Read CaSE’s response to the Industrial Strategy, setting out the government’s long-term plan to boost the UK’s productivity
CaSE responds to the Industrial Strategy
27 Nov 2017
CaSE Executive Director, Dr Sarah Main, said:
“Many industrial strategies have started, but not many have been completed. On its first day, can we tell if this one will run to completion, how will we know if it does and who will be accountable for delivering it? To reach completion, the strategy must have clear goals and accountability for delivering them that survive the political weather. The mission at hand is an important one, so it is more than just political sport to ask if the strategy will survive a political term, it is vital to the quality of life of people around the UK.
There is a vision, direction of travel, specific commitments in places and some clear goals in the strategy. But there seems a faintness of heart from Government in taking ownership for it. Yes, Government can’t do it alone and it requires commitment from across the economy, but surely Government should show how it will drive the strategy to completion? An independent watchdog, as has been suggested by the Industrial Strategy Commission, should have the teeth to motivate and be heard at the Cabinet table.”
On R&D investment
In her introduction to the Industrial Strategy, the Prime Minister said:
“And we are not fulfilling Britain’s potential if, despite having scientists and universities renowned the world over, we cannot turn their ideas into the products and services on which the industries of the future will be built.”
CaSE Executive Director Dr Sarah Main, said:
Scientists, engineers and innovators find themselves in the Prime Minister’s sights today as she seeks to deliver greater productivity through investing in R&D and skills. The ambition and pace of the industrial strategy initiatives are welcome, but we must remember that the first and foremost reason that research-intensive companies invest in the UK is for the quality and creativity of our research base, both its output and its people. Therefore the commitments to increase support for the UK’s unique and demonstrably successful research funding modes through Research Councils, university Quality Related funding and Higher Education Innovation Funding are critical to the success of this strategy in attracting overseas R&D investment. So too is the commitment to developing a roadmap to R&D investment across the economy of 2.4% of GDP.
Research-intensive companies are clear that they are attracted to the UK by the quality and creativity of our research base, both its output and its people. The UK’s research funding system of dual support through Research Councils and universities is recognised as being the secret to our success. Challenge-led funding is now a growing component of our funding model. It may be shown in time to be a successful one but is, as yet, relatively untested, particularly at this scale. It will be important to make sure the dual support system that has worked so well continues to grow so that new ideas, innovations and sectors are developed to tackle the challenges of tomorrow.
On the environment and migration
CaSE Executive Director, Dr Sarah Main, said:
“To uphold a flourishing research base, the UK must have an environment that supports research and development on an international scale. That means developing a migration system and regulatory framework to match post-Brexit. The industrial strategy tackles some of the challenges of new regulatory systems for innovation, but has little to say on migration may support the goals of the industrial strategy. Government must work together across its departments to align its aims, and I hope to see development of a proportionate and flexible post-Brexit migration system that meets the UK’s skills needs and research priorities in due course.”
Industrial Strategy 2017 – Digest
With the Industrial Strategy the government has identified five foundations of productivity which are “the essential attributes of every successful economy”. These are:
- Ideas (R&D, innovation)
- People (skills and education)
- Infrastructure (broadband, energy, transport)
- Business environment (support for specific sectors and SMEs)
- Places (tackling regional disparities)
Improving the Five Foundation will enable to UK to tackle a series of Grand Challenges that the government has identified which will help the UK “take advantage of global changes, improve people’s lives and the country’s productivity.”
The Grand Challenges are
- AI and the data revolution (how to embed and maximise the advantages of AI and data)
- Clean growth (low carbon technologies across the economy)
- Mobility (low carbon transport, automation, infrastructure)
- Aging society (healthcare and labour market challenges)
The announcements surrounding the Five Foundations include:
Ideas – R&D, Innovation
- The government has committed to reaching 2.4 percent of GDP investment in R&D by 2027 and reaching 3 per cent of GDP in the longer term. The government previously announced an additional £2.3bn for 2021/22, raising total public investment in R&D to approximately £12.5bn in that year alone. The government will work with industry in the coming months to develop a roadmap for meeting this target.
- Investing £300m over the next three years in world-class talent through Knowledge Transfer Partnerships and PhD programmes, among other pathways.
