Industrial Strategy

Lord Henley Excerpts

Monday 8th January 2018 Lords Chamber

Moved by

[Lord Henley]

That this House takes note of Her Majesty’s Government’s Industrial Strategy and of the case for boosting earning power and productivity across the United Kingdom with investment in the skills, businesses and infrastructure of the future.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, we are at a critical moment for the United Kingdom. The world is changing and we have to ensure that we are building the type of economy that gives us a global competitive edge. New technology is creating new industries, changing existing ones and transforming the way we live our lives. We need to ensure that we are well prepared to prosper in this future. The decision to leave the European Union makes that even more important.

The United Kingdom has significant economic strengths on which we will build, but we also need to make the most of our untapped potential right across the country. In the Industrial Strategy White Paper, we have set out a long-term plan to help boost the productivity and earning power of people throughout the UK by focusing on five foundations of productivity.

Our first foundation is “Ideas”. Innovation and ideas are at the heart of increasing productivity. Our ability to come up with new ideas and to develop and deploy them is one of the United Kingdom’s historic strengths. We are building on these strengths and taking action to ensure that we are generating, and making the most of, new ideas, new ways of doing things, new goods and services, and new technologies. We want to be the world’s most innovative economy and we have announced a major step towards achieving this: increasing investment in research and development to 2.4% of GDP—an extra £80 billion over 10 years.

Our second foundation is “People”: ensuring access to good jobs and greater earning power for all, with a strong focus on technical skills, maths and engineering, and retraining throughout careers. An effectively skilled population is pivotal to a modern and productive economy. We will deliver a dynamic country that has high levels of skills in science, technology, engineering, mathematics, digital and social sciences. Our strategy also takes action to address regional disparities in education and skill levels so that we build on local strengths and deliver opportunities for people wherever they live. Creating a balanced economy that boosts the earning power of everyone means reaching out to underrepresented groups in the labour market: older workers, women, disabled people and black and minority ethnic workers. It is vital not just for them and for our communities but for the productivity of the United Kingdom economy as a whole that everyone has the opportunity to realise their full potential.

Our third foundation is “Infrastructure”. We have committed to a major upgrade to our digital and physical infrastructure, including increasing the national productivity investment fund to £31 billion. High-quality infrastructure is vital for economic growth and prosperity across all regions of the United Kingdom. We are ensuring that our infrastructure investments actively support our long-term productivity as well as providing greater certainty and clear strategic direction to investors and businesses. We will ensure that our country is one of the best in the world in terms of digital connectivity, with high-speed fixed and mobile access available in all areas. Trials in road and rail digital connectivity will prepare us for the future and the potential for the adoption and deployment of autonomous vehicles.

Our fourth foundation is supporting our “Business Environment”, by driving more than £20 billion of investment in innovative and high-potential businesses. The United Kingdom has an excellent reputation in the business world. Our industrial strategy aims to build on this and make it the very best place to start and grow a business and a real draw for the most innovative and successful companies. We have world-class companies and we will do more to support them, spreading their best practice and creating a more balanced and thriving economy.

Our fifth foundation is “Places”, in which our ideas, people, infrastructure and business environment happen. The United Kingdom has a rich heritage, with world-leading businesses located in every region. Our cities, towns and rural areas are essential to shaping our economic future. We will ensure that the entire country is in a position to fulfil its potential. We have created a £1.7 billion transforming cities fund to improve transport between city centres and suburbs. We are investing in innovation, including through our £115 million a year strength in places fund. We are investing in skills, including through our investment in teachers’ professional development in parts of the country where education attainment is lower. Local areas know their own strengths and weaknesses best. That is why we have also committed to developing local industrial strategies, with Greater Manchester and the West Midlands already developing early versions. We need to create a nation where every region is thriving.

Transforming these five foundations of productivity is vital, but we know that, on its own, it is not sufficient, so we have also identified four grand challenges, based on the advice of our leading scientists and technologists, to put the United Kingdom at the forefront of the industries of the future. These areas represent long-term, complex trends which will shape the global economy, creating both opportunities and challenges for the United Kingdom. If we act now we can lead from the front, but if we wait and see other countries will seize the initiative.

For each of these challenges, our industrial strategy sets out how we can seize the opportunity. These grand challenges will be supported by investment from the industrial strategy challenge fund, matched by commercial investment. The four grand challenges are: first, artificial intelligence and the data-driven economy; secondly, clean growth; thirdly, the future of mobility; and, fourthly, meeting the needs of an ageing society. I shall speak on each of these challenges in more detail, and set out, based on our analysis of current evidence and future trends, our priority areas for each grand challenge.

