Recommendations & Conclusions
44 items
1
Conclusion
First Report - Post-pandemic economic g…
The economic outlook has been fundamentally altered by the Covid-19 pandemic and by Brexit, and today’s circumstances therefore require a revised focus in industrial policy. However, some of the foundations and long-term challenges that the 2017 strategy sought to address are still relevant today and should be carefully considered in …
Government response. The Government is grateful to you and the Committee for its inquiry and report on ‘Post- pandemic economic growth: Industrial Strategy’. Since the report’s publication on 28 June, we have been working across Government to carefully consider the Committee’s recommendations …
Department for Business and Trade
2
Recommendation
First Report - Post-pandemic economic g…
The Government now has an opportunity via its Plan for Growth to deliver a more narrow and focused set of polices than the 142 that emerged from the 2017 strategy. We note that the Industrial Strategy Council’s analysis suggests the Government has not started well in this regard. The Government …
Government response. The Government published its strategic objectives for the economy in Build Back Better: our plan for growth on 3 March 2021, alongside the Budget. It sets out how the Government will support economic growth through significant investment in infrastructure, skills …
Department for Business and Trade
3
Conclusion
First Report - Post-pandemic economic g…
Coordinated and strategic industrial policy is required if the Government is to meet its growth, levelling up and net zero ambitions. It appears that many aspects of the Plan for Growth will be overseen by a cross-cabinet committee chaired by the Prime Minister and the Committee welcomes this opportunity to …
Government response. The Government is focussed on the delivery of these ambitious objectives, and its planning and performance framework is being reformed to support this. Published Outcome Delivery Plans (ODPs)1 are being embedded in departments and a new focused performance reporting system …
Department for Business and Trade
4
Recommendation
First Report - Post-pandemic economic g…
Whether labelled Industrial Strategy or Plan for Growth, industrial policy in the UK will require scale and a long-term commitment from Government to be successful. In response to this report the Government should set out: • How it will improve coordination of relevant polices across its Departments and ensure a …
Government response. 6. The Government published its strategic objectives for the economy in Build Back Better: our plan for growth on 3 March 2021, alongside the Budget. It sets out how the Government will support economic growth through significant investment in infrastructure, …
Department for Business and Trade
5
Conclusion
First Report - Post-pandemic economic g…
Abolition of the Industrial Strategy Council suggests that the Government’s commitment to coordinated industrial policy that can withstand and benefit from independent scrutiny has waned. The Council’s abolition risks expanding the gap between Government and the industries that must deliver productivity improvements, economic growth and achieve the UK’s net zero …
Government response. 6. The Government published its strategic objectives for the economy in Build Back Better: our plan for growth on 3 March 2021, alongside the Budget. It sets out how the Government will support economic growth through significant investment in infrastructure, …
Department for Business and Trade
6
Conclusion
First Report - Post-pandemic economic g…
The Secretary of State’s decision to axe the Industrial Strategy Council is difficult to reconcile with his conclusion that the Council did a good job - a conclusion with which we agree. The more challenging context today enhances the necessity of independent oversight. The abolition of the Council is not …
Government response. 6. The Government published its strategic objectives for the economy in Build Back Better: our plan for growth on 3 March 2021, alongside the Budget. It sets out how the Government will support economic growth through significant investment in infrastructure, …
Department for Business and Trade
7
Conclusion
First Report - Post-pandemic economic g…
Abolishing the Industrial Strategy Council was a retrograde step. We are concerned that the Government has disregarded and rejected the benefit of independent long- term analysis and evaluation. Without independent scrutiny implementation of industrial policy will be compromised at best and ineffective at worst. The Council’s analysis and expertise in …
Government response. 83. The Government has noted the Select Committee’s interest in the role of the National Economy and Recovery Taskforce (NERT) in developing industrial policy, and its recommendation to publish the dates and minutes of NERT meetings. However, it is a …
Department for Business and Trade
8
Recommendation
First Report - Post-pandemic economic g…
