Wednesday, 25 January 2017

The UK's New Industrial Strategy: As Good As It Seems?

Monday morning, Theresa May's Brexit Tory Government released the long awaited Green Paper on the UK's Industrial Strategy. Most UK voters will not have heard of such a programme before but it's essentially a comprehensive plan where the Government reveals how it will invest in local and national infrastructure and provide funding in the hope of improving productivity levels in key business sectors. This particular Industrial Strategy is also designed to prepare us for the possible difficult trading conditions we may face the years immediately following Brexit. Whilst I broadly welcome a renewed emphasis on investment in regional infrastructure, more tailored help for businesses and a focus on developing high-level skills amongst the UK workforce especially in working class Northern communities, it does seem slightly hollowed out in places. As a trans, dyspraxic Arts graduate with qualifications in Accountancy and HR living in Lincolnshire I am wondering how such an Industrial Strategy will benefit me specifically. It's important therefore for people like me to read the Industrial Strategy and attempt to critique it. You can read the Green Paper in full for yourself here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/585273/building-our-industrial-strategy-green-paper.pdf.

The Industrial Strategy has 10 "pillars" and I shall be discussing each in turn.

Investing in science, research and innovation:

I do worry about the suggestion made in the Green Paper that our research and development (R&D) sector should become more commercialised. Whilst the UK needs to improve productivity levels in the R&D sector across the UK, the UK must be careful not to make profit the primary factor for companies investing in R&D especially within the bioscience and biotechnology industries. There should be a sense that such research is carried out for the common good and not necessarily to enrich shareholders. At the same time I do realise that we as a country need to do more to embrace new technology; automation is not our enemy.  I was surprised to read the UK has been more reluctant to use robotics to help design more productive ways of working so changing attitudes in businesses towards automation needs to happen, without entry level workers feeling as if they are being replaced unnecessarily. Very tough ask!

The Government should be helping home-grown inventors and the NESTA Challenge Prize Programme for "everyday entrepreneurs" sounds a good way of doing it, but we must not discourage international inventors for wanting to work or set up businesses in the UK. A German born inventor could be just as likely as a British born one to find the cure for HIV/AIDS in the future and wouldn't it be amazing if such a cure was to be developed in the UK? The Green Paper talks about establishing "anchor programmes" to attract leading international research scientists to head departments in the UK but attracting and retaining high quality international PhD students matters too. That means no attempt by the Government to cut international student numbers in the future; maybe if they don't count students as part of the migration quota as Shadow Home Secretary Diane Abbott has suggested is a way forward on this?

I'm dismayed to see that the UK Government has fallen behind other EU countries when it comes to the percentage of GDP in private and public funds spent on R&D; Sweden and Denmark spend more than 3% of their GDP on R&D but the UK only invests 1.7%! The Government has to recognise it has failed to plug the gap in the last 6 years (they've only ring-fenced the science budget) and therefore we can only be optimistic that it will attempt to do so over this parliamentary term. The Conservatives can no longer blame Labour for failure to invest properly in R&D so the promise of an extra £4.7bn "separate from what can be recovered from current EU funding" is welcome (the Industrial Strategy Challenge Fund). Increasing the number of PhD places in STEM (Science, Technology, Engineering and Maths) especially in robotics and artificial intelligence and clean energy technologies is a must.  The UK must try to grow its battery technology capabilities and skillset, so I wait to see what Sir Mark Walport (the UK Government's Chief Scientific Advisor) has to recommend when his report is published in respect to this.

It's also striking to note that the Government is creating a centralised body- The UK Research and Innovation (UKRI) which brings together Research Councils and funding streams for later stage research provided through Innovate UK. A strategic approach does yield results as long as the focus is on nurturing new projects and not scrapping them because of their cost effectiveness. UKRI could allow for an expansion of programmes such as the Higher Education Innovative Funding (HEIF) programme that gives money to universities to fund patents and the Knowledge Transfer Partnership programme that gets PhD students into companies to help improve their skillsbase.

