Renewed focus on industrial strategy key to UK’s Brexit survival

Posted on 17 Oct 2016 by Jonny Williamson

A major report published today by the UK engineering profession has hailed the government’s renewed focus on industrial strategy as a major opportunity to help the UK compete on the world stage, but warned that Brexit must not restrict access to the engineering skills from across Europe that the nation's economy relies on.

With engineering contributing at least £280bn in gross value added to the economy 20% of the total the report aims to inform government of the key issues that impact on the UKs engineering performance as it forms its industrial strategy and position on leaving the EU. 

Engineering a future outside the EU: securing the best outcome for the UK has been compiled by an alliance of the UK’s professional engineering organisations led by the Royal Academy of Engineering and representing more than 450,000 engineers. It reportedly draws on wide-ranging consultation with engineers from all corners of the profession, including academia, industry and the public sector.  

CGI impression of Hinkley Point C - image courtesy of EDF Energy.
Uncertainty about the status of EU workers in the UK could delay major infrastructure projects such as Hinkley Point C – image courtesy of EDF Energy.

Engineering skills and major projects

The report highlights the challenge that Brexit could present to the supply of skilled engineers from the EU, which is states are essential to maintaining the world-class quality and success of UK engineering companies and universities. In academia, engineering has proportionally more staff originating from the EU (15%), than across all subjects as a whole.

The report findings emphasise that uncertainty about the status of EU workers in the UK and further risks to the supply of skilled engineers are likely to result in delays to major infrastructure projects such as HS2, Thames Tideway and Hinkley Point C, which are all expected to face recruitment difficulties and increasing costs if demand for labour outstrips supply. 

In response to these potential challenges, the report calls on government and the engineering community to work together to take decisive action on the engineering skills crisis, as well as to develop a Shortage Occupation List for engineering positions that cannot be filled domestically in the short term. It advocates straightforward solutions such as temporary visas for skilled engineers from EU countries with the specialist skills that the UK lacks.  

 The report also calls on the UK government to extend procedures for intra-company transfers to cover EU citizens, as many companies require their engineers to move freely to support and fulfil contracts.

Impact on research and innovation

The report highlights that innovation is critical to the UKs economy and productivity, as sectors with high concentrations of graduate engineers report greater than average levels of innovation activity and innovation-related income alongside greater productivity

Microscope R&D Innovation Research Institute for Manufacturing
The UK has a globally excellent and highly productive research and innovation base, to which EU support and collaboration has significantly contributed.

The UK has a globally excellent and highly productive research and innovation base, to which EU support and collaboration has significantly contributed. The report warns, however, that losing access to EU research and innovation funding programmes would pose a considerable risk to the quality and quantity of UK research and innovation, and in turn to UK GDP. 

In recognition of the importance of European funding streams and collaboration frameworks to UK research and innovation, it recommends that government seeks the closest achievable association with relevant EU programmes, and if needed develop long-term funding streams that complement current funding by encouraging international mobility and collaboration, particularly between industry and academia. 

Industrial strategy: an opportunity for global leadership 

Throughout the consultation process, one opportunity was pointed to repeatedly: the development of a new industrial strategy, in partnership with academia and industry, as a route to enabling engineering to maintain and increase its contribution to economic development and social progress after the UK leaves the EU.

 The report highlights the UKs strengths in attracting foreign direct investment (FDI), including a relatively open attitude to foreign ownership of assets and a flexible labour market. It calls on the government to continue to create the conditions for the UK to attract a high level of FDI by developing policies and frameworks that are designed to lower the costs of doing business and that make the UK an attractive place to invest in.

The full report and an executive summary of its findings are available to download here.

Standards and legislation are recognised in the findings as non-tariff barriers that are crucial to strong trade relations, with the UKs continued leading role in developing European and global standards seen as being particularly important.

The consultation also found that the UK energy industries would benefit from continued membership of the European Energy Community. Remaining a member would help foster security of supply, ensure that the UK can continue to influence regulation, and deliver economic benefits. 

Overall, the report calls for an industrial strategy that communicates that the UK is forward looking, open for business, and an active and welcoming partner for the international research, innovation and business communities.