Hammond's support for Industrial Strategy lacks depth ahead of Green Paper
In the days running up to the Autumn Statement the Government were rumoured to be ready to publish a Green Paper setting out their thoughts on an approach for Britain's new Industrial Strategy.
Those hoping to see more details will have been disappointed. A Green Paper was not amongst the flurry of documents published following the Autumn Statement. As a result we expect to see the Green Paper published in the coming weeks and the impact of the Autumn Statement in setting the course for the government on the Industrial Strategy were somewhat muted.
Earlier this week hopes were raised when Theresa May took to the stage at the CBI conference to reassure business leaders and revealed the first tentative steps by the government to respond to the feedback received from business. The £2 billion investment in research and development by 2020 that she announced alongside the reassurance that government would seek to avoid an economic cliff edge created by Brexit, made a good start to showing the government's willingness to invest in Britain's productivity challenge, but it did somewhat preempt one of the Chancellors main statements on Industrial Strategy today.
That said some more details were forthcoming. The National Productivity Investment Fund will provide £23 billion of additional spending in areas key to boosting productivity: transport, digital communications, research and development (R&D), and housing. A significant portion of this will be taken up by spending on roads and new infrastructure to support low emission vehicles, which is quickly becoming a key industry that this government is backing to create a competitive advantage.
Other industries to benefit from the new research and development fund will include robotics, artificial intelligence and industrial biotechnology, and the Chancellor was keen to stress that these funds would be focused on commercialisation of technologies in the UK to ensure that new products and technologies were "made, developed and produced" in the UK. There was also an additional £400 million through the British Business Bank to invest in smaller innovative firms, and £1 billion to support private sector investment to roll out more full-fibre broadband by 2020-21 and the 5G mobile telecommunications network. Effectively there was enough there that the Chancellor cannot be said to have overlooked his government's commitment to begin to turn around the productivity.
There is though a lot more needed from this government to reduce the productivity gap that the Chancellor referred to in his statement. Significant investment in skills, new industrial clusters, devolved fiscal and planning powers, support for increased automation, new sources of funding, increased use of Catapults for collaboration: all these policy levers and more will need to be pulled to change the direction of the UK's productivity. The fact that business will have to wait a few more weeks to see what the government thinks will not be too problematic, but interest in the government's Industrial Strategy is now piqued and it will be an important test to have the right level of detail and openness to further consultation.