Updated summary slides on the Government's rationale behind and approach to Industrial Strategy. Includes progress update on sector and technology strands.

1. Industrial Strategy:
government and industry in
partnership
August 2013
www.gov.uk/bis/industrial-strategy #indstrategy

2. No return to the old growth model
• Previous growth model based
on government spending,
consumption and property
speculation.
• Contribution to GDP from
Government activity grew
from 0.3% between 1990-99
to 0.7% between 1999-2008
– becoming the second most
important driver of growth.
A stable macro business environment is key to enabling growth
• The deficit means Government spending cannot contribute to growth to
the same degree.
Why we need to act
Expenditure Contributions to Growth
-4
-3
-2
-1
0
1
2
3
4
1997-07 2008-09 2010-11 2012 2013 2014-15 2016-17
Averageannualcontribution(ppts)
Govt consumption & investment Net trade
Other$ Business investment
Household consumption & NPISH#
3.3%
- 2.5% 1.4% 0.2%
2.7%
2.0%
0.6%
GDP growth
OBR forecasts
$ includes dwellings investment & changes in inventories
# non-profit institutions serving households (mainly charitable sector)
Expenditure Contributions to Growth
-4
-3
-2
-1
0
1
2
3
4
1997-07 2008-09 2010-11 2012 2013 2014-15 2016-17
Averageannualcontribution(ppts)
Govt consumption & investment Net trade
Other$ Business investment
Household consumption & NPISH#
3.3%
- 2.5% 1.4% 0.2%
2.7%
2.0%
0.6%
GDP growth
OBR forecasts
$ includes dwellings investment & changes in inventories
# non-profit institutions serving households (mainly charitable sector)
Source: Office for Budget Responsibility Economic and Fiscal forecasts March 2013

3. UK’s relative position is being challenged
• Globalisation and the rise of the
BRICS* economies are changing the
UK’s relative position in global
economy.
• Developing countries are competing
higher up the value chain,
challenging the UK’s comparative
advantage.
If the UK stands still there is a danger we will be left behind
Why we need to act
*Brazil, Russia, India, China, South Africa

4. The UK Growth Strategy:
Industrial Strategy
The Government’s 4 Growth Ambitions are to:
• Deliver the most competitive tax system in the G20
• Make UK one of the best places in Europe to start, finance and grow a
business
• Encourage investment and exports as a route to a more balanced
economy
• Create a more educated workforce that is the most flexible in Europe
* The 4 ambitions from The Plan for Growth 2011, published by HMT and BIS alongside Budget 2011
Strong, sustainable and balanced growth
Deficit reduction, Monetary activism and Supply-side reform are a core
part of the Government’s approach to improving growth.

5. Industrial Strategy
Industrial Strategy: government and
industry in partnership
Industrial Strategy: Key principles
• Long term;
• Partnership with business;
• Whole of Government approach; and
• Giving businesses the confidence to invest.

6. Five themes of Industrial Strategy:
Industrial Strategy
• A spectrum of support for all sectors;
• Supporting emerging technologies including the “8 Great”;
• Working with business to help develop skills that businesses will need;
• Working to improve access to finance for businesses;
• Giving confidence to business by publishing a forward look of
government contracts.

7. Strategic partnerships – the 11 sectors
Industrial Strategy
Published
Aerospace (March 2013)
Aim: Maintain existing UK
market share; secure UK
employment
Life Science
Strategy (Dec 2011)
and one year on
update (Dec 2012)
Aim: To make the UK
the global hub for life
sciences
Nuclear (March 2013)
Aim: Grow the global
market share; set out role
that nuclear plays in UK
energy mix
Agri-tech
(July 2013) Aim:
increase inward
investment and
exports
Education
(July 2013) Aim:
Increase the UK's
education exports
Information
Economy (June
2013) Aim: to seize
the opportunities
from new ICT
technology
Offshore wind
(August 2013) Aim:
Build competitive and
innovative UK supply
chain
Oil and Gas (March 2013)
Aim: Increase inward
investment in energy
supply chain
Construction
(July 21013) Aim: make
the UK the global leader
in sustainable
construction
Automotive
(July 2013) Aim:
Investment in R&D;
grow and develop UK
supply chain
Professional Business
Services
(July 2013) Aim: make the
UK the global hub of
expertise

