By Daniel Hunter
The UK must grasp its once-in-a-generation opportunity to get industrial strategy right, CBI Director-General John Cridland will say today (Wednesday).
In a speech to the joint Government-CBI Industrial Strategy Conference at Warwick University, Mr Cridland will say good progress has been made in developing an industrial strategy, but the Government still has some way to go to deliver on its promise.
The speech comes as a new CBI report called Raising the Bar — Business priorities for industrial strategy one year on reveals that twelve months after the launch of the UK’s industrial strategy, businesses are split on whether they believe the UK will be a more competitive place in five years’ time.
The report calls for a renewed focus on delivery by improving the competitiveness of the UK’s business environment and strengthening supply chains.
In his speech, Mr Cridland will say: “We’ve achieved a lot over the last year but the challenge now is delivery against the many commitments that have been made.
“The gathering momentum of recovery must not distract us from tackling the profound economic imbalances which built up during the boom years. It’s important that, as things start to look up in the short term, we don’t take our eye off the ball when it comes to long-term challenges.
“Essentially, we’re at a commercial tipping point, and delivering a coherent industrial strategy will undoubtedly boost confidence about the UK’s long-term success.
“For me this means three things: taking action to further improve the competitiveness of the UK’s business environment, strengthening supply chains that underpin our key growth sectors, and raising the bar on implementation by both business and government.”
New CBI research highlighted in Raising the Bar — Business priorities for industrial strategy one year on reveals that:
- 51% of businesses surveyed are confident UK business conditions will improve in the next five years while 48% are not confident
- The UK trails behind its competitors on a number of critical indicators — performing relatively poorly on infrastructure, access to finance, education and skills, regulation, and percentage of GDP spent on research and development
- 60% of businesses surveyed are still unclear about what the UK’s industrial strategy is hoping to achieve
- 63% of businesses surveyed think government funding and policy doesn’t strategically support the UK’s competitive advantages.
The report also highlights the importance of strengthening supply chains, on which Mr Cridland will say: “Strengthening supply chain companies that underpin our champion sectors will make industrial strategy real to people and businesses in every region of the country.
“Nearly two-thirds of businesses surveyed are telling us they aren’t clear about what industrial strategy is seeking to achieve. I want businesses to be able to say that, because of industrial strategy, we’ve got more work and we’re employing more people.
“We have in our grasp a once-in-a-generation opportunity to get industrial strategy right; to underwrite what we’re good at, and to execute a plan to be world-beating abroad, and achieve sustainable and innovative growth and job creation at home.”
The CBI is calling for:
- Improved understanding of supply chains in key sectors through for example supply chain mapping
- Increased awareness of initiatives to support supply chains such as the Advanced Manufacturing Supply Chain Initiative. The Government should commit to and expand this initiative beyond the next round, into the next Parliament
- Action to incentivise supply chain collaboration, encouraging large companies to work with their suppliers on access to finance, skills and exporting, as well as collaboration between suppliers.
The report highlights key sectors where action to strengthen supply chains could deliver long-term growth opportunities:
- Aerospace — global forecasts for the period to 2031 estimate a requirement for 27,000 new passenger aircraft worth $3.7 trillion, 24,000 business jets worth $648bn, and 40,000 helicopters worth $165bn
- Automotive — 80% of components for vehicles could be sourced from domestic suppliers, compared to only 36% now — this would add £3bn to the UK economy
- Offshore Wind — the supply chain has the potential to capture 60% of overall value of investment in the sector to 2030 — supporting 41,000 jobs. UK companies are at present only securing around a third of contracts to supply components to build and install new UK offshore wind developments
- Nuclear — the supply chain has the potential to capture £25bn (44%) of expenditure on new build projects to 2030 and a sizeable chunk of overseas business as well. The construction of a new plant at Hinkley Point could see 57% of its construction contracts going to UK suppliers.
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