Developing skills:
As Britain begins the process of leaving the EU, it is now more important than ever that UK based workers possess the high level skills needed to participate in key industrial sectors. The Green Paper shows that the UK is facing a shortage of workers in industrial sectors that require STEM skills. I personally would like to see more research scientists, engineers and computer programmers recruited from the Lincoln area but at the same time I don't want to put students off from wanting to study English and Philosophy (as I did) at the University of York. Studying an Arts based subject can equip you with excellent skills, especially critical thinking, written and verbal communication and interpersonal/teamworking skills, all vital for gaining employment in a competitive local jobs market.If a student wants to go on and work for the mainstream media or to become an actor, there should no attempts to curb their aspiration. The Government must be careful not to stifle artistic creativity. The lack of emphasis on preserving and expanding the Arts is one reason why I'm a fan of Corbyn's Arts Premium in primary schools and his plan to make crafts and arts based courses free to all adult learners as part of his National Education Service. So yes, advocate for more LGBTQIA coders, more female aircraft engineers and more BAME nuclear physicists but don't impose a need to push science and technology onto students. A love for science has to be nurtured, not forced.

I do think the Government is correct to address the problem of skills shortages amongst those who choose not to go down an academic route- i.e. those who study A Levels and then go to University. To think that England is the only country on the OECD list where "16-24 year olds are no more literate or numerate than 55-64 year olds"! Very shocking. 90% of jobs will require digital literacy by 2036, but "23% of adults lack basic digital skills". That's in spite of colleges running ECDL courses. So what can be done about it?

I'm weary of bashing qualifications for the sake of it but there can be no doubt that some employers do find the number of vocational qualifications currently on offer bewildering, especially in regards to vocational/technical courses. For example, is a Level 2 qualification in Lean Management worth the paper its written on if there is little practical content to the course to help the student implement what they have learned into their own occupational area? Do students really use Kaizen principles when they work in an accounts practice? Finding out that "the UK is placed 16th out of 20 in terms of OECD countries for the proportion of people with technical qualifications" (only 10% of adults have a technical qualification as their highest qualification) is embarrassing but even when a student achieves a technical qualification, they can be locked out from the jobs market as a result of  prejudice based recruitment decisions or a lack of opportunities within their area/region. It's OK studying a Maths degree for 3 years but if the only option given to you after you graduate is to become a teacher because there are no start-up positions available in private firms and you lack the funds to locate to a city, what do you do if you don't want to be a teacher? I know biology grads, maths grads and engineering grads who are locked in entry level service sector jobs because of a lack of graduate positions in businesses in the Lincoln area. Working class talented STEM graduates need to be encouraged to cultivate their own opportunities or to be supported financially so they can relocate, especially if the employer is unwilling to pay for relocation costs (which is increasingly the case). The numbers of SMEs and start-ups in rural areas remain small (mainly due to transportation issues and bad broadband coverage/low download speeds), so until the infrastructure has been updated, there isn't an awful lot that Maths graduate in Lincolnshire can do!

The Government does seem to have a strong approach to addressing the inadequacy of technical education in the UK. Simplifying qualifications, recruiting suitably qualified instructors and tutors and creating a UCAS style system for GCSE students to apply for technical education all sound good on paper. The idea of creating Institutes of Technology using £170m worth of infrastructure funding to deliver high-quality technical education in STEM subjects is bold but I don't know what the criteria would be for selection for those schools and if the entry age is 14, (as some are suggesting) it does seem rather disruptive when students need to focus on achieving GCSE passes in Arts based subjects such as English or Religious Studies. What will a student do if they are recommended to attend an Institute but they want to study Religious Studies alongside the STEM subjects? It's not entirely clear yet.

Transition years for students between 16 and 17 who are not ready for advanced study to help improve their basic numeracy and employability skills is a welcome idea but I hope that there will be opportunities for differentiation so that disabled students are allowed to develop numeracy skills at their own pace. For example, if a student with dyscalculia fails their GCSE Maths course they should be able to use the transition year to retake the GCSE exam, as is currently the case if they achieve below a grade C. Digital proficiency can also be addressed during the transition year and perhaps even advanced coding lessons can be offered for those who show promise or an aptitude for programming. Extra tutoring sessions will mean that more teachers, teaching assistants and SEN assistants will need to be recruited to cope with the additional transition year. That ultimately requires more funding from the education budget.

I'm also glad to see that the Government is starting to notice there needs to be a better universal careers advice service for secondary school students so that they can make an informed choice about their future. This should not mean stifling ambition. Careers advisors should help disadvantaged children expand their horizons so they don't feel that they will be resigned to a life of being on benefits if they have a disability or being stuck in an entry level position because they don't have access to an extensive Old Boys Contacts Network. The £900m investment in the Careers & Enterprise Company Enterprise Advisor Network, which connects 1,300 schools with local companies to provide work experience is a start, but it's not enough. Therefore I shall look forward to reading the Government's Career Strategy Review later in the year which seeks to address existing issues.

