What next for the Government’s Industrial Strategy?
How can we shape industrial and innovation policy around a bold vision of challenges? And is there a future for a flagship policy of the outgoing Prime Minister?
By Dr. George Dibb
When Theresa May became Prime Minister, she spoke of the need to correct the burning injustices of modern society. Part of this was the creation of a new Department for Business, Energy, and Industrial Strategy (BEIS). The return of Industrial Strategy to the UK landscape was further embedded with the Government’s Green and White papers on the topic, the latter of which announced that the strategy would aim to remedy four societal Grand Challenges: AI and Data Economy, Future of Mobility, Clean Growth and Ageing Society.
For the past 14 months the UCL Commission on Mission-Oriented Innovation and Industrial Strategy (MOIIS), co-chaired by Prof Mariana Mazzucato and Lord David Willetts, have been working on how the Industrial Strategy can be structured to deliver solutions to these Grand Challenges, and how it can provide a bold vision to catalyse growth and investment. The outcome of this work, the MOIIS Commission report — A Mission-Oriented UK Industrial Strategy — sets a bold vision for how the Government’s Industrial Strategy can be designed to not only stimulate innovation and investment, but to develop solutions to grand societal challenges.
This vision, combining top-down direction from Government with bottom-up innovation, was supported by Chris Skidmore MP, Minister of State for Universities, Science, Research and Innovation, who spoke at the report launch alongside Sir Patrick Vallance, Government Chief Scientific Advisor. The Minister said that by setting the most ambitious goals — as seen in the report — we can spark imagination, innovation and collaboration at such a wide scale that will benefit society. The report makes eight top-level recommendations including that Industrial Strategy must steer the direction of innovation-led economic growth, drive the UK’s international competitiveness, and solve grand challenges through cross-sectoral missions.
Yet, we cannot pretend that this report exists in isolation from a political reality. Just two days after the report was launched the Prime Minister resigned, putting the Industrial Strategy in uncertain position. The strategy itself is closely linked with May having been one of the major planks of her economic policy, and has been strongly supported by business secretary Greg Clark, who is likely to be shifted in a post-leadership-contest Cabinet reshuffle. Furthermore, history teaches us that the business department has been one of the most frequently targeted for renaming. In fact, one of the candidates to replace May as PM spent 18 months as business secretary trying to dismantle any semblance of Government Industrial Strategy.
Whoever replaces Theresa May in 10 Downing Street will face a series of challenges, but the MOIIS Commission see plenty of opportunities for a new Prime Minister to use Industrial Strategy as a tool to drive growth and international competitiveness. We know that despite the Government’s commitment to gross spending on R&D reaching 2.4% of GDP by 2027, the UK has some of the lowest private and public sector investment rates among OECD countries. This is alongside the challenges faced by Brexit and reinventing or rethinking structures that support R&D, science, and investment. The UK receives more than €1bn annually in research funding from the EU, and multiples of that for infrastructure and long-term finance from the European Investment Bank.
How can Industrial Strategy solve these challenges? By setting concrete, measurable, ambitious missions in four grand challenge areas, the Government can, not only fix markets, but actively create markets. These in turn shape future investment opportunities making the UK a comparatively more attractive investment prospect for firms. Furthermore, by supporting the UK’s already strong innovation base, we can build on our strengths whilst also directing innovation towards solving bold societal challenges. If UK scientists, innovators, and inventors can develop solutions that help achieve ‘Clean Growth’ or solve the challenges of an ‘Ageing Society’, the markets for these is global.
But all of these things can only be achieved with a Government who are willing to use Industrial Strategy to look at the UK’s strengths and how these can be directed towards grand challenges whilst supporting R&D and innovation. The MOIIS Commission support the Government’s current Industrial Strategy — particularly the Grand Challenge program — and advocate a continuity of this approach under any incoming administration. We need an Industrial Strategy now more than ever, and the current efforts deserve to survive this political upheaval.
The report by the MOIIS commission sets a framework for how Governments can use all the tools at their disposal to support innovators, to develop technologies that solve societal challenges, and shape new markets. The question is now whether the incoming Prime Minister will grasp this opportunity to use Industrial Strategy to create economic growth that is more inclusive and sustainable.
Dr George Dibb (@GeorgeDibb) is Head of Industrial Strategy and Policy Engagement at UCL Public Policy and the UCL Institute for Innovation and Public Purpose (IIPP).
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