Industrial Strategy: Iffy or Ingenious?
When Theresa May came to power last summer, one of her first acts was to create the Department for Business, Energy and Industrial Strategy (BEIS).
And while its first two responsibilities are clear – boosting British business and keeping the lights on – what does Industrial Strategy mean? It certainly sounds dull.
Fortunately, for those left guessing, the Government recently released a green paper, or a ‘first draft’ of proposals, setting out its Industrial Strategy’s goals.
And, equally fortunately, it’s far from dull.
Industrial Strategy usually conjures images of mineheads, molten steel and failing nationalised industries being propped by a government that’s borrowing billions from the IMF just to stay afloat. But the world has changed and Industrial Strategy with it.
Gone is the emphasis on heavy industry. No longer will the state run companies. The Government’s Industrial Strategy in 2017 rests on 10 pillars, from supporting research and development into a galaxy of cutting edge technologies, to bettering the UK’s key skills and infrastructure.
We will look at those 10 pillars, how they will affect you and whether Industrial Strategy makes sense anyway.
- Investing in science, research and innovation
- Developing skills
- Upgrading infrastructure
- Supporting businesses to start and grow
- Improving procurement
- Encouraging trade and inward investment
- Delivering affordable energy and clean growth
- Cultivating world-leading sectors
- Driving growth across the whole country
- Creating the right institutions to bring together sectors and places
Mutually reinforcing, they are all about repositioning Britain to seize global opportunities outside the EU, enhance that which we’re already good at, such as Higher Education, and confront what’s been dubbed the ‘Fourth Industrial Revolution’.
If the First centred on steam power, the Second electricity and the Third information technology, the Fourth promises economic growth driven by cyber-digital systems. This includes artificial intelligence (AI), robotics, the ‘Internet of Things’, new energy sources, and bio and nanotechnology.
Khaos Control, superior business management software, is a child of the Third Revolution. Only recently did computer processors reach a sufficient speed for a low enough price to cope with the potentially thousands of transactions generated by day-to-day business operations.
Our ERP system has fuelled many companies’ growth by improving efficiency and making products widely available with multichannel integration. We’re excited about the future growth prospects delivered by upcoming technologies and hope to make the most of them in the years ahead. But we also recognise it’ll be disruptive. Across major industrialised countries, it’s estimated 57% jobs are at risk of automation.
So, it’s essential the workforce develops extra skills to take on new tasks. It’s something that’s happened before – the spinning jenny caused job losses in the 18th century. But it also boosted productivity, making more yarn for less, ultimately enriching the economy so those that lost jobs could be hired elsewhere, using different skills for other things.
So, if the Industrial Strategy succeeds, what will it mean for you?
Better infrastructure and interconnectivity will reduce transit times for goods and information, upping the rate at which items can be produced and sold. Greater trade and investment will increase the inflow of money into the UK from abroad, providing capital for businesses to expand. And extra research and development will lead to all manner of innovations, creating new demands and ways of doing commerce until now undreamt of.
In short, it should mean higher productivity – a key metric where Britain’s fallen behind France, Germany and the U.S. – and that everyone’s better off.
Will it work?
We think that where the Government steps back, cutting red tape and taxes, there will be definite gains for the British economy since it’ll be easier to set up and expand businesses with fewer hurdles to overcome and taxes to pay.
The picture becomes trickier the more Government does.
Being a loud advocate for free trade, so businesses can sell more products to, and buy more raw materials from, other countries is a one-way bet. A small cost will lead to a huge payoff.
But Government investment in infrastructure, and research and development, is error prone. All too often, bad projects are supported over good for political reasons, rather than addressing genuine needs. And when it becomes apparent something isn’t working, Government is too slow at recognising it and pulling the plug.
An effective model to emulate would be DARPA, the Defense Advanced Research Projects Agency in the U.S. Tasked at nurturing technologies for military applications, it’s held at arms-length from the Federal Government and funds a diverse range of projects. Support for those showing promise is reinforced, for those failing it is promptly cut off. In this way, DARPA experiments relentlessly to push technological development forward. Failure is an occupational hazard, but its effect is limited.
Among its successes are the internet, driverless cars and a version of Google Street View developed in 1978.
So, Industrial Strategy. Iffy or ingenious?
Our world is changing and changing at an accelerating pace. It makes sense to ready Britain for this and drive up economic growth along the way. But there are also risks. Government could end up sinking a lot of money into white elephants while overlooking better alternatives. It’s up to everyone, companies and individuals, to keep the Government accountable and ensure that their Industrial Strategy delivers.
If you’re too busy getting orders out of the door and chasing up suppliers to worry about your own company’s strategy, never mind the Government’s, then you should consider implementing our ERP solution. Call us today to find out how we can help your business to weather the challenges ahead.