Industrial Strategy Consultation — House of Lords, 2017-01-23
Topic: Macroeconomics
David Prior (Conservative, Centre-right): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy. The Statement is as follows: "Mr Speaker, this is a hugely important moment for the United Kingdom: a moment when we must prepare a new strategy to earn a prosperous living in the years ahead. Leaving the European Union allows—and requires—Britain to make long-term decisions about our economic future. We will, of course, be ambitious in the upcoming negotiations and will secure the best possible access for firms to trade with and operate in the European market While the terms of trade with other economies are important, so is the competitiveness of our own economy. That is why the Government are committed to a modern industrial strategy. Its objective is to improve living standards and economic growth by increasing productivity and driving growth across the whole country. Today’s Green Paper is part of an open dialogue to develop this strategy as the enduring foundation of an economy that works for everyone We start from a position of considerable strength. We are the fifth biggest economy in the world despite having the 22nd highest population. We have achieved higher levels of employment than ever before in our history—in fact, 2.7 million more than in 2010. We have businesses, research institutions and cultural achievements at the very forefront of global excellence. For all these reasons, we attract investment and talented individuals from around the world However, there are challenges that Britain must face up to now and in the years ahead. The first is to build on our strengths and extend excellence into the future. British excellence in key technologies, professions, research disciplines and institutions provides us with crucial competitive advantages, but we cannot take it for granted. If other countries invest more in research and development and we do not, we cannot expect to keep, let alone extend, our technological lead in key sectors or the world-beating performance of our universities. The same goes for our record as Europe’s leading destination for inward investment or our position as a centre of international finance. Our competitors are not standing still. They are upgrading infrastructure networks and reforming systems of governance. Therefore, we, too, must strive for improvement In industrial sectors—from automotive and aerospace to financial and professional services and the creative industries—the UK has built a global reputation, but the competition for new investment is fierce and unending. The conditions that have allowed UK investment destinations to succeed include the availability of supportive research programmes, relevant skills in local labour markets, and capable supply chains. For continuing success, these foundations must be maintained and strengthened The second challenge is to ensure that every place meets its potential by working to close the gap between our best-performing companies, industries, places and people and those which are less productive. For all the global excellence of the UK’s best companies, industries and places, we have too many that lie too far behind the leaders. That is why, on average, workers in France, Germany and the USA produce around as much in four days as UK workers do in five. It is also why despite having the most prosperous local economy in northern Europe—in central London—we also have 12 of the 20 poorest among our closest neighbours. We must address these long tails of underperformance if we are to build a strong economy and ensure sustainable growth in living standards. To do so is a huge opportunity for the whole nation to benefit from improved productivity —that is, earning power—in all parts of the country The third challenge is to make the UK one of the most competitive places in the world to start or to grow a business. A fatal flaw of 1970s-style industrial strategies was their dominant focus on existing industries and the companies within them—and then mostly the biggest firms. Too often they became the strategies of incumbency. It is worth noting that many of the most important companies in the world today did not even exist 25 years ago. Unlike in the past, industrial strategy must be about creating the right conditions for new and growing enterprise to thrive, not protecting the position of incumbents To meet these challenges, we have identified 10 pillars around which the strategy is structured—10 areas of action to drive growth right across the economy and in every part of the country. They are: investing in science, research and innovation; developing skills; upgrading infrastructure; supporting businesses to start and grow; improving procurement; encouraging trade and inward investment; delivering affordable energy and clean growth; cultivating world-leading sectors; driving growth across the whole country; and creating the right institutions to bring together sectors and places. Across all these areas, the Government are already taking strategic decisions to keep British industry on the front foot; for instance, the go-ahead for major upgrades to our infrastructure, such as Hinkley Point C, Heathrow and High Speed 2, and, in the Autumn Statement, the biggest increase in research and development spending since 1979 In conjunction with today’s Green Paper, we are launching a range of further measures. These include: a new approach to enabling existing and emerging sectors to grow through sector deals, with reviews taking place regarding life sciences, ultra-low-emission vehicles, industrial digitalisation, nuclear, and the creative industries; deciding on the priority challenges and technologies for the new Industrial Strategy Challenge Fund to focus on and the other opportunities we can address using the £4.7 billion increase in research and development funding; and an overhaul of technical education, including £170 million of capital funding to set up institutes of technology to deliver education in science, technology, engineering and mathematics subjects In a world containing so much uncertainty, public policy should aim to be a countervailing force for stability, not an additional source of unpredictability. So our aim is to establish an industrial strategy for the long term, to provide a policy framework against which major public and private sector investment decisions can be made with confidence. It is therefore vital that the full development of our industrial strategy should take place with—and not just for—British enterprise. The full involvement of innovators, investors, job creators, workers and consumers in England, Scotland, Wales and Northern Ireland is the only basis on which we can produce an enduring programme of action. That is why this is a Green Paper—a set of proposals for discussion and consideration, and an invitation to all to contribute collaboratively to their development. I commend this Statement to the House".