90% of firms say industrial strategy will drive up living standards but only if given the priority it needs.

The fourth industrial revolution is on our doorstep, and the UK is in pole position to benefit from it. With its strong eco-system of large and small firms, outstanding science base, proven innovation and unmatched talent pools, the UK can be one of the world’s winners. The prize would be reversal of the UK’s poor productivity record, rising living standards and a fairer society.

But seizing the opportunity will need a new kind of industrial strategy. The opportunities are great, but so are the challenges. As many as 35% of jobs may be displaced by automation and artificial intelligence: new ones will take their place but will require a strategic approach to retraining. It needs to be long-term, rooted in a new ’partnership of the century’ between government and business, and crucially, it needs to be a ‘leapfrog’ strategy, aimed at the UK overtaking competitors, not just catching up.

The CBI survey of over 400 firms, published today (Monday), shows there is strong consensus amongst firms (82%) that the main pillars of our new industrial strategy need to be people, infrastructure and innovation. They say that all three need to be transformed to power a new, modern economy. Uncertainty is taking its toll, with key concerns including: uncertain economic outlook (54%) and what post-Brexit trade will look like (39%)

An effective industrial strategy can be a tonic for uncertainty, but the Government must learn from historical missteps and build cross party consensus. To support this, the CBI recommends the creation of an independent Industrial Strategy body, similar to the OBR, that could measure, advise and build confidence that this plan will last. Regional industrial strategies are a large part of the solution. Every region of the UK has special strengths that can be unlocked by devolution and tailored strategies. To ensure no part of the UK is left behind, the CBI recommends the appointment of a regional commissioner to oversee delivery, regardless of local political structures.

Carolyn Fairbairn, CBI Director-General, said:

“As uncertainty continues to bite on the UK economy, there has never been a more important time for the UK to unite behind a ‘leapfrog’ industrial strategy. The aim is to enable British firms to compete and win in the new technology age. It is also urgent. Change is coming at lightning speed and the world won’t wait for Britain.

“This means we can’t afford to let Brexit distract from the long-term action that is so badly needed. What’s at stake is the UK’s future in a global economy redefined by artificial intelligence and automation. Brexit must not be allowed to crowd this out.

“Firms agree on what matters most: transforming the UK’s skills base, modernising its physical and digital infrastructure and accelerating innovation. But they also agree that catching up is not enough.

“A leapfrog industrial strategy is within reach but not easy and will require a partnership of the century between government and business. Nobody wants to have this conversation again in four years’ time, and jobs and opportunity won’t wait around.

“We look forward to the publication of the Government’s strategy and to working with them and across all parties to build an industrial strategy that can stand the test of time and improve lives across the UK.”

To deliver the Industrial Strategy successfully, the CBI urges the Government to:

• Build a new style of partnership between government and business, tasked with leapfrog thinking in skills and retraining, infrastructure and innovation
• Set up a joint commission on Artificial Intelligence in 2018, involving both business and employee representatives, to better understand the impact on people’s lives, jobs and our future economic growth
• Deliver on the recommendations as laid out by the industrial digitalisation review, chaired by Siemens UK CEO Juergen Maier
• Establish an independent Industrial Strategy Office – similar to the Office for Budget Responsibility – to measure and monitor performance and give impartial advice on industrial strategy progress. 
• Appoint an independent commissioner to ensure all regions of the UK have appropriate levels of devolution to deliver the Industrial Strategy 
• Work across the party spectrum to ensure that strategy sits above political cycles.

Olly Benzecry, UK & Ireland Managing Director at Accenture said:

“The Industrial Strategy presents an opportunity for Government to take on board, and implement, some of the bold ideas being recommended by industry, such as those laid out in the recent Made Smarter Review.

“This review highlighted how digital technologies, such as artificial intelligence, augmented reality and robotics have huge potential to bring about economic growth, increased productivity and jobs. Realising this opportunity can make a real difference to the UK’s industrial future.”

Nigel Heap, Managing Director of Hays UK & Ireland, comments:

“The results of this survey mirror the findings of our own recent Hays UK Salary & Recruiting Trends 2018 guide, where we found that 59% of employers stated that skills shortages are negatively impacting on productivity. If we are going to make headway and ensure that the industrial strategy is a success, we need to make sure businesses have access to the skills they need in order succeed. Businesses are looking for certainty, which in turn would lead to stronger business confidence and job creation, allowing Britain to take a stronger position on the global stage.”