Industrial Strategy to target 'winners'

London –  Business secretary Vince Cable has set out his Industrial Strategy for the UK, looking at where the country has a competitive advantage now, and where it can build on that in the next 20 years.

Measures outlined by Cable include: A new Government-backed ‘Business Bank to help companies invest; Government and industry partnerships with strategies for specific sectors by 2013; and a £165-million investment in skills that businesses need.

The ‘Business Bank’ is intended to help companies invest in capital and drive their expansion. Details of the institution are still to be decided, but it could operate through alternative providers such as the new challenger to banks and non-bank lenders.

“Not only would this boost their lending capacity, but would also corral existing provision such as co-investment and guarantees to support business expansion,” said Cable.

The Government will create a series of collaborative sector strategies in advanced manufacturing, knowledge-intensive industries, and the ‘enabling’ industries. This will include building strategic partnerships with industries and targeted support to help companies to fully exploit major growth opportunities.

“Our first part of that plan is lifting the barrier that poor access to finance puts on growth. By helping firms to invest capital, businesses expand, and create jobs,” said Cable.

“It will give our businesses certainty, allow them to make their own plans, and know that the full weight of Government is behind them. We will work in a strategic partnership with industry, focusing our support on specific sectors. This is our commitment to growth in action.”

There is also to be a new Innovation and Knowledge centre to boost commercialisation of research, while skills policy is to be more closely linked to industrial strategy to meet industry’s future skills needs.

Commenting on the industrial strategy, Juergen Maier, managing director of Siemens Industry UK and Ireland, said: “The announcement by Vince Cable on industrial strategy looks largely positive and supportive. I certainly agree with more support for faster commercialisation of products and services from core research.”

But while Maier supported the idea of backing winning sectors and technologies. he is concerned that this will be confused with ‘backing winners’.

“Today’s world is very different to the failed UK industrial strategy of the 1970’s. Technology is moving at a lightning pace compared to back then, and unless we place a key focus on a few areas, we will never be world beating at any area and attract the private sector investment levels into those activities.

Citing the development of Graphene – a revolutionary new material discovered in Manchester, Maier warned that without extra special focus “we won’t exploit its full potential in terms of commercialisation alongside economic growth – and other countries will”

manufacturers’ organisation, the EEF, which includes steel industry lobby group UK Steel, likewise, expressed mixed views about the Industrial Strategy.

EEF chief executive Terry Scuoler, of EEF, the said: “Business will welcome government attempts to provide it with greater certainty and prioritise how it invest its resources. However, this must be rooted in a robust analysis of which technologies will generate the greatest future opportunities and, in which the UK has the greatest potential.

On proposals for a British Investment Bank, Scuoler said: “Government must do everything it can to encourage the financial sector to better support business investment. This means raising the level of competition within the Banking sector and developing a range of alternatives to Bank finance.

“Targeting assistance to challenger banks, if it can be done, will be positive as will consolidating the plethora of government finance support schemes under a single agency with a strong mandate for promotion. But we shouldn’t kid ourselves this will be the full answer on access to finance.”
“We need more entrants into the SME banking market, one of the most concentrated banking markets in the UK, as well as greater ease for businesses to switch between banks. We also need more alternative forms of lending. The objective must be a finance landscape that supports higher investment in the UK without leaving the taxpayer stranded with all the cost and all the risk.’

The EEF leader went on to describe the Employee Ownership Pilots on skills within the strategy as a good first step and urged the government to push on with rolling this out across the economy.

“To build on this there is much more to do to make it easier to invest in apprenticeships and to ensure our education system is generating sufficient numbers of young people with the right skills,” he said.