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Government publishes its productivity plan

10 Jul 2015

A handy digest of the new announcements for science and engineering in the Government’s Productivity Plan, published today.

The Government today published its plan to raise UK productivity, “Fixing the foundations: creating a more prosperous nation”, as part of the Summer Budget.

The government’s framework includes 15 key areas, built around two pillars: first, encouraging long term investment, and secondly, promoting a dynamic economy.

Summary of key new announcements for science and engineering:

  • A long-term National Infrastructure Plan will be published (no date set). And a dedicated National Infrastructure Plan for Skills will be published in the summer (p16)
  • Moves will be taken to raise the standard and profile of apprenticeships. The Government ambition to create £3 million apprenticeships will be paid for with a levy on large UK employers (p24)
  • Institutes of Technology will be established to deliver high-standard training at levels 3, 4, and 5 (p25)
  • A new careers and enterprise company will encourage greater collaboration between schools, colleges and employers, helping young people to access the best advice (p26)
  • Maintenance grants will be replaced by maintenance loans for new students from 2016-17 and the yearly loan allowance will rise to £8,200 a year (p27)
  • A new Teaching Excellence Framework will be introduced and institutions offering high quality teaching will be able to increase their tuition fees in line with inflation from 2017-18 (28)
  • Plans to provide income-contingent loans for post-graduate study will be taken forward later this year (p28)
  • The Government has stated that “The commitment to excellence, facilitated through a dual support system, must remain absolute” (p38)
  • The government will invite universities, cities, Local Enterprise Partnerships (LEPs) and business to work with the government to map the strengths of different regions through a series of science and innovation audits (p38)
  • Access to innovation funding for businesses will be made simpler and more customer-focussed (p39)
  • Proposals for new Catapult centres will be brought forward shortly (p39)
  • A Digital Transformation Plan will be published by autumn 2015 (p61)
  • Local Enterprise Partnerships will be invited to bring forward bids for a new round of Enterprise Zones (p73)

What’s missing?

  • Harnessing R&D in all the plan’s key areas, such as transport, energy and digital infrastructure, to address the productivity problem
  • Commitment to invest in basic research, which is a key recommendation of the OECD to raise productivity
  • New ideas focussed on raising private sector investment in R&D
  • Funding for the promised new Catapult centres
  • Ensuring the workforce is sufficiently equipped with the skills to deliver in all the plan’s key areas
  • How much the apprenticeship levy will raise and how it will fund training of high-enough quality and skill level to meet the shortages in key economic sectors
  • A coherent plan to increase the supply of high-level skills over NQF5 (for which there is currently high demand as shown by the breach of the Tier 2 skilled worker visa cap in June)
  • Improving public sector productivity by engaging with the research community to support policy development

Full details of announcements in the plan for science and engineering 


  • The government will publish a new long-term National Infrastructure Plan for the key economic infrastructure sectors – transport, energy, flood defences, water, waste, communications and science. This will be supported by annual updates on progress with delivery. The government will also publish a dedicated National Infrastructure Plan for Skills in the summer, to provide analysis of current capability and future need and ensure the UK has the right skills base to deliver and maintain world-class infrastructure. The NIP will continue to be underpinned by the Infrastructure Pipeline, which will be published on a regular basis, starting with an update this summer. (p16)


  • The tax system can support productivity by providing incentives, stability and certainty for long-term investment and innovation, avoiding distorting economic choices, and minimising the administrative burden of paying taxes. (p17)

