Introduction
The Industrial Strategy is a vital document in guiding economic development activities at the local level; however, it somewhat lacks details on what ought to be delivered locally and regionally to support implementation.
To understand what might be undertaken locally and regionally within the strategy, some reading between the lines is necessary. It is likely, however, that those local or combined authorities adopting the various initiatives outlined in the strategy can support their local business base and subsequently drive economic growth.
In summary, a vital business development role can be carried out locally to support businesses in engaging with the various activities outlined in the Strategy. It is no exaggeration to say that the success of implementing the Strategy depends on this function being performed. It is also evident that no resources have been allocated to local economic development teams to undertake this work.
This paper highlights areas where local and regional delivery activities can significantly benefit local economies and, therefore, by inference, suggests that funding for business support can more than pay back in the medium term.
The Strategic Themes
Several economic themes are emerging in the government's various recent strategies and statements. The Industrial Strategy clearly emphasises certain priorities. The IS8 is new terminology for the eight priority sectors, which will become part of economic development shorthand.
The government has identified the priority sectors as the most promising long-term opportunities for growth, productivity, employment, innovation, and trade across the country. Consequently, growth, productivity, employment, innovation, and trade will serve as the likely benchmarks for measuring future success.
Another theme that can only have been reinforced by the geopolitical environment is the importance the Strategy places on strengthening resilience in supply chains, including increasing domestic production. The Industrial Strategy refers to some of the critical industries which underpin the UK’s capabilities and sets out an intention to define this more closely in the future.
There are other aspects of prioritisation in the strategy. The increased focus on Mayoral Combined Authorities (MCAs) and also an ambition to become AI value creators, as well as being AI-enabled. There are 95 references to AI in 160 pages.
IS8
The IS8 may or may not become the future industrial terminology (I have my doubts). However, it is essential to begin an analysis of the Industrial Strategy by explaining these priority sectors. The Industrial Strategy Green Paper had outlined the approach, but the published strategy has gone further and highlights the ‘frontier industries’ or sub-sectors, which are believed will underpin growth.
Beyond the IS8, the strategy also considers foundational industries like steel and ports, which, it notes, provide essential materials, parts, and infrastructure. A new Supply Chain Centre will further study these industries, reviewing inputs, assessing the impact of future trends on demand, and identifying necessary actions such as developing domestic capability, diversifying sources, or forming strategic international partnerships. It will be essential to monitor the findings from the Supply Chain Centre as they emerge.
The IS8 and their ‘Frontier Industries’ are as follows:
The interventions relevant to local areas
The interventions are a key point where local and regional involvement can create an advantage. The Industrial Strategy is written as if UK businesses in each frontier industry or those able to diversify into these industries are already identified, or have read the Industrial Strategy and are prepared to take part in various initiatives. In reality, however, there is an urgent need to identify and engage directly with businesses. Understanding opportunities for companies is most effectively done at a local or regional level.
There are numerous ways in which local authorities with the closest relationships with their businesses can secure an advantage. We have categorised these into three areas of work:
- Taking advantage of initiatives – to maximise the effectiveness of national planned initiatives at the local level, which will help drive local growth
- Directly supporting businesses – to support local businesses to engage with the Industrial Strategy interventions and help drive local growth
- Designing and implementing supply-side initiatives – to prepare for future growth
Each of these is examined in some detail, although this should not be seen as the full range of potential opportunities. Opportunities will also vary by area. At a Mayoral Combined Authority level, and in regions with Freeports and Investment Zones (now Industrial Strategy Zones), there are further opportunities.
- Taking advantage of initiatives
The initiatives set out in the Industrial Strategy are not always earmarked for the involvement of local agencies, although it is clear that those areas with the best understanding of their local businesses can participate to a greater extent and reap the benefits of the growth which can then arise.
- A Local Innovation Partnerships Fund, led by UKRI, will have £500m to spend on initiatives that build innovation in clusters. Some of the funding is pre-allocated to MCAs. Still, the remainder will be allocated through a competition for clusters in all other parts of the UK to bid for support to grow their innovation ecosystems. Details are yet to be released, but this appears to be a successor to the Strength In Places Fund. To be successful, locations are likely to need a strong understanding of local businesses and both existing and potential links to Higher Education or Research Institutions.
