In a report today the House of Commons Business and Trade
Committee warns that a “once in a century” opportunity for the
British economy will be lost unless the Industrial Strategy is
‘funded to work' and delivers a sweeping package of pro-growth
reforms that can transform the UK's international competitiveness
- including action to slash industrial energy costs that are
among the highest in the world and are holding back growth.
Evidence to the BTC inquiry from key industry figures emphasised
the damaging impact of the UK's energy prices on its
competitiveness in manufacturing and on attracting inward
investment. Nissan's senior VP in the UK attested that the auto
manufacturer's plant in Sunderland “pays more for its electricity
than any other Nissan plant in the world”.
Alongside energy costs a broken system of public procurement;
chronic skills gaps; blocks to the diffusion and
commercialisation of innovation; trouble accessing scale-up
finance; over-centralisation of decision-making; and the sheer
complexity of key institutions risk are holding back growth,
deterring investment and hampering the spread of cutting-edge
business practice.
To fix the UK's stubborn economic challenges and exploit the
potential for explosive growth in the industries of the future,
ministers must transform the way public and private sectors work
together: in the national interest, at new speed, to deliver the
highest rate of sustainable growth in the G7.
Through the Spending Review Government must fund the Industrial
Strategy to work - providing real clarity about the sum of public
expenditure that will be allocated to the Strategy over the
remainder of this Parliament. The Committee sets out ten key
tests (see Notes) that will act as a framework to
judge whether the industrial strategy will work; with targets
that measure success to be enshrined in public spending
agreements between the Treasury and departments and an annual
progress review delivered to Parliament for the life of the
Strategy.
Rt Hon , Chair of the Committee,
said:
“Britain stands at the cusp of the next economic and
technological evolution in pole position: an open, rules-based
economy at the junction of newly forming trade and defence
alliances that unite the world's largest markets.
“In a splintering global order we are home to world-leading
science and technology, a bastion of political stability, a
creative leader that plays by the rules and one of the world's
greatest financial centres. In the new world that is taking
shape, we hold a lot of aces.
“Yet the evidence we've heard from the nation's leading
industrialists, scientists, economists and trade unionists is
that this moment of history will be lost if the Chancellor's new
investment is not matched by a re-making of the British state for
a new economic era.
“Ministers' task now is to re-shape the way public and private
sectors move together, at unprecedented speed, to unlock new
technologies and new markets in ways that create quality,
well-paying jobs - not in some parts of Britain, but in
every part of our United Kingdom. That is the challenge the new
Industrial Strategy must meet.”
The Committee calls for:
Levelling the playing field with international competitors on
industrial energy prices.
Transformation in public procurement to make it drive UK growth
and take down non-tariff and ‘behind the border' barriers to UK
exporters in the growth driving sectors.
New measures to help firms access the funding they need to
scale-up and commercialise their innovations in the UK: for
a start, Government should increase the amount of support the
British Business Bank provides to help firms
scale-up. Too many promising companies
are leaving for the US and other countries.
Transfer of responsibility for skills to the Department for
Business and Trade and devolving responsibility for post-16
technical education and training to mayors where they can prove
up to the task .
The Regulatory Innovation Office to be expanded to act as
clearing house to rapidly troubleshoot regulatory conflicts,
giving businesses a place to report disjointed regulations;
New legislation to put the Industrial Strategy Council on a
statutory footing and a hard-wired connection to the new Council
of Regions and Nations.
The ten BTC tests for judging the new Industrial Strategy:
- Test 1: Is there a clear vision for the Industrial Strategy?
- Test 2: Are there clear metrics to help judge progress
closing the growth-gap?
- Test 3: Are there grand challenges or clear goals to
galvanise a whole-of-government effort to deliver the industrial
strategy with the private sector?
- Test 4: Are there clear targets for using our trade
deals and export teams to deliver a growing share of export
markets for priority sectors?
- Test 5: Is public procurement being used effectively to
deliver the strategy's goals?
- Test 6: Is government improving the private sector's access
to capital to deliver the strategy?
- Test 7: Are our energy prices internationally
competitive?
- Test 8: Are we closing skills gaps for firms in the priority
sectors?
- Test 9: Is there clear, well-resourced institutional
leadership for research and development in each of the growth
sectors?
- Test 10: Is there leadership from the top, delivering kinetic
energy and coherence?