4Conclusions
70.Last autumn, the Council for Science & Technology wrote to the Prime Minister on the then still under development Industrial Strategy, to highlight the “compelling case” for science and skills in the initiative.148 The Green Paper subsequently presented science and skills as the first two in its list of 10 ‘strategic pillars’ to increase the country’s productivity. This, and the raft of helpful initiatives involved under these headings, presents a picture of the Government taking seriously these essential productivity building blocks. The president of the Royal Society believed that “by placing science and innovation at the heart of our industrial strategy, the Government is clearly focused on capitalising on the UK’s strengths.”149 Our witnesses were also generally supportive of the Green Paper’s approach.150
71.The Green Paper takes insufficient account, however, of Brexit. The Royal Academy of Engineering stated last year that:
Following the result of the EU referendum, an industrial strategy becomes all the more important in providing a vision and roadmap for how the UK can strengthen and grow as a technologically advanced, globally engaged and competitive economy.
An industrial strategy will take many years to deliver. […] Measurable change may take 10 years to realise, although it is possible to employ softer measures or monitor incremental gains in the short term. An early benchmarking exercise will be needed at the outset.151
Similarly, the Bio-Industry Association said that “industrial strategy needs to be joined-up with Brexit risks and opportunities and should bolster areas of adverse impact, as well as assist in the exploitation of areas of opportunity.”152
72.Once the Green Paper was published, Allan Cook from the Royal Academy of Engineering emphasised that “the industrial strategy is a big challenge, and adding to it the complexity of Brexit makes it an even bigger challenge”.153 Steve Bates from the Bio-Industry Association observed that “the three things that the industrial strategy does not touch on that are vital for our sector in the context of Brexit are regulation, immigration and funding”.154 Professor Paul Nightingale emphasised “huge uncertainty around Brexit” and highlighted the importance of non-tariff barriers for some sectors in particular.155 Professor Quintin McKellar believed that the industrial strategy “could be supportive of us leaving the European Union and helping maintain that productivity as we leave”.156 Professor Alex Halliday was most worried about the uncertainty surrounding the regulatory environment.157
73.The BEIS Committee criticised a lack of clarity about “the relationship between the industrial strategy and [the Government’s] negotiating priorities for leaving the European Union”. It found it “unfortunate” that the recent Brexit White Paper “reinforces a lack of coordination between the Government’s major challenge and its principal plank of business policy”.158
74.There is a weakness in the industrial strategy in that it could give more room for discussing or even acknowledging its links with Brexit. The industrial strategy must be configured to shape our Exit negotiations, but equally those negotiations will affect what can be achieved through the industrial strategy as well as how the different measures envisaged should be prioritised and re-prioritised.
75.The complicating factor of Brexit, which could in time render the industrial strategy over-ambitious or under-ambitious depending on the terms of the Exit and how well our new research and trading relationships with others turn out, makes it difficult to set a yardstick for judging the eventual success of the strategy—the possible scenarios are perhaps inevitably too difficult to map out at this stage. This is, nevertheless, an area that the Government must address as the Brexit negotiations get under way and the industrial strategy evolves in what we hope will be dynamic document.
76.In the meantime, some of our witnesses provided their own preferences on success metrics for the Industrial Strategy. Professor Quintin McKellar believed that “increased productivity across the country” should be the metric for measuring the delivery of the Industrial Strategy. Allan Cook similarly highlighted “productivity and economic growth”.159 Steve Bates favoured monitoring the number of UK companies that grow “to global scale”.160 Professor Alex Halliday emphasised the importance of ‘place’—the impacts beyond the traditionally favoured regions.161
77.With UKRI set to play such a pivotal role in delivering key aspects of the research and innovation strand of the industrial strategy, our call in our Leaving the EU report last year for the Government to set out “measurable benefits” to be delivered by the organisation remain critically important. We were pleased to see in the Government’s response an acknowledgement that it would be “appropriate to develop specific metrics to monitor the success of UKRI in concert with ministers and the CEO of UKRI, once the CEO and UKRI board are in post.” The response helpfully listed areas which might provide metrics, and emphasised that UKRI’s forthcoming Research and Innovation Strategy “will identify qualitative and quantitative objectives for which UKRI will be accountable. We intend to continue to monitor the operation of UKRI as well as its part in delivering a measurable success for the industrial strategy.
148 Council for Science & Technology, Letter (and Annex) to the Prime Minister on the Industrial Strategy, 20 October 2016
149 Royal Society, ‘Royal Society response to Industrial Strategy’, press release, 23 January 2017
150 Q2 [Prof Quintin McKellar, Prof Paul Nightingale, Prof Alex Halliday], Q43 [Allan Cook, Jen Rae, Steve Bates]
153 Q47
154 Q47
155 Qq6–7
156 Q6
157 Q8
158 Business, Energy and Industrial Strategy Committee, Second Report of Session 2016–17, Industrial Strategy: First Review, HC 616, paras 77 and 79
159 Q46
160 Q46
161 Q4
5 April 2017