- British Business Bank Cluster Champions will ensure that proactive work is in place to provide funding to businesses in the IS8 across 10 City Regions (in Greater Manchester, West Yorkshire, the West Midlands, Liverpool City Region, South Yorkshire, North East, West of England, Glasgow City Region, Cardiff City Region, and Belfast City Region). Still, of course, a detailed local knowledge of individual businesses can help ensure that the funding is targeted effectively, and a locally based account management programme is a valuable conduit in providing the maximum success in securing the financing.
- The Connections Accelerator Service aims to ensure that new projects with the potential to create high-quality jobs and deliver significant economic value are quickly connected to the power grid. The government recognises the importance of collaborating with Local Authorities on this initiative. However, only those authorities aware of the opportunities being considered by their businesses can most effectively influence the process.
- The UK will ensure that Ambassadors and Trade Commissioners in key export markets develop plans to support initiatives that promote the export success of businesses in the IS8. These plans are intended to be created in collaboration with UK businesses and with national, regional, and local leaders. Those with in-depth knowledge of local companies will have the opportunity to help drive these initiatives.
- The Supply Chain Centre is likely to become a key organisation in shaping support mechanisms for businesses across the UK and in identifying areas where further UK investment is needed. The work of this centre could highlight opportunities to support local companies and help define sectors that should be targeted. Once again, the intelligence from this agency is likely to be most valuable to those areas with a good understanding of their local companies.
- Some of the work in the defence sector requires non-defence-related businesses to recognise the dual role that they can play with defence-related adaptations, offering them new market potential. Securing their interest is best delivered through local engagement initiatives.
- Directly supporting businesses
Business engagement work can help ensure that local businesses secure more funding and supply chain opportunities, expanding the number of local companies actively involved in Industrial Strategy initiatives, which in turn will lead to greater economic growth.
- Advanced Manufacturing businesses will have an opportunity to secure funding for investment and R&D with a £4.3bn fund (of which £2.8bn is allocated for R&D). Additional Made Smarter and Skills initiatives will also be rolled out.
- Clean Energy will offer £1 billion under a supply chain fund, and there are other direct allocations to specific aspects of power generation, which will be relevant to specific companies and locations.
- The Creative sector will have £100 million over the next 5 years to spend on ‘creative clusters’ and a £25 million Creative Futures programme, creating five new CoSTAR R&D labs across the UK. Additional allocations are allocated for some specific MCAs and industries.
- In defence, a new UK Defence Innovation Fund will have a £400m budget, and an expansion of the National Security and Strategic Investment Fund will allocate £330m to invest in supply chain businesses. In addition to these programmes, at least £7.5 billion of MOD procurement expenditure is earmarked for spending with SMEs.
- Digital activity will receive substantial R&D funding, with £22.6bn allocated to innovation opportunities in the sector. In addition, various specific initiatives, particularly in AI.
- Life Sciences will benefit from a Life Sciences Innovative Manufacturing Fund with an allocation of £520m.
- Designing and implementing supply-side initiatives
From a supply-side perspective, areas best positioned to capitalise on initiatives will be most effective in capturing future growth.
- Areas will be able to identify sites which can take advantage of the Strategic Sites Accelerator, which has £600m allocated to bring forward more investible employment sites across the UK proactively.
- There is an opportunity to better identify those businesses best able to influence and participate in the various skills initiatives set out in the Strategy
Conclusions
The Industrial Strategy encompasses a substantial number of initiatives, and many of these are still to be fully defined. This may lead to further initiatives which are relevant at a local level. As outlined above, there are additional initiatives targeting predefined locations and sectors, with a greater emphasis on MCAs.
It is clear, however, that there are a large number of more general initiatives linked to driving growth in the IS8, and these are mainly related to innovation, trade and investment. Whilst the importance of local and detailed business engagement is not cited within the Strategy, it is clear that those areas most engaged with their businesses have a tremendous opportunity to take advantage of the approach more fully. Delivering effective account management in conjunction with a broader local investment strategy is, therefore, the key takeaway for local areas from this strategy.
Finally
Mickledore is an economic advisory business specialising in strategy, investment, business cases, and evaluation. We have worked on sector and industrial strategy across the UK. For more information or a discussion about specific local opportunities, contact Nigel Wilcock at nwilcock@regionaldevelopment.co.uk