Framework for Growth

To unlock growth, there is a need to build trust in the certainty and longevity of an industrial strategy.

Among surveyed business leaders in our research there is widespread agreement that a clear, and long-term industrial strategy can unlock growth and investment. However, trust that this can be delivered is low, with past strategies seen to have been short-lived and subject to frequent change. Across the sample, broad stability and predictability was consistently prioritised over a strategy focussed on their sector or industry.

Given this starting point, an industrial strategy in and of itself will not be enough. Businesses are unlikely to engage without clear signs from the Government that the strategy offers certainty against which businesses can take decisions and invest. 

There was an appreciation amongst the businesses we spoke to that any long term strategy will at times need to reprioritise and evolve, but they felt clarity on it’s objectives, as well as the logic that underpinned it’s chosen areas of intervention and investment, would allow for greater certainty and confidence.

Any industrial strategy must include a plan for the public sector.

In our research we spoke to senior leaders in both the public and private sector who questioned the exclusion of a plan for the public sector from past industrial strategies. For these leaders, any strategy that focuses on the private sector, to the exclusion of the public sector, is only looking at half the picture. A well-functioning public sector was viewed as essential to providing the healthy, skilled and connected population necessary for businesses to thrive. Improved productivity within the public sector was also highlighted as a catalyst for wider economic growth as it would enable a greater number of more productive partnerships and collaboration with the private sector. 

The public sector was also seen as offering considerable opportunities to attract investment and support growth – examples sighted included using the NHS’s international renown to attract investment in health sciences, or using public sector bodies as anchor institutions to help stimulate growth in a region. Businesses felt that while these opportunities are undoubtedly being explored, an new approach to industrial strategy would offer an opportunity to fully integrate this across sectors and services and underpin growth across the economy.

“I think we need a much more open conversation about public services in the round. Previously we’ve done industrial strategy without getting all the necessary partners onto the page. It should be joined up and it’s not.”

Health and social care provider

Success will require a level of collaboration between business and government that is currently lacking.

There was an appreciation from the business leaders we spoke with that building a successful long-term industrial strategy will inevitably be complex. One of the core challenges will be establishing a deep understanding of the opportunities and challenges faced by different sectors and regions. This knowledge can only stem from deep collaboration between the Government, businesses, trade unions, local leaders and other stakeholders who can influence and inform decision making. 

Despite this clear need, only just over half of the business leaders we heard from feel that past governments have listened to businesses when designing policies to promote economic growth. Many of the business leaders we spoke to were sceptical as to whether the needs of their sectors would be considered in any future industrial strategy. However, a large number of business leaders admitted that they rarely engaged the industry bodies who represent the views of their industries to policy makers. Lower representation was particularly acute amongst micro businesses (0-9 employees) and smaller businesses (10-49 employees), which raises an additional challenge given that small and medium sized businesses (0-250 employees) account for 99.9% of all UK business and generated 52.5% of the total turnover.

• Only 53% of business leaders in our survey feel that past governments have listened to businesses when designing policies to promote economic growth. 

• Over 40% of business leaders we surveyed were neither members of, nor regularly engaged with, industry bodies which seek to inform Government policy.

Beyond these low levels of engagement, business leaders also highlighted work that they still need to do to bridge this knowledge gap. Whether it is the difficulty in predicting what skills will be most critical, or what technological investments would be most beneficial, businesses highlighted to us the difficulty they face in identifying how their needs are likely to change. Increasing the amount of time and effort businesses spend on planning for future risks and opportunities, and enhancing the level of collaboration at a sector level, will be fundamental to enhancing the shared understanding of businesses’ evolving priorities and helping to shape both national and local strategies in response.

“Engagement is the only way they’ll understand what’s needed and what’s lacking. [At the moment] the outcomes and follow-up are less visible, it feels like it goes into a black hole. You might find yourself having a similar conversation with someone else in government later on, but you don’t see anything that’s introduced that makes a difference.”

Retail business

Developing robust local industrial strategies will be crucial.

While the business leaders we heard from understood the role of national government policy in helping to tackle the UK’s barriers to growth, they highlighted that the changes most critical for their businesses - the skills system, planning system, infrastructure investment as well as the overall support made available to smaller businesses - were best driven at a local level. Companies felt that local planning and collaboration would be crucial in determining the right priorities and developing the most effective ways to accelerate growth. Business leaders told us however that these efforts would need to be properly funded, resourced, developed in partnership with local businesses and backed-up with sufficient powers if they were to stand any chance of being successful.

“There’s an absolute appetite for localised decision-making, and for more power for cities in terms of their policies. The role of central government is to direct policy and make sure it’s well funded, but more decision making with local government is important too.”

Infrastructure provider