How to approach putting together a Sector Deal

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The Industrial Strategy has landed and we’ve been busy blogging about it, speaking with our members and with wider stakeholders. Through these discussions, without fail, everyone wants to talk about what is meant by Pillar 8... Sector Deals.

A Sector Deal, in short, is a something for something agreement with government.

The crucial thing is additionality to the wider industrial strategy and addressing specific challenges holding the sector back from achieving its ambition.

In exchange for government action specific to a sector, over and above the horizontal pillars of the industrial strategy, you (the sector) agree to deliver outcomes in support of the industrial strategy objectives (we've written about the need for some stronger objectives and success metrics).

Sector Deals are modelled on place based Deals which had a similar something for something approach (e.g. devolved powers and funding but local areas had to demonstrate outcomes linked to jobs or growth).

In that respect, the concept is a good one – we previously set out some questions government will need to answer to avoid wasting businesses time. In this blog we set out what Sector Deals could look like.

So how does EEF think Sector Deals should look?

Start with the strategic context and ambition

Deals should start with an overview and strategic context.

What's great about the sector you are in? Is it world beating? Where is it heading? What's the ambition?

If the government delivers the contents of the deal, what would be the response from the sector in terms of new investment, jobs, exports and productivity?

Define the sector

This should be followed up by who the sector is. Who was involved in coming up with the Deal? Who will be responsible for delivering on its outcomes?

In our view the definition of a sector can be as broad or narrow as it needs to be. Either a distinct supply chain, an ecosystem of companies that all come together to deliver a product, service or outcome, or a traditional 'sector' in the national accounts definition.
There is no need to try and boil the ocean when it comes to defining sectors either.

Asks of government

The first round of Sector Deals will come with no new money, so this is about what you as a sector are willing to do to get government attention. That attention will be given based on your ambition. Asks should be specific to the sector and those signed up to the Deal. As an example we can all agree that the UK needs more students studying STEM subjects, that isn’t a sector specific requirement.

Asks should use the basic structure – what’s being asked for, why it is important (linked to the industrial strategy objectives), examples of what is being asked for (where these exist) and the expected outcomes in terms of the response from the sector.

Where could a Sector Deal help? – Examples:

Removing regulatory barriers

  • In this space, overturning a technical regulation which affects one sector. This could be focussed on simplifying regulations to lower the administrative burden of doing business in a sector, or which is slowing down the pace of innovation. Evidence would need to be presented on what government taking action in this area would deliver e.g. more investment or more innovation.

Supporting technology diffusion

  • Such a Deal could focus on a targeted outcome such as boosting productivity and technology investment across a supply chain in a particular technology – such as those associated with the 4th industrial revolution.

Stimulating demand

  • For example, promotion of the benefits of a product or service by suppliers through demonstrators or other means. This could be linked to government ambitions to reduce energy consumption or to increase the amount of UK content in a defence contract.

Targeted export support

  • For example, a sector may wish to target a particular region or international project (such as an infrastructure project) where, through aggregating supply, a Sector Deal may provide greater weight during contract negotiations.

Governance

The Government will need to do a Deal with someone, or something. While everyone may be rushing around to create permanent sector councils modelled on the aerospace or automotive ones – we’re not convinced permanence is always necessary.

For example, the use of a ‘task and finish’ approach could help to deliver elements of a Sector Deal focussed on removing regulatory barriers or supporting technology diffusion.

Under such an approach government and the sector would work together on co-designing the solutions that are necessary to unlock growth and once deployed both could then monitor that the expected outcomes are being achieved without the need for a permanent sector council.

In some areas permanent bodies may be required, but could an existing body such as a trade association help to represent the interests of the sector and be the ‘guardian’ of the Deal?

We’ll be working with government to ensure guidance is developed to support manufacturing sectors in coming up with Sector Deals. But it is worth saying - not all sectors will need a Deal, so don't feel obliged to put something together or take a punt - it will be obvious. Proposals in place based Deals which were clearly about taking a punt on funding or lacked any evidence on how local action could address challenges were completely knocked back.

Tell us your view - Are you in a sector where you are facing sector-specific barriers and challenges? How could a sector deal address these challenges? What would you need to know to put one together?

You can tell us what you think by email: research@eef.org.uk or on Twitter: @EEF_Economists


 

Author

This person has now left EEF. Please contact us on 0808 168 1874 or email us at enquiries@eef.org.uk if you have any questions.

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