The abolition of the Industrial Strategy Council removes the opportunity to provide independent analysis over industrial policy in the long term. The Government must ensure that effective scrutiny is put in place in another form in order to measure outcomes and constantly evaluate the strategy. The Council’s abolition removes the …
Government response. 83. The Government has noted the Select Committee’s interest in the role of the National Economy and Recovery Taskforce (NERT) in developing industrial policy, and its recommendation to publish the dates and minutes of NERT meetings. However, it is a …
Department for Business and Trade
9
Conclusion
First Report - Post-pandemic economic g…
Uncertainty about the relevance or content of the Industrial Strategy suggests that, in combination, the strategy’s multiple overlapping features made it overly complex and obscured its purpose. The extent to which the strategy’s Foundations and Grand Challenges shaped the day-to-day experience of the business people who participated in our roundtables …
Government response. The Government recognises the importance of working closely and collaboratively with key stakeholders, in the business community and beyond, to ensure that the Government’s plans address challenges faced by business and grasp opportunities for future growth. There are several fora …
Department for Business and Trade
10
Conclusion
First Report - Post-pandemic economic g…
The UK Government should clarify how the devolved Governments will be involved in the design and delivery of future policies and strategies associated with the Plan for Growth. The UK Government should implement lessons from the devolved Governments’ experience of engaging with the UK Government on policies relating to the …
Government response. 11. There has been no change in the machinery of Government or in departmental responsibilities. The Treasury remains the Government’s economics and finance ministry; and BEIS retains its responsibility for business, science, research, innovation and Net Zero.
Department for Business and Trade
11
Conclusion
First Report - Post-pandemic economic g…
In addition to co-production with the Devolved Administrations, the Plan for Growth should be developed with regional and local leaders in England with a focus on promoting local engagement with industrial policy, and not merely a strategy document for consumption in Whitehall.
Government response. 11. There has been no change in the machinery of Government or in departmental responsibilities. The Treasury remains the Government’s economics and finance ministry; and BEIS retains its responsibility for business, science, research, innovation and Net Zero.
Department for Business and Trade
12
Conclusion
First Report - Post-pandemic economic g…
Overall, the Industrial Strategy’s blend of horizontal policies with vertical sector- based interventions and a mission-oriented approach offered significant flexibility for policymakers. The mission-based approach helped to provide direction of travel and focus for both the Government and industry on a set of objectives, though 50 Post-pandemic economic growth: Industrial …
Government response. The 2017 Industrial Strategy consisted of several core programmes, including Sector Deals, Grand Challenges and Missions, Foundations and Local Industrial Strategies. Delivery of ongoing aspects of the 2017 Industrial Strategy will continue, with some programmes continuing in their current form …
Department for Business and Trade
13
Conclusion
First Report - Post-pandemic economic g…
When launched in 2017, the fundamental purpose of the Industrial Strategy was to address poor productivity in the UK, particularly outside of the South East. However, improved productivity was not itself a Grand Challenge or mission of the strategy. This may have contributed to a sense of the Strategy’s complexity …
Government response. 14. The 2017 Industrial Strategy consisted of several core programmes, including Sector Deals, Grand Challenges and Missions, Foundations and Local Industrial Strategies. Delivery of ongoing aspects of the 2017 Industrial Strategy will continue, with some programmes continuing in their current …
Department for Business and Trade
14
Conclusion
First Report - Post-pandemic economic g…
We are concerned that the Plan for Growth lacks mission-based structures (beyond references to net zero and levelling up) or formal mechanisms for strategic sectoral engagement and support. The reduced emphasis on these elements lessens the formal complexity of the Plan for Growth compared to the Industrial Strategy, but risks …
Government response. 14. The 2017 Industrial Strategy consisted of several core programmes, including Sector Deals, Grand Challenges and Missions, Foundations and Local Industrial Strategies. Delivery of ongoing aspects of the 2017 Industrial Strategy will continue, with some programmes continuing in their current …
Department for Business and Trade
15
Recommendation
First Report - Post-pandemic economic g…
While we recognise it has chosen not to replicate the Industrial Strategy’s formal structure of Sector Deals, Foundations, and Grand Challenges and missions, the Government should clarify what balance it has sought between vertical, horizontal and mission-led policy in the Plan for Growth. Doing this would ensure the Plan for …
