Industrial Strategy: update of summary slides August 2013


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Updated summary slides on the Government's rationale behind and approach to Industrial Strategy. Includes progress update on sector and technology strands.

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Industrial Strategy: update of summary slides August 2013

  1. 1. Industrial Strategy: government and industry in partnership August 2013 #indstrategy
  2. 2. No return to the old growth model • Previous growth model based on government spending, consumption and property speculation. • Contribution to GDP from Government activity grew from 0.3% between 1990-99 to 0.7% between 1999-2008 – becoming the second most important driver of growth. A stable macro business environment is key to enabling growth • The deficit means Government spending cannot contribute to growth to the same degree. Why we need to act Expenditure Contributions to Growth -4 -3 -2 -1 0 1 2 3 4 1997-07 2008-09 2010-11 2012 2013 2014-15 2016-17 Averageannualcontribution(ppts) Govt consumption & investment Net trade Other$ Business investment Household consumption & NPISH# 3.3% - 2.5% 1.4% 0.2% 2.7% 2.0% 0.6% GDP growth OBR forecasts $ includes dwellings investment & changes in inventories # non-profit institutions serving households (mainly charitable sector) Expenditure Contributions to Growth -4 -3 -2 -1 0 1 2 3 4 1997-07 2008-09 2010-11 2012 2013 2014-15 2016-17 Averageannualcontribution(ppts) Govt consumption & investment Net trade Other$ Business investment Household consumption & NPISH# 3.3% - 2.5% 1.4% 0.2% 2.7% 2.0% 0.6% GDP growth OBR forecasts $ includes dwellings investment & changes in inventories # non-profit institutions serving households (mainly charitable sector) Source: Office for Budget Responsibility Economic and Fiscal forecasts March 2013
  3. 3. UK’s relative position is being challenged • Globalisation and the rise of the BRICS* economies are changing the UK’s relative position in global economy. • Developing countries are competing higher up the value chain, challenging the UK’s comparative advantage. If the UK stands still there is a danger we will be left behind Why we need to act *Brazil, Russia, India, China, South Africa
  4. 4. The UK Growth Strategy: Industrial Strategy The Government’s 4 Growth Ambitions are to: • Deliver the most competitive tax system in the G20 • Make UK one of the best places in Europe to start, finance and grow a business • Encourage investment and exports as a route to a more balanced economy • Create a more educated workforce that is the most flexible in Europe * The 4 ambitions from The Plan for Growth 2011, published by HMT and BIS alongside Budget 2011 Strong, sustainable and balanced growth Deficit reduction, Monetary activism and Supply-side reform are a core part of the Government’s approach to improving growth.
  5. 5. Industrial Strategy Industrial Strategy: government and industry in partnership Industrial Strategy: Key principles • Long term; • Partnership with business; • Whole of Government approach; and • Giving businesses the confidence to invest.
  6. 6. Five themes of Industrial Strategy: Industrial Strategy • A spectrum of support for all sectors; • Supporting emerging technologies including the “8 Great”; • Working with business to help develop skills that businesses will need; • Working to improve access to finance for businesses; • Giving confidence to business by publishing a forward look of government contracts.
