By Daniel Hunter
The Government should actively embrace and support a modern ‘Industrial Strategy’ for innovation-led growth to secure economic recovery, say UK business leaders.
This is not a call for a return to the 1970s’ ‘Industry Policy’ of picking winners at a company level. It is about identifying and supporting winning technologies and sectors.
Over the last six months PA Consulting Group's Martin Smith and George Freeman MP have hosted a series of roundtable meetings with leading entrepreneurs, investors, academics and CEOs from organisations such as Procter & Gamble, Nokia UK Limited, Kraft Foods and Nestle.
The consensus is clear — to secure the UK’s economic recovery, the Government must support an active business-led strategy of identifying and supporting key technologies and sectors. There was a clear desire to see more active collaboration between government, industry, academia and finance to expand the UK’s economy effectively.
"Across each of these sectors there was a clear message: businesses want Government to embrace a new partnership to support innovation-led growth," Martin Smith, technology and innovation expert at PA Consulting Group, said.
"It means playing a key role in supporting our science base and creating incentives for near-market research and technology transfer. Government must invest in the skills and infrastructure to build integrated supply chains and promote a culture supportive of entrepreneurship and engineering. The clear message from these business leaders is that they are optimistic about the future and committed to growing their business in the UK. We now need to build the most supportive environment possible for them to achieve this.”
Co- chair George Freeman MP, newly elected to Parliament after a 15 year career in technology venture capital, said this was about a new Government approach.
“This is not a call for a return to 1970s’ ‘Industrial Policy’ of ‘picking winners’ at a company level, subsidies or protectionism," he said.
"It is about a new partnership approach with Government supporting business led, sector-specific strategies for key sectors and technologies in which Britain is globally competitive.”
There was clear consensus from business around four key actions:
1. Picking winning technologies and sectors
This is not a return to the 1970s’ ‘Industrial Policy’ of ‘picking winners’ at a company level, but backing technologies and sectors with the greatest potential to unlock sustainable UK growth. Other countries have done this to achieve world domination in key areas such as South Korea in memory chips and Germany in areas of alternative energy.
A modern industrial strategy should be led by industry and supported by Government. The targeted areas might be sectors such as automotive or aerospace or technologies such as lightweight vehicles or intelligent highway systems.
2. Aligning organisations active in targeted areas
Business must be empowered to lead change. The work done to rebuild a highly competitive UK automotive sector since the 1970s, most recently through the Automotive Council, is seen as a successful case study of what can be done. The UK motor industry is the sixth largest industry and produces 1.7 million vehicles a year. With the right support we can, for example, capitalise on Britain’s outstanding record in drug development. Innovation and investment is needed to ensure the related economic benefits are realised.
3. Encouraging entrepreneurism
A stronger culture of promoting and celebrating entrepreneurship across schools, universities, banks, public services and Government is vital. A successful innovation economy needs a high rate of start-up success (and failure) and an environment to support it. The view was more needs to be done to support SMEs in growing to become the medium sized companies (£50M - £100M) of tomorrow. The UK’s alternative investment market (AIM) provides much less depth and continuity of investment than US markets. Many UK SMEs site R&D offshore in return for funding. Mid-term finance is a particular problem, causing companies with successful early-stage growth to stagnate or sell out before achieving their full potential.
4. Increasing excitement about the manufacturing industry
A technologically-advanced and competitive innovation economy needs investment in key skills across the board. There was a call for more of the UK’s school children to study science, technology, engineering and maths at school or university and greater awareness of the benefits of industrial careers. To unlock growth in our highest-growth sectors we need to rebalance the higher education and further education sectors to support these subjects and develop proven career pathways for a high technology economy. The new ‘Inside Manufacturing’ programme, a joint public-private initiative, is a step in that direction. The scheme invites pupils, teachers and careers professionals to visit some of the UK’s leading facilities to learn about modern manufacturing and the range of jobs available.
Join us on