Source · Select Committees · Public Accounts Committee
Recommendation 4
4
Accepted
Provide greater transparency on factors and processes used for balancing industry support decisions.
Conclusion
It is not clear how the Department balances multiple government objectives, such as growth and net zero, when making decisions about how to support industry. Government needs to consider a wide range of metrics when making investment decisions including employment, net zero, and economic growth. Pursuit of these metrics requires trade-offs, but how the Department assesses and balances these factors is not transparent. This can make it difficult for stakeholders to understand government priorities, the rationale behind support, and for the Department to evaluate the effectiveness of its portfolio of support. Steel, for example, provides critical inputs into other sectors such as construction, manufacturing, and defence. Despite this, government policies, such as those designed to support decarbonisation, can put UK steel companies at a competitive disadvantage. There are new forums which can consider these policy choices and trade-offs and inform ministerial decisions, including the Growth Mission Board and the Permanent Secretaries’ Growth and Delivery Group. The Department acknowledges that decisions are made using a mix of data, facts and evidence, and judgement and that there is no easy formula for balancing competing objectives. recommendation The Department should provide greater transparency on the factors it considers when supporting industry, including how these factors are balanced when making decisions on what to support and how, and the processes underpinning these.
Government Response Summary
The government will provide greater transparency by using new 'place-based business cases' and supplementary guidance to assess projects and private sector contributions. It will also work with various bodies to maximise the impact of business-facing funds, with an approach already outlined in the Industrial Strategy's Technical Annex and a new supply chain centre being established.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Industrial Strategy. Following the Green Book Review 2025: Findings and actions policy paper publication in June, new ‘place-based business cases’ will assess complementary projects in specific regions. Supplementary guidance on economic resilience will ensure private sector contributions are consistently appraised. The department and HM Treasury will work with ISAC, the Industrial Development Advisory Board and other bodies to address barriers and maximise the impact of business-facing funds on jobs, skills, resilience, regional growth, small businesses, and net zero. The government defines top-level objectives for the growth mission by increases in Gross Domestic Product (GDP) per capita and Real Household Disposable Income. The Industrial Strategy supports both by enhancing productivity, the key long-term growth driver. Invest 2035: The UK’s Modern Industrial Strategy, a Green Paper and public consultation document published in October 2024, identified the eight growth-driving sectors using indicators such as output, productivity, and international position. The department also assessed the fronter industries where government intervention could have the greatest impact. This identified over 30 ‘frontier industries’ within the IS-8 growth-driving sectors, as well as eight supporting ‘foundational sectors and inputs’ which are critical to frontier industries’ success. critical to frontier industries’ success. There is no one-size-fits-all method for identifying which frontier industries have the most growth potential. The department drew on a variety of quantitative and qualitative evidence, including responses to the Invest 2035 consultation and an extensive programme of expert engagement to test its assessments. Frontier industries were selected based on growth potential and alignment with strategic objectives (net zero, regional growth, resilience). Assessments used mixed evidence and scoring methods (Likert scale, RAG rating) and were moderated by multiple assessors. The high-level approach to this was set out in the Technical Annex published alongside the main Industrial Strategy. Foundational industries and strategic inputs were also analysed using qualitative and quantitative evidence, including consultation responses. A new supply chain centre will refine this work with industry.