The Industrial Strategy White Paper confirms many of the announcements made as part of the Budget, including those relating to R&D funding, skills, access to finance and infrastructure. It frames them in foundations that match the ScaleUp Institute’s key planks of work – notably on people, place, infrastructure and business environment alongside innovation.
The Industrial Strategy White Paper focuses throughout on the value of scaleups which are recognised as part of the solution to the productivity challenges.
The White Paper takes forward all of the areas of recommendations made by the ScaleUp Institute both in our reviews and in the work of the Scaleup Taskforce (referenced on pages 172 and 173).
It progresses what we have championed in relation to data, including use of HMRC data to pinpoint scaling firms; reinvesting in growth hubs; developing relationship models in local and product specialist areas; harnessing the export agenda to scaleups and improving the procurement and finance solutions to scaling up. It develops the skills and migration agenda and places emphasis, as we have, on the role of universities and business schools. It also picks up many of the sectors and case studies we are working with.
Announced alongside the White Paper is the intention to create a body to hold the Government to account in a similar way to the Office for Budget Responsibility. This was a matter raised by those of us around the table at the Scaleup Taskforce over the last few months; it is encouraging that the Government recognises the role for independent oversight of delivering the Industrial Strategy.
We fully expect to play a key role in next steps as evidenced in the foreword and speech by the Ministerial Scaleup Champion Margot James at the launch of our annual review and in the references to the value of our work in underpinning the Industrial Strategy.
Here are the key elements that relate to the Scaleup Agenda from the Industrial Strategy White Paper, and where the commentary is aligned to the Institute’s work in progress. We have included the page numbers for ease of reference.
On use of data
“We are working to improve collaboration on data sharing between agencies, for example, between HM Revenue and Customs, the Department for Business, Energy and Industrial Strategy, Local Enterprise Partnerships and Growth Hubs to support the objectives of the industrial strategy.
“… we will explore means of identifying businesses with scale up potential, and encouraging them to access the support available to help them reach their potential. We are working to harness data from across the government to identify those businesses with greater propensity to successfully export, and to provide them with appropriate support. We will report on progress next year.” (p157)
The Industrial Strategy strongly reflects issues that the ScaleUp Institute has consistently reinforced as key to the skills agenda. This includes recognising the importance of expanding visas for skilled workers and the value of lifelong learning.
“We will invest £300m over the next three years in world-class talent including in priority areas aligned with the Industrial Strategy, such as artificial intelligence, to enhance our skilled workforce and attract private sector R&D investment. This investment will focus on collaboration and the flow of people between industry and academia and interdisciplinary and cutting-edge research and innovation to support the Industrial Strategy programme and the Grand Challenges. Support will range from Knowledge Transfer Partnerships and PhD programmes, with strong and flexible links to industry, to prestigious awards that support rising stars and the top talent from both the UK and overseas.” (p68)
“To ensure that our labour market remains competitive, the Migration Advisory Committee has recently undertaken a wide-ranging consultation to form a UK-wide view of our skills needs140, ensuring our future migration system supports our Industrial Strategy. We will consider the Migration Advisory Committee’s forthcoming conclusions carefully.” (p125)
The Industrial Strategy looks to use the four ‘grand challenges’ as a way to break down barriers between institutions. It notes
“The public and private sector must work with universities, researches and civil society to put the UK at the forefront of these revolutions, breaking down conventional barriers within and between business sectors and academic disciplines.” (p32)
“Universities work with businesses in many different ways to exchange ideas – from licensing intellectual property and creating spin-outs to collaborative R&D, contract research and consultancy. To capture this diversity fully we are asking UK Research and Innovation to develop a new Knowledge Exchange Framework. This framework will benchmark how well universities are doing at fostering knowledge sharing and research commercialisation. It will sit alongside the Research Excellence Framework and the Teaching Excellence and Student Outcomes Framework, providing a holistic view of how universities are delivering their threefold mission of generating knowledge through research, transmitting knowledge through teaching, and translating knowledge into practical uses through knowledge exchange.” (p78)
The Government also commits to:
“…increase funding that supports universities and businesses working together to innovate and commercialise research.” Noting that “Key to this is the Higher Education Innovation Funding (HEIF) in England, which enables universities to engage with businesses and improve the commercial skills of their staff.” (p79)
In addition the paper also restates the commitments set out in the Budget:
- “Establish a technical education system that rivals the best in the world, to stand alongside our world-class higher education system;
- Invest an additional £406m in maths, digital and technical education, helping to address the shortage of science, technology, engineering and maths (STEM) skills;
- Create a new National Retraining Scheme that supports people to re-skill, beginning with a £64m investment for digital and construction training” (p94)
As part of the ScaleUp Institute programme Driving Economic Growth through Scaleup Ecosystems programme in 2016 we focused on the need to provide locally rooted ecosystems to enhance growth. We brought in Growth Hub leaders as participants alongside educators and other private sector players. We are pleased that the Industrial Strategy reinvests in these; joining them up with product specialists and with locally rooted solutions, including peer to peer networks.