  7. 7. Strategic partnerships – the 11 sectors Industrial Strategy Published Aerospace (March 2013) Aim: Maintain existing UK market share; secure UK employment Life Science Strategy (Dec 2011) and one year on update (Dec 2012) Aim: To make the UK the global hub for life sciences Nuclear (March 2013) Aim: Grow the global market share; set out role that nuclear plays in UK energy mix Agri-tech (July 2013) Aim: increase inward investment and exports Education (July 2013) Aim: Increase the UK's education exports Information Economy (June 2013) Aim: to seize the opportunities from new ICT technology Offshore wind (August 2013) Aim: Build competitive and innovative UK supply chain Oil and Gas (March 2013) Aim: Increase inward investment in energy supply chain Construction (July 21013) Aim: make the UK the global leader in sustainable construction Automotive (July 2013) Aim: Investment in R&D; grow and develop UK supply chain Professional Business Services (July 2013) Aim: make the UK the global hub of expertise
  8. 8. Technologies We are investing in emerging technologies, where the UK has the depth of research expertise and the business capability to develop and exploit these. • £600 million is being used to support the eight great technologies Regenerativ e Medicine Agri- science Energy storage RoboticsBig data Synthetic biology Advanced materials and nanotechnology Space technology Industrial Strategy • The first seven Catapult centres are now open for business (High Value Manufacturing, Cell Therapy, Offshore Renewable Energy, Satellite Applications, Connected Digital Economy, Future Cities and Transport Systems) with total public and private investment exceeding £1.4 billion over their first 5 years of operation. •Patent Box introduced progressively from April 2013 will provide reduced corporation tax rate of 10% for companies exploiting patented inventions • We recently announced £185m additional funding for the TSB in SR 2015-16. Part of this will be used to expand the Catapult network with new Catapults in Energy Systems and Diagnostics for Stratified Medicine.
  9. 9. Access to Finance Access to Finance is a key issue for businesses. • We are setting up a Government-backed Business Bank which will receive £1bn of new Government funding. • Budget 2013 set out that £300 million of this £1 billion will be invested by Government alongside private investors over the next two years to provide diverse sources of finance for SMEs - strategy update. • We are stimulating the development of non-bank finance sources through the £1.2bn Business Finance Partnership. • We have agreed an additional £800m of financial transaction funding for the Green Investment Bank in 2015-16 - Green Investment Bank. Industrial Strategy
  10. 10. Skills We are working with business to developing the skills that business and the wider economy need as a fundamental measure to support growth: • We are giving employers the opportunity to access skills funding through activity such as the Employer Ownership Pilot. • In June 2013, we announced that a new £100m employer ownership fund has been created to co-finance investment in skills in key sectors and new technologies. • Rigour and Responsiveness in Skills was published in April 2013 and outlined the Government’s priorities in reforming apprenticeships, creating traineeships, ensuring meaningful qualifications and raising standards of provision. • We are taking a range of action to improve young people’s engagement with engineering such as ‘See Inside Manufacturing’ and ‘Make it In Great Britain’ initiatives. Industrial Strategy
  11. 11. Procurement We are ensuring we get the most out of procurement; and working to support supply chains. • We published in May 2013 updated Procurement pipelines covering a range of sectors. The potential contract opportunities from Government and local authorities are now worth nearly £79 billion. • We are working with business to assess the strategic capabilities required in the supply chain. • We are operating an open door policy for business to develop a more strategic relationship with current and future providers. • We are opening up more Government contracts to SMEs - the ambition is that 25% of Government’s spend goes to SMEs by 2015 . Industrial Strategy
  12. 12. Progress Summary • We have published strategies in eleven key sectors. • £1.6 billion Industrial Strategy package at Budget 2013 (Aerospace, Automotive, Agri-tech). • £1 billion of new capital for Business Bank. • £600 million for 8 great Technologies in the Autumn Statement and over £200 million for seven Catapults. • £330 million skills EOP (Rounds 1 and 2). • £100 million for the sequencing of 100,000 whole genomes over next 3-5 years (referenced in the Strategy for UK Life Sciences 'One Year On', December). • Publishing reports on tunnelling Building Information Modelling (BIM) and Renal Care. • Launching a new programme to help 1.6 million small and medium sized enterprises (SMEs) scale up their business online over the next five years. Industrial Strategy
