CBI demands delivery of the Industrial Strategy

Posted on 11 Sep 2013 by Ruari McCallion

"Raising the Bar" - New report calls for strengthening of supply chains

The UK must grasp its once-in-a-generation opportunity to get industrial strategy right, CBI director-general John Cridland told the joint Government-CBI Industrial Strategy Conference at Warwick University.

In a speech to the joint Government-CBI Industrial Strategy Conference at Warwick University, Mr Cridland said that good progress has been made in developing an industrial strategy but the Government still has some way to go to deliver on its promise.

The speech was delivered as the CBI published a new report: “Raising the Bar – Business priorities for industrial strategy one year on“. It finds that businesses remain split on whether the UK will be more competitive in five years’ time and calls for a renewed focus on delivery by improving the competitiveness of the UK’s business environment and strengthening supply chains.

“The gathering momentum of recovery must not distract us from tackling the profound economic imbalances which built up during the boom years,” Mr Cridland said. “It’s important that, as things start to look up in the short term, we don’t take our eye off the ball when it comes to long-term challenges.”

He claimed that the country is at a “commercial tipping point” and that the delivery of a coherent industrial strategy will  boost confidence about the UK’s long-term success.

“For me this means three things,” he continued. “Taking action to further improve the competitiveness of the UK’s business environment, strengthening supply chains that underpin our key growth sectors, and raising the bar on implementation by both business and government.”

Confidence in the balance

Key points from CBI research highlighted in the Raising the Bar report:

  • 51% of businesses surveyed are confident UK business conditions will improve in the next five years while 48% are not.
  • The UK trails behind its competitors on several critical indicators – performing relatively poorly on infrastructure, access to finance, education and skills, regulation, and percentage of GDP spent on research and development.
  • 60% of businesses surveyed are still unclear about what the UK’s industrial strategy is hoping to achieve;
  • 63% of businesses surveyed think government funding and policy doesn’t strategically support the UK’s competitive advantages.

“Strengthen supply chains”

“Strengthening supply chain companies that underpin our champion sectors will make industrial strategy real to people and businesses in every region of the country,” said Mr Cridland.

“Nearly two-thirds of businesses surveyed are telling us they aren’t clear about what the industrial strategy is seeking to achieve. I want businesses to be able to say that, because of industrial strategy, we’ve got more work and we’re employing more people.

The CBI is calling for improved understanding of supply chains in key sectors through for example supply chain mapping; and increased awareness of initiatives to support supply chains such as the Advanced Manufacturing Supply Chain Initiative. It says that Government should commit to and expand this initiative beyond the next round, into the next Parliament.

It looks for action to incentivise supply chain collaboration, encouraging large companies to work with their suppliers on access to finance, skills and exporting, as well as collaboration between suppliers.

Billion pound opportunities

The report highlights key sectors where action to strengthen supply chains could deliver long-term growth opportunities. In Aerospace, it states that global forecasts for the period to 2031 estimate a requirement for 27,000 new passenger aircraft worth $3.7 trillion, 24,000 business jets worth $648bn, and 40,000 helicopters worth $165bn. In automotive, it calls for 80% of components for vehicles to be sourced from domestic suppliers (the current figure in the UK is 36%). This would add £3bn to the UK economy.

In Offshore Wind, the supply chain has the potential to capture 60% of overall value of investment in the sector to 2030, which will support 41,000 jobs. UK companies are at present only securing around a third of contracts to supply components to build and install new UK offshore wind developments.

The Nuclear supply chain has the potential to capture £25bn (44%) of expenditure on new build projects to 2030 and a sizeable chunk of overseas business as well. The construction of a new plant at Hinkley Point could see 57% of its construction contracts going to UK suppliers.