- Working with UKRI to develop a new competitive Strategic Priorities Fund, which builds on the vision of a ‘common fund’ set out in Sir Paul Nurse’s review.
- UK Research and Innovation strategy will deliver a real-terms increase in council budgets of approximately 20 per cent between 2015/16 and 2019/20.
- Increased support for Quality-Related research through Research England.
- Introduced a new Advanced Clearance Service for R&D expenditure credit claims.
- The government will allocate a further £44m of grant funding to enable Innovate UK to fund £150m of responsive grant competitions in 2017/18.
- In addition, Innovate UK will pilot new ways of financing innovation;
- £50m Innovation Loans pilot over the next two years to target the most promising projects in viable businesses on the cusp of commercialisation
- An Investment Accelerator pilot to bring in seed equity alongside grant funding
- Increasing the importance of ‘impact’ in the Research Excellence Framework (REF), raising it from 20 per cent to 25 per cent in the next assessment round.
- Increasing the rate of the R&D expenditure credit for large businesses from 11 per cent to 12 per cent from 1 January 2018.
- Announcing a n increase of £40m a year to HEIF and will now commit to reaching a total of £250m a year by 2020-21.
- Putting in place £178m of interim funding to allow Catapults to continue their work and will agree long-term funding for the network early next year.
- £50m programme to enable new satellite launch services and low gravity spaceflights from UK spaceports, building on £99m already invested in building National Space Testing Facility.
- Providing £220m for a new Clean Air Fund to help individuals and businesses adapt as measures to improve air quality are implemented.
- £725 million over four years invested in Wave 2 of the Industrial Strategy Challenge Fund. This competitive funding programme will address themes related to the Grand Challenges:
- Transforming construction
- Prospering from the energy revolution
- Transforming food production
- Audience of the future
- Next generation services
- Data to early diagnosis and precision medicine
- Healthy ageing
New technical education system as recommended in the Skills Plan, including ‘T Levels’ (emphasising technical skills) and apprenticeships
- New T levels backed by over £500m annually by the time the programme is rolled out fully.
- Convening T level Panels (made up of employers, industry professionals and education experts) across the six routes for delivery in 2020 and 2021, and further panels across the remaining five T level routes for delivery in 2022.
- Investing up to £20m between 2018/19 and 2019/20 to help further education colleges develop the skills of their staff to deliver the new technical qualifications.
- Undertake a review into higher level technical education at levels 4 and 5. This review will consider the supply of, and demand for, quality higher-level classroom-based technical education, responding to the recommendations of Lord Sainsbury’s review.
Investing £400 million in maths, digital and technical education
- £8.5m pilot to test innovative approaches to improve outcomes in basic maths for those aged 16 and over.
- Investing £40m to establish Further Education Centres of Excellence across the country to build teaching capacity and spread best practice.
- Providing a £600 premium to existing per pupil funding rates for each additional student who takes maths or further maths at AS/A level or core maths
- Investing £27m in the further expansion of Teaching for Mastery maths programme to reach 11,000 primary and secondary schools in total by 2023.
- Providing £350,000 annual funding for every maths school to deliver the specialist maths school model, including extensive outreach work with schools and teachers to ensure all students have the chance to achieve their mathematical potential.
- Investing £84m over the next five years to deliver a comprehensive programme to improve the teaching of computing and drive up participation in computer science, with a particular focus on girls.
- Up-skilling 8,000 computer science teachers
- Investing £20m in a new Institute of Coding, which will be formed through a consortium of universities and employers.
- New digital platforms will expand the reach of STEM Ambassador and CREST Awards programmes to increase young people’s engagement with STEM subjects.
Opportunity and growth across the country
- £280m Strategic School Improvement Fund to provide high quality, evidence-based support to schools across England.
- £72m Opportunity Areas programme to target intensive support through discrete interventions in 12 disadvantaged areas.
- Piloting a student loan reimbursement programme to help attract and retain teachers in the subjects and areas of the country that need them most.
- Finally, the government has a role to play in ensuring that the connections and capacity exist in local areas and regions to link educational institutions with labour markets.
Opportunities for all throughout life
- Improving funding for part-time students, with maintenance loan support available from 2018/19 for all first degrees and graduates undertaking a second degree in a STEM subject.
