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Engineering industry says renewed focus on industrial strategy is key to the UK’s global competitiveness outside the EU

17 October 2016


A report published today by the UK engineering profession hails the government’s renewed focus on industrial strategy as a major opportunity to help the UK compete on the world stage, but warns that Brexit must not restrict access to the engineering skills from across Europe that our economy relies on.

Engineering a future outside the EU: securing the best outcome for the UK has been compiled by an alliance of the UK's professional engineering organisations, including the Institution of Engineering and Technology (IET), led by the Royal Academy of Engineering and representing over 450,000 engineers. It draws on wide-ranging consultation with engineers from all corners of the profession, including from academia, industry and the public sector. With engineering contributing at least £280 billion in gross value added to the economy – 20% of the total – the report aims to inform government of the key issues that impact on the UK’s engineering performance as it forms its position on leaving the EU.

Engineering skills and major projects

The report highlights the challenge that Brexit could present to the supply of skilled engineers from the EU, who are essential to maintaining the world-class quality and success of UK engineering companies and universities. In academia, engineering has proportionally more staff originating from the EU (15%), than across all subjects as a whole.

The report findings emphasise that uncertainty about the status of EU workers in the UK and further risks to the supply of skilled engineers are likely to result in delays to major infrastructure projects such as HS2, Thames Tideway and Hinkley Point C, which will face recruitment difficulties and increasing costs if demand for labour outstrips supply.

In response to these potential challenges, the report calls on government and the engineering community to work together to take decisive action on the engineering skills crisis, as well as to develop a Shortage Occupation List for engineering positions that cannot be filled domestically in the short term. It advocates straightforward solutions such as temporary visas for skilled engineers from EU countries with the specialist skills that the UK lacks.  

The report also calls on the UK government to extend procedures for intra-company transfers to cover EU citizens, as many companies require their engineers to move freely to support and fulfil contracts.

Impact on research and innovation

The report highlights that innovation is critical to the UK’s economy and productivity [1], as sectors with high concentrations of graduate engineers report greater than average levels of innovation activity and innovation-related income alongside greater productivity [2]. 

The UK has a globally excellent and highly productive research and innovation base, to which EU support and collaboration has significantly contributed. The report warns, however, that losing access to EU research and innovation funding programmes would pose a considerable risk to the quality and quantity of UK research and innovation, and in turn to UK GDP. Evidence suggests that EU collaboration with UK researchers is already been put on hold or has been scaled back since the referendum, and if European project funding becomes less available, the UK is likely to become a less attractive destination for the brightest and best students and researchers.

In recognition of the importance of European funding streams and collaboration frameworks to UK research and innovation, it recommends that government seeks the closest achievable association with relevant EU programmes, and develops long-term funding streams that complement current funding by encouraging international mobility and collaboration, particularly between industry and academia. 

Industrial strategy: an opportunity for global leadership

Throughout the consultation process, one opportunity was pointed to repeatedly: the development of a new industrial strategy, in partnership with academia and industry, as a route to enabling engineering to maintain and increase its contribution to economic development and social progress after the UK leaves the EU.

Engineering a future outside the EU highlights the UK’s strengths in attracting foreign direct investment (FDI), including a relatively open attitude to foreign ownership of assets and a flexible labour market. It calls on the government to continue to create the conditions for the UK to attract a high level of FDI by developing policies and frameworks that are designed to lower the costs of doing business and that make the UK an attractive place to invest in.

Standards and legislation are recognised in the findings as non-tariff barriers that are crucial to strong trade relations, with the UK’s continued leading role in developing European and global standards seen as being particularly important. The report emphasises, for example, that it will be necessary for data protection and cyber security laws to be closely comparable to EU law in order to avoid barriers to trade, and that frameworks need to be put in place that allow the UK to continue to collaborate in the digital single market. The internet economy contributes 8% of the UK’s GDP, a greater contribution than in any other G20 country, and policy changes that limit ongoing collaboration in the sector would undermine the UK’s leadership. 