8. Technologies
We are investing in emerging technologies, where the UK has the depth of
research expertise and the business capability to develop and exploit these.
• £600 million is being used to support the eight great technologies
Regenerativ
e Medicine
Agri-
science
Energy
storage
RoboticsBig data Synthetic
biology
Advanced
materials and
nanotechnology
Space
technology
Industrial Strategy
• The first seven Catapult centres are now open for business (High Value Manufacturing,
Cell Therapy, Offshore Renewable Energy, Satellite Applications, Connected Digital
Economy, Future Cities and Transport Systems) with total public and private
investment exceeding £1.4 billion over their first 5 years of operation.
•Patent Box introduced progressively from April 2013 will provide reduced corporation
tax rate of 10% for companies exploiting patented inventions
• We recently announced £185m additional funding for the TSB in SR 2015-16. Part of
this will be used to expand the Catapult network with new Catapults in Energy Systems and
Diagnostics for Stratified Medicine.

9. Access to Finance
Access to Finance is a key issue for businesses.
• We are setting up a Government-backed Business Bank which will receive
£1bn of new Government funding.
• Budget 2013 set out that £300 million of this £1 billion will be invested by
Government alongside private investors over the next two years to provide
diverse sources of finance for SMEs - strategy update.
• We are stimulating the development of non-bank finance sources through
the £1.2bn Business Finance Partnership.
• We have agreed an additional £800m of financial transaction funding for the
Green Investment Bank in 2015-16 - Green Investment Bank.
Industrial Strategy

10. Skills
We are working with business to developing the skills that business and
the wider economy need as a fundamental measure to support growth:
• We are giving employers the opportunity to access skills funding through
activity such as the Employer Ownership Pilot.
• In June 2013, we announced that a new £100m employer ownership fund
has been created to co-finance investment in skills in key sectors and new
technologies.
• Rigour and Responsiveness in Skills was published in April 2013 and outlined
the Government’s priorities in reforming apprenticeships, creating
traineeships, ensuring meaningful qualifications and raising standards of
provision.
• We are taking a range of action to improve young people’s engagement with
engineering such as ‘See Inside Manufacturing’ and ‘Make it In Great Britain’
initiatives.
Industrial Strategy

11. Procurement
We are ensuring we get the most out of procurement; and working to
support supply chains.
• We published in May 2013 updated Procurement pipelines covering a range
of sectors. The potential contract opportunities from Government and local
authorities are now worth nearly £79 billion.
• We are working with business to assess the strategic capabilities required in
the supply chain.
• We are operating an open door policy for business to develop a more
strategic relationship with current and future providers.
• We are opening up more Government contracts to SMEs - the ambition is
that 25% of Government’s spend goes to SMEs by 2015 .
Industrial Strategy

12. Progress Summary
• We have published strategies in eleven key sectors.
• £1.6 billion Industrial Strategy package at Budget 2013 (Aerospace, Automotive, Agri-tech).
• £1 billion of new capital for Business Bank.
• £600 million for 8 great Technologies in the Autumn Statement and over £200 million for seven
Catapults.
• £330 million skills EOP (Rounds 1 and 2).
• £100 million for the sequencing of 100,000 whole genomes over next 3-5 years (referenced in
the Strategy for UK Life Sciences 'One Year On', December).
• Publishing reports on tunnelling Building Information Modelling (BIM) and Renal Care.
• Launching a new programme to help 1.6 million small and medium sized enterprises (SMEs) scale
up their business online over the next five years.
Industrial Strategy

13. Industrial Strategy - Stakeholder quotes
• "What's critical is identifying where a long-term partnership between business and
government can make the greatest difference when it comes to encouraging investment
and boosting exports," - John Cridland, Director-General of the Confederation of British
Industry (CBI)
• “Companies and sectors with the potential to deliver new technology and long-term
growth in the economy will do it where there is a coherent, consistent and certain
approach from government” – EEF Spokesperson
• "The strategy fosters strong and meaningful collaboration between the government and
industry and will help to focus efforts on addressing particular areas such as skills,
technology and exports” - Malcolm Webb, chairman of industry body Oil and Gas UK
• “AMEC welcomes this strategy, which recognises the crucial importance of a strong and
growing British nuclear industry to support the domestic and international nuclear
markets” - Clive White, President of AMEC’s Clean Energy Europe business
• “Today’s announcement is the culmination of a lot of hard work from ministers, civil
servants, academics, ADS and industry through the AGP” - Marcus Bryson, CEO of GKN
Aerospace
Industrial Strategy

