An industrial strategy that plays to our strengths must be at the heart of efforts to rebalance the UK economy towards business investment and trade. A new CBI report, Playing our strongest hand: Maximising the UK’s industrial opportunities, sets out a joined up approach to industrial strategy, providing indicative sector-specific action plans to make the most of the substantial opportunities for growth in key sectors.
By maximising the existing strengths that the UK has in sectors such as aerospace, automotive, green technology and the creative industries, CBI analysis indicates the potential for £30bn worth of export opportunities by 2020.
Realising our potential however requires that the UK keeps pace with its international rivals who are also seeking out the same opportunities. This will need the Government to build a world-class environment for business to operate in and then to go further – by using policy to play to our competitive advantages in a focused number of sectors, tilting the playing field to build champions.
Katja Hall, CBI Chief Policy Director, said:
"The debate has moved on from whether the UK should have an industrial strategy, to what the right approach should be. It’s not about picking winners and it’s not about the Government spending more money – rather, it’s about tilting the playing field for those sectors where we have real advantages, potentially boosting our exports by up to £30 billion.
"The new super-material graphene is just one example of what could be possible, and the UK has a leading position following some stunning research in our universities. Graphene could be used in a whole range of future applications, even having the potential to progress fuel cell powered cars. So it makes sense to encourage further research, and help translate these breakthroughs into real-life applications with a high economic value.
"The UK has a long, proud industrial heritage, and we still have a great many world-beating companies today. We should not be shy about talking up our success stories, in sectors from aerospace to creative industries, chemicals and pharmaceuticals to green tech, maximising their potential to capture high-growth opportunities and ensuring these companies are helped every step of the way, not held back by mis-directed Government action."
An industrial strategy should capitalise on our strengths
To successfully support our champion sectors, it is essential that the UK focuses on where best to compete, based on our competitive advantages and future global opportunities. But it is not good enough to just list champion sectors – the Government must act decisively and collectively, working with industry to establish action plans that help these sectors to prosper over the long-term.
Every sector is different so these action plans will need to be tailored. Some sectors will require very specific actions to stimulate growth, like changes to the regulatory environment or altering public procurement processes. Others will need different tools to maximise their success, such as a particular piece of infrastructure, or support with the development of new technologies.
The CBI has set out an indication of what could be included in action plans for 7 indicative sectors that we have identified with a clear competitive advantage and high growth potential:
Automotive (see pg29);
Aerospace (see pg27);
Chemicals and Pharmaceuticals (see pg30);
Agri-food (see pg28);
Green technology and services (see pg32);
Creative industries (see pg31);
Knowledge-intensive business services (see pg33).
Mike Wright, Executive Director of Jaguar Land Rover, said:
"The UK automotive industry is enjoying a resurgence, but we face stiff competition from large car manufacturers around the globe. If the UK plays to its strengths, setting the right conditions and developing the right skills for industry, we can thrive long into the future.
"We enjoy a strong relationship with our suppliers, and development across the industry is mutually beneficial: so it is equally essential to make sure that small and medium-sized enterprises get the capital to invest and grow."
Ivan Dunleavy, Chief Executive, Pinewood Shepperton plc, said:
"The UK’s creative industries are performing well. In film, we are seeing high levels of inward investment productions taking advantage of our skills, talent, technology and infrastructure. Pinewood’s involvement in global box office successes like Skyfall and Prometheus showcase those skills and talents to great advantage.
"A collaborative approach between Government and our industry that builds on existing competitive strengths in the creative sector and reaffirms the UK’s world class reputation, will provide focus and help drive forward real opportunities to boost jobs and investment, and will ensure we stay ahead of the game in an increasingly competitive global market."
Many international competitors are already doing this successfully
The UK is not alone in looking to exports and investment as the route to sustainable long-term growth. Many of our international competitors are already doing this, pursuing strategic plans, and shaping their business environments to support their firms to access the largest global opportunities. Many of them go further, setting goals for sectors and backing those areas which they have identified with growth potential to significantly boost production and trade.
From Singapore to South Korea, governments are helping to support their industrial bases and build their future capabilities. Closer to home, Germany has boosted its green tech industries with policies that stimulate demand. While lessons can be drawn from what the rest of the world is doing, the Government must create an industrial strategy fit for the UK.
Katja Hall, said:
"What is crystal clear is that we have no time to waste. Countries like China, Singapore, South Korea, Germany and even the USA, are already backing sectors where they have strengths, boosting their industrial bases. If we choose to stand still, we will simply fall behind.
"Get this right and it will deliver a collective set of policies for growth that are more than a mere sum of their individual parts. The Government can send a clear signal that the UK is the place to invest, ensuring we can continue to compete effectively with our international rivals.
"A new strategy will have to provide focus for at least 10 years ahead, using resources intelligently, getting all parts of government working in the same direction and matching business investment timescales to make a difference. This means setting industrial strategy priorities that survive beyond the next election."
Embed industrial strategy for the long-term
Initial sectors and action plans are only the start though, as the CBI calls on the Government to ensure the right strategic approach is embedded for the long-term. A new industrial strategy will only succeed if it can be delivered consistently and coherently in the decades ahead. This means government working with our champion sectors to set the long-term agenda for future action.