbon bio-based products and processes. 

There are no specific measures listed for the chemicals sector, though the strategy does commit to making energy-intensive industries competitive in the clean economy and exploring the many potential uses of low-carbon hydrogen. The government recognises the oil and gas industry’s contribution to the economy, supporting 200,000 direct jobs and generating £24bn (US$32bn) in annual exports, and says it will support the development of the emerging shale gas industry. It commits to working with the wider sector to explore its contribution to clean growth through technologies such as carbon capture use and storage and the hydrogen economy.

Sector deals

The government is underpinning this push for grand challenge innovation with “five foundations” – ideas, people, infrastructure, business environment and places – with policies designed to address the country’s poor record of productivity and provide businesses with the certainty to invest.

Chief among them is a series of new “Sector Deals” billed as partnerships between government and those industries willing to help address sector specific challenges and opportunities.

The government’s strategy got an immediate endorsement from pharma major MSD, which announced it will establish a new R&D facility in London, creating 950 new jobs on the back of a Life Sciences Sector Deal. Another three deals have been announced for the AI, automotive and construction sectors. Meanwhile, discussions are also underway to create deals for the nuclear industry and industrial digitalisation.

Research and funding

A further £725m of new funding has been pledged for the Industrial Strategy Fund over the next three years, building on the £1bn earmarked this year for investment in six cutting-edge areas including robotics. The aims of the new funding include making food production and construction more environmentally-friendly.

The government has also committed to raising R&D investment from 1.7% of GDP today to 2.4% by 2027. It estimates that this increase will boost public and private R&D by as much as £80bn over the next ten years. While the increase has been welcomed (see Reactions, below) it falls short of the 3% called for by engineers earlier this year, and is lower than 2.8% and 2.9% being invested by US and Germany today.

Infrastructure and skills

The strategy includes a series of commitments to strengthen the UK’s built environment, including £400m for electric car charging infrastructure. The National Productivity Investment Fund will be extended to 2022/23 and increased from £23bn to £31bn, with investment targeted at areas that can have the biggest impact on productivity. This includes £4.9bn for transport, £11.6bn for housing and £740m for digital infrastructure.

Within its policies on ‘people’ are a number of plans to address skills shortages. It has ambitions to establish a technical education system “that rivals the best in the world” to stand alongside the UK’s renowned higher education system. It will invest £406m in maths, digital and technical education, helping to address the shortage of STEM skills. And specifically on engineering it notes the initiative announced earlier this year to make 2018 The Year of Engineering and the £15m in funding given for a new engineering university in Hereford.

The New Model in Technology & Engineering (NMiTE) aims to become the first new ‘greenfield’ university in the UK for 30 years and is scheduled to accept its first cohort of students in 2020.

Impact assessment

To hold itself to account, the government plans to create an independent Industrial Strategy Council that will assess performance and make recommendations. This follows a highly-critical assessment by E&Y of the government’s Catapult programme, which establishes centres to help commercialise emerging technologies. E&Y criticised the lack of commonly-agreed purpose and poor governance of the centres which have received £745m of public funding since 2014, and said funding should be cut unless improvements are made. The High Value Manufacturing Catapult, which established the Centre for Process Innovation, is one of only a few of the 11 Catapults to receive a positive appraisal.

The government has committed to making improvements and has pledged to invest £178m of interim investment with a longer-term funding agreement set to be agreed next year.

Launching the strategy, Business secretary Greg Clark said: “We have a thriving research and science base and are home to a wide range of innovative sectors, from advanced manufacturing and life sciences, to fintech and creative industries. The Industrial Strategy is an unashamedly ambitious vision for the future of our country, laying out how we tackle our productivity challenge, earn our way in the future, and improve living standards across the country.”