Government response. The Government’s approach to sectoral policy draws on the academic consensus that identifies economy-wide horizontal interventions – on regulation, research, skills, infrastructure, business environment and innovation – as the bedrock of effective economic strategy, allowing the market to find and …
Department for Business and Trade
16
Conclusion
First Report - Post-pandemic economic g…
A fundamental flaw of post-2017 industrial policy is that the Industrial Strategy failed to embed itself as touchstone for British industry. Each foundation and mission of the Strategy was appropriate in its own right, but in combination the Industrial Strategy was complex and remote. The ‘opportunistic’ nature of the agreed …
Government response. The 2017 Industrial Strategy consisted of several core programmes, including Sector Deals, Grand Challenges and Missions, Foundations and Local Industrial Strategies. Delivery of ongoing aspects of the 2017 Industrial Strategy will continue, with some programmes continuing in their current form …
Department for Business and Trade
17
Conclusion
First Report - Post-pandemic economic g…
While some businesses in some sectors were aware of the strategy’s purpose and objectives, for many it was distant, did not provide clear direction nor influence decision making. We would like Government to ensure that future industrial policy is easily understood at the grassroots of British industry and translatable to …
Government response. The 2017 Industrial Strategy consisted of several core programmes, including Sector Deals, Grand Challenges and Missions, Foundations and Local Industrial Strategies. Delivery of ongoing aspects of the 2017 Industrial Strategy will continue, with some programmes continuing in their current form …
Department for Business and Trade
18
Conclusion
First Report - Post-pandemic economic g…
Sector deals can have a galvanising effect across industries, bringing to bear an industry-wide focus on enhancing skills and advancing research and development. We are mindful, however, that multiple sector deals can spread resources too thinly and that ‘horizontal’ mission focused interventions can be effective across multiple sectors.
Government response. The Government’s approach to sectoral policy draws on the academic consensus that identifies economy-wide horizontal interventions – on regulation, research, skills, infrastructure, business environment and innovation – as the bedrock of effective economic strategy, allowing the market to find and …
Department for Business and Trade
19
Conclusion
First Report - Post-pandemic economic g…
The Secretary of State’s commitment to maintain the existing sector deals does not fully address long-term concerns about the Government’s approach to sectoral policy. Whether the Government intends to refocus and prioritise its sectoral Post-pandemic economic growth: Industrial policy in the UK 51 approach, as suggested in its evidence, remains …
Government response. The Government remains committed to building long-term strategic partnerships with businesses across all sectors. The Plan for Growth committed to set out a vision for high-growth sectors and technologies where the country is well placed to develop a globally competitive …
Department for Business and Trade
20
Conclusion
First Report - Post-pandemic economic g…
Each sector deal is different, some are new whilst some established in 2017 built on cross-sector working already in place. There is value in maintaining the sectoral approach—but clear measures of success and failure are required.
Government response. 21. The Government recognises the importance of working closely and collaboratively with key stakeholders, in the business community and beyond, to ensure that the Government’s plans address challenges faced by business and grasp opportunities for future growth. There are several …
Department for Business and Trade
21
Recommendation
First Report - Post-pandemic economic g…
The Government should maintain sector deals, not least to ensure an appropriate and strategic balance between vertical and horizontal policy interventions as described in Chapter 3. However, we are concerned that outside the structure of the Industrial Strategy, sector deals should not lose their strategic purpose—either for pursuing comparative advantage, …
Government response. 21. The Government recognises the importance of working closely and collaboratively with key stakeholders, in the business community and beyond, to ensure that the Government’s plans address challenges faced by business and grasp opportunities for future growth. There are several …
Department for Business and Trade
22
Recommendation
First Report - Post-pandemic economic g…
In response to this report the Government should set out how it intends to take forward a sectoral approach to industrial policy. The Government should explain how reprioritisation may be consistent with maintaining the existing deals and whether a coordinated process will be established for agreeing new sector deals.
