Industrial Strategy: Did they listen to you?

Cumbria Chamber of Commerce embarked on a major consultation earlier this year. We sent questionnaires to thousands of businesses and convened focus groups to comment on the Government’s proposals for an Industrial Strategy.

Our response, submitted in April, made dozens of recommendations including reform of business rates, sector deals for nuclear and tourism, and tax breaks to encourage investment.

The Industrial Strategy is an important document that is likely to influence government policy for years to come.

Rob Johnston, Chief Executive of Cumbria Chamber of Commerce, said: “Part of the Chamber’s role is to represent Cumbrian businesses and to lobby government on their behalf, and I’d like to thank all the businesses that took part in our consultation and so helped shape our submission.

“The Industrial Strategy is an important document that is likely to influence government policy for years to come. That’s why we felt it was important to consult Cumbrian businesses and table a considered response.

“We’re delighted that the Government appears to have taken on board a lot of what we said – that underlines the effectiveness of the Chamber as a lobbying organisation on behalf of businesses.”

Here are some of the points we made, with details of how the Industrial Strategy responds to them.

Skills

We said: “Cumbrian businesses are facing particular skills shortages in STEM subjects and engineering, and expect the situation to worsen as major projects at BAE Systems in Barrow, and Moorside, Sellafield, come on stream.”

The Strategy acknowledges that there is “unmet demand” for STEM skills, in particular graduates, and promises to create a new regulator to ensure that higher education is responsive to employer and industry needs.

We said: “There is a concern that schools encourage pupils to pursue academia rather than technical training”, that vocational qualifications lack the prestige of a degree, and that all pupils should get “meaningful” work experience.

The Strategy pledges to improve the status of vocational education, and increase by more than 50% the number of hours training for 16-19 year-old T-level students, including a high quality work placement.

We said: “At present, there is a mismatch between the skills many young people possess and the skills that employers need” and that “there should be more emphasis on STEM subjects in primary schools”.

The Strategy promises measures to boost maths teaching in schools at all levels, including £27m to expand the Teaching for Mastery maths programme to reach 11,000 primary and secondary schools by 2023.

We said: “It is important for business growth and competitiveness that individuals can switch careers at any stage in their working life. The information they need to make decisions must be readily available, simple and accessible, with institutions in place to provide guidance and facilitate the appropriate training and development.”

The Strategy promises to introduce a National Retraining Scheme by the end of this Parliament to help adults upskill and reskill.

Infrastructure

We said: “Long-standing concerns about inadequate broadband and mobile phone coverage in Cumbria persist. Some areas lack 3G mobile coverage, never mind 4G, impacting across the business community, including manufacturers and others not purely the visitor economy.”

The Strategy pledges to boost digital infrastructure with over £1bn of public investment including £176m for 5G and £200m to encourage roll out of full-fibre networks, and it reiterates a pledge that 95% of premises will have access to superfast broadband by the end of this year, and 96% will have 4G coverage.

We said: “Infrastructure development within Cumbria is disadvantaged by the calculations used to decide between competing schemes. If infrastructure investment decisions are based on a crude analysis of uplift in GVA, then investment will inevitably gravitate to more highly populated areas.”

The Strategy recognises calls for investments to be more “geographically balanced” ensuring that “investments drive growth across all regions”.

We said: “There are concerns that spending on flood defences is prioritised towards defending homes rather than business premises” and we cited the “sluggish” response in repairing damage caused by Storm Desmond in 2015.

The Strategy says that future infrastructure investments will “aim for resilience as well as efficiency” to avoid “disruptions caused by shocks such as flooding”.

We said: “Lack of affordable housing hinders efforts to attract and retain skilled workers. The problem is particularly acute in South Lakeland and Eden districts, where average house prices are a multiple of 9.8 to 9.9 times average earnings. These are the highest ratios in the North West.”

The Strategy commits the Government to raising housing supply by the end of this Parliament to its highest level since the 1970s, on track to reach 300,000 new homes per year.

Access to finance

We said: “The British Business Bank should act as a key banker and lender [to SMEs], and be prepared to take a degree of entrepreneurial risk.”

The Strategy promises to establish a £2.5bn investment fund incubated in the British Business Bank, ensuring that businesses can get the capital they need to scale up. It also pledges to support businesses to get access to debt finance by extending the British Business Bank’s Enterprise Finance Guarantee.

Nuclear

We said that: “A sector deal for nuclear is a key priority for Cumbria”.

The Strategy confirms that the Government is in “advanced discussions” on a sector deal for nuclear. But while it acknowledges that “nuclear is a vital part of our energy mix” there is no explicit commitment to further nuclear new build. The emphasis is on achieving “substantial costs reductions” across the existing new build and decommissioning programmes.

Business rates

We said: “Businesses see business rates as a barrier to growth. They are a tax on investment that deters businesses from investing in their premises.”

The Strategy promises to “improve the fairness” of the business rates system and provide a further £2.3bn of support for businesses over the next five years.

Innovation

We said: “Learning from success elsewhere, for example Eindhoven, an organisation should be established with a specific remit to evaluate innovations and ideas, identify commercial applications for them and help the inventors or innovators bring them to market.”

The Strategy promises to set up ‘Innovation Clusters’ centred on universities and research organisations, bringing together world-class research, business expertise and entrepreneurial drive.

We said: “Support for innovation and commercialisation should include tax incentives for businesses to invest in R&D.”

The Strategy makes an explicit commitment to improve the UK tax system to support innovation by increasing the R&D tax credit and introducing an advanced clearing system for R&D expenditure credit claims.

Public procurement

We said: “Often opportunities sit within publicly procured contracts. There is value therefore in a shared risk/shared reward model for public-sector procurement that allows innovative businesses to retain their intellectual property rights and back them with access to debt or equity funding to bring products or services to market.”

The Strategy sets out to Improve public procurement as an important source of finance for innovative businesses, without diluting their equity.

Local Enterprise Partnerships

We said: “Businesses are supportive of Local Enterprise Partnerships in principle, but feel that Cumbria LEP has underperformed” and that all LEPs should have a “common governance structure and proper accountability”.

The Strategy pledges to bring forward reforms to LEP leadership, governance, accountability, financial reporting and geographic boundaries.