Government’s Industrial Strategy

Richard Furlong - City Surveys Group

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Published: 11th January 2018

This Article was Written by: Richard Furlong - City Surveys Group


Business Secretary, Greg Clark, has published a new industrial strategy that demonstrates that construction will be one of four key industries to benefit from government backing.

The strategy is the flagship policy of the Department for Business, Energy & Industrial Strategy, and its aim is to boost the UK economy.

The strategy has been built on the following foundations, aimed at reviving the UK’s flagging economy:

  • ideas: the world’s most innovative economy;
  • people: good jobs and greater earning power for all;
  • infrastructure: a major upgrade to the UK’s infrastructure;
  • business environment: the best place to start and grow a business;
  • places: prosperous communities across the UK.

In the first instance public money will be used to implement the policy with funds sunk into areas including innovation, training and infrastructure. It is hoped this will encourage further investment from the private sector.

The strategy comes at a time crucial time, with the Office for Budget Responsibility downgrading its growth forecast for the UK economy. It has predicted the economy will grow at an extremely slow rate over the next four years:

  • 1.4% in 2018
  • 1.3% in 2019 and 2020
  • 1.5% in 2021
  • 1.6% in 2022

Mr Clark claims the publication, entitled Industrial Strategy: building a Britain fit for the future, is the answer to Britain’s productivity ‘weakness’.

Following the focus of a government green paper on four potential economic growth areas – People, Infrastructure, Business Environment and Places.  The strategy has agreed sector deals between the government and industry to increase productivity in construction, life sciences, artificial intelligence and the automotive sectors.

At the heart of the deals is the £170 million earmarked for the Transforming Construction Challenge Fund, an initiative announced in last month’s Budget statement.

The policy document states: “Our new Industrial Strategy ‘Transforming Construction’ programme will take full advantage of new technologies to provide safer, healthier and more affordable places to live and work that use dramatically less energy to build and run.

“It will ensure UK businesses develop world-leading capabilities in integrating construction, digital energy and efficiency technologies – the kind of system integration at which the UK excels.

“We have launched a call for evidence on additional measures to build a market for energy efficiency among homeowners. This will incentivise greater private investment in household and commercial building energy efficiency, to grow the markets for these types of buildings and technologies.”

Critics claim the money will have to spent carefully to have much impact on an industry with an annual turnover of £370 billion.

Critics of the strategy also claim it lacks sufficient measures to deal with the existing skills and training gap in the UK, particularly following the recent Budget, which revealed the country’s dismal productivity forecast.

To combat the skills gap, a key measure of the strategy is a new National Retraining Scheme that supports people to develop their skills. This includes a £64 million investment in digital and construction training, and a £406 million fund for maths, digital and technical education.

To encourage productivity, the strategy proposes increasing Government spending on Research & Development (R&D) to 2.4% of GDP by 2027; increasing the rate of R&D tax credit to 12%; and investing £725 million in new Industrial Strategy Challenge Fund programmes.

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.”

Head of Public Policy at the Chartered Institute of Personnel and Development (CIPD), Ben Willmott, said the government was doing the right thing in setting the goal of creating a modern industrial strategy, but that its level of investment and ambition was inadequate, given the UK’s productivity challenge.

He said: “On skills, there is nothing in the strategy that addresses the UK’s chronic under-investment in adult skills and lifelong learning, with the focus mainly on education policy and the supply of skilled labour for the future in niche sectors”.

Managing Director at consultancy Accelerating Experience, Mike Taylor, said a focus on building technical skills among employees was much-needed but that ‘a glaring omission of commitment to solving the UK’s leadership crisis’ was holding back the UK’s performance.

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