Government response. The Government remains committed to building long-term strategic partnerships with businesses across all sectors. The Plan for Growth committed to set out a vision for high-growth sectors and technologies where the country is well placed to develop a globally competitive …
Department for Business and Trade
23
Recommendation
First Report - Post-pandemic economic g…
In light of the shocks experienced across the economy and society the Government should establish a plan to review each sector deal to account for the impact Covid-19 has had on employment, pay and productivity.
Government response. The Government recognises the huge impact that Covid-19 has had across sectors and is committed to supporting businesses and individuals across all sectors through the provision economy-wide support packages, including the Coronavirus Business Interruption Loan Scheme, the Coronavirus Job Retention …
Department for Business and Trade
24
Conclusion
First Report - Post-pandemic economic g…
Government should develop clear ‘defensive’ interventions for sectors going through rapid change, to prepare workers and communities for the loss of jobs and/or businesses that will inevitably occur in their local communities, and to support them in taking advantage of new work and business opportunities. These interventions should be delivered …
Government response. The Government recognises that there are several sectors undergoing rapid change, including those who have been significantly impacted by Covid-19. The Plan for Jobs programme is a part of the UK Government’s focus on protecting, supporting and creating jobs across …
Department for Business and Trade
25
Conclusion
First Report - Post-pandemic economic g…
The process of developing Local Industrial Strategies was a useful exercise for many areas, even where no strategy was ultimately agreed with central Government. However, it is unclear what impact they have had in practice at either increasing local growth and productivity, or contributing to specific aims of the national …
Government response. 56. The Government has worked with all places across England, through the Cities and Local Growth Unit (MHCLG/BEIS) to develop Local Industrial Strategies (LIS). However, in the four years since the Industrial Strategy was produced, the UK’s economic and business …
Department for Business and Trade
26
Conclusion
First Report - Post-pandemic economic g…
We are concerned that so few local strategies were agreed and published, and at evidence which calls into question the varying ability of local institutional structures to take forward industrial policymaking. Regardless of whether the specific Local Industrial Strategy model is continued, Government should consider the lessons that can be …
Government response. Post-pandemic economic growth: Industrial policy in the UK: Government Response 7
Department for Business and Trade
27
Conclusion
First Report - Post-pandemic economic g…
The Local Industrial Strategy model faced key limitations, including: a lack of associated long-term funding that could help unlock local investments; variable local institutional capacity to develop, implement and evaluate local strategies; limited priority and capacity within central Government to support the development of 52 Post-pandemic economic growth: Industrial policy …
Government response. 29. The Government agrees with the Committee that its policies and strategies should support the whole economy and deliver for all parts of the UK.
Department for Business and Trade
28
Recommendation
First Report - Post-pandemic economic g…
We conclude that Local Industrial Strategies are useful and should be continued in the future, but that the Government should set out how it will ensure that local areas are equipped with the skills, resource and incentives needed to produce and deliver effective local industrial policy. It should make engaging …
Government response. 29. The Government agrees with the Committee that its policies and strategies should support the whole economy and deliver for all parts of the UK.
Department for Business and Trade
29
Conclusion
First Report - Post-pandemic economic g…
The Government’s recognition of the value of the insights generated through the process of working with local areas to design, and in some cases agree, Local Industrial Strategies is welcome. However, it does not address the fundamental uncertainty regarding the future status of local strategies which are already published, and …
Government response. 29. The Government agrees with the Committee that its policies and strategies should support the whole economy and deliver for all parts of the UK.
