Industrial Strategy: Fit for the future?
11 December 2017
Energy & Environment, Science & Technology, Planning & Development, Healthcare
With the launch of the Industrial Strategy: Building a Britain fit for the future white paper the UK Government have set out their plans for the development of a modern strategy to help businesses to create high quality, well paid jobs across the country. Will the strategy help to fulfil the government’s ambitions to propel Britain to be a global leader of the industries of the future? Just importantly will the strategy help make the UK a country that ‘works for everyone?’
The government have set four grand challenges for the wider economy to respond to: AI and data economy; maximising the advantages of the global shift towards clean growth; becoming a world leader in shaping the future of mobility; and harnessing the power of innovation to meet the needs of an ageing society. Government policy levers to help meet these challenges include raising R&D investment; investing in digital and technical education from STEM subjects to re-skilling schemes; National Productivity Investment Fund to support investments in digital and transport infrastructure; the launch of Sector deals and a new £2.5bn Investment Fund; and agreeing Local Industrial Strategies alongside a Transforming Cities fund.
Artificial Intelligence and data economy
The expected economic benefits of the machine learning and AI revolution have been estimated by PwC to be worth £232bn to the UK economy. The recent budget allocated £75million for the development of artificial intelligence, however if the UK wants to be positioned as a global leader then this funding looks starkly uncompetitive. The budget allocation is just 0.6% of the £11.5 billion that China plans to spend in order to become the global leader in AI by 2030.The Organisation of Economic Cooperation and Development reports that 70% of investment in AI is happening in China, Japan, Korea and Taiwan.
Plans include a new national research centre based at Alan Turing Institute to support AI disciplines and increase the numbers of PhDs by at least 200 extra places a year by 2020-21. The government have also committed investment of £84m over the next five years to improve the teaching of computing and drive up participation in computer science alongside a scheme to support people to up-skill and re-skill as the economy transforms.
The strategy briefly states the ‘need to build an evidence base about how technological change may affect different sectors, groups and places’ but does not yet offer any resource or funding announcements to support this need. The impacts of a race to automation, particularly on low-paid jobs and those most vulnerable in society to such transformation in the economy, is an unknown. Are the productivity gains and economic benefits likely to be felt by disadvantaged areas of low employment and groups in the most need? Building an evidence base should be just as much as a priority as investing in frontier technologies and education.
Local examples of AI in action include Southend-on-Sea Borough Council who are the first local authority to buy and use a state of the art child-size robot under an academic license. ‘Pepper’ is the first robot with the ability to recognise principal human emotions as well as being able to adapt his own behaviour and make independent decisions. The robot is able to play videos, music, and sensory games that will be used to help dementia sufferers and children with complex disabilities.
Rather than AI the government might have missed a trick on not focusing on a holistic, place-based approach with smart city technologies. Here in Manchester perhaps the best example of the data revolution is the £16m CityVerve project. The project brings together the latest Internet of Things (IoT) technologies, deployed at city scale to deliver transformative benefits: new business and jobs for Manchester; better healthcare, transport and education; safer streets; and more engaged and empowered citizens.
In the recently published UK Smart Cities Index, based on evaluations of 20 cities and their strategies, Sir Andrew Cahn of the Huawei UK Board, said: "The successful cities of the future are going to be smart cities.”
Topping that index was not the capital but Bristol. The report singled out the South west city for praise in community engagement and the Bristol is Open project, which closely integrates innovative programmes into city strategy. The project has made strides in providing a large-scale connectivity testbeds and report recognised the new City Operations Centre that ensures that services are effectively implemented. The city also leads in data access and energy innovation.
The strategy states that the move to cleaner economic growth – through low carbon technologies and the efficient use of resources – is one of the greatest industrial opportunities of our time. The International Energy Agency estimates that the global CCS market alone could be worth over £100bn. By one estimate, the UK’s clean economy could grow at four times the rate of GDP. UK Government is investing £162m in innovation for low carbon industry, the long-term options for clean heating and the many potential uses of low carbon hydrogen.
At a local level Leeds have shown real ambition. The hydrogen conversion strategy for the Leeds City area includes proposals to supply the local grid with low-carbon hydrogen produced at four steam methane reformers on Teesside utilising Carbon Capture and Storage. This is joined-up, at scale energy policy at the forefront of clean economic growth but support for regional schemes such as Leeds does not surface in the industrial strategy.
Future of Mobility
Significant investments are being made in the electrification and automation of road vehicles, in the modernisation of rail services, to deliver higher capacity, speed and connectivity. Although driverless cars grabbed the headlines it is the potential of new technologies to transform public transport that perhaps will gain the most traction.
The strategy outlines support for transition to zero emission vehicles including a new £400m Charging Infrastructure Investment Fund (£200m from the government to be matched by private investors); £100m new funding for the plugin car grant; £40m R&D funding (matched by industry) for new charging technologies including on-street and wireless projects. Alongside these investment announcements the strategy makes a commitment to making 25 per cent of all cars in the central government department fleet ultra-low emission by 2022.
In terms of modernisation of the railways there is no further announcements in the strategy on the electrification of train lines in Wales, the Midlands and the north that were ditched early in the year. Analysis from IPPR North has suggested the north of England would have had £59bn more in public funding over the past decade if it had received the same amount per person for infrastructure as London. Whereas £30bn has been earmarked for Crossrail 2 in the capital the proposed modernisation of the TransPennine route between Manchester and Leeds remains stalled.
Despite success stories such as Mobike the future of mobility strategy does not focus on cycling as a mode of transport or the associated environmental and public health benefits. In Manchester the Transport for Greater Manchester wants to see bike journeys increase across the region from 2% to 25% by 2025 and have appointed the region’s first cycling commissioner in former Olympic champion Chris Boardman. Further funding for schemes to improve city infrastructure for our cyclists appears to be a missed opportunity.
The strategy aims to harness the power of innovation to help meet the needs of an ageing society and help people stay independent for longer. The report makes clear that the UK’s ageing population will create new demands for care technologies, products and services, new housing models and innovative savings products for retirement. The government will be developing Digital Innovation Hubs to explore the application of data for better, more innovative health and care.
Ageing also presents significant challenges to the economy, including greater caring demands on those of working age and increased health and social care costs. A Green Paper in care and support in England will respond to some of the pressing challenges facing social care. The paper will no doubt reflect on the level of funding in social care and whether it can reverse the trend of chronic underspending. Adass’s annual survey of social care budgets found that local councils were planning £824m of savings this financial year, meaning that overall councils have spent more than £6bn less on social care since austerity began in 2010. As the ‘baby boomers’ hit retirement age the social care gap is one challenge that will need some real innovative thinking to resolve.