Speech

Matthew Hancock speech on Industrial Strategy

Matthew Hancock outlines the government’s industrial strategy, and what this means for both advanced manufacturing and wider economy.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Matt Hancock MP

Intro

Today I want to talk about why we back an industrial strategy, and what this means for both advanced manufacturing and wider economy.

As Minister for Portsmouth I’m delighted to be back, because this city is a great place to make this argument.

You’ve been at the cutting edge of maritime technology since the ninth century, when King Alfred came here to supply his fleet with bigger and faster longships than those in use by the Vikings.

It was an early instance of the Anglo-Saxon model proving more efficient than its Nordic counterpart.

Later, in the eighteenth and nineteenth centuries Portsmouth perfected the art of fighting sail; in the twentieth century it was home to the Royal Navy’s first submarines and the revolutionary dreadnought battleship.

But far from basking in old glory, you remain at the cutting edge.

Your response to change has been extraordinary. Faced with difficult decisions over shipbuilding, you have picked yourselves up, dusted yourselves off, and reinvented yourselves anew.

Cutting edge marketing industries. Leading in autonomous vessels, new composite materials, and even here the space industry.

Space is now a vital part of Britain’s industrial landscape.

It contributes £11.3 billion to the economy each year and employs more than 35,000 people, a large proportion of them here at Airbus Defence and Space - the largest satellite manufacturing company in Europe.

And this government is committed to capturing 10 percent of the global market for space technology and services by 2030: a £40 billion industry and 100,000 new jobs for the UK.

See Inside Manufacturing Announcement

Today marks the beginning of a month of SIM events. The programme has expanded from one sector in 2011, to now include all manufacturing sectors.

Last year 6,300 young people and their teachers took part in over 175 visits and events throughout the UK.

The programme will now carry on throughout the year.

Airbus Defence and Space – and many other manufacturers around the country - are helping inspire next generation of engineers by hosting SIM events.

This is being done with the unwavering support of our industrial policy.

It is a strength for our country that our industrial strategy is now supported by a strong cross party consensus.

Whether we like it not, government impacts different businesses differently. While some regulations are generic, others affect only the sector to which they apply. Government is a major customer. We make decisions that affect business over infrastructure, tax and as the main provider of education and skills.

For better or for worse, for richer and for poorer, those decisions inevitably have sector specific impact.

Portsmouth isn’t a major centre for advanced manufacturing by accident, but because it’s where successive governments have chosen to locate our most advanced surface ships.

Aberdeen is the world centre for offshore oil. It’s a huge asset to our country so let’s double down and back it.

By contrast, poor regulation of our banking sector had a catastrophic impact in the crash six years ago.

So rather than pretending we don’t have a footprint, we need to think intelligently about how we use that footprint to secure jobs, opportunity and long-term prosperity.

I pay tribute to the work Lord Hestletine and Vince Cable have done in the past, and the huge effort of my predecessor Michael Fallon.

In skills, finance, procurement and science let us pull in harness with business, work hand in glove, and promote the best of British.

It’s all part of our long-term economic plan to make Britain the best place in the world to start and grow a business.

And it has wider purpose: to back job creators and wealth creators so we can prosper as a nation in an increasingly competitive world.

Backing success what does this mean in practice?

First, dialogue

When we came to office we found no formalised way for business and government to engage, in detail and in partnership.

Yet without that dialogue we cannot listen to the needs of business, and respond to them.

Getting this dialogue right is a crucial starting point, because if you don’t talk, you can’t then do.

It’s important to get it right.

It can’t just be at the top - though it must go right to the top. Dialogue needs to be drilled down to every level.

It can’t just be with some, typically big, players, but must be open to the concerns of a whole sector.

It can’t just be about the government on broadcast, but if anything is more important for the government to listen, and listen hard.

Our industrial councils formalise this dialogue, and provide a structure for interaction from the very top of government to the most detailed working level.

Second, the chequebook matters

Whether in terms of finance through the British Business Bank, regional support through the Growth fund, training through Apprenticeships, support for research through our protected science budget, or direct procurement, it is important government thinks carefully and strategically about how we spend taxpayers money.

Value for money matters.

This is not government cash but taxpayers’ hard earned cash after all. Probity and even handedness are crucial.

But to get the best value for money we should be active in thinking about and understanding the consequences of spending.

And when I say the chequebook matters, what I mean is that both the government and the private chequebook matters.

Taxpayer contributions can bring heft and recognition.

But the best guarantor of good value is for any taxpayer cash to sit alongside cash contribution from the private sector.

Take science.

The billion pound annual taxpayer budget has been protected, but is only part of the story. Working alongside business and using the best possible independent research, we have identified eight great technologies likely to have a huge future impact. We are backing those technologies, and the role Britain can play. We are doing that alongside private investment, to ensure we double down on ideas others are backing, rather than trying to push water uphill.

Government can add scale and firepower to double down on British strengths.

So we’ve committed £4 billion to support the development and commercialisation of technologies where the UK has the expertise and business capability to become a world leader, from robotics to regenerative medicine, advanced propulsion to aerospace.

We’ve come in with £395 million to support nine Catapult innovation centres, alongside private cash, aimed at turning at research into commercial reality.

Through the Defence Growth Partnership government and industry are working together to harness the wealth of capability and innovation that resides in the UK defence industry – to capture the value defence procurement brings for new market opportunities and grow high value jobs.

As part of the DGP’s initial set of launch projects we are establishing a UK Centre for Maritime Intelligent Systems here in Portsmouth to develop world-leading capability in the growing maritime autonomous systems market.

Near here, the Solent is well placed to have a world beating marine and maritime industry. It has ports that lie just 20 miles from the world’s busiest shipping route from Shanghai to Rotterdam – and a business base, skills, traditions research and educational strengths that are second to none.