Upgrading infrastructure:
Ask the average voter on the street in Lincoln, Labour or Conservative, Green or UKIP one question: "does our infrastructure need updating?" They'd probably all answer yes. In Lincolnshire, this means the Government needs to focus on updating digital infrastructure, rebuilding flood defences on the East Coast and repairing our roads and railway systems. The Government has already announced the National Productivity Investment Fund which allows £2.6bn for transportation improvements to reduce journey times and £740m to support the roll-out of fire-optic broadband connections and 5G mobile technology. Having talked to voters about the Autumn Statement these proposals were broadly welcome but there was some scepticism as to whether the projects were deliverable before the next General Election (you can read more about the discussion here: http://sassysvensknorsk.blogspot.co.uk/2016/11/grassroots-survey-on-mr-hammonds-first.html).

What's different in this Green Paper is that the Government has said that it will be more interventionist investment wise. This includes improving the framework for public investment, setting up the National Infrastructure Commission and Infrastructure and Projects Authority "to enhance planning and project delivery". Supporting private investment is OK through provision of investment bonds and loans and the construction-only guarantee sounds OKish but it shouldn't be to the detriment of government departmental budgets.

I like the Government's announcement of a £2.3bn Housing Infrastructure Fund which allows for more houses to be built in areas where there is acute need, especially on sites which aren't initially seen as viable by property developers and construction firms. The £1.7bn Accelerated Construction programme is also designed to support new entrants into the house building market to build twice as fast as traditional house builders-i.e. building an element of competition into the market. This may improve house building productivity but at the same time it's important not to throw money down the drain for the sake of competition for its own sake, especially when funding is still needed to improve our over-stretched NHS and Social Care services.

In terms of flood defence, the Green Paper states that there is "a £170m investment as part of a £2.5bn investment over 6 years". This will lead to the building of 1,500 new flood defence schemes which will protect 300,000 more homes than before. All good news if you are a homeowner whose home will fall within the protection zone as long as those projects do actually materialise and work when the storm surge hits.

Supporting businesses to start and grow:
Start-ups are the backbone of the UK. 350,000 start-up businesses were recorded in 2014 and there are 5.4 million small businesses currently trading in the UK. The Government wants to see more small businesses scale-up and feel that offering more access to funding will be the way to do it. It's strange to me that the Government will use data gathered from HMRC and Companies House to identify firms that are "fast growing at an early stage". I hope that doesn't mean there will be pressure to make these businesses scale-up. Scaling-up won't suit every business owner. For example, if you're a local bookkeeper offering services in your market town and you feel you earn enough to support yourself and your family and you don't want to increase stresses on your personal life, you won't want to scale up. However, those start-ups who do want to scale-up need to be given the long-term funding (patient capital) to make it happen and if fast-growing small businesses are identified by the Government and they are put in touch with the ScaleUp Institute to get advice on accessing funding, that's great. The Government have also said they are committed to looking at the reasons why venture capital funding levels differ between the South East and the North East, working with the British Business Bank to do this.

I still think non-monetary barriers to entrepreneurship need to be lifted. There needs to be more opportunities for start-up business owners to network and pick up key skills to grow their business without having to pay through the roof to attend courses. Working class people, LGBTQIA people, those from BAME backgrounds or who are disabled should be encouraged to think about starting up a business and SME owners to be encouraged to scale-up, especially if their business is connected with R&D or technology. Tailored support could include paying for a mentor to work with a dyspraxic business owner to help them improve business productivity (maybe facilitated through the Productivity Council since the Government gave them £13m in the Autumn Statement) or create a tantalising business plan to access bank funding from the British Business Bank. Business schools may help some who wish to set up a business (4,700 students have been placed into businesses and 800 new businesses have been set up) but they haven't necessarily helped working class NEETs in Lincolnshire as of yet.

Improving procurement:
The UK Government needs to think smart when it comes to public service procurement. Current spending levels are £268bn per year, equivalent to 14% of GDP. I'd like to see Local Government services support more local small businesses by using strategic procurement to do it, so I'm pleased to see that the Green Paper commits the Government to increase the share of SMEs in central procurement to one third. Ensuring that government contractors also pay their suppliers on time by signing them up to  the Prompt Payer Code is good news for small businesses too. There has also been efforts to encourage more small businesses to bid for government contracts by advertising them transparently on the Contracts Finder website.

