Greg Clark: Why we formed our industrial strategy. What it achieved. And how my successor can build on it.

11 Mar

Greg Clark is Chair of the Science and Technology Select Committee, a former Business Secretary, and is MP for Tunbridge Wells.

Sometimes you need to think ahead to get ahead.

Four years ago, Sir John Bell, the Regius Professor of Medicine at Oxford, told me that he thought Britain was missing a big opportunity in vaccines. The need for the rapid development and production of vaccines against new threats was a rising concern across the world.  The UK had some of the most brilliant scientists on the planet making discoveries, but we could join up the work of companies, research bodies, the NHS and the government to be more agile and effective. And we weren’t creating as many jobs associated with new discoveries in life sciences as we could. They ‘leaked’, as he put it, to other countries, because we weren’t as strong as we could be in areas like medical manufacturing.

The Industrial Strategy set out to correct that. We established a new way of working jointly between investors, academic researchers, government funders, medical charities and the NHS. And we launched a Vaccines Manufacturing and Innovation Centre (VMIC) so that researchers and companies large and small can use shared resources to accelerate the development and production of novel vaccines. It’s early days, but this new approach pioneered by the Life Sciences Industrial Strategy has more than shown its worth during the Covid pandemic.

Our car industry is one of the most productive in the world. It employs – directly and indirectly – 800,000 people in all parts of the UK. They are good jobs, paying half as much again as the national average wage.  The car industry is changing. Most people think that its future – globally – will be electric.  So we need to prepare for that. And while the technology behind the lithium-ion battery was developed in Oxford, we have only a small battery manufacturing capability in the UK.

So in the Industrial Strategy, we established the Faraday Challenge – to give the opportunity for scientific leadership in battery innovation, and to develop the manufacturing technology for batteries that would soon become the most valuable component of the next generation of cars, and on which the car industry depends.

A British success story that is too little known is that of satellites.  Of all the small satellites in orbit today, 40 per cent were made in Britain. With applications from vehicle navigation to agricultural crop monitoring, there is no-one who doesn’t think the industry will continue to expand explosively.

Yet every one of the satellites built here has to be transported overseas to be launched, and we have been short of test facilities that are accessible to innovative but smaller businesses. So the Industrial Strategy acted to secure our future by establishing the National Satellite Test Facility open to all firms, and the ability to launch satellites manufactured here from sites including in Sutherland and Cornwall.

These are just three examples of why it pays to think ahead about what is needed to help us prosper in the future, and where it makes sense for the government to be prepared to work alongside businesses.

If a shareholder asked a Board Director at a company’s AGM: “how are we preparing to prosper in the future?” you could expect a confident and authoritative response.  No one would find acceptable to hear “well, we haven’t really thought about it,” or “we thought we’d just play it by ear.”  And while a government isn’t the same as a company, in preparing for the future, I think the same question applies.  It pays to prepare.

Forming a forward view has a number of advantages.  Companies and investors can make decisions with a broad idea of what the policy regime is going to be in the future.  Sometimes – such as in scientific research programmes, or with shared facilities like the VMIC and the Battery Innovation Centre and the Satellite Test Facility –  a shared understanding for the future can help companies and government bodies to work together.

Countries as diverse as Singapore, South Korea, Israel and Germany have all taken such an approach for years – and with success.

The term Industrial Strategy can have bad associations. In its name in the 1970s, governments tried to ‘pick winners’ – directing taxpayers’ funds into individual companies. The winners usually turned out to be losers, and the money subsidised decline.  Governments like those of Singapore and Israel take the opposite approach: targeting areas of opportunity to be open to insurgents more than incumbents and creating institutions rather than directing funds to individual businesses.

Industrial Strategy can also suffer the drawback of being thought to be largely about manufacturing, whereas the Creative Industries, Life Sciences, Technology and Services Industries were very much part of the scope of the 2017 Industrial Strategy.

That Strategy was by no means perfect: none is.  It was far reaching, and may have tried to do too much in one White Paper.  But there is value in bringing together policies from across government into alignment.  And the Strategy was a means to make valuable commitments, such as establishing a target for us to reach the OECD average of research and development investment of 2.4 per cent, compared with the 1.7 per cent we invested in 2017. It’s hard to think that the right future is to be a less research-intensive country than the rest of the world, and so I hope that commitment will endure and be met.

A big part of the 2017 Industrial strategy was devoted to what is now called ‘levelling up.’  It made the case that much of the UK’s record on productivity is a matter of disparity. Britain has some of the most productive people, companies and places on the planet – but we have a “long tail” of underperformance.

That represents a massive opportunity to improve the prospects of the whole country as well as people in places below the national average by closing that gap.  Among the measures we launched was the idea of Town Deals – starting with Grimsby. It is marvellous that this has been taken up with such enthusiasm by the Government.  And ‘levelling up’ is undoubtedly a better term than the ‘long tail.’

Therein lies my hope for a new approach. A new administration is right to want to do things, and express them, in its own way. The Prime Minister and the new Business Secretary face a challenging time – but one that is full of promise as the economy turns decisively from recession to growth, with Brexit delivered and the already breathtaking pace of change in technologies and science accelerating.  The Prime Minister is someone who has always been galvanised by our potential, and Kwasi Kwarteng brings a fresh perspective and a record of thought and capability.

I hope that the Government will bring together its ambitions for our future prosperity, as well as the steps it intends to take to achieve them, and set them out clearly and confidently.  I hope it will recognise that there is nothing untoward in a Conservative government working closely with business, institutions and making joint commitments – as its application in the brilliantly successful development of vaccines is showing the world.