FST JOURNAL

Summary:

• For businesses to turn a profit, they must innovate and the role of science and technology is vital. However, converting that technology into trade is extremely challenging
• Without an aligned ecosystem, innovation cannot thrive
• Growth is the number one mission of this government, and a modern industrial strategy is central to this mission.

I would like to present two perspectives that I hope will complement those of my fellow speakers. The first is that of an end user, drawing from my extensive experience in industry where I have felt the implications of an industrial strategy. The second is that of an insider, as a Civil Servant in the Department of Business and Trade, which co-leads the industrial strategy with the Treasury. This gives me an insider's view.

The first perspective

Prior to my role in government, I was the Chief Technologist at BAE Systems' Air Sector, where I spent around 25 years in the technology-intensive aerospace, defence, and security sectors. During this time, I worked both domestically and internationally, collaborating with companies of all sizes, academics and entrepreneurs. It may seem obvious, but for businesses to turn a profit and stay ahead, they must innovate, transforming ideas and technology into tradable outcomes—competitive products and services. Whether it is developing robotics for human-machine teaming in a digitised factory,or applying new materials to reduce the carbon footprint of aircraft, the role of science and technology is vital. However, converting that technology into trade is extremely challenging.

Many factors must align. Technology must be ready at the right time, and we know that different technologies mature at varying rates. Consider the rapid refresh rate of  phone handset technology compared to the long development cycle of quantum sensing for brain imaging. Development cycles, service lifetimes, and business models all differ significantly and require careful planning and agility.

Moreover, the right skills must be available—not just technical skills, but also those that help businesses deliver programmes, scale operations, raise finance, and manage risk. Without a comprehensive skill set, innovation cannot thrive. Additionally, the necessary infrastructure—physical, digital, and data infrastructure—is crucial for connecting the ecosystem and enabling development, testing, qualification, and certification. Without this infrastructure, innovation struggles to flourish, and products cannot reach the marketplace.

Regulation is another factor; we expect innovative, disruptive technology to challenge established practices. Therefore, it is crucial for regulators to be part of the innovation journey and to have the incentives that allow them to support growth. Access to finance is essential at every stage of the innovation process, whether for large corporations or university spinouts. Innovators need access to capital throughout their development journey—from lower Technology Readiness Levels (TRL) to higher, more complex stages, and into the marketplace.

Competition for market access and market share is a vital part of business strategy. Successfully delivering competitive products to the right market at the right time is critical. Often, the domestic market may not be sufficient, necessitating access to international markets. These challenges are consistent, whether establishing floating offshore wind capabilities or developing a supply chain for semiconductors used in batteries for electric vehicles. Overcoming these hurdles requires a unified vision and coordinated resources among government, industry, and academia. Targeted investments can accelerate collaboration, drive onshore innovation, and create self-sustaining ecosystems. This fosters the exchange of ideas across different sectors and builds enduring expertise through the people, businesses, institutions, and communities developed over time. This demonstrates the potential of a well-conceived industrial strategy.

When I joined the department two years ago, my first question to the Permanent Secretary was whether we would create an industrial strategy; I was pleased to find that my wish had come true. 

The second perspective

My role on the inside—growth is the number one mission of this government. A modern industrial strategy is central to this mission. Our Green Paper outlines this vision for a modern industrial strategy and aims to invest in a 10-year plan that provides the certainty and stability businesses need to invest.

We all recognise that the current context is challenging. In the 20 years leading to the global financial crisis, productivity grew by around 2% per year. In the (nearly) 20 years since, however, it has grown by less than 1%, which has resulted in significant challenges. Yet the opportunity to build on our strengths is substantial. The UK possesses high-quality research capabilities, innovative firms, a favorable global trade outlook, trusted regulatory frameworks, and a highly skilled workforce. 

Our goal is to support the adaptation and growth of the UK's already successful services and manufacturing sectors while seizing opportunities to lead in emerging sectors that create high-quality, well-paid jobs and shape sustainable growth. We are committed to supporting net-zero initiatives, regional growth, and economic sustainability.

Policy will be guided by long-term stability and the strategic coordination of efforts. Our commitment to free and fair trade, alongside an improved investor journey, will involve collaboration with local and regional leaders, devolved governments, and businesses. Science and technology will be crucial in driving growth across growth driving sectors. 

Growth driving sectors:

Our Industrial Strategy will channel support to eight key growth-driving sectors – those in which the UK excels today and will excel tomorrow. These are:

1. Digital and Technologies: Our strong foundations enable a technology ecosystem valued at over a trillion dollars, ensuring we develop and grow new businesses whilst underpinning innovation in existing sectors.
2. Advanced Manufacturing: This sector accounts for nearly half of the UK's private sector R&D investment, generating over $200 billion annually. 
3. Life Sciences: With around 7,000 businesses generating over £100 billion in turnover, advancements in AI technology like AlphaFold showcase the innovation potential in this field.
4. Defence Industry: Supporting over half a million jobs, this sector applies advanced technologies that often benefit other areas of the economy. 
5. Clean Energy Industries: The transition will involve significant investments in new technologies, projected to create over a trillion pounds in opportunities by 2030. 
6. Financial Services: As a global financial centre, our potential for exports is enhanced by technological advancements in areas like FinTech. 
7. Creative Industries: The UK ranks as the third-largest exporter of creative services globally, increasingly influenced by technology. 
8. Business and Professional Services: Contributing £174 billion in exports in 2023, this diverse sector presents vast opportunities for growth. 

To maximize these opportunities, we need an integrated approach where academia, industry, and regulators work together to stimulate growth and remove barriers. 

Thank you to all who engaged in the green paper consultation. Our teams are diligently working on synthesising the feedback as we build the foundations for businesses, innovators, and individuals to thrive in this exciting time. It is a privilege to be part of this journey.