Industrial Strategy inquiry launched by Business Committee

The Business, Energy and Industrial Strategy (BEIS) Committee has today announced the terms of reference for its new Industrial Strategy inquiry looking at the barriers to growth. This new sub-inquiry forms part of the Committee’s overall ‘super-inquiry’ into Post-Pandemic Economic Growth.

As part of its evidence gathering for this inquiry, Darren Jones, BEIS Committee Chair, will be writing to FTSE 350 companies and to business organisations [letter available via link], including the British Chambers of Commerce (BCC), the Federation of Small Business (FSB), the Institute of Directors (IoD), and the CBI, to seek the views of businesses, large and small, and their thoughts on the constraints on growth as well as the policies and support which they believe are working well.

Darren Jones, Chair of the Business, Energy and Industrial Strategy Committee, said: “In this inquiry, we will want to examine whether, particularly following the impact of Covid-19, the Government’s current industrial strategy (IS) is fit for purpose, whether it is genuinely strategic, and whether it is focused on the right sectors, issues and policy areas. Fundamentally, we want to look at whether the Government’s Industrial Strategy is properly designed and implemented to encourage the growth of a more productive, inclusive and sustainable economy which generates wealth, innovation and high-quality jobs.

“Helping businesses prosper should be at the heart of the Industrial Strategy. As a Committee, we are keen to hear the views of businesses, from SMEs and bigger companies too, about their thoughts on the barriers to growth and whether the Industrial Strategy is working for them in terms of providing the right environment to deliver sustainable investment, a skilled workforce, and high-quality jobs.

“Drawing on the evidence from businesses and others, and through our public evidence sessions starting in September, I hope the Committee will gain a wider understanding of the constraints on growth which enables us to deliver a credible diagnosis of the problems we face in the British economy and to recommend workable policy solutions which the Government can act upon”.

The Committee’s inquiry will focus on the policy substance of the Industrial Strategy (IS) but also the structure, delivery framework and financing associated with it, how the national Industrial Strategy connects to local industrial strategies and whether it aligns with broader government-led interventions in the market.

Industrial Strategy – inquiry terms of reference

The Committee welcomes evidence submissions on the terms of reference outlined below. The closing date for submissions is 1st September 2020. The key issues which this inquiry will examine includes:

• Industrial Strategy (IS) Priorities: how does the Government understand, diagnose and monitor the underlying constraints on UK economic growth and is this informing the IS? How has Covid-19 impacted this evidence-base and should the IS change to reflect this?

• Relevance of the IS: how can the IS be made more relevant and accessible for the UK’s supply chain, LEPs, Growth Hubs and for individual companies, investors and entrepreneurs? Has it helped SMEs grow and innovate? Is it helping Ministers decide on broader market interventions and policies to recover the economy following Covid-19?

• IS Delivery: is the IS deliverable within the current institutional framework? Does the IS Council have sufficient insights and powers? Are Whitehall departments delivering on their respective IS obligations and how is the IS being optimised over time? How has the IS operated in the Devolved Administrations and how does it compare to our key competitors?

• IS Foundations: what data exists to evidence the impact the IS has had on the five foundations (ideas, people, infrastructure, business environment and places)? How has the IS impacted existing embedded policy areas – such as R&D funding and skills and education delivery – across Government departments?

• IS Grand Challenge Missions: is the Government focusing on the right grand challenge missions (artificial Intelligence and data, ageing society, clean growth, future of mobility) and, if not, which are missing? Are missions addressing the right problems and are they the best approach? Where the Government has established additional capacity to deliver them (e.g. the Office of AI), has it succeeded, how is this evidenced, and can they be improved?

• IS Support: is existing IS support (e.g. British Business Bank and Innovate UK), effective? Are IS priorities properly financed and how is value for money assessed? What type of businesses/organisations have benefited from R&D funding under the IS Challenge Funds? Where investment risks are taken, how does Government assess and mitigate them? Does the IS merely bolster existing strengths or balance it against frontier innovation work?

• IS Sector Deals: is the Government focusing on the right sectors and, if not, which are missing? Have they delivered growth in goods or services output, solved underlying problems (e.g. productivity or decarbonisation) and/or created or improved jobs/pay? Does the Government need to rethink/re-prioritise sector deals because of Covid-19 and Brexit?

• Measuring Success: has the IS increased national and regional GDP and GDP per capita and should it aim to deliver a more inclusive and sustainable economy? How should IS success be measured and are current tools/metrics adequate, especially if seeking to deliver goals broader than GDP?

Industrial Strategy sub-inquiry & the overall Post-pandemic economic growth inquiry

The Post-pandemic economic growth inquiry, launched in June, is an over-arching inquiry likely to run through the Parliament and will include a series of sub-inquiries examining issues such as devolution and the ‘levelling-up’ agenda, the role Government might play as a shareholder or investor in businesses in the future, and the measures needed to rebuild consumer confidence and stimulate economically and environmentally sustainable growth. Further terms of reference for these sub-inquiries will be published during the course of the Parliament.