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Posted: Mon 14th Oct 2024
The government has begun the process of creating a new industrial strategy aimed at delivering long-term economic growth over the next decade.
In a foreward to a new green paper which launches a consultation of businesses, representative groups and others, chancellor Rachel Reeves and business secretary Jonathan Reynolds said the government wants to create an industrial strategy that "cultivates the right pro-business, pro-worker environment for the UK to soar".
They add that the green paper:
"...sets out our vision for a modern industrial strategy and a credible, 10-year plan to deliver the certainty and stability businesses need to invest in the high growth sectors that will drive our growth mission."
The government is focused on eight key sectors:
advanced manufacturing
clean energy industries
creative industries
defence
digital and technologies
financial services
life sciences
professional and business services
Targeted plans will be created for each sector with "policies that support businesses to overcome barriers and invest". Those policies include people and skills, innovation, energy and infrastructure, the regulatory environment, crowding in investment, and international partnerships and trade.
Within the sectors, the government will "prioritise subsectors" that "meet its objectives and where there is evidence that policy can address barriers to growth".
To inform the industrial strategy, the government will create the Industrial Strategy Advisory Council on a statutory footing. It will be chaired by Clare Barclay, CEO of Microsoft UK.
Business and trade secretary Jonathan Reynolds MP said:
"Our modern industrial strategy will hardwire stability for investors and give them the confidence to plan not just for the next year, but for the next 10 years and beyond.
"This is the next step in our pro worker, pro business plan which will see investors and workers alike get the security and stability they need to succeed.
"Clare's wealth of talent and experience will help ensure the industrial strategy delivers its mission of unleashing the potential of high productivity sectors to spur growth, spread wealth, and drive-up employment across the UK.
Chancellor Rachel Reeves MP said:
"I have never been more optimistic about our country's potential. We have some of the brightest minds and greatest businesses in the world. From the creative industries and life sciences to advanced manufacturing and financial services.
"This government is determined to deliver on Britain's potential so we can rebuild Britain and make every part of the country better off."
Among the small business-related details in the industrial strategy green paper are:
In a list of the UK's strengths, the green paper said "the UK has a strong pro-entrepreneurial environment, with several of the most successful start-up hubs in Europe, and the world's third largest venture capital market".
The government said it is focused on "promoting productivity and growth in small businesses across our economy, particularly in supply chains across our growth-driving sectors".
To ensure the industrial strategy is "pro-business and focused on reducing barriers to investment in the UK", the government said "policy must make it simpler and cheaper for companies to scale up and invest in the UK".
Supporting digital technologies and the business delivering them by "backing smaller, less proven, and more disruptive businesses alongside larger, well-established businesses in existing sectors".
The government said "the UK would experience significant productivity gains" if technology adoption was improved. It said the UK ranked fifth out of 133 countries in the WIPO 2024 global innovation index, but only 31st in knowledge absorption. The proportion of UK firms adopting a range of intermediate digital technologies is significantly below OECD leaders, and UK SMEs were ranked sixth in the G7 on technology adoption.
The UK's creative industries is made up of many small businesses and freelancers. The government says one of its aims is "unlocking private investment, boosting exports, and developing [the] highly skilled workforce" in the UK's "working-leading" creative industries.
Workplace skills is a key of the industrial strategy. The government said "what employers need will vary according to their sector and geography, and the skills system must be more flexible and address those disparities".
One of the examples highlighted is "weaknesses in management and leadership skills, particularly in small businesses". The government said it aims to "support local businesses and education providers to understand and address the skills needs specific to their areas, through tailored local skills improvement plans".
The green paper references the introduction of the Procurement Act 2023 in February 2025 which it said will "deliver economic growth, raise standards, and deliver greater social value, opening up procurement to new entrants such as small businesses and social enterprises". The Procurement Act was originally due to come into force this October, but it has been delayed.
In 2022, only 11.9% of registered businesses are exporters. The government said it will set out its trade strategy "to help businesses to overcome barriers and maximise trade for the growth-driving sectors and across the whole economy".
The industrial strategy has a strong focus on regional and local devolution, as well as a "place-based approach to policy". It said "significant powers" will be devolved to mayoral combined authorities across England and "giving them the tools they need to grow their sectoral clusters and improve the local business environment through ambitious local growth plans".
The government said it will "engage widely" to develop the industrial strategy. This includes through regional visits to "ensure the government's plans reflect what it means to run and grow a business", as well as "industrial strategy mission groups" to "bring together business, from scale-ups to large enterprises, to develop targeted solutions on barriers to investment and growth".
The industrial strategy and sector plans will be published alongside the government's spending review in Spring 2025.
The consultation ends on 24 November.
