UK Government Green Paper: Building our industrial strategy – 23rd January 2017

Overview

The Prime Minister Theresa May used her first regional Cabinet meeting to launch the long-awaited industrial strategy green paper. As anticipated the green paper set out 10 strategic pillars intended to underpin the Government’s vision for a strategy which will improve living standards and economic growth by increasing productivity and driving growth across the whole country. The lengthy paper includes many encouraging initiatives; however, the strategy’s implementation might prove challenging, particularly when set against the backdrop of Brexit.

The paper emphasises that this is the start of the discussion and invites industry to contribute to the consultation which closes on 17th April 2017. The strategy provides an important opportunity for industry to engage, including clear questions for consultation. This document sets out the key areas of development, highlighting those that are likely to have an impact on life sciences.

Key pillars

The strategy sets out 10 key pillars which will frame the Government’s approach. Under each of these, a programme of the new policy will be outlined.

  1. Investing in science, research and innovation
  2. Developing skills
  3. Upgrading infrastructure
  4. Supporting businesses to start and grow
  5. Improving procurement
  6. Encouraging trade and inward investment
  7. Delivering affordable energy and clean growth
  8. Cultivating world-leading sectors
  9. Driving growth across the whole country
  10. Creating the right institutions to bring together sectors and places

The pillars are designed to reinforce each other, creating a coherent focus on growth and innovation.

Investing in science research & innovation

Positive MAP Insights
It is welcome that the first of the 10 key pillars is Investing in science, research and innovation. The green paper sets out that the “industrial strategy will launch a major upgrade in the role of science and innovation in our economy for the years ahead. It will build on our world-leading science base and hardwire innovation into our businesses, schools, workforce and individuals.”

The paper highlights that the percentage of GDP spent on research and development in the UK is just 1.7%, below the OECD average of 2.4%. To address this shortfall the Government confirmed that it will substantially increase investment in research and development (R&D) to ensure the UK research continues to be world class – with an additional £4.7 billion made available by 2020-21 (announced in 2016). A range of options for distribution of these funds are explored in the strategy, including investment in local services and innovation strengths; increased support for commercialisation; investment in future talent such as through additional PhDs for science, technology, engineering and maths; attracting international talent to research institutions; and delivering sector-specific funding to support business investment in R&D.

The paper sets out the proposed priority challenges for the new Industrial Strategy Challenge Fund which includes “leading edge healthcare and medicines” and other technology developments. Consultation responses are invited to inform its development. Other existing pledges include enhancing the strategic capability of the UK through the creation of UK Research and Innovation (UKRI) and a review of the tax environment for R&D which will examine whether there is more that could be done to make the UK an even more competitive place to do R&D. There is also a high-level forum on EU Exit, Universities, Research and Innovation which will advise on how best to build on the excellence of UK research and innovation in the context of the UK’s exit from the EU.

New commitments in the green paper include commissioning independent research on approaches to commercialisation in different institutions; stimulating collaborative innovation and licensing opportunities through the Intellectual property system; and launching a challenge prize programme to encourage home-grown inventors.

Questions for consultation include:

  • What should be the priority areas for science, research and innovation investment?
  • Which challenge areas should the Industrial Challenge Strategy Fund focus on to drive maximum economic impact?
  • What else can the UK do to create an environment that supports the commercialisation of ideas?
  • How can we best support the next generation of research leaders and entrepreneurs?
  • How can we best support research and innovation strengths in local areas? 

Improving procurement

The green paper identifies government procurement as an opportunity to encourage innovation, competition and investment in skills. A review of the UK’s Small Business Research Initiative will be undertaken to assess how the Government can “use strategic procurement to support businesses developing innovative new products and services”.

Health is identified as a sector where the Government is a customer and therefore has an opportunity to achieve wider benefits through procurement. It highlights that around £6billion of the NHS budget is spent on procurement of goods. The Government’s current procurement reform programme will focus on a new Supply Chain contract which will enable the NHS to:

  • Be better aware of the market, improving value by taking advantage of long-term volume deals and horizon scanning for innovative products that the NHS should adopt rapidly;
  • Improve the management of supplier relationships, creating mutually beneficial objectives for suppliers with a substantial stake in both the UK economy and NHS;
  • Ensure that there is a strong, UK-based medical supply chain; and
  • Create an organisation with potential to be a world player in health procurement and logistics
Positive MAP Insights
The section on procurement also refers to the Accelerated Access Review published in October 2016 and its recommendations to speed up the uptake of new diagnostic tools, treatments and medical technologies by the NHS.  In particular, it highlights the proposals for an ‘Accelerated Access Partnership’; strategic commercial unit at NHS England; increased capacity and capability at Academic Health Science Networks and research-led tertiary trusts; and proposals to strengthen NHS digital capabilities. The inclusion of these point suggests that the Government’s official response is likely to accept these recommendations.

A balanced scorecard approach to procurement will be rolled out for major construction, infrastructure and investment projects over £10 million. Steps are also being taken to reduce bureaucracy in government procurement processes.

Questions for consultation include:

  • Are there further steps that the Government can take to support innovation through public procurement?
  •  What further steps can be taken to use public procurement to drive the industrial strategy in areas where the government is the main client, such as healthcare and defence? Do we have the right institutions and policies in place in these sectors to exploit government’s purchasing power to drive economic growth? 

Encouraging trade and inward investment

The Department for International Trade will review what can be learned from successful inward investment promotion agencies across the world. The review will consider whether there should be a greater emphasis on the effect of investment projects on growth. This review will be reported on in 2017.

Questions for consultation include:

  • What can the Government do to improve our support for firms wanting to start exporting? What can the Government do to improve support for firms in increasing their exports?
  • What can we learn from other countries to improve our support for inward investment and how we measure its success? Should we put more emphasis on measuring the impact of Foreign Direct Investment (FDI) on growth? 

Cultivating world-leading sectors

At the centre of the green paper is an offer for businesses to strike new sector deals and bring them to the Government. The Government may then choose to improve the prospects of success through various initiatives such as aligning government policies with a particular sector; addressing a regulatory issue; or promoting the creation and diffusion of new technology.

Positive MAP Insights
Life sciences are identified as a sector that provides significant growth opportunities and the green paper welcomes the work being led by Sir John Bell on the strategy to make the UK the best place in the world to invest in life sciences.

Questions for consultation include:

  • How can the Government and industry help sectors come together to identify the opportunities for a ‘sector deal’ to address – especially where industries are fragmented or not well defined?
  • How can the Government ensure that ‘sector deals’ promote competition and incorporate the interests of new entrants?
  • How can the Government and industry collaborate to enable growth in new sectors of the future that emerge around new technologies and new business models?

Impact and engagement opportunities

The green paper sets out a range of new and existing initiatives in the context of increasing growth and productivity across the UK. Science and innovation is a clear priority area which presents a number of opportunities for the life sciences sector. The strategy also provides an opportunity for companies to highlight challenges in terms of funding and access within the NHS as a potential barrier to further investment in the UK. In reality, the ambitious proposals within the document may be held back by wider economic uncertainty as a result of Brexit.

The green paper is open for consultation until Monday 17th April and it is likely that consultation events will take place in the coming weeks. Details of how to respond are available here.

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Published on 25. January 2017 in News UK