Artificial intelligence and machine learning are general purpose technologies .They can be seen as new industries in their own right. By one estimate, artificial intelligence could add £232 billion to the United Kingdom economy by 2030. To ensure our success in this area, we will make the United Kingdom a global centre for artificial intelligence and data-driven innovation. We will support sectors to boost their productivity through AI and data analytic technologies. We will lead the world in the safe and ethical use of data and AI and help people develop the skills needed for those jobs of the future.

The move to cleaner economic growth is another of the greatest industrial opportunities of our time. The Paris Agreement of 2015 commits countries to revolutionising power, transport, heating and cooling, industrial processes and agriculture. The effect of these changes will be felt across the economy and will involve the reallocation of trillions of pounds of public and private finance towards the pursuit of cleaner growth. We will take advantage of these trends by developing smart systems for cheap and clean energy across power, heating and transport; by transforming construction to dramatically improve efficiency; by making our energy-intensive industries competitive in the clean economy; by putting the United Kingdom at the forefront of high-efficiency agriculture; by making the United Kingdom the global standard setter for green finance; and, finally, by developing United Kingdom leadership in low-carbon transport across road, rail, aviation and maritime.

Mobility and transport are on the cusp of a profound change in how people, goods and services are moved around our towns, cities and countryside. This is driven by extraordinary innovation in engineering, technology and business models. Our mobility grand challenge will establish a flexible regulatory framework to encourage new modes of transport and business models; seize the opportunities and address the challenges of moving from hydrocarbon to zero-emission vehicles; prepare for a future of new mobility services, increased autonomy, journey sharing and a blurring of the distinctions between private and public transport; and explore ways to use data to accelerate development of new mobility services and enable the more effective operation of our transport system.

Finally, our grand challenge on ageing recognises our obligation to help older citizens lead independent, fulfilled lives. Our population is ageing, creating new demands for technologies, products and services, including new care technologies, new housing models and savings products for retirement. It is important that we get this right. To do so, we will encourage new products and services for the growing global population of older people, meeting important social needs and realising the business opportunity for the United Kingdom; we will support care providers to adapt their business models to changing demands, encouraging new models of care to develop and flourish; we will support sectors to adapt to a changing and ageing workforce; and, finally, we will explore the application of our health data to improve health outcomes and UK leadership in life sciences.

In addition to the work we are doing on the foundations of our productivity and our grand challenges, we are finding new ways of partnering with businesses. In the Green Paper we asked businesses if they would like to agree sector deals—strategic, long-term partnerships between industry and the Government, backed by sizeable private sector co-investment. The answer was an emphatic yes. We have already published deals in construction and life sciences, and in the coming weeks we will publish deals with the artificial intelligence and automotive industries. We set out our criteria for future deals in the White Paper and look forward to continuing our conversations with different sectors about their proposals.

The scale of ambition in our industrial strategy is clear and we can deliver on this only if we work in partnership. We will use the framework set out in the strategy to work with industry, academia and civil society in the years ahead to build on the United Kingdom’s strengths, make more of our untapped potential, and create a more productive economy that works for everyone across the UK. We believe that by acting now, the United Kingdom can lead from the front. Our strategy is all about seizing opportunities to put the United Kingdom at the forefront of the industries of the future. Our vision is that the United Kingdom will have good jobs and greater earning power for all, make a major upgrade to our infrastructure, be the best place in which to start and grow a business, and have prosperous communities across the country.

As I said, in the next month we hope to be concluding sector deals with the automotive, artificial intelligence and construction sectors. Alongside this, we are in ongoing negotiations to create nuclear, industrial digitalisation and creative industries sector deals. We will also be making progress in other areas, including setting up the industrial strategy council; developing our four grand challenges and appointing business champions for each of those challenges; and making further allocations of the industrial strategy challenge fund. Other departments—I emphasise that this is a government-wide White Paper—will also be setting out strategies designed to support the industrial strategy, such as Defra’s upcoming 25-year environment plan.

This is a strategy for the long term, involving all of government, which will evolve and adapt to respond to the challenges of the future. But, as set out, it is also taking action now to ensure that we make the most of our strengths, opportunities and untapped potential. I beg to move.