Public procurement using UK small businesses still doesn't mean that the Government can get away with spending more taxpayers' money than is needed on a product or service just because it is new. When considering bids for government contracts, I am sympathetic to Jeremy Corbyn's suggestion that private contractors would be obligated to take on apprentices when their contract is worth over £250,000. I also believe Mr Corbyn is right to look at pay ratios for the bosses of private contracting firms bidding for government contracts, so they can only earn 20 times more than their lowest paid employees (20:1). That would save taxpayers' money that can then be spent to help improve the NHS, Social Care and Adult Education.

Encouraging trade and inward investment:
Isn't it good to find out that the UK is currently the No1 location for inward investment in Europe?! I hope this will not be scuppered by our exit from the EU. What is clear is that the UK is great at importing but must improve our exporting capabilities. Less than 11% of UK owned businesses export goods abroad. The Department of International Trade has a massive task on its hands. Yes, it is good that the department has already been approached by Mexico, the US, New Zealand, India etc to do a trade agreement but they will take a while to negotiate and come into effect after we have left the EU. We'll have 63 trading agreements that need to be negotiated after we leave the EU, including with Norway.
The "Team UK" guff sounds a bit gimmicky to me but I'm pleased to read that the Government has a Prosperity Fund to help boost growth and look at trading opportunities in "horizon markets" such as Nigeria. It's not just China or the US that the UK should be looking to trade with, after all. The launch of an integrated digital platform "great.gov.uk" to bring together exporters and investors will help make exporting easier for small businesses and there should be more recurring international trade fairs for the Creative Industries that take place outside of London in Manchester, Leeds and Edinburgh. National and regional trade fairs need to be more promoted by Local and National Government but detail as to how the Government is planning to do this is sketchy in the Green Paper.

Delivering affordable energy and clean growth:
Millennials such as myself care deeply about protecting the environment and we want to see a sustained commitment to tackling climate change. I don't want to see a reduction in environmental legislation after Brexit just because some businesses may regard them as "red tape". There has to be a balance and meeting the legally binding targets under the Climate Change Act is not enough. The Government needs to develop renewable energy projects across the UK. Initial start-up costs may be expensive but the energy output is generally more affordable as the projects develop and expand. I am heartened to see the Government will be looking at ways to reduce the cost of offshore wind farm energy production but where are the announcements for more biomass plants, more hydroelectric power stations or plans to explore possible geothermal energy resources? There's no commitment to ban fracking, but a commitment to honour construction of the Hinkley C nuclear power station, despite mass opposition.

Investing in new technologies such as electric cars and driverless cars to reduce fuel consumption is good. The Government has already invested £600m to accelerate the transition to low emission cars and a further £270m was announced in the Autumn Statement. Some critics will ask whether such money should be better spent on improving public transport systems in rural counties such as Lincolnshire but the Government feels there needs to be long term investment in car technology and that includes testing grid energy technologies in places across the UK to test the viability of electric cars. If such projects help the UK to transition to a low carbon economy, they should receive funding.

Energy costs do need to be lowered for businesses to thrive. Introducing interactive smart-meters to every household and small business in Great Britain is a good start as it will help businesses to monitor their energy usage and keep track of their spending but making sure that Ofgem keeps energy providers accountable and transparent so they can provide details on affordable business energy plans matters too.

Cultivating word-leading sectors:
This primarily involves the Government creating an "open door challenge" to companies and individual entrepreneurs across the UK and different industrial sectors to devise proposals to transform their sectors...i.e. "Sector Deals". It's "pretty pie-in-the-sky" thinking to me but companies should have some say over how to improve productivity, boost skills amongst the workforce in general, increase exports etc  in their own sectors. A film production company knows more about developing workforce talent in their industry than someone whose background is in engineering or accountancy. Sir Peter Bazelgette has already had some input into creating a "Sector Deal" for the creative industries and any policies that can lead to addressing regulatory barriers (that do not reduce workers' rights) will broadly be welcomed provided they don't suggest scrapping employment rights, safety legislation or environmental protections.

Driving growth across the whole country:
The Government believes that the infrastructure investment funding can be differentiated so that it supports the local economy and rebalances the national economy away from London and the South East. The Housing Infrastructure Fund and £1.1bn road investment fund means that money can be directly given to local councils in time for them to fund local investment projects as and when needed. Current major infrastructure investments announced by the Government include the Midlands Rail Hub and Northern Powerhouse Rail. The devolution of powers should help give more control to local decision makers, including through new mayoral combined authorities and regional bodies such as Midlands Connect. More voters want to see accountable governance at the local level as long as local businesses and residents get to have some say over investment infrastructure decisions.

