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Industrial Strategy one year on: A look back and forwards

By Dr George Dibb | @GeorgeDibb

It has been one year since the publication of the government’s Industrial Strategy White Paper — a long-awaited document, the subject of much consultation, and a bold vision of state intervention to drive productivity and prosperity across the UK. So, 12 months on, where are we? What do we have to look forward to? And what is the vision for the future?

Released in November 2017, the Industrial Strategy White Paper set the agenda for the new department for Business, Energy & Industrial Strategy (BEIS). The white paper set out the five foundations of including ‘ideas’, ‘people’ and ‘infrastructure’, but on the advice of Professor Mariana Mazzucato (founder and director of the UCL Institute for Innovation & Public Purpose (IIPP)) the government also set four horizontal Grand Challenges: clean growth, healthy ageing, the future of mobility, and artificial intelligence & data. This novel proposal hinted at a bigger shift in government thinking — the acceptance that new technology, industry, and the public sector in collaboration can give direction to innovation that addresses broad societal issues.

Looking back over the past year, we shouldn’t overlook the basics– we have to be thankful that we have an Industrial Strategy at all. In a time of business uncertainty as the UK withdraws from the European Union, we must have a sharp focus on our economic deficiencies and an eye on the prize of sustainable growth in productivity and prosperity.

We have also seen good progress in developing thinking on grand challenges — notably the announcement by Prime Minister Theresa May of a bold but achievable “mission” under each grand challenge. Thinking from IIPP has been invaluable in framing and developing these missions, and this advice was formalised by the formation of the UCL Commission on Mission-Oriented Innovation & Industrial Strategy (MOIIS), chaired by Prof Mazzucato and Lord David Willetts, which was formally launched by Secretary of State Greg Clark in March 2018. The MOIIS commission has been advising government on what criteria should be applied to missions, and how they should be framed and delivered? The commission will soon be publishing recommendations to government on how a mission-oriented Industrial Strategy can be implemented with purpose-driven innovation at its core.

The Industrial Strategy has also kick-started some great initiatives already, such as the Made Smarter sector deal lead by Siemens UK CEO Juergen Maier which is poised to harness next-generation connectivity and automation to increase the UK’s sluggish manufacturing productivity. However, there remain some open questions about the current sector deal strategy with an open door to sector lobbying groups and whether this public-private deal making can ever match the bold, problem-solving ambition of the grand challenges and missions.

When it comes to funding, the bolstering of the National Productivity Investment Fund and the steady drip of academic-industry collaborations through Industrial Strategy Challenge Funds (ISCF) are almost universally viewed as positive steps towards an innovation-led vision of economic growth. However, viewing innovation through a missions lens means we look more towards outcomes than outputs. For example, an ISCF on batteries is great in terms of driving technology development, but to get an electric-car-owning society we also need to look at the more complex network of charging infrastructure, shared ownership structures, or built environment. Proposing this is easy, but funding it is harder, and at IIPP we have been looking at the cost benefit analysis (CBA) policy evaluation frameworks used to assess these proposals, particularly focussing on whether they are suitable for analysing mission-based investments with high degrees of dynamism and risk.

The ambition for gross UK national spend on research and development (R&D) to hit the OECD average of 2.4% of Gross Domestic Product within ten years was warmly received by academia and business alike, but with one of those ten years now gone and no roadmap announced there is an appetite for more details of how the UK can reach this target.

A key actor in this space will be the Industrial Strategy Council, led by Bank of England Chief Economist Andy Haldane, which met for the first time this month. Bringing together academics, policymakers and business to determine “what does good look like?”. The IS Council is undoubtedly a positive development, although it’s a shame that there remains no oversight on a statutory footing (like the Office for Budgetary Responsibility) to truly embed the Industrial Strategy as a critical issue for every department and for every budgetary event. No government can bind the hands of its successor, but with broad cross-party support, this may be an opportunity that is too good to miss to cement the Industrial Strategy as a long-term component of UK policy.

Taking this opportunity of the one year anniversary of the Industrial Strategy we must look at what we’ve achieved over the past 12 months and contrast it with the potential huge opportunities that lie ahead. It’s probably fair to say that the Industrial Strategy has resulted in a lot of movement in the right direction, but incremental movement, rather than a whole-sale rethink of the UK’s economic model or the drivers and barriers to innovation-driven economic growth. This is understandable, ministers and government have been bogged down in Brexit negotiations, but with the UK falling to the bottom of the Eurozone growth table this is an even greater reason to act now. Government must grasp the Industrial Strategy for what it is; an opportunity to address the great ‘wicked’ problems we face as a nation, and to develop a coherent picture of how public and private sectors can work together to solve them. An opportunity to look honestly at the root causes of our stubbornly low productivity and how innovation can drive improvement but also inclusivity. An opportunity for the government to set an ambitious vision for every region of the UK and a national future as a research and development powerhouse. Only by embracing bold missions can the Industrial Strategy succeed in driving inclusivity and sustainability, alongside productivity and prosperity!

Dr George Dibb is the Head of Industrial Strategy & Policy Engagement at UCL Institute for Innovation and Public Purpose (IIPP)

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The official blog of the UCL Institute for Innovation and Public Purpose | Rethinking how public value is created, nurtured and evaluated | Director @MazzucatoM | https://www.ucl.ac.uk/bartlett/public-purpose/

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UCL Institute for Innovation and Public Purpose

UCL Institute for Innovation and Public Purpose

Changing how public value is imagined, practiced and evaluated to tackle societal challenges | Director: Mariana Mazzucato | Deputy Director: Rainer Kattel

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