  13. 13. Industrial Strategy - Stakeholder quotes • "What's critical is identifying where a long-term partnership between business and government can make the greatest difference when it comes to encouraging investment and boosting exports," - John Cridland, Director-General of the Confederation of British Industry (CBI) • “Companies and sectors with the potential to deliver new technology and long-term growth in the economy will do it where there is a coherent, consistent and certain approach from government” – EEF Spokesperson • "The strategy fosters strong and meaningful collaboration between the government and industry and will help to focus efforts on addressing particular areas such as skills, technology and exports” - Malcolm Webb, chairman of industry body Oil and Gas UK • “AMEC welcomes this strategy, which recognises the crucial importance of a strong and growing British nuclear industry to support the domestic and international nuclear markets” - Clive White, President of AMEC’s Clean Energy Europe business • “Today’s announcement is the culmination of a lot of hard work from ministers, civil servants, academics, ADS and industry through the AGP” - Marcus Bryson, CEO of GKN Aerospace Industrial Strategy
  14. 14. Annexes
  15. 15. Aim: To secure the UK’s position as a global hub for health life sciences. • Publication of Life Sciences - One Year On strategy in December 2012; • BIS through the MRC and TSB will invest £310m to support the discovery, development and commercialisation of research; • commitment to sequence the whole genome of 100,000 NHS patients • Help smaller, high risk, early stage companies by introducing a new Seed Enterprise Investment Scheme, offering a 50 per cent income tax relief on investments; • Introduce an above the line R&D tax credit, to improve the visibility and certainty of R&D tax relief to attract large scale investment in innovation. Industrial Strategy
  16. 16. Aim: To maintain existing UK market share and secure UK employment. • Publication of the Aerospace Strategy in March 2013 - “Lifting Off” ; • Budget 2013 allocated £1bn to fund Aerospace Technology Institute, match funded by industry; • Develop the aerospace Manufacturing Accelerator Programme - industry will scope the business case by the end of 2013/14; • Tackle Access to Finance issues through the newly created Aerospace Finance Forum; • The sector and UKTI will work together to develop a more strategic approach to identifying and pursuing opportunities in overseas target markets. Industrial Strategy
  17. 17. Aim: To maximise the economic production of The UK’s offshore oil and gas resources. • Publication of the Oil & Gas strategy in March 2013 - “Business and Government ; • Map the UK supply chain, including exports, by value and destination, to determine areas of constraint and potential opportunities for additional support; • Government and industry group which works to maximise economic recovery of the UK’s offshore resources of oil and gas; • Review supply chain position in relation to ‘performance bonds’; • Industry to establish a national centre of excellence for technology; • Establish a national programme to retrain ex- military personnel and those from other industries with the relevant transferable skills. Industrial Strategy
  18. 18. Aim: Ensure the development of a vibrant UK nuclear industry that is an area of economic and strategic national strength, providing the UK with a safe, reliable and affordable supply of low-carbon electricity. • Publication of the Nuclear Strategy in March 2013 - “The UK’s Nuclear Future” • Invest £15m through UK Research Councils in equipment and access to Culham, National Nuclear Laboratory and Dalton Cumbrian Facility to facilitate research. • Government (BIS/DECC) and Industry: Initiate cost reduction programme. • UKTI to develop a strategy to increase the level of investment over time for all parts of the nuclear supply chain. • UKTI to work with Nuclear Industry Council, the Nuclear Industry Association and other parts of the industry to develop an export strategy, involving other parts of government. Industrial Strategy
  19. 19. Aim: For the UK to be the best place in the world to start and grow a technology business and for all our companies and organisations to be confident and successful consumers of technology. • Publication of the Information Economy Strategy in June 2013; • Launching a new programme to help 1.6 million SMEs scale up their business online over the next five years; • Developing a new data capability strategy, allowing people to identify innovative and efficient interventions on big policy challenges such as education or transport; • Establishing the world’s first facility for testing state of the art 5G mobile technology, working with industry and the University of Surrey. • Promotion of innovative teaching tools in schools, using online learning platforms; • Working with business, local bodies and skills organisations to develop a high level digital skills strategy. Industrial Strategy