The Government has specifically noted that they want to:
“…ensure all businesses have access to a local Growth Hub. Over the last three years, we have established and tested Growth Hubs in every Local Enterprise Partnership area in England. We will build on this programme, providing continued funding to enable Growth Hubs to bring public and private sector partners together, such as UK Research and Innovation, the British Business Bank, Tech Nation, investors and universities. We want Growth Hubs to carry on building their reach, developing peer-to-peer networks, connecting businesses to the best support available from the private and public sectors. We will also work with Local Enterprise Partnerships, Growth Hubs, universities and the private sector to support high potential businesses to scale up.” (p182)
“We must also make sure that regulation is as simple as possible for businesses. In England, we will continue to support businesses to comply with regulation at a local level. All businesses choosing to set up a Primary Authority partnership will have access to assured advice, with support from Growth Hubs. We will support Local Enterprise Partnerships in translating and co-ordinating regulatory frameworks that focus on local business needs, simplifying the way regulation is delivered.” (p188)
The Government notes the importance of Account Managers to provide a single point of contact:
“[we will] make the government more streamlined, responsive and focused on delivering the highest value deals. To assist this, we will expand our existing account management approach, including the Strategic Relationship Management programme to offer a single point of contact, coordinating HMG support, to a broader range of companies.” (p188)
Further, the importance of local Mayors in galvanising local growth and providing leadership on local productivity is recognised and additional money is earmarked to boost their resources.
“We now have directly elected mayors in place for a number of our English city regions, covering a third of the English population. The government will make available to Mayoral Combined Authorities a £12m fund for 2018/19 and 2019/20 to boost the new mayors’ capacity and resources.” (p221)
On access to markets
The ScaleUp Institute has had strong engagement with the Department for International Trade where clear scaleup messages were delivered. You will see the importance of scaleups and initiatives to support them referenced throughout. We are continuing our senior level engagement to help implement these initiatives.
The Government highlights that they will be:
“…piloting intensive export growth support for potential scale-ups and particularly ambitious medium sized businesses. This includes co-investment to access commercial export support services, with each eligible business offered a grant on a 50:50 match funded basis. We will work with Local Enterprise Partnership Growth Hubs to ensure joined up and easily accessible export and business growth advice” (p186)
In line with the development of a stronger account management framework, and clearer champions in local areas, the Government has noted that it will:
“[Establish] a network of nine UK Trade Commissioners, each developing a regional trade plan covering export promotion, investment and trade policy” (p185)
In addition to additional support through UKEF (announced in the Budget) the Industrial Strategy notes that a review of reinvigoration of the GREAT campaign will include looking for expertise able to help with:
- “identifying smaller businesses with the potential to succeed and grow as exporters;
- better signposting to online and local sources of information, and access to finance;
- working with the private sector to ensure all businesses receive high quality export advice; and
- strengthening government-to-government relationships to realise new export opportunities.” (p184)
Procurement, Supply Chains and Corporate Collaboration
“We will improve public procurement as an important source of finance for innovative businesses that does not dilute their equity and gives an endorsement for others to invest.” (p70)
Government has also committed to:
- “launch a new Supply Chain Competitiveness programme that will target areas where key businesses need to improve to match the best in Europe and beyond, supporting training and enhanced business processes.
- encourage industry leaders and the best performing sectors to improve further by adopting best practice as exemplified by the automotive sector.” (p183)
On access to finance
The Industrial Strategy Document restates commitments to tackle access to finance and patient capital made in the Autumn Budget 2017, which include:
“drive over £20bn of investment in innovative and high potential businesses, including through establishing a new £2.5bn Investment Fund, incubated in the British Business Bank.” (p164)
“significantly expanding the support that innovative knowledge-intensive businesses can receive through the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) while introducing a test to reduce the scope for and redirect low risk investments, together unlocking over £7bn of new investment” (p179)
It is also important to note that the Enterprise Capital Funds programme which the ScaleUp Institute endorsed this year (and which is included in our Annual Review) is referenced and supported as part of the Industrial Strategy (p180).
As set out in the Autumn Budget 2017, Government has committed to:
“Raising total R&D investment to 2.4 per cent of GDP by 2027
Increasing the rate of R&D tax credit to 12 per cent
Investing £725m in new Industrial Strategy Challenge Fund programmes to capture the value of innovation”
The Industrial Strategy also notes the value of the Catapults.
“We want Catapults to play a growing role in UK innovation. We will use this review to improve the strategies, governance and performance management of Catapults, and to agree long-term funding for them to ensure they can deliver better outcomes for the Industrial Strategy. We will be putting in place £178m of interim funding to allow them to continue their work and will agree long-term funding for the network early next year. For those Catapults where most improvement is needed, we will ask UK Research and Innovation to run a 12-week process to develop their plans.” (p82)
The Industrial Strategy White Paper rightly notes the importance of sectors. As previously flagged, the ScaleUp Institute will focus on sectors as part of its work in 2018. In advance of this work, we are well connected with sector bodies and businesses and have work in train on manufacturing, life sciences, the creative sector and the social impact sector where we are already engaged in active work to analyse social impact scaleups.
“We are announcing Sector Deals with life sciences, construction, artificial intelligence and the automotive sector, with the creative industries, industrial digitalisation and a number of other sectors in advanced discussions.” (p193)
The document also notes:
“Recognising the importance many consumers and workers place on the social contribution of businesses, we have also established the Inclusive Economy Partnership to address some of the biggest challenges that face our society, encouraging collaborations between business and civil society, enhancing the UK’s reputation as a global hub for social investment.” (p190)