Industrial Strategy:government and industry in partnership

West Midlands Councils 19 November 2012

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Why do we need to act?

The Heseltine review

Industrial strategy activity

3

In the medium/long-term, structural changes in the international economy will impact the UK

• Globalisation and rise of BRICS are changing UK’s relative position in global economy.

• Developing countries are competing higher up the value chain, threatening the UK’s traditional comparative advantage.

• The UK’s previous growth model fuelled by debt was unsustainable.

• If the UK stands still there is a danger we will be left behind.

• A stable macro business environment is key to enabling growth.

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Government spending cannot drive growth – we need to look at other sources

• Contribution to GDP from Government activity grew from 0.3% between 1990-99 to 0.7% between 1999-2008, becoming the second most important driver of growth.

• The deficit means Government spending cannot contribute to growth to the same degree.

• Business investments and exports will have a critical role in driving growth in the coming years.

• We need to reflect this change and align Government intervention strategically and systematically, using all the levers Government has to support the environment for growth

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2011 2012 2013 2014

Per

cent

age

poin

ts

Private consumption Business investment Other private investment

Government Net trade

GDP Growth Forecasts

0.9% 0.7% 2.1% 2.7%

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Why do we need to act?

The Heseltine review

Industrial strategy activity

6

…..we must lay out a strategic vision for where our future industrial capabilities lie, and how to deliver them

Key messages:

– A whole of government approach

– Cabinet, No10 and ChX fully supportive

– A spectrum of support for all sectors

– Partnership strategies with key sectors

– Cross-cutting themes:

• Access to Finance

• Technology

• Procurement

• Skills

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• A light touch approach where policies are working well, or where there is less scope for Government to make a difference.

• Strategic partnerships with specific sectors that have real impact.

Businesses in the sector know who to contact if there’s a problem

- Immediate response, eg, real estate

Government takes action to facilitate a response to a specific issue

- Short-term, eg opportunities for tourism in 2012, steel, and energy intensive industries

Sustained co-ordination, dialogue and action, eg sector councils

- Medium-term, eg respond to the chemical strategy, Creative Industries Council

A strategic industry / Government partnership

- Long-term, eg Aerospace Growth Partnership, Automobiles, Life Sciences

Government sets the business environment (eg tax, IPR, skills), but no sector specific policies

Government provides sector specific regulation, support and co-ordination

Government shapes, procures and oversees

A spectrum of support for all sectors

Light touch

Strategic partnership

Action Sustainedco-ordination

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Early 2013

Aerospace

Agri-tech

Nuclear

Renewables

Oil and Gas

Automotive

InformationEconomy

Education

Construction

ProfessionalBusiness Services

Spring 2013 Summer 2013

Strategic partnerships the sector strategies

Life Sci

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Sector strategy principles• Developed for business – not concentrated on Whitehall policy levers.

• Co-created with business –industry taking a core role in shaping development and long-term delivery. Cross-government consultation and buy-in.

• Shared long term vision – where we are now, where we want to be, and how we will get there. A full SWOT analysis as well as horizon scanning.

• Private Sector Leadership – spanning development and delivery, although existing priorities and commitments need to be recognised and incorporated.

• Action oriented – with explicit and specific pledges from government and business about what will be done to deliver the strategy.

• Delivery – each document should state how the strategy is to be delivered

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Access to finance• action through a range of schemes, Enterprise Finance

Guarantee, Business Finance Partnership etc.• business bank to increase diversity and support competition.

Cross cutting themes

Procurement• greater clarity for business. Pipelines of £70bn of future

contracts across 13 sectors published in April. • developing capability assessments with industry

Skills• giving employers more direct control of vocational skills spend • Employer Ownership Pilot generated £98m private investment

for Government’s £67m. Will support nearly 11,000 new apprenticeships and 27,000 vocational courses.

Technologies• long-term plans for innovation investment.

• support emerging disruptive technologies on an ongoing basis.

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Why do we need to act?

The Heseltine review

Industrial strategy activity

12

The Heseltine review

• No Stone Unturned - published 31 October

Key messages

– Localism – building on our strengths– Whitehall – a confident, strategic centre

of Government– Government and growth – catalyst,

enabler, partner– Private sector – broadening the

capacity for excellence– Education and skills – the foundation

for growth and prosperity

– 89 recommendations– Government has welcomed the report,

and indicated that it plans an initial response around Autumn Statement