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Building an Effective Industrial Strategy

As I argued in my last blog, governments can't avoid having an industrial strategy of some kind - the question is only how explicit such strategies are. And when they do develop explicit strategies, they should go with the grain of what's working already, not reinvent the wheel.

As I argued in my last blog, governments can't avoid having an industrial strategy of some kind - the question is only how explicit such strategies are. And when they do develop explicit strategies, they should go with the grain of what's working already, not reinvent the wheel.

Many existing organisations involved in this policy space have proved successful - the research councils and the Technology Strategy Board, for example - but there is a continuing need to ensure they work effectively together and that maximum benefit is obtained from each pound of taxpayers' money spent on them.

One of the programmes that is supported by the Technology Strategy Board bridges the gap between universities and research and technology companies - Catapult centres. The TSB describes them:

" A Catapult is a physical centre where the very best of the UK's businesses, scientists and engineers work side by side on late-stage research and development - transforming "high potential" ideas into new products and services to generate economic growth."

The centres will allow businesses to access equipment and expertise that would otherwise be out of reach, as well as conduct their own in-house research and development (R&D). Catapults will also help businesses access new funding and will make them aware of new technology and its potential.

Seven catapult centres are being developed that each specialise in a specific technology. All seven Catapults will be up and running during 2013, aiming to accelerate innovation and growth over the coming years and decades in;

1. High value manufacturing

2. Cell therapies

3. Offshore renewable energy

4. Satellite applications

5. Connected digital economy

6. Future cities and

7. Transport systems.

Each Catapult focuses on an area which the government has already identified as strategically important in global terms and where there is genuine potential for the UK to gain competitive advantage.

But the government has separately identified "eight key technologies".

The approach used by George Osborne in his speech to the Royal Society to identify the technologies is the right one to use more generally in industrial strategy.

"It is not government who creates the scientific innovation, or translates into growth. But we can back those who do. And as a government and as a scientific community we need to be willing to identify Britain's strengths and reinforce them. We do not claim to be able to predict them with 100% accuracy. But we need some sort of assessment."

He then identified the eight technologies "where we believe we can be the best - where we already have an edge, but we could be world-leading."

Each of these technologies was identified using three tests:

1. It is an important area of scientific advance

2. Britain has a distinctive capability

3. It has identifiable commercial opportunities

The eight technologies were:

1. The "Big Data" revolution and innovations in energy efficient computing;

2. Satellites and analysis of the data they provide

3. Robotics and autonomous systems,

4. Synthetic biology;

5. Regenerative medicine,

6. Agricultural technologies,

7. Advanced materials and

8. Energy storage.

While this is a prudent and appropriate way to make a choice that must be made, it is interesting to try to correlate the eight technologies with the seven catapult centres. There is great room for confusion about where the strategic priorities of the government actually lie simply between these two programmes.

And then there are the Technology Strategy Board's fifteen Knowledge Transfer Networks, described by the board,

"Knowledge transfer is critical to enable UK businesses to compete successfully at the forefront of global technology and innovation. Knowledge Transfer Networks (KTNs) are one of the Technology Strategy Board's key tools for doing this - facilitating the UK's innovation communities to connect, collaborate and find out about new opportunities in key research and technology sectors."

The KTNs are:

1. Aerospace, Aviation and Defence

2. Biosciences

3. Chemistry Innovation

4. Creative Industries

5. Electronics, Sensors, Photonics

6. Energy Generation and Supply

7. Environmental Sustainability

8. Financial Services

9. HealthTech and Medicines

10. ICT

11. Industrial Mathematics

12. Materials

13. Modern Built Environment

14. Nanotechnology

15. Transport

On top of this, and the centrepiece of BIS's current industrial activism, eleven sector specific industrial strategies have already been announced or are in development. Appropriately they are often in sectors where we are already internationally successful and wish to maintain that success such as life sciences, information technology and aerospace.

A Business, Innovation and Skills Department paper in September 2012 reviewed "a range of evidence on which sectors could make the greater contribution to future economic growth and employment in the UK, and then consider[ed] in which Government action could add most value."

This led the government to choose the following sectors for more detailed work:

1. Aerospace

2. Automotives

3. Non-health life sciences

4. Nuclear

5. Renewables

6. Oil and gas

7. Chemicals/Pharmaceuticals

8. Information economy

9. Education exports

10. Construction

11. Business services

Strangely, the list does not appear to be complete, or event to reflect the full scope of the government's work to collaborate with industry. For example Defence, which is the subject of a defence growth partnership rather than a sector strategy and Space, has its own Space Leadership Council. This does leave the government's presentation of its work on industrial strategy a little opaque.

More worryingly, the list does not include many important areas of manufacturing, technology and design. It's not clear how the range of products developed by James Dyson would fit into the list, for example. And it is very surprising indeed to see no mention of 3-d printing or imaging technology.

One sector which many other manufacturing sectors derive benefit from, but which is not featured, is the Motorsport sector. Distinct from the broader Automotive sector (and in many respects closer to Aerospace), sceptics might attribute its success to the lack of intervention, but that would be a deception. Ensuring the right climate in the UK for this world class sector is vital if we are to fight off international interest in attracting the very successful companies in the sector to other countries.

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