Department for Business and Trade
30
Conclusion
First Report - Post-pandemic economic g…
The process of designing Local Industrial Strategies effectively underpinned strategic conversations about industrial policy at the local level. In particular, the insights and networks they generated among local stakeholders could support the effective use of central Government funding for levelling up and community investment. Discontinuing this underpinning structure could hinder …
Government response. 56. The Government has worked with all places across England, through the Cities and Local Growth Unit (MHCLG/BEIS) to develop Local Industrial Strategies (LIS). However, in the four years since the Industrial Strategy was produced, the UK’s economic and business …
Department for Business and Trade
31
Recommendation
First Report - Post-pandemic economic g…
The Government should clarify whether a new structure will replace Local Industrial Strategies, or what form local growth plans will take in future. This would help to ensure a strategic approach can be taken to distributing funding through levelling up and community investment programmes including the Shared Prosperity Fund. Local …
Government response. 32. The Government’s approach to sectoral policy draws on the academic consensus that identifies economy-wide horizontal interventions – on regulation, research, skills, infrastructure, business environment and innovation – as the bedrock of effective economic strategy, allowing the market to find …
Department for Business and Trade
32
Conclusion
First Report - Post-pandemic economic g…
The paucity of agreed Local Industrial Strategies ultimately limited the contribution of local insights and intelligence into national industrial policy. However, co-creation of industrial policy at local and national level is the right approach and was a strength of the Industrial Strategy. We share the Industrial Strategy Council’s concern that …
Government response. 32. The Government’s approach to sectoral policy draws on the academic consensus that identifies economy-wide horizontal interventions – on regulation, research, skills, infrastructure, business environment and innovation – as the bedrock of effective economic strategy, allowing the market to find …
Department for Business and Trade
33
Recommendation
First Report - Post-pandemic economic g…
The Government should clarify through what mechanism it intends to incorporate local industrial and economic insights and intelligence into future national-level policies—in particular, into the Plans, Strategies and Reviews listed in the Plan for Growth which the Government has said will be published within the next 12 months. (Paragraph 117) …
Government response. The Government agrees with the Committee that its policies and strategies should support the whole economy and deliver for all parts of the UK. In delivering the Plan for Growth, the Government will continue to work with the Devolved Administrations …
Department for Business and Trade
34
Conclusion
First Report - Post-pandemic economic g…
The growth capital gap is a brake on the ability of small businesses to innovate and accelerate their growth. Venture capital in the UK does not always fill the gap and support the right businesses in the right places at the right time. There remains a sectoral and geographic vacuum …
Government response. 35. The Government remains committed to building long-term strategic partnerships with businesses across all sectors. The Plan for Growth committed to set out a vision for high-growth sectors and technologies where the country is well placed to develop a 8 …
Department for Business and Trade
35
Conclusion
First Report - Post-pandemic economic g…
International investment in British businesses can support growth and is positive on an individual basis. The flow of businesses and IP out of the UK, however, as a consequence of the international venture capital model is cause for concern. The drift towards foreign investment illustrates that scale ups and innovative …
Government response. 35. The Government remains committed to building long-term strategic partnerships with businesses across all sectors. The Plan for Growth committed to set out a vision for high-growth sectors and technologies where the country is well placed to develop a 8 …
Department for Business and Trade
36
Conclusion
First Report - Post-pandemic economic g…
On this basis, we share the concerns of the Public Accounts Committee (PAC), which called into question the extent to which the Industrial Strategy Challenge Fund (ISCF) supports research-orientated small businesses. Given the scale of the funding attached to the ISCF, the fund should represent a realistic source of alternative …
Government response. 61. The Government recognises the concerns raised by the Committee regarding the Industrial Strategy Challenge Fund (ISCF) and have agreed a robust action plan that will address the recommendations made by the Committee, the Public Accounts Committee, and National Audit …
Department for Business and Trade
37
Conclusion
First Report - Post-pandemic economic g…