- Introducing a National Retraining Scheme in England by the end of this Parliament
- The National Retraining Scheme will be informed by £40m announced in the Spring Budget to test innovative approaches to helping adults up-skill and re-skill.
- A total of £30m will be invested to test the use of artificial intelligence and innovative education technology (edtech) in online digital skills courses.
- Providing £34m to expand innovative construction training programmes across the country, including a programme in the West Midlands, focused on supporting the country’s housing needs and building upon existing good practice.
- Publishing a comprehensive careers strategy shortly that will set out plans to improve the quality and coverage of careers advice for people of all ages.
- £60m available to support apprenticeship take up by young people and poorer families from disadvantaged areas.
- We are also working with employers and other business groups to increase opportunities within the private sector across the UK.
- National Productivity Investment Fund increased to £31 billion by 2022/23 to develop transport, housing and digital (of which £24 billion already allocated)
- Supporting electric vehicles through £400m charging infrastructure investment and an extra £100m to extend the plug-in car grant.
- Over £1bn of public investment in digital infrastructure, including £176m for 5G and £200m for rural broadband.
- Extending the Commercial Capability Development Programme to arms-length bodies and improving procurement tools to make public sector contracts more accessible for SMEs.
- Aligning the Small Business Research Initiative (SBRI) with the Industrial Strategy Grand Challenges, and introducing a GovTech Catalyst with a GovTech Fund of up to £20m over three years.
Launch and roll-out Sector Deals
These partnerships between government and industry help industries to overcome specific issues that they face. The industrial strategy lists four sectors (some of which already have sector partnerships with government). Other sector deals will be announced in the new year. The four sectors detailed in the strategy are:
- Life sciences
- In response to Professor Sir John Bell’s life sciences review, the government will be working to develop a number of regional Digital Innovation Hubs.
- The Industrial Strategy ‘Data to early diagnostics and precision medicine’ programme will better explore the application of data to healthcare
Funding more high potential businesses though the British Business Bank, including through the Investment Fund
- Establishing a £2.5bn investment fund incubated in the British Business Bank. The fund, through co-investment with the private sector, will unlock a total of £7.5bn investment.
- Seeding a series of private sector fund of funds of scale, with a first wave of investment of up to £500m, delivered through the British Business Bank. Up to two further waves will be launched, attracting a total of up to £4bn of investment.
- Backing first-time and emerging fund managers through the British Business Bank’s established Enterprise Capital Fund programme, supporting at least £1.5bn of new investment.
- Launching a National Security Strategic Investment Fund of up to £85m to invest in advanced technologies that contribute to national security missions.
Increasing productivity in SMEs by analysing the reasons for variable rates of productivity.
- Launching a review of what actions could be most effective in improving productivity and growth of SMEs, including the take up of effective business advice and support services. Policy decisions to be announced Autumn 2018.
- Expanding the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) while introducing a test to reduce the scope for and redirect low risk.
- Launching a new Supply Chain Competitiveness programme that will target areas where key businesses need to improve.
Local Industrial Strategies to deliver economic growth across the UK, helping to develop high growth clusters where appropriate
- Working in partnership with places to develop Local Industrial Strategies, the government will identify priorities to improve skills, increase innovation and enhance infrastructure and business growth.
- From 2018the Prime Minister will chair a biannual ‘Council of Local Enterprise Partnership Chairs’. This will provide an opportunity for Local Enterprise Partnership leaders to inform national policy decisions. The Government will work with Local Enterprise Partnerships to set out a more clearly defined set of activities and objectives in early 2018.
Transforming Cities Fund to develop transport links between cities
- The government will make £1.7bn available through the Transforming Cities Fund to support projects that drive productivity by improving connections within city regions. Half will be allocated on a per capita basis to the six combined authorities with elected metro mayors, and half will be allocated via competition.
- The government will make available to Mayoral Combined Authorities a £12m fund for 2018/19 and 2019/20 to boost the mayors’ capacity and resources.
- Creating a new £115m per annum Strength in Places Fund to help grow innovation ecosystems using the evidence from the Science and Innovation Audits.
Pilot a Teacher Development Premium that will help develop high-quality teachers in areas with lower performing schools.
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