Industrial Strategy

Lord Mountevans Excerpts

Monday 8th January 2018 Lords Chamber

[Lord Mountevans (CB)]

My Lords, notwithstanding the rather gloomy look on things by the noble Viscount, as an international shipping specialist for my entire career, and a former Lord Mayor of London, I see much to applaud in the industrial strategy. The proposals are wide-reaching, ambitious and full of purpose. There is no shortage of proposals, and the five foundations and four grand challenges under which they are grouped reflect the thoughts and concerns of many employers. Indeed these are matters which are of the utmost importance for us all.

That is why the strategy was welcomed in the City by firms that know how crucial automation, the physical and business environments, and infrastructure are to sustainable growth. Building on the point made by the noble Lord, Lord Heseltine, and taking up the point made by the noble Lord, Lord Prior, competitiveness should be central to this strategy, which, as the noble Lord, Lord Prior, said, is a work in progress.

It is true that the strategy has little to say on two key sectors. If we, as a nation, are to play as important a role in the 21st century as we did in the 20th century, we need also to recognise and maximise our existing competitive advantages, such as the financial and professional services firms that already employ 2.2 million people around the UK—two-thirds of them outside London. This sector is surely a vital ingredient in the future success of the industrial strategy and of the nation as a key facilitator of business.

While I welcomed the Government’s recognition in their industrial strategy Green Paper of the UK’s position as,

“a world leader in financial services”,

I was disappointed to see that the White Paper makes scant mention of the financial and professional services sector. A report commissioned by the City of London Corporation, where my involvement is on the register, and produced by PwC on the total tax contribution of UK financial services showed that financial services alone contributed an estimated £72.1 billion to the Exchequer—the equivalent of 11% of all UK tax receipts in the year to March 2017. Furthermore, financial services provide crucial support to businesses across the UK through access to capital, underpinning the financing of a significant number of British industries. The sector also provides the country’s largest trade surplus—a trade surplus greater than all other net exporting industries combined.

Across the UK, 21 towns and cities beyond London each have more than 10,000 people employed in the industry. Six cities have more than 30,000 people. These centres are aligned to the financial centres of excellence programme, promoted by the Government and launched by the former UKTI in 2015-16 with the support of TheCityUK. It is vital that in order to encourage these centres to grow and fulfil their role in supporting and enabling the UK economy, there is the right support for this vital and facilitating industry.

This is an industry where Britain is number one in the world, but our world—and, of course, European—leadership in this sector cannot be taken for granted. We face increasing international competition. TheCityUK, in partnership with PwC, has already set out its plans for the industry and a road map to implement them. The report looks at themes such as building regional financial centres and the growth of digitalisation. It estimates that if its vision for a transformed industry were to be realised, the economic benefit to the UK could be as high as £43 billion, with 70% of this growth taking place outside London.

During my time as Lord Mayor of the City of London, I witnessed first hand the efforts made to ensure that the UK remains a key destination for trade in financial services and a centre for innovation in products such as Fintech and green finance. However—here I nod to the ongoing Brexit negotiations—if the Government intend to attract new investment into the sector, as well as to retain and grow existing investment, increase financial services exports and promote job creation, clarity must be provided on three issues: transition, trade and talent. As TheCityUK recommended recently, the single most important thing is collaboration between industry, government and regulators, likely to be overseen by the Treasury, possibly as one of the sector deals floated in the industrial strategy, but definitely arranged to maximise the industry’s contribution to national prosperity.

The second industry which I suggest deserves a place in this strategy is maritime—a subject which your Lordships will be aware has occupied most of my professional life. I was privileged to be asked by the Government in 2015 to chair the Maritime Growth Study, which made a number of recommendations for keeping the UK maritime sector competitive. My involvements in maritime are on the register. This is another area where the UK is a world leader. The growth study highlighted our role as a one-stop maritime shop that exports worldwide and encourages inward investment.

The UK maritime sector is of strategic importance to the UK in two distinct ways. First, in its own right, it is a major economic contributor, with its net benefit to the country close to £40 billion and supporting just under 1 million jobs. Secondly, as an island nation, Britain transports 95% of its exports and imports by sea, making its maritime supply chain critical to its economic and social well-being. For both these reasons our maritime sector—again a key business and trade facilitator—will continue to underpin the future success of the country in a post-Brexit world in which global trading opportunities will never have been more important.

Under Maritime UK, which brings together the principal trade associations and other interests in this wide and diverse sector, the industry has been working closely with government to implement the Maritime Growth Study report and sees the industrial strategy, and an ambitious maritime sector deal, which we are working on, as powerful tools to increase the pace of this work. The aim is to ensure that the UK maritime sector which includes our vital ports, ship-owning, and I am pleased to report that the UK register is growing once more, resurgent shipbuilding, partly reflecting defence work, of course, and vibrant boat building, innovative marine engineering and world-leading professional services, universities and training establishments is best-placed to serve the rest of the economy, and enhance its role as a competitive, innovative and dynamic world-leading sector.

I do not propose to list all the initiatives under way that can, I hope, result in sector status for maritime. Many of the world’s leading maritime industry research and training institutions, manufacturers and service providers are located in the UK. The sector features globally recognised and industry-leading brands that drive forward key developments in equipment, product design and technical innovation. Research and development in the maritime sector is extensive, supported by the world-class capabilities of UK universities and research institutes. The UK’s maritime research landscape is further enriched as a result of the large number of small and medium-sized enterprises at the forefront of R&D innovation.

The UK has the potential to be a leading player in maritime autonomy and therefore the emphasis the Government’s strategy places on robotics and artificial intelligence is most welcome. Indeed, maritime autonomy is an area where we are considering a sector deal bid. Skills implications will be a key part of this discussion, and, on skills, I particularly commend the industry’s request for additional funding for the SMarT Plus officer training scheme.

Industry and academia have developed proposals for the creation of maritime research and innovation UK, to bring together the UK’s excellent academic and research institutions with industry to address the demands for applied R&D. In recognition of the existence of a number of highly valued bodies around the country, the centre should be based on a hub and spoke model, similar to that of the High Value Manufacturing Catapult or the composites catapult in Bristol, fully to utilise the substantial infrastructure which currently exists in the UK, and there will be more.

Our ports remain a global success and a local necessity. It is vital that when looking at the infrastructure investment under the strategy, the connectivity of our ports is improved. Recent research confirmed that coastal towns are among the most deprived, so ports such as Felixstowe, Grimsby, Dover, Glasgow and elsewhere provide employment for local people who often do not have an array of other opportunities. Greater support for the UK’s maritime sector—for example, by developing the skills base—would, therefore, represent an investment in the prosperity of some of its most challenged regions.

In conclusion, while I strongly commend the Government’s efforts to produce a framework for a much-needed modern industrial strategy, I urge the Minister to consider the benefits of widening the scope of this plan. The importance of sectors such as financial and professional services and maritime—both great bastions of British industry—cannot be underestimated if we are serious about,

“building a Britain fit for the future”.

Therefore, I take my hat off to the Government for their work so far, but invite them to extend the breadth and range of the sectors that might be included.