The EIUG does not believe the Industrial Strategy green paper’s approach and focus on the eight sectors selected adresses the relative slowdown in UK productivity compared to other countries. More horizontal policies to create a pro-business environment, such as people & skills, innovation policy and energy and planning reform better address it, but do need a targeted focus.
The green paper identifies economic security and resilience as one of the objectives of the industry strategy and propose to “reduce supply chain and other vulnerabilities in growth-driving sectors which could harm their long-term growth or ability to deliver critical outputs”. Reducing supply chain vulnerability should apply to the whole economy, instead of only to growth-driving sectors.
Key to making the UK economy less vulnerable to external trade shocks is the role of critical materials in supply chains and foundation industries play crucial role in the supply of critical materials to the UK economy, including those sectors the paper identifies as high-growth sectors. The foundation industries manufacture materials for new infrastructure and housing and materials crucial to decarbonising the UK economy. Foundation industries not only supply materials for advanced manufacturing but are also part of advanced manufacturing.
The UK Government should map and recognise the criticality of certain materials for supply chains across the economy. Understanding the linkages between upstream and downstream supply chains is vital for assessing the broader economic impact of supporting any particular sector. Furthermore, it should assess what impact foundation industries have on those growth sectors it has identified and what dependencies there are between them for these sectors to thrive.
As foundation industries tend to be energy-intensive, one of the key barriers to their growth is relatively high industrial electricity prices in GB. This is not a pro-business environment.