BEIS Committee launch inquiry on Industrial Strategy: Sector Deals and Productivity

The Business, Energy & Industrial Strategy (BEIS) Committee has today launched an inquiry into the role of sector deals in the Government’s Industrial Strategy and the impact they will have on the UK’s weak productivity. The Committee’s inquiry will initially focus on four sectors: off-shore wind, construction, retail, and hospitality.

Over the course of the Parliament, the Business, Energy and Industrial Strategy Committee will examine the Government’s Industrial Strategy and the effect it has on raising the UK’s low productivity. The Committee’s first inquiry following the publication of the strategy will look at the creation of sector deals, and what impact these bespoke arrangements will have on the Government’s aspiration to drive transformation in investment and productivity across the economy.

Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee, said: “The UK’s productivity is no higher today than it was in 2008, and last month the OBR revised down the UK’s potential productivity growth again. The Government’s Industrial Strategy is a welcome sign of a commitment to tackle the productivity gap, but we want to ensure that it will meet the Prime Minister’s aim of a United Kingdom that truly works for everyone.

“Sector deals are an integral part of the Industrial Strategy, so we will be looking at what they will mean for businesses, how they are secured, and what success will look like. Focusing on sectors that already have deals and lower productivity sectors that do not, we will be asking whether the Government’s approach will be able to raise productivity across industry and across the country.”

The Committee will look at how sector deals are agreed, what benefits they bring both locally and nationally, and how success is measured by industry and government. The inquiry will focus on four sectors that have different levels of involvement with sector deals and government action, and with varying degrees of productivity growth:

• Off-shore wind: a successful UK industry that has already received government support and which contributes to the Industrial Strategy’s grand challenge of clean growth.

• Construction: one of the largest industries in the UK, contributing £138bn GVA to the economy and employing over 3 million people. The construction sector deal was included in the Industrial Strategy through work with the Construction Leadership Council.
• Retail: identified in the Industrial Strategy as a sector with ‘lower average productivity levels, but where many people work and which are vital to the economy’, but which is seeing a growth in productivity based on ONS figures.
• Hospitality: identified as another labour heavy sector with low productivity, but which has not seen productivity growth over the past decade.

Submitting written evidence – terms of reference

The Committee welcomes written evidence by Friday 26 January 2018 on the following points:

For all sectors: 

• Are the criteria for sector deals sufficiently clear and fair to enable any sector to secure them? Which of the Government’s criteria are the most important?
• What will sector deals contribute to increasing productivity across the entire UK? 
• What is the best role for local decision making in supporting sector deals and grand challenges?
• What are the metrics of success for sector deals? Is there enough transparency throughout the process?

For the construction and off-shore wind sectors:

• How do you engage with the Government to secure industry-wide deals? What do you expect the Government to deliver and how is progress measured?
• What aspects of sector-based deals will help to increase productivity? Are there measures other than investment that can make a difference?

For the retail and hospitality sectors:

• Can sector deals meet specific challenges for labour-intensive sectors in increasing their productivity?
• What should the Government be offering as part of a deal? What should they expect in return?

Background: The Industrial Strategy announced deals for the life sciences, construction, artificial intelligence and automotive sectors. These partnerships between government and business are intended to create opportunities to increase productivity, employment, innovation and skills for sectors that can demonstrate leadership and support for clear proposals.   The Government’sgreen paper on Industrial Strategy confirmed that sector deals are not about increased Government funding, but an offer to work with Government to align policies, address regulation, promote good practice and address market barriers.