Achieving the best sector deals for UK industry

Sector deals are an important part of the government’s Industrial Strategy green paper. However, if they are to work as intended they must have the right framework, and be underpinned with guidance and transparency. Terry Scuoler discusses the issues.

Manufacturers - Sector Deals - Prime Minister Theresa May will use her first regional Cabinet meeting to launch a modern Industrial Strategy.
It is essential that government sets clear guidance as soon as possible, including clarity on the sign off process for the sector deals.

The government’s Industrial Strategy green paper set our sector deals as a new concept.

Under this approach, instead of government researching and prioritising sectors – and being accused of ‘picking winners’ in the process – sectors are asked to come together and set out their ambition to win on their own terms.

Discussions would then take place with government on how it can support or enable that ambition. The new approach builds on existing sector strategies such as those in aerospace and automotive which have their own councils.

Sector deals are not just about replicating this model to other sectors, however, but will be loosely modelled on the place-based deals such as city and devolution deals.

Manufacturers believe such a focus on sector-specific challenges could help them secure positive outcomes, in particular higher productivity, increased exports and investment in training.

Furthermore, by having close links with specific sectors, government would also gain foresight on the economic direction of travel, and intelligence on future challenges such as potential supply-chain disruptions as a result of Brexit.

Process challenges

However, the application of models loosely based on place-based deals is not straightforward.

While local authorities had the resources, a legally enforced role and policy know-how, including a long history of negotiating with government on devolution deals, businesses are starting from a different place while also having to get on with the day job.

In particular, the green paper left a number of questions unanswered around the process and timescales for deals that could hold companies back from engaging.

As such, there is a risk that sectors could spend considerable time developing deals which then collapse because they don’t meet government expectations – as some devolution deals have already done.

Terry Scuoler, CEO, EEF
Terry Scuoler, CEO, EEF.

Should this happen, business may disengage from aiming for sector deals, with a further risk of undermining the government’s Industrial Strategy aims.

Guidance and transparency

Therefore, it is essential that government sets clear guidance as soon as possible, including clarity on the sign off process for the deals. This would enable better industry-government engagement and allow sectors the time to organise themselves and come up with the most robust proposals for a deal.

There should also be transparency around the criteria on which different bids will be selected, and the criteria to be used should prove the new approach will not be confined to traditional industries and that sectors based on emerging technologies will have the confidence to develop deals.

Finally, there should be clarity on which policy areas are out of scope. Given that deals may go beyond the Department for Business, Energy and Industrial Strategy, it will be essential to specify which government departments will be involved in engaging with sectors and delivering targeted interventions, as well as what policy areas may be out of scope.

Getting the sector deal framework right could provide vital and significant support for the overall Industrial Strategy by allowing companies to feel the tangible and specific vertical benefits for their sector.

Transformative guidance can be the key to unlocking the door of successful sector deals.