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MPs debate the Industrial Strategy

26 Apr 2018

James Tooze picks some the details out of the recent debate in the House of Commons

Last week saw a long Parliamentary debate about the Industrial Strategy, with over 40 speakers all coming together to discuss the 256-page document published last Autumn. As in any debate, political allegences will always feature but the Industrial Strategy, at the very least the appearance of one, garners praise across the House. I’ve taken a look through the Hansard of the debate and picked out some areas of interest for us.

Place is key

Throughout the opening speech from the Secretary of State Greg Clark, a great emphasis on ‘place’ shone through. In the Industrial Strategy white paper five pillars of productivity were set out, the ways in which the Government can drive productivity and growth in the UK, one of which is Places. The aspiration of the Government is to maximise the potential and support growth across all regions of the UK by creating local industrial strategies, helping to address regional disparities in productivity.

“The best way to ensure that policies and institutions endure is to take people with us, and to ensure that the advice and wisdom of all parts of the United Kingdom and all parts of the economy are taken and distilled into something of which all can feel a part.” Greg Clark, Secretary of State for Business, Energy and Industrial Strategy

Indeed, the UK suffers from greater regional disparities in productivity than much of Europe, of which many members in the debate lamented the deindustrialisation of the UK since the 1970’s, particularly in manufacturing.

“In the 1970s, manufacturing accounted for around 30% of our GDP; today it stands at barely 10%. The knock-on effects of that decline have been profound. Thanks to the erosion of our manufacturing base, we have seen wealth and resources sucked into the services sector, which has been great for London and the south-east and devastating for the rest of the country.” Stephen Kinnock, Labour MP for Aberavon

Throughout the session, members talked with pride about the strength of industry in their constituencies. Another great vehicle for regional growth are universities, of which the UK has world-class institutions across all regions of the UK. The work that our member NETPark carries out in partnership with Business Durham and Durham County Council is a fine example of understanding the strengths of a local economy and attracting companies and investment to the area, something that the Government should learn from. All indications from Government show they understand the importance of driving growth in all areas of the UK, but there is still the need for a coherent strategy to deliver on this regional growth, making sure local industrial strategies are layered well within the overarching Industrial Strategy.

An immigration system that supports the Industrial Strategy

Skills features heavily in the industrial strategy, but with little mention of how immigration will compliment the development of the UK’s innovation capacity. The Secretary of State was grilled by MP’s over the matter from all corners of the house.

“Clearly, medical innovation and continued investment are welcome, but when dealing with an ageing population and workforce, we need not just innovation but immigration. We need immigration in the healthcare sector to support an ageing population. Does the Secretary of State agree that the Government should review their immigration policy, especially tier 2 visas, which are putting a block on experienced healthcare workers coming to the UK?” Alan Brown, SNP MP for Kilmarnock and Loudon

“When the president of the Royal Society came to speak to the Science and Technology Committee, he pointed out that world-class scientists need to be mobile, anthropologists need to work abroad and those working for the British Antarctic Survey need to go to Antarctica. Will he make sure that the visa system is able to provide that mobility?” Vicky Ford, Conservative MP for Chelmsford

Responding to Vicky Ford, the Secretary of State said:

“One of the commitments in the industrial strategy is to increase the number of visas and studentships for international researchers coming to work in the UK.”

The commitment mentioned includes the move to double the number of Tier 1 visas from 1,000 to 2,000. These types of visas are reserved for those who top tier of scientists and engineers and the increase is a welcome one. Concerns however remain over whether the UK will have a progressive immigration system that will make it easy to attract skilled workers. Combined with current Government rhetoric and messaging of being tough on migrant workers, the Government needs to work much harder to make the UK appear an attractive destination for highly sought after skilled migrants.

A number of other contributors noted that the Industrial Strategy made no mention of the effects that ending free movement of labour from the EU would have on UK industry, or identify the role that EU migrants have played in research and innovation. The Government has commissioned the Migration Advisory Committee to review the effects of European workers in the UK, yet the white paper missed the opportunity to outline how migration should play a role in the success of the Industrial Strategy.

Investment target must not be an end goal

In order to support the Industrial Strategy, the Government have pledged to reach UK spending on R&D to 2.4% of GDP by 2027. The stated long-term goal from the Conservative party manifesto is to reach 3% of GDP on R&D, which also featured in Labour and Liberal Democrat manifestos. The opposition parties do not believe that the target of 2.4% is ambitious enough and these points were raised again during the debate.

“Raising total R&D investment to 2.4% of GDP by 2027 is certainly better than where we were, but the UK has been below the OECD average of 2.4% of GDP for years, and we are way behind world leaders who spend over 3% such as Japan, South Korea, Finland and Sweden. Why are we simply aiming for average?” Rebecca Long Bailey, Shadow Secretary fo State for Business, Energy and Industrial Strategy 

“I absolutely welcome the increased investment in research and development to which the hon. Gentleman refers, but does he agree that aiming to get to the OECD average in 10 years is not exactly ambitious for this country?” Norman Lamb, Liberal Democrat MP for North Norfolk

While it is not within the gift of Government to deliver all the funding itself, using its policy levers to make the UK a more attractive place to invest and signalling the intent for the UK to go beyond 2.4% of GDP invested in R&D can instil confidence in the private sector.

You can read CaSE’s digest of the Industrial Strategy and our immigration work by following these links