Industrial strategy offers manufacturers chance to shape future, say experts

Out-Law News | 24 Jan 2017 | 9:44 am | 5 min. read

The UK government's new industrial strategy offers manufacturers the chance to shape their own future, in a move that will be welcomed by industry, an expert has said.

In its strategy (132-page / 7.57MB PDF), which is open to consultation, the government said it would consider industry suggestions on steps that could be taken to help improve productivity in their sector.

Early work is already underway in some sectors, the government said. A review is being undertaken into "industrial digitalisation", and a new strategy "to make the UK the best place in the world to invest in life sciences" is being developed, it said. Further plans on how to capitalise on the UK's creative industries strengths by "utilising and developing new technology, capitalising on intellectual property rights, and growing talent pipelines" are also being worked on.

Neil Black of Pinsent Masons, the law firm behind Out-Law.com, welcomed the plan and emphasised the need for a long-term consistent industrial strategy. He noted that the strategy looked to build on the UK's existing areas of strength whilst tackling the deep rooted issues facing the UK economy.

"The UK already holds a competitive advantage in areas such as the automotive industry, life sciences and the creative industries and it makes perfect sense to give further backing to these industries," Black said. "The strategy also looks to address key challenges such as the productivity gap and skills shortage both of which need urgent attention."

Black also welcomed the fact that the government appeared to be keeping an open mind in terms of which sectors it offered support to.

"The government has said it is open to working with other sectors that are able to co-ordinate themselves behind strong leadership to address shared challenges and opportunities," Black said. "This is welcomed and presents a real opportunity for businesses in other sectors to collaborate, perhaps under the umbrella of a trade association, to identify the barriers to future success and outline a plan for reform which would enable greater innovation and productivity.  This could present a real opportunity for sectors that are sometimes overlooked by government. Food and drink is a prime example of such a sector and is ripe for government support given its importance to the UK economy."

"This approach by government to an extent requires it to back winners in the economy. There is a risk that such an approach could result in missed opportunities, however, if the government picks the right sectors, it could deliver major benefits to the UK economy," Black said.

Black also hoped the new industrial strategy would serve to put UK manufacturing "front-and-centre" again, and support it in meeting the challenges of the Industry 4.0 revolution. He also noted that it took account of the need to invest in the North of the UK, to help rebalance the UK economy.

Helen Cline of Pinsent Masons said the government's commitment to develop a new life sciences strategy provides an opportunity for UK industry. She said the development of such a strategy was recommended by a UK EU life sciences steering committee (21-page / 507KB PDF) which was tasked with identifying the main issues facing the industry as the UK moves towards Brexit in light of the outcome to the UK's EU membership referendum last June.

"As we have outlined previously, in the wake of the UK’s decision to leave the EU this is a unique opportunity for all stakeholders to work with the UK government to create a long term and holistic strategy for the life sciences sector that builds on existing UK strengths and addresses the challenges," Cline said.

"The UK has a long history of evidence-based permissive regulation and there is an opportunity for the UK to road-test innovative approaches to regulation, building on recommendations made in reports such as the recent Accelerated Access Review. This would go some way to securing the UK’s future as an early launch market for new medical innovations, although adequate funding of the NHS will remain critical," she said.

Simon Colvin of Pinsent Masons also welcomed the government's commitment to harnessing the potential of new technologies.

In its new industrial strategy, the government announced it would "invest an additional £4.7 billion by 2020-21 in R&D funding". A new Industrial Strategy Challenge Fund will be created to channel funds, including potentially to projects on robotics and artificial intelligence, leading edge healthcare and medicine, manufacturing processes and materials of the future, biotechnology and '5G' mobile networks, among others.

"It is pleasing to see that the government is focusing in on many of the technologies that are increasingly coming to the fore," Colvin said. "Many of those technologies listed, for example robotics, have the potential to have huge implications for businesses and the way they operate,"

"It is also encouraging that the industrial strategy again shows the UK is committed to upgrading the country's infrastructure. Technology can play a central role in delivering the infrastructure the UK needs to thrive. The government has already made significant commitments to boost UK broadband coverage and to develop '5G' connectivity. The work of the National Infrastructure Commission (NIC) in examining how new technology can best be harnessed to improve infrastructure productivity will likely shape the government's future approach further," he said.

"It was encouraging to see in last year's National Needs Assessment (NNA) report, which will feed into the NIC's work, that technology should be at the heart of infrastructure planning and operation in the UK," Colvin said.

Another pillar of the industrial strategy is the government's plans to help develop skills. Plans include creating "a proper system of technical education" for young people who elect not to go to university, the government said.

It also announced £170 million of funding to create new Institutes of Technology which will "deliver higher technical education in STEM subjects and meet the skills needs of employers in local areas". The government also vowed to establish "a joined-up, authoritative view of the sector specific skills gaps that the UK faces now and in the future".

Black said it is particularly vital that the measures to address the UK's skills shortage are actioned quickly.

"There is a well-established skills shortage in the UK which already inhibits manufacturers in particular from delivering greater productivity," Black said. "The government has already taken steps to address this, including through the introduction of the apprenticeship levy, but further action is required. With Brexit looming large, there may be further pressure on the skills available to businesses."

"It takes time to grow and develop the skills base – this does not happen overnight – and therefore the government needs to ensure that the skills initiatives identified in its strategy are taken forward as a matter of priority," he said.

Among its other plans, the government said it would establish a new "testing ecosystem" for connected and autonomous vehicles "using both controlled and real world environments".

It said it is also looking into whether to set up "a new research institution as a focal point for work on battery technology, energy storage and grid technology" to help the UK become "a global leader in battery technology".

The government also said it plans to release new guidance to help public bodies to drive innovation through procurement, and that it wants to encourage more university 'spin outs' by collating best practices on "commercialisation of intellectual property".

The government also confirmed a new digital strategy will be published "shortly".