UK’s Industrial Strategy launched with pledge to embrace technology post-Brexit

UK Prime Minister Theresa May today launched her government’s much-anticipated blueprint for boosting productivity and wages while blazing a trail with new technologies in post-Brexit Britain.

The white paper, called ‘Industrial Strategy: Building a Britain fit for the future’, contains a pledge of around £12.5 billion in public research and development spending.

The government says it intends to deliver a step change in the level of R&D investment, the aspiration being that this will rise from 1.7 per cent to 2.4 per cent of GDP by 2027.

This could mean around £80 billion of additional investment in advanced technology in the next decade, according to Whitehall. The rate of R&D tax credit will be increased to 12 per cent.

To mark the launch of the strategy, leading life sciences company MSD said it would open a state-of-the-art hub in the UK – supporting a total of 950 jobs in “high-skilled and high-value research roles” to drive research into future treatments for patients.

The announcement followed an EU decision to move the European Medicines Agency from its current home in London as a direct consequence of the Leave vote. Pro-EU politicians including Conservative grandee Lord Heseltine said on the eve of the announcement that the best industrial strategy would be to simply stop Brexit altogether.

The white paper, released this morning, is an undisguised attempt by the government to allay fears over the impact of leaving the EU on the UK economy. It marks a revival of a state-led approach to industry that was popular in the 1970s but was dispensed with by Margaret Thatcher when she was Prime Minister and has since then been viewed with suspicion by some Conservatives.

Four “grand challenges” are identified in the strategy under the headings ‘artificial intelligence’, ‘clean growth’, ‘an ageing society’ and ‘the future of mobility’. Labour today poured scorn on the document, saying it was full of “re-announced policies and old spending commitments”.

However, it was broadly welcomed by business groups, including the Institute of Directors and Federation of Small Businesses.

Terry Scuoler, chief executive of EEF - the manufacturers' organisation – said: “The white paper acts as a good foundation for a new partnership with industry where government and business can ensure consistency in policy thinking and implementation to ensure the UK is a world leader in…new technologies.”

Among the ideas contained within it is the notion of channeling more students into a first class technical education as opposed to encouraging them to go down the academic route. This builds on earlier efforts to foster a network of new university technical colleges in the UK to mirror the system in Germany and put STEM-specialist institutions on a par with the existing higher education system - something Britain has historically struggled to do.

The government will now update school and college performance measures “to ensure that students can make an informed choice between technical or academic education in time for the introduction of the first T levels, recognising them as equally valued routes”. A multi-million pound pilot programme to improve outcomes in maths for those aged 16 and over has also been announced.

On decarbonisation, the strategy envisions the UK as becoming a future leader in low carbon transport and cites offshore wind as a success story – but, noticeably, it fails to mention onshore wind.

Hugh McNeal, chief executive of RenewableUK, the trade body for wind power, said: “Renewables are set to become the backbone of our modern energy system and the plummeting cost of wind power means onshore and offshore wind can help improve the competitiveness of UK industry. So it’s disappointing that the strategy doesn’t set out how we can use onshore wind, the cheapest new generation source, to power industrial growth.”

The strategy also commits to boosting digital infrastructure with over £1 billion of public investment, including £176m for 5G and £200m for local areas to encourage roll out of full fibre networks. A £1.7 billion fund has been announced for improving intracity transport.

On artificial intelligence, the UK will take an “international leadership role” by investing £9 million in a new Centre for Data Ethics and Innovation. The government’s desire to have self-driving cars on Britain’s roads in just a few years from now is also re-iterated in the strategy, which states: “The process of leaving the European Union inevitably entails some uncertainty as negotiations take place to determine our future economic relationship.”

It adds: “We want to have a continuing deep partnership with the EU that will not disrupt supply chains or impose barriers to our largest trading partner. We will not just respect the rights of European citizens living here; we will develop an approach through which European citizens can continue to come here to work and contribute to our economy.”

It also notes that the International Monetary Fund estimates that above 80 per cent of world growth is likely to come from outside the EU in the near future, adding that “we need to be ready for the opportunities such growth will bring”. It also contains ideas for how UK food production could be transformed outside of the Common Agricultural Policy using the latest technology to maximise yields using less land, thereby supporting a growing population.

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.

“As we leave the European Union and forge a new path for ourselves, we need to focus on building a better future for our country and all the people who live in it. With the Budget last week, and our Industrial Strategy in the years ahead, we will build a Britain fit for the future.”