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Systems not silos: new industrial strategy must deliver on a bold, long-term vision and transcend party politics

24 April 2017


The UK engineering profession has called on government to ensure that its proposals for industrial strategy will rewrite the rules of previous strategies and avoid short-termism and siloed policy making, in a new report published today. Emphasising the importance of long-term, cross-party collaboration, the report - Engineering an economy that works for all - argues that the strategy must enable UK industry, academia, government and investors to break out of their silos and work together as a system to achieve sustainable growth. This approach is critical, it says, if the UK is to maximize the opportunities and mitigate the risks presented by the UK’s departure from the EU.

Engineering an economy that works for all represents a collaboration of all 38 professional engineering organisations representing over 450,000 engineers, led by the Royal Academy of Engineering, and has benefited from an unprecedented level of engagement by the engineering community. The report distills evidence and opinion gathered through a series of 10 workshops across the UK and a survey of the profession that received nearly 1,300 responses.

The report calls for the strategy to embody an ambitious and bold long-term vision that harnesses the UK’s international reputation for engineering excellence and forges a new global identity for Britain as a top destination for inward investment and global talent. It also asks that the government broadens the strategy to address a wider range of interventions to develop skills, highlighting in particular the need for digital skills to support future industries and for urgent action to be taken in primary and secondary schools to address the shortage of teachers in STEM subjects.  A much greater, targeted focus is needed on promoting STEM subjects and engineering careers to under-represented groups (including girls, people from BAME communities and those from lower socio-economic backgrounds) to fully unlock the talent potential in the UK.

Key recommendations include:

  • Government should set a target of 3% of GDP for combined public and private research and development investment, creating a roadmap to achieving that goal.
  • Government must continue to drive for world-class, secure and resilient digital connectivity and act urgently to promote digital skills, particularly across the public sector. Chief Data Officers should be appointed in all major UK cities or regions, and a digital strategy should be developed for all major infrastructure projects.
  • Government needs to demonstrate a greater willingness to accept the risk of failure, or perceptions of it, in its innovation support, including in regard to the management of the Industrial Strategy Challenge Fund. Regulators should be encouraged to explain how risks for innovative technologies are being managed to allay public concerns.
  • A UK-wide register of ‘national innovation assets’, which can serve as test-beds, demonstrators and focal points for skills development, should be compiled and promoted to both UK and international companies, to extend the geographical reach of innovation activities beyond current centres of excellence.
  • Sensible and proportionate arrangements should be in place to retain and attract non-UK nationals who are essential to the UK’s success in engineering, research and innovation.
  • Improving energy efficiency and resource productivity must be a priority, particularly in buildings and energy networks. A long-term, integrated, energy strategy should be developed that builds on all available low carbon forms of generation including CCS, nuclear power and heat networks.
  • Deals with individual sectors should be subject to regular review, linked to a clear evaluation framework, and underpinned by a firm, long-term commitment from government to build investor and business confidence.
  • Government should extend the measures proposed in the industrial strategy to primary and secondary schools, taking decisive action on teacher shortages in STEM subjects, broadening the definition of basic skills to include digital capabilities and including Design and Technology in the English Baccalaureate accountability measure.
  • The Economy and Industrial Strategy Cabinet Committee should take responsibility for joining up the strategy across government, and ensuring its longevity.

Professor Dame Ann Dowling OM DBE FREng FRS, President of the Royal Academy of Engineering, said: "A good industrial strategy will not make government intervention more likely, but it will make it more predictable - and that builds confidence and encourages business investment.The strategy must be long-term and sustained, with cross-party and whole government support, and should be an important part of all party manifestos as they approach the forthcoming general election.

"The industrial strategy is a critical platform to maintain and grow the UK’s prosperity as we prepare to leave the EU, but needs to extend beyond its current proposed scope into primary and secondary schools and continuing professional development to be truly successful. It provides an unparalleled opportunity to engage the public with the UK’s industrial and engineering strengths. Government should capitalise on this to take the opportunity to excite and inspire the public, especially young people, about the country's potential to develop and grow world-leading innovations and their own opportunity to be a part of the innovation process. It also provides renewed impetus to enable creative and productive collaboration between industry and academia to enhance economic growth.” 

Engineering an economy that works for all

Key asks in summary

Enabling actions (Pillars 6 and 9/10)

Government must set an ambitious, bold, global vision for the UK as an outward-looking leading trading nation and a top destination for inward investment and global talent, drawing on the UK’s strengths in engineering, innovation and manufacturing. 

Close and sustained engagement between government and industry in both the delivery and implementation of the strategy is essential – it must be a true partnership to succeed. Strong interfaces with the whole breadth of the research and innovation base will be essential, as will embedding engagement with civil society.

Innovation (Pillars 1, 4, 5 and 8)

Government should set a target of 3% of GDP combined public and private R&D investment, and work with the private sector to formulate a roadmap to achieve the goal. Sector deals should require a shared commitment by businesses in the sector to boost UK investment in R&D and associated manufacturing capability, matched by government co-investment.