15. Annexes

16. Aim: To secure the UK’s position as a global
hub for health life sciences.
• Publication of Life Sciences - One Year On
strategy in December 2012;
• BIS through the MRC and TSB will invest
£310m to support the discovery,
development and commercialisation of
research;
• commitment to sequence the whole genome
of 100,000 NHS patients
• Help smaller, high risk, early stage companies
by introducing a new Seed Enterprise
Investment Scheme, offering a 50 per cent
income tax relief on investments;
• Introduce an above the line R&D tax credit,
to improve the visibility and certainty of R&D
tax relief to attract large scale investment in
innovation.
Industrial Strategy

17. Aim: To maintain existing UK market share and
secure UK employment.
• Publication of the Aerospace Strategy in
March 2013 - “Lifting Off” ;
• Budget 2013 allocated £1bn to fund
Aerospace Technology Institute, match
funded by industry;
• Develop the aerospace Manufacturing
Accelerator Programme - industry will scope
the business case by the end of 2013/14;
• Tackle Access to Finance issues through the
newly created Aerospace Finance Forum;
• The sector and UKTI will work together to
develop a more strategic approach to
identifying and pursuing opportunities in
overseas target markets.
Industrial Strategy

18. Aim: To maximise the economic production of
The UK’s offshore oil and gas resources.
• Publication of the Oil & Gas strategy in March
2013 - “Business and Government ;
• Map the UK supply chain, including exports, by
value and destination, to determine areas of
constraint and potential opportunities for
additional support;
• Government and industry group which works to
maximise economic recovery of the UK’s
offshore resources of oil and gas;
• Review supply chain position in relation to
‘performance bonds’;
• Industry to establish a national centre of
excellence for technology;
• Establish a national programme to retrain ex-
military personnel and those from other
industries with the relevant transferable skills.
Industrial Strategy

19. Aim: Ensure the development of a vibrant UK
nuclear industry that is an area of economic
and strategic national strength, providing the
UK with a safe, reliable and affordable supply
of low-carbon electricity.
• Publication of the Nuclear Strategy in March 2013
- “The UK’s Nuclear Future”
• Invest £15m through UK Research Councils in
equipment and access to Culham, National
Nuclear Laboratory and Dalton Cumbrian Facility
to facilitate research.
• Government (BIS/DECC) and Industry: Initiate cost
reduction programme.
• UKTI to develop a strategy to increase the level of
investment over time for all parts of the nuclear
supply chain.
• UKTI to work with Nuclear Industry Council, the
Nuclear Industry Association and other parts of
the industry to develop an export strategy,
involving other parts of government.
Industrial Strategy

20. Aim: For the UK to be the best place in the world to
start and grow a technology business and for all our
companies and organisations to be confident and
successful consumers of technology.
• Publication of the Information Economy
Strategy in June 2013;
• Launching a new programme to help 1.6 million
SMEs scale up their business online over the
next five years;
• Developing a new data capability strategy,
allowing people to identify innovative and
efficient interventions on big policy challenges
such as education or transport;
• Establishing the world’s first facility for testing
state of the art 5G mobile technology, working
with industry and the University of Surrey.
• Promotion of innovative teaching tools in
schools, using online learning platforms;
• Working with business, local bodies and skills
organisations to develop a high level digital skills
strategy.
Industrial Strategy

21. Aim: Make the UK the global leader in sustainable
construction by 2025, building on the good work
already done on infrastructure, housing and planning.
• Publication of the Construction strategy in July
2013, which aims to make construction 33%
cheaper, 50% faster, safer, better for the
environment, and result in a 50% reduction in the
trade gap between total exports and total imports
for construction products and materials;
• Improving access to finance through the Institute
of Credit Management and by extending the
Enterprise Finance Guarantee Scheme's trade
credit pilot;
• Working to expand the size of the published
public sector procument pipeline by: exploring
with the higher education and local government
sectors how to open up their future construction
requirements;
• Improving apprenticeships by developing new
guidance with the National Apprenticeship
Service.
Industrial Strategy

