Reflections on the new Industrial Strategy

The government has put out its new blueprint[1] for encouragement of business growth in the new political and economic environment brought on by the Brexit vote.

It’s been generally well received by industry, commerce, and much of the business press.

One obvious point about it is that it isn’t built around one or two radical or very large-scale proposals. Rather it covers a range of often-familiar ground  –  support to R&D, skills improvement (with a particular focus on basic and technical skills), infrastructure projects, encouragement of business start-ups and ‘scale-up’ of successful small businesses, and so on.

A second obvious point is that, though it’s keen to support regional growth and see wealth spread out from London and the South East, and sees some sectors as particularly likely to generate growth, it isn’t particularly interventionist in the sense of focussing government funding heavily on ‘good prospects’ – essentially it’s an ‘enabling’ strategy seeking to create fertile ground for growth not a ‘betting’ strategy directly investing in hypothetical winners.

As researchers in frequent contact with businesses, training providers, and learners, a couple of points – probably not ones for a high-level government strategy document but nevertheless relevant to the eventual implementation of strategy – come to mind.

The first concerns culture and values. Published strategy, necessarily perhaps, is concerned with rational analysis of issues, identification of challenges, and corresponding policy design to meet those challenges. However, we are sometimes struck, when we talk to people in surveys, in-depth interviews, and focus groups, how often they divert from how public policy might expect, or want, them to think and behave. Employers press on with business strategies that don’t always place training highly in their hierarchy of priorities even as they recognise their skills gaps; some educational and training institutions (though less frequently in recent years) find it difficult to respond to new challenges and expectations; young people (and their parents) pursue sub-optimal educational and career choices; and private investors and venture capital choose to invest in types of business which return an early profit where government might wish them to take a longer term interest .

A second point concerns the ‘grit’ which gets into the ‘wheels’ of policy implementation. This is the huge multiplicity of on-the-ground factors which can make public interventions less attractive to their supposed beneficiaries or more difficult to implement. Just from our recent research we continue to see the bureaucracy which can put some small employers off apprenticeship, and public procurement which puts adherence to its financial years ahead of optimal project planning. To its credit, the new Industrial Strategy recognises these types of problem and streamlining is, at least, on the agenda. But then, as a final example (of ‘grit’ as we call it above), our recent discussions with providers of engineering and construction training continue to show the severe difficulty which many of these institutions experience in getting skilled teaching staff. We wonder, as the new strategy proposes to enhance technical training in FE Colleges and proposed new Technical Institutes whether development may be constrained by this factor?

Anyway, as we acknowledge above, a national and broad policy document probably isn’t the place to dwell on the various factors, cultural or administrative, which policy implementation always encounters; and BMG Research will be keen to work with clients to supply the data and intelligence which the strategy will require in future years to underpin decisions and measure progress – particularly in respect of sector and regional growth, of the new developments in the post-16 skills agenda, of support to business start-up and growth, and of the Strategy’s interest in reviewing the role of Local Enterprise Partnerships, all areas in which we have abundant experience and research skills.

Finally, as somewhat of an aside, we note that the Strategy raises one particular research challenge, which, as a long-term contributor to delivery of the national Employer Skills Survey (ESS) and of many other sub-national skills surveys, we find particularly intriguing. The Strategy observes that:

We recognise that previous efforts by the Government and industry to forecast skills shortages have lacked the accuracy to enable timely and effective action, and that further action could be taken to ensure that we can better identify and address future shortages.

Part of the problem has been the lack of a single authoritative source: the UK Commission for Employment and Skills (UKCES), the Low Pay Commission, the Migration Advisory Committee, and individual sectors have produced assessments focused on their specific remits. But no organisation has been tasked with identifying persistent or emerging sector specific gaps and proposing action. We will now work towards a single, authoritative view of the gaps faced by the UK now and in the future.’

The Strategy is clearly right in recognising that, while ESS and other surveys continue to provide a broad and very accurate picture of the national skills challenge, these surveys do not generate the fine detail (somewhat of a Holy Grail for skills planning) on skill shortages and gaps at sector and regional levels (and even more so at sub-sector and sub-regional levels) which would validate a specific and viable training response if it were available. We look forward with interest as to how this particular remit of the Strategy will be tackled (and, where possible, to contributing to the solution)!

[1] Building our industrial Strategy, Green Paper, HM Government, January 2017