Education and skills

  • In order to ensure that England has the highest STEM teaching quality, the government will train an additional 17,500 teachers in STEM subjects. The government will also encourage greater use of evidence on ‘what works’ – there remains significant scope for schools to make better use of evidence, such as from the Education Endowment Foundation. (p23)
  • The government has committed to significantly increasing the quantity and quality of apprenticeships in England to 3 million starts this Parliament, putting control of funding in the hands of employers. (p24)
    • employer-routed funding reforms, such as the digital apprenticeships voucher, are putting control of funding directly into hands of employers
    • apprenticeships will be given equal legal treatment to degrees, to ensure that apprentices and employers can be given confidence in the brand
    • the government will abolish employer NICs for almost all apprentices under the age of 25 from April 2016
    • the government will set apprenticeship targets for public sector bodies
  • A new approach is needed which puts employers at the heart of paying for and choosing apprenticeship training. In recognition of this, the government will introduce a levy on large UK employers to fund the new apprenticeships. Levies to fund training are already in place in Germany, France, Denmark and over 50 other countries, often supporting high quality apprenticeship systems. (p24)
  • The government will simplify and streamline the number of qualifications so that individuals have a clear set of routes which allow for progression to high level skills, rather than thousands of qualifications. (p25)
  • The creation of National Colleges has been announced to provide high-level sector-specific training. The government will go further and invite some colleges to become prestigious Institutes of Technology to deliver high-standard provision at levels 3, 4 and 5. Building on international best practice, Institutes of Technology will be sponsored by employers, registered with professional bodies and aligned with apprenticeship standards. The government will empower National Colleges, Catapults, and elite professional institutions to design each route, alongside employers and professional bodies. (p25)
  • The government will improve destination data to enable informed choices. The government is supporting the development of online portals to present all post-16 learning options to young people in a user-friendly way, and is strengthening the provision of destination and earnings data. The new careers and enterprise company will encourage greater collaboration between schools, colleges and employers, helping young people to access the best advice. (p26)
  • The government wants strong local areas and employers to take a leading role in establishing a post-16 skills system that is responsive to local economic priorities. The government will make an offer to local areas:
    • first, the government will invite local areas to participate in the reshaping and recommissioning of local provision to set it on an efficient and financially resilient footing.The government anticipates that many colleges will be invited to specialise according to local economic priorities, to provide better targeted basic skillsalongside professional and technical education, and that some will be invited to become Institutes of Technology
    • second, following on from this restructuring process, the government will enable local involvement in the ongoing commissioning of provision, putting power in the hands of people who are best placed to tailor provision to local economic needs (p26)
  • The government will move away from the funding per qualification model for adult learners and, with input from local areas and employers, will develop options to ensure provision is targeted at training with the greatest impact. (p26)
  • The government will set out more details of the above reforms in the autumn. (p26)


  • The government has committed to removing the cap on student numbers. (27)
  • Maintenance loan support will rise to £8,200 a year for those studying away from home and outside London. (p27)
  • The government will ask graduates to meet more of the costs of their degrees once they are earning, according to their income. From the 2016-17 academic year, maintenance grants will be replaced by maintenance loans for new students, paid back only when their earnings rise above £21,000 a year. (p27)
  • The government will consult on freezing the repayment threshold at £21,000 for five years and will also review the discount rate applied to student loans and other transactions to bring it into line with the government’s long-term cost of borrowing. (p27)
  • The government will introduce a new Teaching Excellence Framework to sharpen incentives for institutions to provide excellent teaching, as currently exist for research. (p28)
  • To support teaching excellence, the government will allow institutions offering high quality teaching to increase their tuition fees in line with inflation from 2017-18, and will consult on the mechanisms to do this. (p28)
  • To enable the best new providers to compete on a level playing field with established universities, the government will introduce a clearer and faster route to degree awarding powers for those assessed to offer the best quality education. As part of the review of validation arrangements,the government will explore options to allow the best providers to offer degrees independently of existing institutions before they obtain degree awarding powers. (p28)
  • The government will also free up student number controls for the best alternative providers by introducing a performance pool of places from 2016-17, which will allocate additional student places to the best providers. The government will continue to monitor the quality of courses offered by providers and will impose sanctions on those where quality is not high enough. (p28)
  • The government has announced an intention to introduce income contingent loans for postgraduate taught Masters courses and PhDs. Following the consultation launched in March 2015, the government will set out details of how these loans will be delivered later this year. (p28)

