UK Government publishes its new Industrial Strategy: read the summary from a cleantech perspective

Government Industrial Strategy, November 2017

At the end of November, the Government published its long-awaited 250-page industrial strategy, ‘Building a Britain fit for the future’. There is much to favour the cleantech sector throughout the document and a whole ‘Grand Challenge’ devoted to Clean Growth alone. Below we summarise the strategy with a focus on opportunities for cleantech sector businesses and practitioners. The strategy aims to tackle Britain’s productivity problems and stay on the curve by boosting investment in the high-value tech sectors at the forefront of ‘Industry 4.0’. The focus is firmly on supporting R&D: several competitive challenges will be launched in Spring 2018 under the new Industrial Strategy Challenge Fund; and Innovate UK will channel £44m of new grant funding, as well as piloting new Innovation Loans for pre-commercial businesses, and an Investment Accelerator to join seed equity with grant funding. The government also promises to lead the way through its own procurement, with a GovTech Catalyst and GovTech Fund to help tech firms deliver innovative fixes in the public sector.

The overall strategy is broken down into four ‘Grand Challenges’:
  1. AI and Data Economy – the government wants to put the UK at the forefront of the artificial intelligence and data revolution. AI is currently underpinning a rapid transformation of business models in a whole range of sectors, and is set to add £232bn to the UK economy by 2030, by one estimate. There will be £45m funding for extra PhDs in AI, plus a £10m Regulators’ Pioneer Fund to support UK regulators such as Ofgem and the FCA to keep up with the rate of change. A new AI Council and government Office for AI are to be established.
  2. Clean growth – maximising advantages for UK industry from the global shift to clean growth is cited as ‘one of the greatest industrial opportunities of our time’. The government foresees a reallocation of trillions of pounds of public and private finance in the pursuit of cleaner growth – across power, transport, heating, cooling, industrial processes, construction, and agricultural sectors. The strategy announces a specific focus on local smart energy systems through a new programme ‘Prospering from the energy revolution’, as well as a Smart Systems and Flexibility Plan to build on the rollout of smart meters. Other key initiatives include investing £162m in low-carbon innovation, and working with industry through ‘Sector Deals’ to stimulate market investment agri-tech, construction, clean energy, and other efficient processes and technologies. There is a specific focus on energy storage through the foundation of the new Faraday Battery Institute, with £65m for 7 university partners (including the University of Cambridge) to lead pioneering research into the next generation of battery technology. There will also be an attempt to develop the first set of green financial management standards with the British Standards Institution and the City of London’s Green Finance Initiative. For more on this theme, take a look at our summary of the Clean Growth Strategy which came out in October 2017.
  3. Future of mobility – the UK aims to be a world leader in the way people, goods and services move. The strategy envisages fully self-driving cars by 2021, noting that this will require a thorough review of the current regulatory framework. The government pledges £400m to be delivered through a Charging Infrastructure Investment Fund which will be 50% match-funded by private investors, along with £100m to extend the plug-in car grant, and £40m R&D funding (matched by the car industry) for new vehicle charging tech. Keep an eye out for a new ‘Future of Urban Mobility’ strategy in next 12 months, and for the launch of two competitions: an R&D competition run by the Centre for Connected and Autonomous Vehicles, and an innovation prize from the National Infrastructure Commission to determine what future roads will need to look like.
  4. Ageing society – the needs of an ageing society provide both an economic/social challenge and a growing global market. Opportunities in this space orbit around smart home technologies, wearable devices and tech-enabled health and social care services which allow older people to remain independent for longer. The NHS’ enormous datasets provide a goldmine for tech-related research and innovation, which can be applied through the Strategy’s new ‘Data to early diagnostics and precision medicine’ programme.
These four cornerstones of Britain’s industrial future vision are in turn supported by the strategy’s five ‘Foundations of Productivity’: Ideas, People, Infrastructure, Business Environment, and Places. It’s in this section that the strategy pins down some more specific policies and figures:
  1. Ideas – aiming to position the UK as ‘the world’s most innovative economy’, the government outlines its plans to raise R&D investment to 2.4% of GDP by 2027, increase the rate of R&D tax credit to 12%, and invest £725m in a new Industrial Strategy Fund.
  2. People – policies under this theme centre around boosting jobs and earning potential by investing specifically in digital and STEM education, both through a revamped technical education system and a National Retraining Scheme.
  3. Infrastructure – the strategy document announces a major upgrade to the UK’s infrastructure, to be achieved by increasing the National Productivity Investment Fund to £31bn, and investing in transport, housing and digital infrastructure. £400m is allocated specifically to electric vehicle charging infrastructure, and an extra £100m for the plug-in car grant, and £1bn is promised to public investment in digital infrastructure including 5G and fibre networks.
  4. Business Environment – aiming to make the UK the ‘best place to start and grow a business’, the government announces the launch of ‘Sector Deals’ with a range of industries including life sciences, construction, artificial intelligence and automotive. Under the new plans, there will be £20bn of investment in high potential innovative businesses, including a £2.5bn Investment Fund to be administered through the British Business Bank
  5. Places – the strategy outlines plans to put in place a new Transforming Cities fund with £1.7bn for intra-city transport, a competitive £115m Strength in Places Fund, and to agree Local Industrial Strategies to support prosperous communities across the UK.
The Industrial Strategy shows an attempt to take control of Britain’s economic direction in rapidly shifting circumstances, by acknowledging a stronger role for the state in coordinating strategic industrial sectors. An independent Industrial Strategy Council has been set up to keep the government accountable, assessing progress and making recommendations; this needs to be a long-term (or at least mid-term) plan, to build trust amid current instability surrounding funding, investment, business and trade. As ever, Brexit casts a featureless shadow over the subtext, but the authors of the Strategy choose not to dwell on it at length, mentioning just the desire for ‘free and frictionless trade’ with the EU as a ‘major trading partner’.