We are concerned that the ISCF as a source of public finance should not reinforce the trends seen in access to private finance, in particular venture capital. In addition, we are concerned that difficult approval processes and the challenge of providing finance to satisfy the collaborative approach disincentivise small, innovative …
Government response. 61. The Government recognises the concerns raised by the Committee regarding the Industrial Strategy Challenge Fund (ISCF) and have agreed a robust action plan that will address the recommendations made by the Committee, the Public Accounts Committee, and National Audit …
Department for Business and Trade
38
Recommendation
First Report - Post-pandemic economic g…
We recommend that UKRI put in place an action plan which: • sets out how they will ensure that the ISCF stimulates innovation in all the nations and regions of the UK; • details how UKRI will reverse the trend of funding moving sharply away from SMEs to larger businesses; …
Government response. 61. The Government recognises the concerns raised by the Committee regarding the Industrial Strategy Challenge Fund (ISCF) and have agreed a robust action plan that will address the recommendations made by the Committee, the Public Accounts Committee, and National Audit …
Department for Business and Trade
39
Conclusion
First Report - Post-pandemic economic g…
The Advanced Research and Invention Agency (ARIA) could provide a mechanism to contract for innovation by driving public-private collaboration and encouraging 54 Post-pandemic economic growth: Industrial policy in the UK competition between commercial organisations to secure alternative sources of investment for growth. We believe that an agency which can take …
Government response. 40. The Government recognises the huge impact that Covid-19 has had across sectors and is committed to supporting businesses and individuals across all sectors through the provision economy-wide support packages, including the Coronavirus Business Interruption Loan Scheme, the Coronavirus Job …
Department for Business and Trade
40
Conclusion
First Report - Post-pandemic economic g…
We note the conclusion of the House of Commons Science and Technology Committee that ARIA is a “brand in search of a product” and share concerns that its function remains uncertain. ARIA’s remit and objectives are very broad and we are concerned that its potential should not be diluted by …
Government response. 40. The Government recognises the huge impact that Covid-19 has had across sectors and is committed to supporting businesses and individuals across all sectors through the provision economy-wide support packages, including the Coronavirus Business Interruption Loan Scheme, the Coronavirus Job …
Department for Business and Trade
41
Conclusion
First Report - Post-pandemic economic g…
The post-pandemic and post-Brexit environment will provide the Government with an opportunity to reshape how public procurement can be used to drive innovation by British businesses. Whilst there was no appetite amongst witnesses for industrial policy to be used to prop-up failing businesses, beyond support for defensive policy to support …
Government response. 78. On the Committee’s request for the Treasury to set out its plans for modernising Government procurement rules, last year (December 2020), the Cabinet Office published the Green Paper Transforming Public Procurement, setting out proposals and demonstrating the possibilities for …
Department for Business and Trade
42
Conclusion
First Report - Post-pandemic economic g…
Whilst the future of the Grand Challenges is uncertain the fundamental issues which underpinned them remain pertinent. A growing R&D budget channelled through the Industrial Strategy Challenge Fund and the Advanced Research and Invention Agency, in combination with a modification of state aid rules and procurement, has significant potential to …
Government response. 17. Much of the Government’s 2017 Grand Challenges and Missions work, including the Government’s commitment to Net Zero, is now core Government policy. The time is right to evolve the Government’s approach to ensure the country remains responsive to a …
Department for Business and Trade
43
Recommendation
First Report - Post-pandemic economic g…
British business should be provided with a clear picture of the landscape in which it will operate in the post-Brexit and post-Covid-19 era. We recommend that the Government publish an overview of the scale and nature of its future relationship with industry to clarify the mechanisms it will use for …
Government response. 44. The Government recognises that there are several sectors undergoing rapid change, including those who have been significantly impacted by Covid-19.
Department for Business and Trade
44
Recommendation
First Report - Post-pandemic economic g…
To provide clear direction the Government should present to the House an updated industrial policy statement which sets out the Government’s strategic assessment of industrial policy in the UK. The Government should provide:(Paragraph 180) • Confirmation of who is leading industrial policy in the UK—is it the Prime Minister as …
Government response. 44. The Government recognises that there are several sectors undergoing rapid change, including those who have been significantly impacted by Covid-19.
Department for Business and Trade