The government’s Industrial Strategy white paper has outlined new plans for economic clusters and further devolution around the UK.
Against the backdrop of the UK’s declining productivity and the challenges of Brexit, the policy document aims to set out a long-term economic plan for the country.
Business secretary Greg Clark said the plan would enable the UK to “lead the global technological revolution”.
Critics have said the paper is thin on detail and will have little impact on dealing with the challenge of Brexit to UK industry. Lord Adonis, chair of the National Infrastructure Commission, tweeted: “Set against Brexit, today’s ‘industrial strategy’ is irrelevant. Like discussing a new diet while the Titanic sinks.”
However, the paper does provide important new details about the government’s devolution agenda and strategy to drive investment in particular sectors to different areas.
EG has picked out 10 key areas of significance for the industry:
1. Pharma campuses for Manchester and London – Two pharmaceutical firms have said they will invest more than £1bn in the UK, creating two new campuses. MSD will support a new research centre in London, creating around 950 new posts. Germany’s Qiagen will develop a genomics and diagnostics campus in Manchester, creating up to 800 jobs. The requirements were announced alongside a life sciences sector deal, which outlines a new partnership between government and industry, aiming to increase sector productivity.
2. New wave of civil service hubs – The strategy reiterates government’s commitment to moving civil servants, including those in senior roles, out of London to new hubs and specialist clusters between now and 2025. A new digital health cluster will be created in Leeds, as one example which is likely to result in further public sector office requirements. After moving NHS Digital to MEPC’s Wellington Place, the paper says government is looking to “move further health functions to the city to build on this success”.
3. Construction sector deal – A vague construction sector deal has been announced, which government says is the first of a series it intends to negotiate. The deal, which was brokered with the Construction Leadership Council, commits to working collaboratively in three areas:
■ Developing a procurement standard and cost and performance benchmarks for assets and contractors and monitoring outcomes including increased housing capacity
■ Investing in a transformative programme to develop and commercialise digital and offsite manufacturing technologies
■ Reforming the Construction Industry Training Board to make it more strategic and industry-led with the aim of helping to drive investment in skills development.
4. Local industrial strategies – Government will establish its first local industrial strategies by March 2019, prioritising areas which drive wider regional growth, and focusing on clusters of expertise and centres of economic activity. They will identify local strengths and challenges, future opportunities and the action needed to boost productivity, earning power and competitiveness. This might include addressing skills issues, improving infrastructure, harnessing the potential of world-class science and innovation, supporting new high-value businesses, or identifying leading sectors to inform the development of deals. They will establish new ways of working between national and local leaders in both the public and private sectors. As announced in last week’s Budget, the first will be with Greater Manchester.
5. More power for LEPS, but more accountability – Local enterprise partnerships will receive new powers, overseeing local industrial strategies for areas without a metro mayor. From next year, the prime minister will chair a biannual “council of local enterprise partnership chairs” with LEP leaders to help inform national policy decisions. The paper concedes that LEPs, which were established in 2011 to replace regional development agencies, have had mixed feedback on their performances. A review of the role of LEPS in early 2018 will bring forward reforms to leadership, governance, accountability, financial reporting and geographical boundaries.
6. Less power for local authorities – Notable for its omission was the role of local government in the white paper, which appeared to suggest that all local and national funding would now to be channelled through LEP and devolved administration-led local industrial strategies.
7. Transport investment rebalance – Recognising that static analysis of economic outcomes from infrastructure investments can often favour areas where development has already happened, government will create a new guide which will consider the long-term benefits that infrastructure can bring to a place. A “Rebalancing Toolkit” will aim to ensure the benefits of investment are considered more strategically. Government will consult with devolved administrations on how this approach could work across the UK.
8. Place-based strategy – A new £115m-a-year Strength in Places Fund will build on existing identified “areas of excellence” across the country, funding collaborative programmes proposed by universities, local employers, LEPS and their counterparts in devolved nations. Grants will be identified using evidence from the science and innovation audits which identify sectoral strengths for different regions (see table below). A key theme of the paper, the strategy aims to rebalance the UK’s economy so it is less reliant on London.
9. Artificial Intelligence and digital skills centres – The strategy sets out a plan to attract research talent, including £45m to support additional PhDs in AI and related disciplines, increasing numbers by at least 200 extra places a year by 2020- 21, aiming to expand the numbers in UK universities year-on-year into the next decade. The Alan Turing Institute in King’s Cross, N1, will become a national research centre for AI. Government will work with industry to set up a new National Centre for Computing Education.
10.Devolution in different forms – In addition to high-profile regional devolution deals, the white paper outlines the government’s intent to have “policy flexibility” below the regional or LEP level, supporting economic clusters in inner city boroughs, small towns or rural hinterlands to ensure they are able to contribute to, and benefit from, wider economic growth. Government is working with a range of local partners to explore new approaches, including on a pilot town deal with Grimsby, which is developing a new approach to regeneration that will be taken forward by public and private sector partners to revitalise the town centre and deliver new housing.
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