The consultation also found that the UK energy industries would benefit from continued membership of the European Energy Community. Remaining a member would help foster security of supply, ensure that the UK can continue to influence regulation, and deliver economic benefits. 

Overall, the report calls for an industrial strategy that communicates that the UK is forward looking, open for business, and an active and welcoming partner for the international research, innovation and business communities.

Professor Dame Ann Dowling OM DBE FREng FRS, President of the Royal Academy of Engineering, said: “Engineering makes an enormous contribution to economic and social progress in the UK, and we have heard from a significant cross-section of the engineering profession that leaving the EU poses a real challenge to this contribution.

“For many we have consulted over the last two months, plans to trigger Article 50 raise questions about our ability to train enough skilled engineers to meet the country’s needs, to attract the brightest and best international talent to the UK to address specific skills shortages, and to collaborate with colleagues in non-UK European Union countries in a way that accelerates innovation that is of value to wider society.

”As government develops its plans for a renewed focus on industrial strategy, we hope it will use this opportunity to build on the UK’s existing strengths in engineering research, innovation and industry to grow their contribution to economic and social progress, and to invest in increasing the supply of skilled engineers necessary to sustain this growth.    

“The UK engineering community is committed to building on its international reputation, and stands ready to support the government in securing from the negotiations the best possible outcome for the UK.”

The full report and an executive summary of its findings are available to download at www.raeng.org.uk/UKEngineeringFuture.

[1] Investing in Innovation, RAEng, 2015, p2
[2] Assessing the economic returns of engineering research and postgraduate training in the UK, Technopolis Group, 2015

Notes to editors:

The engineering profession’s response to the EU referendum is being published by the Royal Academy of Engineering through the Engineering the future (EtF) policy group.

Engineering the Future is an alliance of professional engineering institutions and national organisations that between them represent 450,000 professional engineers. Through EtF, the engineering profession speaks with one voice on engineering issues of national and international importance. It provides independent – and expert – engineering advice to government. It promotes understanding of the critical contribution that engineering makes to national policy and to addressing the grand challenges.

EtF membership comprises the UK’s 35 engineering institutions plus EngineeringUK, the Engineering Council and the Royal Academy of Engineering. The full list of members is as follows:

  • BCS, The Chartered Institute for IT
  • British Institute of Non-Destructive Testing (BINDT)
  • Chartered Institution of Building Services Engineers (CIBSE)
  • Chartered Institution of Highways & Transportation (CIHT)
  • Chartered Institute of Plumbing and Heating Engineering (CIPHE)
  • Chartered Institution of Water and Environmental Management (CIWEM)
  • Energy Institute (EI)
  • Engineering Council
  • EngineeringUK
  • Institution of Agricultural Engineers (IAgrE)
  • Institution of Civil Engineers (ICE)
  • Institution of Chemical Engineers (IChemE)
  • Institute of Cast Metals Engineers (ICME)
  • Institution of Engineering Designers (IED)
  • Institution of Engineering and Technology (IET)
  • Institution of Fire Engineers (IFE)
  • Institution of Gas Engineers and Managers (IGEM)
  • Institute of Highway Engineers (IHE)
  • Institute of Healthcare Engineering and Estate Management (IHEEM)
  • Institution of Lighting Professionals (ILP)
  • Institute of Marine Engineering, Science & Technology (IMarEST)
  • Institution of Mechanical Engineers (IMechE)
  • Institute of Measurement and Control (InstMC)
  • Institution of Royal Engineers (InstRE)
  • Institute of Acoustics (IOA)
  • Institute of Materials, Minerals and Mining (IOM3)
  • Institute of Physics (IOP)
  • Institute of Physics and Engineering in Medicine (IPEM)
  • Institution of Railway Signal Engineers (IRSE)
  • Institution of Structural Engineers (IStructE)
  • Institute of Water
  • Nuclear Institute (NI)
  • Royal Academy of Engineering (RAEng)
  • Royal Aeronautical Society (RAeS)
  • Royal Institution of Naval Architects (RINA)
  • Society of Environmental Engineers (SEE)
  • The Society of Operations Engineers (SOE)
  • The Welding Institute (TWI)