There is now a shared plan between government, local political and business leaders to unify and enhance the many elements of marine excellence in the region, to embrace the new technologies and seize the opportunities they bring, improving R&D, transport links, upgrading ports and ferry terminals and supporting Sir Ben Ainslie’s campaign to win the Americas cup for Portsmouth, all with the clear goal to build on the pride, heritage and ambition of the region.

Third, it’s not just about the money

Improving regulation is a constant effort of looking at the detail, from the primary legislation or European Directive, through individual regulations, how well written and understandable is the guidance, it’s interpretation on the ground, and how it’s enforced in practice.

We are determined to improve this..

And we can only do this if we listen to business. In some areas this is a matter of straightforward deregulation.

In others, there are important public policy goals we as a society want to achieve. Businesses get that. But there are often ways we can deliver the same results so much better.

This is especially important for smaller firms which don’t have dedicated public affairs arms.

So our One In Two Out rule is delivering, ensuring we are on track for this to be the first Parliament in modern history that lowers the burden of domestic regulation.

Our Red Tape Challenge, invites firms to identify regulations they think should be scrapped or amended. So far, we’re reforming or removing over 3000 regulations, saving business almost a billion pounds a year. But there are more to do. We have introduced a growth duty into all non economic regulators, and will give a director a specific duty to be the small business champion in each.

Our guidance re-write has taken thousands of pages of guidance and put it into plain English.

But these thousands of pages are but the foothills of the mountains of guidance that need translating into plain English.

Our focus on enforcement reviews are now led by business directly in technology and agriculture so employers themselves can tell us where heavy handed enforcement can be reformed to deliver the same regulatory outcomes, at a much lower cost to business.

We have started with twelve, but have hundreds more areas to cover and we welcome an approach from business or any industry body who wants to work with us to improve the enforcement of regulations.

In many areas, like health and safety, our myth busters help people to follow what the actual rules are, not some over the top interpretation, often given by consultants who rely on complex regulation to stay in business.

Our principle is clear: if you act reasonably, you should not fall foul of regulation, and it shouldn’t take some expensive consultant to tell you how to stay within the rules.

The work of regulatory reform never ceases, and there is much more to do, but we are changing the culture of Whitehall and listening to business: all part of our Industrial Strategy.

The fourth element is that clusters matter

Location location location isn’t just a tv show.

Through our Industrial Strategy we have turned on its head the government attitude to location.

Gone are the days when government would see an area with a particular strength in a sector, and complain it wasn’t diversified enough, that it didn’t need help as it was doing better than elsewhere, and that the success should be shifted to other parts.

By contrast, where we see success, we want to back it. Where a cluster exists, let us double it.

One of the ironies of the modern world is that more advanced communications have strengthened the need for technologies to cluster in close knit geographical communities with strong physical transport networks.

So we are backing clusters, using the privately led LEPs to back local strengths and local priorities, as part of and integrated with the national Industrial Strategy.

Support for all sectors, not just one

This approach of Industrial Strategy is working.

The value of the cars we export is outstripping imports for the first time in my lifetime. Our aerospace industry is growing at over 9% a year, almost triple the global average.

Pharmaceuticals are expanding.

But it would be a mistake to think of Industrial Strategy as a manufacturing concept.

Wherever people are putting their time, talent and energy into private enterprise we will back them; we are committed to offering support to all sectors of the economy, not just one.

It would be a mistake to limit the coverage of our industrial strategy.

For this reason, this year I set up the Tourism Industrial Council.

Tourism is a £127 billion industry that employs 3.1million people and it is the 5th largest export industry in the UK. They need a voice at the top table too.

I am committed to rebooting our national nuclear industry through Hinkley Point C.

Last week we got the green light from the EU Commission which was an important milestone on this journey. Hinkley has the potential to power nearly 6 million homes, create 25,000 jobs during construction alone and roughly 50% of the supply chain will be based here in the UK.

We are backing this development every step of the way as part of our Nuclear Industrial Strategy - bringing not just the power but the jobs and skills for new nuclear back to Britain where they belong.

We must spread the success of industrial strategy to all sectors that want them.

And while we have our ideas, this is a partnership. So if your sector needs an industrial strategy, let us know. Broadening the scope, drilling down into specific regional needs and bringing in new sectors is the future for our industrial strategy.

This open approach to an industrial strategy that reflects the modern economy is itself reflected in the approach we’re taking to its components too.

For example, the record growth of Apprenticeships was founded in a recognition that Apprenticeships add value in all sectors - from engineering to education, from space to spies.

And we have spread Apprenticeships to new areas previously untouched, like accountancy, the BBC and healthcare.

And we’ve asked employers – market leaders in sectors from finance to food, retail to steel - to literally rewrite the Apprenticeship rulebook.

They’re condensing hundreds of pages of complex, messy frameworks to a two-page description of the skills and behaviour employees should demonstrate in a particular industry and how they should be assessed.

Shorter, clearer, better standards written by employers for employers.

In your own sector, a new Defence apprenticeship standard will develop the standard for Masters-equivalent apprenticeships in advanced systems engineering.

We’ve just announced a National College specifically to train up the workers that will be building and operating HS2. And we will go further, making sure that each and every sector has the supply of talent it needs to grow – in turn opening up a wealth of skilled job opportunities to help build a better, more prosperous Britain.

Conclusion

So you can see that our industrial strategy is about more than just GDP.

Our Industrial strategy is a modern success story and we want to expand it.

It’s about advancing our society, pushing at the boundaries of human ingenuity and encouraging our young people to reach for the stars.

There’s still much more to do but if the history of this city proves anything it’s that British resolve, British enterprise and the British people will rise to the challenge.

Published 13 October 2014