Graduate skills retention rates as mentioned above need to be improved in rural areas such as Lincolnshire. Yes there has to be more apprenticeship opportunities for working class school leavers but at the same time, entrepreneurship needs to be encouraged, tech and social enterprise start ups need to expand to allow for more apprenticeship places to be created. Unless graduates feel that they will be able to make a living in Lincolnshire, they will not stay here and not every STEM gap can be filled by an apprenticeship straight away.

Creating the right institutions to bring together sectors and places:
Collaborative networking is key to improving productivity in the UK. Universities and colleges can help provide high quality locally based apprentices/graduates to fill entry level positions in SME companies beginning their scaling up process and these companies in turn could provide future entrepreneurial talent that will create sustainable jobs. Local Enterprise Partnerships already exist to encourage networking and provide advice on funding. The Government says it's doing its part by devolving business revenue to local government for them to invest as appropriate. The Green Paper suggests other ways to encourage further collaboration during and post the Brexit process; for example, supporting the growth of UK based supply chains to reduce import costs for businesses or relocating Government agencies to a Business Park setting in the hope of creating a cluster to boost private sector growth. More controversially, the Green Paper talks about using cultural assets to make different areas more attractive to private businesses. I don't think that museums, art galleries and national monuments should be used as a means to an end but it's OK to market Lincoln to potential businesses by talking about the merits of Lincoln's historic architecture that can be seen at Lincoln Castle or Cathedral. Cultural assets can be a draw for potential entrepreneurs who are culture vultures but unless they have the initial funding and advice to set up in Lincoln they'd never stay. Encouraging universities to network is good but not purely for commercial means. The Government offering funds for collaboration on certain research programmes such as those offered by Midlands Innovation, based in Nottingham does seem appropriate, though.

Conclusion:
The Green Paper proposed by the Government is certainly detailed and bound to appeal to business owners, large and small across the UK who want to see funding levels increase, accessibility to venture capital funding improve, infrastructure co-ordination programmes expand and basic literacy and numeracy skill levels improve in the local area so that they can employ more local people in their businesses. If you're a pig producer who wants to export more Lincolnshire sausages to China or a PhD student who wants to study animal science at the University of Lincoln, the Industry Strategy should give you hope.

However there was a sense that there needs to be a lot more thought put into funding key Industrial Strategy proposals. The Universities and College Union (UCU)'s general secretary, Sally Hunt, points out that £170m is a "drop in the ocean" funding wise to help establish Institutes of Technology across the country. Clive Lewis, Shadow Secretary of State for Business, Energy and Industrial Strategy mentions that there has been a cut to the Adult Skills budget of £1.1bn since 2010, so £170m for vocational education isn't really enough to plug that gap. There was also no talk of how such Institutes will be able to recruit enough tutors and instructors to help run them effectively.   There was no talk of bring back Night Schools as David Lammy, MP for Tottenham has suggested as a way of providing digital literacy, English and Maths courses for free to full time workers. Lifelong learning courses should be easily accessible and affordable, so those who do want to develop high-level STEM skills to try and gain a position in a local tech firm can do so. Plus we still need to make sure comprehensive schools have appropriately qualified staff in sufficient numbers to help deliver the National Curriculum and increase numeracy and literacy proficiency. The Conservatives do seem to make a habit of taking away with one hand and feeding us crumbs with another, especially in relation to adult education.

The Green Paper didn't mention any extra help in terms of childcare, nor any mention of new schemes that can help disadvantaged graduates establish entrepreneurial businesses in their home towns. The Careers Advice Strategy won't be published until later in the year but students need decent careers advice now as they prepare to choose their GCSE subjects and future path post-16.

The Industrial Strategy also did not address the current situation of The Green Investment Bank, a solely Government owned bank created in 2012 which helps to provide investment for green energy projects in the UK which was supposedly being privatised by the Conservative Government but the deal now hopefully seems to be in doubt. There was no mention of rolling out more renewable energy schemes to help the UK transition to a low-carbon economy, either. The UK Government needs to look into the possibility of creating more tidal power stations, hydroelectric power stations and biomass power stations rather than focussing on fracking and expanding nuclear power stations.

I pretty much posed a question at the start of my blogpost: Would the Industrial Strategy help a trans, dyspraxic Arts graduate with Accountancy and HR qualifications in Lincolnshire? Not directly. It may lead to an increase in job opportunities in Lincoln if start-ups are given the funding to scale-up and local infrastructure is improved but that's a big if. I don't need to be skilled up in numeracy, literacy or IT and starting up a business is real hard if you have a few gaps on your CV. Perhaps the Industrial Strategy isn't as good as it seems, after all?