  20. 20. Aim: Make the UK the global leader in sustainable construction by 2025, building on the good work already done on infrastructure, housing and planning. • Publication of the Construction strategy in July 2013, which aims to make construction 33% cheaper, 50% faster, safer, better for the environment, and result in a 50% reduction in the trade gap between total exports and total imports for construction products and materials; • Improving access to finance through the Institute of Credit Management and by extending the Enterprise Finance Guarantee Scheme's trade credit pilot; • Working to expand the size of the published public sector procument pipeline by: exploring with the higher education and local government sectors how to open up their future construction requirements; • Improving apprenticeships by developing new guidance with the National Apprenticeship Service. Industrial Strategy
  21. 21. Aim: To make the UK the global hub of expertise in Professional and Business Services. • Publication of the Professional and Business Services strategy in July 2013. •The number of Higher Apprenticeships are set to be trebled to 10,000 a year over the next five years. • A new network of senior business envoys will champion UK capabilities and trade opportunities when overseas. • UK Trade and Investment will also arrange trade missions specifically for PBS. Industrial Strategy
  22. 22. Aim: To create a competitive, growing and dynamic UK automotive industry making a large and increasing contribution to employment and economic growth in the UK. • Publication of the Automotive strategy in July 2013. • Invest around £1 billion over 10 years to establish a new Advanced Propulsion Centre. • Set up a new Automotive Investment Organisation (AIO) within UK Trade & Investment (UKTI) funded by up to £3 million over the next two years to support inwards investment. • Recruit more than 7,600 additional apprentices and 1,700 additional graduates over the next five years. Industrial Strategy
  23. 23. Aim: The UK is a world leader in agricultural innovation, productivity and sustainability; increases inward investment and exports in agricultural technologies, products and services; and increases its contribution to global food security and international development. • Publication of the Agricultural Technologies strategy in July 2013. • Invest £90 million in world class Centres for Agricultural Innovation with additional investment from industry, which will support the wide-scale adoption of innovation and technology across key sectors, technologies and skills in the food and farming supply chain. • Create a £70 million Agri-Tech Catalyst to help new agricultural technologies bridge the so called ‘valley of death’ between the lab and the marketplace. Co- funded with industry, the catalyst will specifically support small and medium sized enterprises. • Recruit a new UKTI agri-tech team to boost exports and overseas investment in the UK’s agricultural technologies. Industrial Strategy
  24. 24. Aim: Increase the UK’s education exports • Publication of the International Education strategy in July 2013. • Launching ‘Education is Great’ campaign. • Establishing an Education UK Unit. • Appointing a new UK Education Champion. Industrial Strategy
  25. 25. Aim: Build competitive and innovative UK supply chain • Publication of the Offshore Wind Energy strategy in August 2013. • £20m from the Regional Growth Fund for GROW: Offshore Wind, a new Manufacturing Advisory Service programme. • £46 million funding over five years for the Offshore Renewable Energy Catapult Centre. • Industry-led initiatives to share information with the supply chain about their procurement timelines. • A new Offshore Wind Investment Organisation, established by UKTI. Industrial Strategy
  26. 26. Government is developing strategic partnerships with key sectors • We have identified which sectors could make the greatest contribution to growth based on: – Size and opportunity for future economic growth and employment – Barriers to growth – Scope for Government action • Analysis published in September 2012 Industrial Strategy
  27. 27. Witty Review – Universities and Growth • Review into Universities and Growth. • How to maximise commercial potential of university research in sectors and technologies relevant to Industrial Strategy; whilst also supporting local growth. • He plans to make recommendations aimed at the UK realising the optimum economic benefits of research excellence. • Call for Evidence closed on 31 May. Review due for publication in September. • The Review will provide preliminary findings relevant to the guidance to LEPs on their growth strategies in Summer.
  28. 28. A stable macro environment is key • Industrial Strategy builds on the Government’s wider activity to support growth • Government has laid the broad foundations … o responsible government finances o a competitive currency o promoting exports, especially to emerging markets o competitive business taxes o support for science • … But more is needed to keep a sustained advantage 1 1.2 1.4 1.6 1.8 2 2.2 Jan- 07 Jun- 07 Nov- 07 Apr- 08 Sep- 08 Feb- 09 Jul- 09 Dec- 09 May- 10 Oct- 10 Mar- 11 Aug- 11 Jan- 12 Jun- 12 Nov- 12 CurrencyUnitper£ Euro US $ No business would operate without a long term plan UK exports of Goods and Services to: 0 50 100 150 200 250 Other emerging countries BRIC Other advanced economies EU27 £billion 1998 2008 2009 2011 Industrial Strategy