Industrial Strategy: building a Britain fit for the future

On 27 November 2017, Business Secretary Greg Clark MP unveiled the government white paper; ‘Industrial Strategy: building a Britain fit for the future’. This followed consultation on 'Building our Industrial Strategy' green paper published in January 2017, and came less than a week after the Autumn Budget 2017.

The white paper sets out ‘…a long term plan to boost the productivity and earning power of people throughout the UK’, aiming to make the UK the world’s most innovative nation by 2030. It focuses on five foundations of productivity:

Ideas: the world’s most innovative economy.
People: good jobs and greater earning power for all.
Infrastructure: a major upgrade to the UK’s infrastructure.
Business environment: the best place to start and grow a business.
Places: prosperous communities across the UK.

Each foundation is supported by policies intended to give business the certainty and reassurance that the UK will continue to have a competitive edge.

The white paper creates four ‘sector deals’, for; construction, life sciences, the automotive industry and artificial intelligence. These are strategic, long-term partnerships with government, backed by private sector co-investment. It also identifies four ‘Grand Challenges’ that represent an invitation to engage with the government to innovate and develop new technologies in; artificial intelligence, clean growth, ageing society and future of mobility.

In relation to infrastructure, the white paper sets out plans to:

Increase the National Productivity Investment Fund to £31 billion, supporting investments in transport, housing and digital infrastructure.
Support electric vehicles through £400 million charging infrastructure investment and an extra £100 million to extend the plug-in car grant.
Boost digital infrastructure with more than £1 billion of public investment, including £176 million for 5G and £200 million for local areas to encourage the roll out of full-fibre networks.
Adopt the 'balanced scorecard' approach on all major construction and capital investment projects.
Use the power of government spending to help drive the adoption of modern methods of construction and a presumption in favour of offsite construction by 2019 across suitable capital programmes.

The 'places' foundation includes creating plans to create a new 'transforming cities' fund that will provide £1.7 billion for intra-city transport.

The 'people' foundation includes a new National Retraining Scheme supporting people to re-skill, beginning with a £64m investment for digital and construction training.

The 'clean' growth challenge includes a £170m Industrial Strategy Challenge Fund for 'Transforming construction'.

However, the rather vague construction sector deal itself, which is intended to transform the productivity of the sector, only offers a commitment to work collaboratively in three areas:

Procuring for Value. Working to ensure construction projects across the public and private sectors are procured and built based on their whole life value. A procurement standard will be developed with the Infrastructure and Projects Authority (IPA) to provide cost and performance benchmarks
Industry-led Innovation. A joint commitment to invest in a transformative programme which brings together the construction, digital technology, manufacturing, materials and energy sectors.
Skills for the Future. Reforms to the Construction Industry Training Board (CITB) to drive increased investment in skills development, whilst adopting a more strategic and coordinated approach to recruitment, and equipping workers with the skills they will need.

The government suggests this will be the first of a series of deals with the sector.

[NB: The construction sector deal was clarified in a statement by Greg Clark on 29 November 2017. See Construction sector deal for more information.]

An Independent Industrial Strategy Council will be launched in 2018 to make recommendations to government on how it measures the success of the strategy.

Greg Clark said:

“The way we earn and live our lives as workers, citizens and consumers is being transformed by new technologies. The UK is well-placed to benefit from this new industrial revolution and we start from a position of significant strength....The Industrial Strategy is an unashamedly ambitious vision for the future of our country, laying out how we tackle our productivity challenge, earn our way in the future, and improve living standards across the country.”

Prime Minister Theresa May said:

“Our modern Industrial Strategy will shape a stronger and fairer economy for decades to come. It will help create the conditions where successful businesses can emerge and grow, and support these businesses in seizing the big opportunities of our time, such as artificial intelligence and big data, whilst also making sure our young people have the skills to take on the high-paid, high-skilled jobs this creates.”

Lord Adonis, Chairman of the National Infrastructure Commission, said:

“A key part of securing long-term economic growth and increased productivity will be to invest in our infrastructure network – so I welcome that today’s Industrial Strategy has this at its heart. It is significant that the strategy has a clear focus on developing new low-carbon technologies, but also that the first sector deals are in construction as we deliver major projects like HS2, and artificial intelligence technology which could transform how we operate and maintain our infrastructure. These will be key considerations as we work to deliver the country’s first-ever National Infrastructure Assessment to tackle the 3 Cs of congestion, capacity and carbon for the country’s long-term economic benefit.”

Suzannah Nichol, Chief Executive at Build UK said:

“Today’s commitment to a construction sector deal, coupled with the £170m announced in last week’s budget to increase productivity in the construction, is fantastic news for the whole sector. It demonstrates the strength of partnership we have developed with the government and Build UK looks forward to working with the CLC and others to develop an effective and efficient industry capable of delivering the much needed infrastructure and housing across the UK.”

Mark Farmer, chief executive of Cast consultancy said:

“When combined with the recent Autumn Budget announcement regarding the government moving towards a presumption of using modern methods of construction for many of its programmes, this represents the single biggest and coordinated set of measures attacking construction industry modernisation since the publication of the Farmer Review last year.”

Dr Diana Montgomery, chief executive of the Construction Products Association said:

“The newly announced sector deal for construction will be crucial for the whole supply chain over the coming years, especially if we are to help government achieve its aims of building more homes and improving the UK’s infrastructure."

Further details of the Construction sector deal were set out by Business Secretary Greg Clark on 29 November 2017. For more information see: Construction sector deal.

This was followed on 6 December 2017, by publication of Transforming Infrastructure Performance giving details of plans to improve infrastructure and boost the productivity of the construction sector with the intention of saving £15 billion a year on economic infrastructure such as transport and energy networks, and social infrastructure such as schools and hospitals. For more information see: Transforming Infrastructure Performance