TheTreasurer

UK Industrial Strategy promises business investment surge

Government programme promises huge expansion of public-private partnerships, plus £2.5bn scale-up funding pot for nation’s SMEs

A new Industrial Strategy for the UK aims to significantly broaden the scope for corporate access to finance, via a host of interrelated measures.

Developed by the government in partnership with the Federation of Small Businesses (FSB) and British Chambers of Commerce, the Strategy paves the way for a dramatic expansion of public-private partnerships.

Initiatives announced in the plan – published on 27 November – include a £725m Industrial Strategy Challenge Fund, designed to harness and focus the output of innovative companies.

The Strategy also encompasses four so-called ‘Sector Deals’, which will provide preferential boosts to the capabilities of industries thought to hold the greatest economic potential for Britain’s future: construction, automotive, life sciences and artificial intelligence.

In addition to that grouping, the white paper also outlines visions for what it calls the ‘Five Foundations of Productivity’ – namely ideas, people, places, business environment and infrastructure.

In the latter Foundation alone, the Strategy aims to:

  • raise the National Productivity Investment Fund to £31bn, supporting investments in transport, housing and digital infrastructure;
  • support the development of electric vehicles with a £400m investment in charging network infrastructure – plus a further £100m to extend the plug-in car grant;
  • boost the UK’s digital infrastructure with more than £1bn of public investment, including £176m for 5G and £200m for local areas to encourage the rollout of full-fibre networks;
  • launch a review to pinpoint the most effective actions for improving productivity and the growth of SMEs – including thoughts on how to address what has come to be known as the ‘long tail’ of lower productivity firms; and
  • invest more than £20bn in innovative and high-potential firms – including through a new £2.5bn Investment Fund, incubated at the government-owned British Business Bank (BBB).

It is thought that, by itself, the BBB-managed Investment Fund will unlock around £7.5bn of capital to help growing firms scale up.

In order to support that effort, and others outlined in the Strategy, the BBB will roll out a network of regional managers by autumn 2018.

Those individuals will ensure that business leaders are fully aware of the investment options available to them through the Bank.

Business secretary Greg Clark said: “The UK is well-placed to benefit from [the] new industrial revolution and we start from a position of significant strength.

“We have a thriving research and science base and are home to a wide range of innovative sectors, from advanced manufacturing and life sciences to fintech and creative industries.”

BBB CEO Keith Morgan noted: “Making sure that finance reaches smaller businesses across all regions of the UK is important to delivering widespread growth.

“By putting in place a new network of regional managers, we will further address regional disparities in awareness of – and access to – funding choices for businesses across all regions of the UK.”

FSB national chairman Mike Cherry added: “FSB has been delighted to work with the business secretary… as he delivers this government’s first Industrial Strategy.

“The UK’s 5.5 million small businesses have a huge role to play if we are to increase productivity across the economy, in every sector. This is the only way to achieve sustained wage growth and higher living standards.”

Read the full Industrial Strategy white paper here.

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