How an industrial strategy can help support 4IR adoption

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A week ago we had the Autumn Statement where the Chancellor reaffirmed the government's commitment to creating an industrial strategy with a focus on boosting productivity - you can read EEF's round up here.

EEF has long been calling for an industrial strategy and our recent report on the subject set out manufacturers’ ambitions and how a strategy from government would support that.

This week, our report on the 4th industrial revolution (4IR) also showed manufacturers are on a journey bringing with it productivity benefits, greater customer value and the ability to remain competitive.

How could an industrial strategy support manufacturers with that 4IR journey?

Looking at the four main policy pillars of our industrial strategy framework the following are some of the early areas where government action would help:

Pillar 1: Delivering a more skilled and adaptable workforce

Our 4IR report highlighted the important role staff skills and leadership and management skills will play. Yesterday Maddie outlined why these areas (you can read this blog here), particularly leadership skills, were so important.

At Autumn Statement the Chancellor announced £13m to support the Mayfield led initiative to improve the quality of management in the UK – a recognition that this has a key role to play, not just in manufacturing.

But there are additional things needed including ensuring that the future workforce is technically competent to work with data.

As a policy solution EEF has been calling for a STEMBacc to be created which includes more technical subjects, including computing. The STEMBacc should also have equal weighting to the EBacc in school performance measures and league table.

Pillar 2: Building more reliable and resilient infrastructure

The importance of digital infrastructure for manufacturing has been well covered by us. 4IR is about connectivity and a core enabler will be secure and reliable digital infrastructure.

At Autumn Statement the Chancellor set out plans for a Digital Infrastructure Investment Fund to support the rollout of 5G and full-fibre connectivity.

This fund will only be meaningful if it serves as a catalyst for change. Our recent blog post highlighted the scale of the challenge – rural areas being left behind and reliability serving as a roadblock. More than 50% of manufacturers say their current internet connection is not adequate for their expected needs over the next five years.

While the Fund is a start we need to see numbers also put behind it, just 2% of properties are currently connecting to full-fibre – EEF believes there should be a clearly stated ambition for rollout by 2025, including a specific figure for business fibre connectivity.

Pillar 3: Providing better support for growing businesses

At the Autumn Statement the Chancellor announced £4.7bn by 2020/21 for innovation. Some of this will support our call for a Technology Catalyst Fund to de-risk early stage investments in new technologies.

Our recent analysis of R&D data shows that manufacturing is driving UK innovation and the steps government needs to take over the comings months in ensuring the UK remains an attractive location for R&D activities.

Pillar 4: Reducing the cost of doing business in the UK

For most manufacturers the decision on where to expand production is an international one and the cost competitiveness of the UK is one that is constantly monitored. Signals from government on the long-term trajectory of costs – fiscal or otherwise, are important.

An industrial strategy focussed on this area would remove the manufacturing productivity tax, particularly as this isn’t a tax replicated internationally.

The government did however make some progress on the R&D with an intention to review the R&D tax credit to encourage more process innovation – this was a major win for industry.

Just the start

There are many other things needed as part of an industrial strategy and we await the government’s delayed consultation paper.

This is very much the start and over the coming months as the government develops its industrial strategy EEF will be ensuring this is a strategy which supports manufacturers to meet their ambition of higher levels of productivity, investment and net trade – all things which will gain a significant boost as they embrace the 4th industrial revolution.

Author

Head of Business Environment Policy

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