In view of potential changes to State Aid restrictions when the UK leaves the EU, government needs to review how levers to stimulate innovation, such as R&D tax credits and procurement policy, can be enhanced. The levy of VAT on shared research facilities with industry should also be addressed in light of Brexit.

Government needs to demonstrate a greater willingness to accept the risk of failure, or perceptions of it, in its innovation support, including in regard to the Industrial Strategy Challenge Fund and in public procurement. Regulators should explain how risks for innovative technologies are being managed to address public concerns.

Government should capitalise on the significant potential provided by public procurement to advance economic and social objectives by radically rebooting SBRI, providing greater transparency on procurement spend with SMEs, and ensuring the balanced scorecard approach fully recognises the value of both innovation and diversity and inclusion.

High-quality opportunities for companies to test and demonstrate their technological innovations in real world environments should be substantially expanded. A UK-wide register of ‘national innovation assets’, which can serve as test-beds, demonstrators and focal points for skills development, should be compiled and promoted to both UK and international companies.

Skills (Pillars 1, 2 and 9/10)

Digital skills should be included in the government’s future definition of basic skills and a comprehensive programme of upskilling developed in partnership with industry and training providers to ensure the UK workforce at all levels, in the public and private sector and in all parts of the UK, has the skills needed to shape and participate in the industries of tomorrow. A global network of Chief Data Officers in cities and regions should be established.

A much greater, targeted focus is needed on promoting STEM subjects and engineering careers to under-represented groups (including girls, people from BAME communities and those from lower socio-economic backgrounds) to fully unlock the talent potential in the UK. The best teaching in these subjects needs to be available to learners at all ages, and all STEM subjects, including computing and design and technology, should be incentivised in school accountability measures.

The Further Education sector needs additional, long-term investment, as well as incentives to promote provision of high-cost subjects such as engineering. Increasing the number of people with higher level technical skills (levels 4 and 5) must be a priority; while Institutes of Technology will help, wider national provision is also needed.   

Universities and colleges should ensure that STEM students and academic staff receive entrepreneurial, business skills and IP awareness training to improve their ability to undertake knowledge exchange activities and help companies to generate and absorb innovation. Increased mobility between business and academia is also vital.

Sensible and proportionate arrangements should be in place to retain and attract non-UK nationals who are essential to the UK’s success in engineering, research and innovation.

Infrastructure and energy (Pillars 3 and 7)

The long-term approach in the National Infrastructure Delivery Plan must be continued after the UK leaves the EU to provide certainty to investors. The current level of infrastructure funding and incentives must be maintained and the UK’s status with the European Investment Bank addressed early.

Regional infrastructure strategies should be developed across the country. Local and combined authorities and sub-national transport bodies should have access to flexible financing options. Strategic bundling of smaller schemes and incentivised partnerships across public and private sectors would support efficient delivery and value for money.

Regulatory frameworks across all infrastructure sectors should incentivise whole life investment decisions based on outcomes for the end user. Maintenance of assets should be addressed through adoption of a total expenditure method (TOTEX).

Digital delivery strategies and smart infrastructure solutions should be embedded across all economic and social infrastructure. In addition, government must continue to drive for world-class digital connectivity that is fast, secure and resilient.

The development of nationally strategic energy and transport projects should be accelerated to increase UK sustainability and productivity.

Government must take a systems approach to energy that addresses costs to business and the public along with ensuring security and resilience while reducing greenhouse gas emissions. Energy efficiency and resource productivity should be prioritised and addressed through incentives to increase efficiency and stronger enforcement of regulations.

Government should renew its support for carbon capture and storage as well as ongoing support for small modular reactors, energy storage and options to decarbonise heat. Particular focus needs to be given to real-world, commercial viability at scale and local benefits, alongside active support for community energy schemes.

To avoid cost overruns, subsidy mechanisms need to have clearly-articulated deployment targets and payment reduction structures for when prices of renewable technologies come down.

Growing businesses across the UK (Pillars 1 and 4)

SMEs need much clearer, simpler signposting to sources of advice and support, with greater exploitation of existing channels and contact points such as banks, HMRC and Companies House. Regional and sectoral dimensions should be taken into account to ensure the most effective marketing channels are used.

Government should revisit the limits on the amounts that can be invested under the popular Seed Enterprise Investment Scheme, Enterprise Investment Scheme and Venture Capital Trusts, as well as developing additional tax incentives that stimulate longer-term investments. Government, in partnership with others, should promote the investment opportunities and investment successes across the whole of the UK.

Business owners who have successfully scaled up and who have founded companies that are ‘born global’ should be promoted as role models, and their stories used as case studies to inspire and educate the next generation of companies with scale-up potential.

Notes to editors:

The engineering profession’s response to the industrial strategy is being published by the Royal Academy of Engineering through the Engineering the future (EtF) policy group and is available at www.raeng.org.uk/industrialstrategy.

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)