The call comes on the back of a report and survey by Make UK, called “Industrial Strategy – A Manufacturing Ambition”
British manufacturers are urging the government to create a Royal Commission that would help develop a modern, long-term industrial strategy. This will provide companies with a clear vision and a stable environment to invest in and grow their businesses. The call comes on the back of a report and survey by Make UK, called “Industrial Strategy – A Manufacturing Ambition”, which highlights the need for the establishment of an Industry Strategy Council. This independent body would monitor the strategy, and the Cabinet Office would be responsible for policy coordination across the government.
The timing of the report is crucial because of the impact of the US Inflation Reduction Act (IRA) and similar measures being introduced by the European Union. The UK economy risks being squeezed, and its competitors, particularly France and Germany, are implementing far-reaching industrial strategies towards 2030. The IRA is worth 1.5% of the US GDP, which, if the equivalent sum were invested in the UK, would be worth £33 billion. Make UK’s ambition is not only to address the accepted challenges around skills, innovation, infrastructure, and the business environment but also the opportunities from a rapidly changing policy landscape, including green transition, digitalization, leveling up, and accelerating technologies such as AI and Augmented Reality.
Make UK also sets a target of growing the manufacturing sector to 15% of GDP, which it estimates would add an extra £142 billion in output annually, creating high-value, high-skill jobs. Six in ten manufacturers believe the government has never had a long-term vision for manufacturing, and two-thirds say the lack of an industrial strategy hinders access to skills. Furthermore, eight in ten companies believe the absence of a strategy puts their company at a competitive disadvantage when compared to other manufacturing nations, while a quarter said it is the foremost reason the sector has not grown more quickly over the last decade.
However, manufacturers are clear that an industrial strategy would bring benefits, with nine in ten saying it would give them a long-term vision, eight in ten a more stable environment, and three in ten said it gave them much-needed accountability. Half of the companies believe it would aid public-private coordination, while almost four in five companies (77%) believe a strategy should be guaranteed beyond government terms and administered by a separate body to review it every three to five years.
The lack of a proper, planned, industrial strategy is the UK’s Achilles heel, says Stephen Phipson, Make UK CEO. Every other major economy, from China to Germany to the US, has a long-term national manufacturing plan. The UK is the only country without one. Phipson argues that a national industrial strategy is needed as a matter of urgency, to tackle regional inequality and to enable the country to compete on a global stage.
According to Make UK, any industrial strategy must be long-term, independent of unnecessary interference, and driven by industry, for industry. It must provide clear strategic direction and adequate channels for monitoring, evaluation, and accountability. This approach would allow for strategic allocation of funding, support, and interventions to the areas that require them the most, fostering collaboration and coordination among all stakeholders, including private sector entities, universities, research institutes, colleges, all levels of government, and independent delivery organizations.
Make UK has made the following recommendations to begin this process:
- Establishing a Royal Commission on Industrial Strategy that will create a consensus on future priorities and ambitions for manufacturing and the wider economy. The commission’s aims and objectives will be considered strategically important markers of success for informing a wider industrial strategy planning in five key areas, namely skills, innovation, green transition, infrastructure, and the business environment. The strategy should have growth targets and timeframes with responsibilities for delivery assigned to both the private and public sectors.
- The Industrial Strategy Council (ISC) should be re-established with statutory status to ensure its longevity. The ISC’s remit as an independent oversight body will be to ensure rigorous evaluation, monitoring, and efficacy of policy delivery. The ISC could also collate timely information and provide a feedback mechanism for better policymaking, which will aid in the delivery and implementation of targets across all levels of government.
- The Cabinet Office should be responsible for ensuring cross-government coordination and implementation of industrial strategy. After devising a plan through consultation with all relevant stakeholders, the re-established ISC should have the mandate to inform and advise the Cabinet Office on ways to improve policy delivery.
- The recommendation put forth for the Royal Commission involves negotiating and agreeing upon institutional reforms aimed at ensuring the stability of policy delivery and outcomes. Such reforms should include making alterations to the regulatory landscape, such as the corporate governance code, to incentivize private and public sector best practices and promote long-term productivity growth for the public good.
To provide support for this recommendation, a survey was conducted among 312 companies between April 5 and 14. The survey aimed to gather insights into the current state of policy delivery and outcomes, as well as the effectiveness of the regulatory landscape in promoting best practices and productivity growth. The findings of the survey are likely to have informed the recommendation for institutional reforms.