The UK needs a plan for growth and innovation – an industrial strategy is a way of picking winners in terms of sector investments and prioritisation.
Today’s iteration (the fourth in recent times, with Theresa May’s government providing the previous one) chooses eight high-potential sectors to prioritise funding and skills interventions, with the overall intention of encouraging private investment over the long term.
Picking winners for the long term
The choices are the important bit – as the strategy itself notes
Past UK industrial strategies have not lasted because they have either refused to make choices or have failed to back their choices up by reallocating resources and driving genuine behaviour change in both government and industry.
And there are clear commonalities between previous choices and the new ones. Successive governments have prioritised “clean growth”, data and technology, and health – based both on the potential for growth and the impact that investment could have.
What is different this time is the time scales on which the government is thinking – much of the spending discussed today is locked in to the next five years of departmental spending via the spending review, and of course we have those infamous 10-year research and development plans in some areas: the Aerospace Technology Institute (linked to Cranfield), the National Quantum Computing Centre (at the Harwell STFC campus), the Laboratory of Molecular Biology (MRC supported at Cambridge), and the new DRIVE35 automotive programme are the first to be announced.
The headlines
My colleague Michael Salmon has analysed the skills end of the strategy elsewhere, here we are looking at investments in research and innovation – both in the industrial strategy itself and the five (of eight) IS-8 sector plans published alongside it (Advanced manufacturing, Creative industries, Clean energy, Digital and technologies, Professional and business services – with defence, financial services, and life sciences pending)
Government funded innovation programmes will prioritise the IS-8, within a wider goal to focus all of research and development funding on long term economic growth. This explicitly does not freeze out curiosity delivered research – but it is clear that there will be a focus on the other end of the innovation pipeline.
At a macro level UKRI will be pivoting financial support towards the IS-8 sectors – getting new objectives around innovation, commercialisation, and scale-up. If you are thinking that this sounds very Innovate UK you would be right, the Catapult Network will also get tweaks to refocus.
The £500m Local Innovation Partnerships Fund is intended to generate a further £1bn of additional investment and £700m of value to local economies, and there are wider plans to get academia and industry working together: a massive expansion in supercomputer resources (the AI research resource, inevitably) and a new Missions Accelerator programme supported by £500m of funding. And there’s the Sovereign AI Unit within government (that’s another £500m of industry investments) in “frontier AI”. On direct university allocation we get the welcome news that the Higher Education Innovation Fund (HEIF) is here to stay.
There’s an impressively hefty chunk of plans for getting the most out of public sector data – specifically the way in which government (“administrative”) data can be used by research and industry. Nerds like me will have access to a wider range of data under a wider range of licenses – the government will also get better at valuing data in order to maximise returns for the bits it does sell, and there will be ARDN-like approaches available to more businesses to access public data in a safe and controlled way (if parliamentary time allows, legislation will be brought forward) – plus money (£12m) for data sharing infrastructure and the (£100m) national data library.
By sector
The sector plans themselves have a slant towards technology adoption (yes even the creative sector – “createch” is absolutely a thing). But there’s plenty of examples throughout of specific funding to support university-based research, innovation, and bringing discoveries to market – alongside (as you’ll see from Michael’s piece) plenty on skills.
Clearly the focus varies between sectors. For example, there will be a specific UKRI professional and business services innovation programme; while digital and technologies work is more widely focused on the entirety of the UK’s research architecture: there we get promises of “significant” investment via multiple UKRI and ARIA programmes alongside a £240m focus on advanced communication technologies (ACT). The more research-focused sectors also get the ten-year infrastructure-style investments like the £1bn on AI research resources.
Somewhat surprisingly clean energy is not one of the big research funding winners – there’s just £20m over 7 years for the sustainable industrial futures programme (compare the £1bn energy programme in the last spending review). With sustainability also being a mission it also gets a share of the missions accelerator programme (£500m), but for such a research-intensive field that doesn’t feel like a lot.
The creative industries, on the other hand, get £100m via UKRI over the spending review period – there’s a specific creative industries research and development plan coming later this year, alongside (£500m) creative clusters, and further work on measuring the output of the sector. And “createch” (the increasingly technical underpinnings of the creative industries) is a priority too.
It’s also worth mentioning advanced manufacturing as a sector where business and industry are major funders. Here the government is committing “up to £4.3bn” for the sector, with £2.8bn of this going to research and development. Key priorities include work on SME technology adoption, and advanced automotive technologies – the focus is very much on commercialisation, and there is recognition that private finance needs to be a big part of this.
Choice cuts?
The IS-8 are broadly drawn – it is difficult to think of an academic research sector that doesn’t get a slice. But there will be a shaking out of sub-specialisms, and the fact that one of the big spenders (health and medicine) is currently lacking detail doesn’t help understand how the profile of research within that area will shift during the spending review period.
Industrial policy has always been a means of picking winners – focusing necessarily limited investment on the places it will drive benefits. The nearly flat settlement for UKRI in the spending review was encouraging, but it is starting to feel like new announcements like these need to be seen both as net benefits (for the lucky sectors) and funding cuts (for the others).
