Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Acknowledged
Ministerial decisions on industry support trade-offs lack explicit, detailed methodology
Conclusion
We asked the Department how it balances trade-offs when making decisions about support, and how it makes this explicit. Officials told us that it assesses interventions using HM Treasury’s five principles. Proposals are then put to Ministers who make decisions based on advice from the Department and their own understanding of what the trade-offs should be. HM Treasury told us it would want to look at the best range of evidence in making an overall assessment, and that it would vary from policy to policy. In the case of the forthcoming Industrial Strategy, the principal objective is growth, but it also has other objectives, including net zero, security, resilience and regional impact. The Treasury said it would expect the forthcoming Industrial Strategy document to say more about the methodology, and how the government made such trade-offs.36
Government Response Summary
The government is aligning industry support with strategic priorities, including the Industrial Strategy, and will use new 'place-based business cases' to assess complementary projects in specific regions, with supplementary guidance on economic resilience.
Government Response
Acknowledged
HM Government
Acknowledged
4.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2026 4.2 The government is aligning industry support with strategic priorities, including the 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. 4.3 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. 4.4 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. 4.5 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. 4.6 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.