Science and innovation

  • The UK’s system of funding science is central to ensuring the best researchers have the flexibility to innovate and to maintain the UK’s position as a world leader. The commitment to excellence, facilitated through a dual support system, must remain absolute. (p38)
  • But the wealth and breadth of possibilities in science and innovation mean that prioritisation is needed. The government will ensure these strategic choices are made through:
    • investments in national infrastructure; the government will deliver on the science capital commitment, investing £6.9 billion in the UK’s research infrastructure up to 2021
    • ensuring the UK’s excellent science has a focus on those areas with greatest potential, from genetics to quantum technology
    • clear strategies in cross-departmental areas of research interest such as health, where the government works closely with medical research charities. The Accelerated Access Review offers a significant opportunity to improve quality of care and cost effectiveness, and the UK is leading the fight against the global health risk posed by antimicrobial resistance (p38)
  • It is crucial that the UK supports excellence wherever it is found. The government will therefore invite universities, cities, Local Enterprise Partnerships (LEPs) and business to work with the government to map the strengths of different regions through a series of science and innovation audits. These will provide a new, powerful way to build on different regions’ strengths and to maximise the economic impact from the UK’s research base. (p38)
  • Sir Ian Diamond’s review highlighted that collaboration has an important role to play, both in improving the efficiency and supporting the quality of research. The government encourages universities to strengthen local collaboration wherever this will achieve these objectives.(p38)
  • The government will also introduce new Regius Professorships in order to recognise excellence in universities across the UK. The government will launch a competition later this year, with a view to making awards in early 2016 to celebrate the Queen’s 90th birthday. (p38)
  • The government has asked Sir Paul Nurse to examine how Research Councils can evolve to support research in the most effective ways. His independent review, which will report later this year, will help to inform the government’s decision-making in the Spending Review. (p38)
  • The government will continue to support universities in collaborating with industry and commercialising research. The government therefore welcomes Professor Dame Ann Dowling’s review on this topic. The government will respond in full by the Spending Review, including on how to make it easier for business to find help and support from universities and government. The government’s ambition is that UK universities will continue to increase their collaboration with industry to drive research commercialisation, and increase the income they earn from working with business and others to £5 billion per annum by 2025. (p38)
  • The government can confirm significant industrial support for specific science investments including £128 million in the UK Collaboration for Research in Infrastructure and Cities (UKCRIC) and £200 million industry funding from IBM to drive forward Big Data research at Hartree. (p39)
  • At the March Budget 2015 the government announced a Research Partnership Investment Fund competition of £400 million to support capital investment in scientific grand challenges. The government can confirm that this will focus on proposals that not only meet expectations for excellent research, but also recognise the potential for local economic growth, local collaboration and leverage. (p39)
  • Improving UK business participation in Horizon 2020 will contribute to the drive to commercialise UK research. (p39)
  • Significant support for research and development and bringing new products to market is provided through Innovate UK, and also through sector-specific funds including the Aerospace Technology Institute (ATI) and the Advance Propulsion Centre (APC). The government will work to ensure that the means through which businesses access this support are simplified and customer-focussed. (p39)
  • Support to business will be focussed on where it will deliver the most innovation, growth and jobs. The government will use its Challenger Businesses Programme to identify and address barriers to expansion for early-stage disruptive businesses. (p39)
  • Innovate UK, working with Research Councils, has now identified further areas where a Catapult might be the right way to ensure the UK is at the forefront of commercialising technologies which offer global opportunities, and will come forward with proposals shortly. (p39)

Reducing regulatory burden

  • The government will require departments to work with regulators to publish Innovation Plans by spring 2016. These will set out how legislation and enforcement frameworks could adapt to emerging technologies and disruptive business models. (p60)
  • The UK’s digital economy is vibrant and growing rapidly. To ensure that these benefits are felt throughout the whole economy the government will publish a Digital Transformation Plan by autumn 2015 that sets out concrete actions the government will take to support the adoption of digital technologies across the economy, and the ways in which the government will assist in tackling barriers to new businesses entering and creating new markets. (p61)
  • The government has committed to cut at least a further £10 billion of red tape on business. The Better Regulation Executive will launch the Cutting Red Tape programme to help deliver this ambitious target, working in partnership with industry to identify and address red tape resulting from legislation and enforcement activities in sectors. (p61)

Devolving power to the regions

  • More powers will be devolved to mayors and local authorities (p69)
  • The government will ensure cities take a leading role in developing the skills they need, including inviting local areas to participate in the restructuring and commissioning of professional and technical provision, including the ability to invite colleges to become specialist Institutes of Technology. (p72)
  • The development and diffusion of ideas is a vital component of cities’ productivity advantage. To support this:
    • the government will invite universities, LEPs, businesses and cities to work with the government to map research and innovation strengths and identify potential areas of strategic focus for different regions through a series of science and innovation audits
    • the government will encourage universities to strengthen local collaboration, to be recognised through funding stream such as the Research Partnership Investment Fund, building on successful models such as the N8, the M6 and W4. (p73)
  • The government is inviting Local Enterprise Partnerships to bring forward bids for a new round of Enterprise Zones. They will be able to work with DCLG to develop their business cases, and only proposals with strong economic potential will be awarded Enterprise Zone status. (p73)
  • The government also remains open to any further proposals from local areas for devolution of significant powers in return for a mayor, in time for conclusion ahead of the Spending Review. (p71)

Other key areas identified by the plan for raising productivity:

Improving the transport system (p29)

Reforming energy supply (p33)

Improving digital infrastructure in every part of the UK (p35)

Reforming planning laws to make it easier to build new homes (p44)

Welfare and working-age benefit reforms (p51 and p52)

Promoting the provision of finance to support productive investment (p56)

Boosting the UK’s export potential (p66)

Raising public Sector Productivity (p75)