22. Aim: To make the UK the global hub of
expertise in Professional and Business
Services.
• Publication of the Professional and Business
Services strategy in July 2013.
•The number of Higher Apprenticeships are
set to be trebled to 10,000 a year over the
next five years.
• A new network of senior business envoys will
champion UK capabilities and trade
opportunities when overseas.
• UK Trade and Investment will also arrange
trade missions specifically for PBS.
Industrial Strategy

23. Aim: To create a competitive, growing and
dynamic UK automotive industry making a
large and increasing contribution to
employment and economic growth in the UK.
• Publication of the Automotive strategy in
July 2013.
• Invest around £1 billion over 10 years to
establish a new Advanced Propulsion
Centre.
• Set up a new Automotive Investment
Organisation (AIO) within UK Trade &
Investment (UKTI) funded by up to £3
million over the next two years to support
inwards investment.
• Recruit more than 7,600 additional
apprentices and 1,700 additional graduates
over the next five years.
Industrial Strategy

24. Aim: The UK is a world leader in agricultural
innovation, productivity and sustainability;
increases inward investment and exports in
agricultural technologies, products and
services; and increases its contribution to global
food security and international development.
• Publication of the Agricultural Technologies strategy in
July 2013.
• Invest £90 million in world class Centres for
Agricultural Innovation with additional investment
from industry, which will support the wide-scale
adoption of innovation and technology across key
sectors, technologies and skills in the food and
farming supply chain.
• Create a £70 million Agri-Tech Catalyst to help new
agricultural technologies bridge the so called ‘valley of
death’ between the lab and the marketplace. Co-
funded with industry, the catalyst will specifically
support small and medium sized enterprises.
• Recruit a new UKTI agri-tech team to boost exports
and overseas investment in the UK’s agricultural
technologies.
Industrial Strategy

25. Aim: Increase the UK’s education
exports
• Publication of the International
Education strategy in July 2013.
• Launching ‘Education is Great’
campaign.
• Establishing an Education UK Unit.
• Appointing a new UK Education
Champion.
Industrial Strategy

26. Aim: Build competitive and innovative
UK supply chain
• Publication of the Offshore Wind Energy
strategy in August 2013.
• £20m from the Regional Growth Fund for
GROW: Offshore Wind, a new Manufacturing
Advisory Service programme.
• £46 million funding over five years for the
Offshore Renewable Energy Catapult Centre.
• Industry-led initiatives to share information
with the supply chain about their procurement
timelines.
• A new Offshore Wind Investment
Organisation, established by UKTI.
Industrial Strategy

27. Government is developing strategic
partnerships with key sectors
• We have identified which sectors could make the greatest contribution to
growth based on:
– Size and opportunity for future economic growth and employment
– Barriers to growth
– Scope for Government action
• Analysis published in September 2012
Industrial Strategy

28. Witty Review – Universities and Growth
• Review into Universities and Growth.
• How to maximise commercial potential of university research in sectors
and technologies relevant to Industrial Strategy; whilst also supporting
local growth.
• He plans to make recommendations aimed at the UK realising the optimum
economic benefits of research excellence.
• Call for Evidence closed on 31 May. Review due for publication in
September.
• The Review will provide preliminary findings relevant to the guidance to
LEPs on their growth strategies in Summer.

29. A stable macro environment is key
• Industrial Strategy builds on the
Government’s wider activity to support
growth
• Government has laid the broad
foundations …
o responsible government finances
o a competitive currency
o promoting exports, especially to
emerging markets
o competitive business taxes
o support for science
• … But more is needed to keep a
sustained advantage
1
1.2
1.4
1.6
1.8
2
2.2
Jan-
07
Jun-
07
Nov-
07
Apr-
08
Sep-
08
Feb-
09
Jul-
09
Dec-
09
May-
10
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10
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11
Aug-
11
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12
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12
CurrencyUnitper£
Euro US $
No business would operate without a long term plan
UK exports of Goods and Services to:
0
50
100
150
200
250
Other emerging countries BRIC Other advanced economies EU27
£billion
1998 2008 2009 2011
Industrial Strategy