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Industrial strategy must focus on skills and infrastructure, not cash injections

23 Jan 2017

big ben and westminster bridge

The Government’s new industrial strategy must focus on getting the UK’s infrastructure up to scratch and ensuring companies can have access to the skills they need, rather than cash support for individual firms, business leaders have urged today. A new survey of over 800 members of the Institute of Directors shows almost 9 in 10 back the creation of a joined-up plan, set to be published next week, which the Government hopes will foster the “new industries that…will shape our lives in the future”*.

Implementing a long-term skills strategy is the top priority, with three-quarters of the firms surveyed saying it is ‘very important’. Nearly two-thirds say the same of improvements to infrastructure, while 6 in 10 call for the Government to accelerate the roll-out of fast broadband. In contrast, only 4% said cash support for at-risk large companies is ‘very important’.

If the Government does choose to support industries financially, IoD members would prefer this to come in the form of tax breaks to draw investment. If a large company or factory is at risk of closure, the most popular option among business leaders would be for Ministers to provide funds to re-train workers facing unemployment.

James Sproule, Director of Policy at the Institute of Directors, said:

“Earlier this week, the Prime Minister outlined a vision for a prosperous post-Brexit Britain that promoted innovation and the free flow of trade and ideas. The new industrial strategy can be a key plank of this vision. Leaving the EU is not the only way in which the UK will change in the coming years. As more jobs are taken on by robots or algorithms, and our population ages, it is vital we think seriously about the future of skills and training.

“The strategy must also focus on the physical infrastructure that businesses need to be competitive, not only transport, but also the broadband network, which many firms feel is too slow. On balance, our members favour improvements to existing infrastructure, and that will often mean essential but unglamorous road and rail upgrades.

“The new strategy is a chance to provide a positive environment for existing companies, but also encourage the upstarts which will develop the products and services of the future. It is painful to watch established businesses fail, but the Government should be very sceptical of its power to keep struggling companies going through cash payments. Instead, the focus should be on re-training anyone who becomes unemployed, so that communities can adapt to changes in the economy.”   

*Greg Clark, Secretary of State for Business, Energy and Industrial Strategy, speaking at the IoD’s Annual Convention at the Royal Albert Hall last September.

Full results:

844 members of the IoD responded to the survey between December 8th-23rd 2016

The Government has promised to outline an ‘Industrial Strategy’ which will “make the right long-term decisions” on issues such as infrastructure, skills development, research and development and regulation. To what extent do you support the Government’s drive to create an industrial strategy?

Strongly support

50%

Somewhat support

34%

Neither support nor oppose

10%

Somewhat oppose

3%

Srongly oppose

2%

Don’t know

1%


How important is it that the Industrial Strategy includes…


A long-term skills strategy

Cash support for at-risk large companies

New large-scale infrastructure

Improvements of existing infrastructure

Plans to devolve business policy to local areas

Cash support for R&D at universities and research parks

Accelerating development of fast/ultrafast broadband infrastructure

Enterprise Zones with business rates exemptions & tax write-offs for capital investment

Very important

74%

4%

41%

63%

11%

39%

61%

26%

Somewhat important

21%

25%

42%

31%

34%

44%

31%

38%

Neither important not unimportant

1%

30%

8%

2%

29%

10%

4%

23%

Somewhat unimportant

1%

24%

5%

2%

16%

4%

2%

8%

Very unimportant

2%

13%

2%

1%

7%

2%

2%

3%

Don't know

1%

4%

2%

1%

3%

1%

0%

2%

 

Where do you see responsibility sitting for the following?


Building physical infrastructure

Building digital infrastructure

Education to the age of 16

Adult learning and training

R&D of new technology

R&D of existing technology

Tax-setting and tax-collecting powers

Central Government

50%

40%

46%

22%

16%

13%

65%

Local Government

6%

3%

25%

26%

1%

2%

6%

Private Sector

4%

13%

2%

7%

28%

43%

0%

Partnership of CG & LG

14%

6%

20%

19%

2%

2%

24%

Partnership of Govt & Private Sector

26%

39%

8%

27%

53%

40%

4%


Some have called for the Industrial Strategy to include immediate support for struggling individual factories or companies. With other industries likely to see decline in years to come, would you prefer the Industrial Strategy to:

Offer cash support to local authorities and skills providers to retrain existing workers

28%

Provide accelerated tax breaks for investment into qualifying struggling businesses

27%

The Government should do nothing out of the ordinary in such a case

18%

Offer cash support in times of need for firms where a closed plant could create significant increases in unemployment

13%

Other

7%

Provide cash subsidies for ongoing operational costs such as energy use

6%

Don’t know

2%

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