View from the Academy: Setting out a firm industrial strategy

A successful industrial strategy is a vehicle for developing a shared vision for an ambitious and

forward-looking UK 

At the end of April, the 38 organisations representing professional engineering in the UK, led by the Royal Academy, published a comprehensive response to the government’s consultation on industrial strategy: Engineering an economy that works for all. Prepared in just 12 weeks and informed by nearly 1,300 survey responses, as well as a series of 10 workshops held around the UK, this was a substantial piece of work. Of course, we – like many others – failed to anticipate that the prime minister would call a snap general election on the day we were due to publish.

There are good reasons to believe that an industrial strategy will ultimately be forthcoming. The Labour Party is committed to an industrial strategy, so for the first time in decades the government and the official opposition have been consulting on this policy.

So what are the features of a successful industrial strategy? At its heart, it is a vehicle for developing a shared vision for an ambitious and forward-looking UK, and for creating the policy framework and partnerships necessary to ensure that resources support this vision. An effective industrial strategy must provide a long-term horizon against which industry and other stakeholders can plan their activities with confidence. Cross-party support for the key tenets of the strategy is therefore highly desirable to ensure the main pillars of the strategy are not dismantled wholesale with each change of government. It is also essential that the strategy takes a systems approach in order to align the full gamut of policies – led by different departments and ministers – in favour of sustainable growth.

Perhaps the most consistent concern that has emerged from our consultation is the shortfall in engineering skills at all levels. The report argues that the industrial strategy should reach back into the schools system. It highlights the need for urgent action to address the shortage of STEM teachers in schools, as well as calling for a much greater focus on promoting STEM subjects and careers to under-represented groups to fully unlock the talent potential in the UK. Increasing the number of people with higher-level technical skills (levels 4 and 5) is critical and, while institutes of technology have a part to play, wider national provision and sustained investment in further education (FE) is needed.

The importance of ensuring that the UK is adequately prepared for an increasingly digital future is another strong theme. The report concludes that government must continue to drive for world-class, secure and resilient digital connectivity and that digital strategies should be developed for all major infrastructure projects. Digital skills should be included in the future definition of basic skills and a comprehensive programme of upskilling developed in partnership with industry and training providers to ensure the UK workforce at all levels has the skills needed to shape and participate in the industries of tomorrow. I would welcome readers’ views on the types of digital skills that industry will need over the next five to 10 years as we enter a period of increasing industrial digitalisation.

In order to boost investment in research and innovation, the report calls on government to set a target of 3 per cent of GDP for combined public and private research and development investment, and to work with industry to develop a roadmap to achieve that goal. It also suggests that government needs to demonstrate a greater willingness to accept the risk of failure, or perceptions of it, in its innovation support. A UK-wide register of ‘national innovation assets’, which can serve as test-beds, demonstrators and focal points for skills development, should be compiled and promoted to both UK and international companies, to extend the geographical reach of innovation activities beyond current centres of excellence.

Strengthening innovation performance in SMEs remains a priority for the UK, and the report identifies public procurement as a key lever for promoting this. A radical reboot of the Small Business Research Initiative and greater transparency of procurement spend with SMEs could both help, but without clearer signposting to sources of support, low awareness among SMEs will continue to be a barrier to uptake. Greater exploitation of existing SME contact points such as banks, HMRC and regional networks would help.

Finally, improving energy efficiency and resource productivity are identified as priorities, particularly in buildings and energy networks. The report calls for a long-term, integrated, energy strategy to be developed, drawing on all available low-carbon generation technology, including CCS, nuclear power and heat networks.

Critics of industrial strategy argue that it encourages government intervention in activities best left to the market. However, a good strategy will not make intervention more likely; rather it makes it more predictable, and that builds confidence and supports investment. Our consultation demonstrates that many in the engineering community recognise this and are ready to support the next government in developing a modern industrial strategy that works for all.

Dr Hayaatun Sillem is deputy chief executive of the Royal Academy of Engineering 

Engineering an economy that works for all is available here.