Industrial Strategy must deliver sweeping public-private reforms - and lower energy costs - or ministers will miss ‘once in a century’ opportunity for British economy - say MPs

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 Liam Byrne, 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?