Industrial
Strategy
Building a Britain fit for the future
Industrial Strategy White Paper
2
Contents
Foreword from the Prime Minister
04
Foreword from the Secretary of State
06
Introduction
08
Grand Challenges
30
Ideas
56
People
92
Infrastructure
126
Business Environment
162
Places
214
Conclusion: Britain and the world
240
Industrial Strategy White Paper
4
Foreword from the
Prime Minister
Over the last seven years, we have made huge progress in
restoring our public finances and rescuing our economy from the
brink of bankruptcy. Thanks to the sacrifices of the British people,
the deficit is now down two-thirds since 2010, the unemployment
rate is at its lowest in over 40 years and we have had 19
continuous quarters of economic growth.
We should take enormous pride in
these achievements and the difference
they are making for many families and
businesses in our country. But at the
same time, we must also recognise
there are some communities which
have struggled to keep pace with
changes in the global economy and as a
result not fully shared in the prosperity
that growth has delivered.
For me it is not enough to see growth
in the national economy if your
local economy is shrinking. It is not
ambitious enough to have record jobs
growth, unless those jobs are secure
and delivering real growth in wages.
And we are not fulfilling Britain’s
potential if, despite having scientists
and universities renowned the world
over, we cannot turn their ideas into
the products and services on which the
industries of the future will be built.
That is why one of my first actions
as Prime Minister was to begin the
development of a modern Industrial
Strategy that would help businesses to
create high quality, well paid jobs right
across the country. This document is
a vital step in delivering that vision.
More than just a set of announcements,
it heralds a new approach to how
government and business can work
together to shape a stronger, fairer
economy. At its heart it epitomises my
belief in a strong and strategic state
that intervenes decisively wherever it
can make a difference. It is rooted in
the conviction that a successful free-
market economy must be built on firm
foundations: the skills of its workers, the
quality of the infrastructure, and a fair
and predictable business environment.
And where these are missing it takes
energy and partnership between
government and the private sector to
address the problems.
5
That is exactly what this Industrial
Strategy aims to do. It will help young
people develop the skills they need to
do the high-paid, high-skilled jobs of the
future. It backs our country for the long-
term: creating the conditions where
successful businesses can emerge and
grow, and helping them to invest in the
future of our nation. And it identifies
the industries that are of strategic value
to our economy and works to create
a partnership between government
and industry to nurture them. In doing
so, it will help propel Britain to global
leadership of the industries of the
future - from artificial intelligence
and big data to clean energy and
self-driving vehicles.
Two centuries ago it was our industrial
revolution which led the world. Thirty
years ago, it was our bold, pro-market
reforms which set an example for
others to follow. Today, our ambition is
just as high. As we leave the European
Union and forge a new path for
ourselves, so we will build a Britain fit
for the future and fulfil the mission that
I set on my first day as Prime Minister:
to make our United Kingdom a country
that truly works for everyone.
The Prime Minister
6
Industrial Strategy White Paper
Foreword from
the Secretary of State
We are at one of the most important, exciting and challenging
times in the history of global enterprise.
Powered by new technologies, the way
we live our lives as workers, citizens and
consumers is being transformed across
the world.
Britain is extraordinarily well-placed
to benefit from this new industrial
revolution. We are an open enterprising
economy, built on invention, innovation
and competition. Our universities and
research institutions are among the
best in the world. We have a deserved
reputation for being a dependable
and confident place to do business,
with high standards, respected
institutions, and the reliable rule of
law. We have achieved near historic
levels of employment. We are a
crossing point for the world because
of our geographic position, the English
language, our strong ties, our openness
to ideas and our vibrant culture. We
have many industries - from financial
services to advanced manufacturing,
from the life sciences to the creative
industries – which are world leading.
To benefit from the opportunities
before us, we need to prepare to seize
them. This would be needed at any
time, and Britain’s decision to leave
the European Union makes it even
more important.
More decisions about our economic
future will be in our own hands,
and it is vital that we take them.
In our Industrial Strategy we set out
how we will build on our strengths,
extend them into the future and
capitalise on the opportunities
before us.
A serious strategy must also address
the weaknesses that keep us from
achieving our full potential.
For all the excellence of our world-
beating companies, the high calibre
of our workforce and the prosperity
of many areas, we have businesses,
people and places whose level of
productivity is well below what
can be achieved.
By improving productivity while
keeping employment high, we can
earn more – raising living standards,
providing funds to support our public
services and improving the quality of
life for all our citizens.
So this Industrial Strategy deliberately
strengthens the five foundations
of productivity: ideas, people,
infrastructure, business environment
and places.
As well as setting a path to
improved productivity, our Industrial
Strategy sets out four areas
where Britain can lead the global
technological revolution.
These four Grand Challenges –
in artificial intelligence and big data;
clean growth; the future of mobility;
and meeting the needs of an ageing
society – have been identified on the
advice of the our leading scientists and
technologists. They will be supported
by investment from the Industrial
Strategy Challenge Fund and matched
by commercial investment.
Our Industrial Strategy will inform
decisions now, and in the future.
Other countries have benefited from
establishing policies and institutions
which endure. That is our aim. Through
the consultation on our Green Paper,
over 2,000 organisations from all
parts of the United Kingdom have
helped shape this strategy.
That partnership with innovators,
inventors, job creators, local leaders,
the devolved administrations, workers
and consumers will continue as we
work together to make our country
fit for the future.
7

Rt Hon Greg Clark MP
Secretary of State for Business,
Energy and Industrial Strategy
Industrial Strategy White Paper
8
Introduction
9
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Industrial Strategy White Paper
Overview: We will create an economy that boosts
productivity and earning power throughout the UK
Our five foundations align to our vision for a transformed economy
5
foundations of
productivity
Ideas
the world’s most innovative economy
People
good jobs and greater earning power for all
Infrastructure
a major upgrade to the UK’s infrastructure
Business environment
the best place to start and grow a business
Places
prosperous communities across the UK
We will set Grand Challenges to put the United Kingdom at the
forefront of the industries of the future:
AI & Data Economy
We will put the UK at the forefront
of the artificial intelligence and
data revolution
Clean Growth
We will maximise the advantages
for UK industry from the global
shift to clean growth
Future of Mobility
We will become a world
leader in the way people, goods
and services move
Ageing Society
We will harness the power of
innovation to help meet the needs
of an ageing society
10
11
Key policies include:
Ideas
`
` Raise total research and development
(R&D) investment to 2.4 per cent of
GDP by 2027
`
` Increase the rate of R&D tax credit
to 12 per cent
`
` Invest £725m in new Industrial Strategy
Challenge Fund programmes to capture
the value of innovation
People
`
` Establish a technical education system
that rivals the best in the world to
stand alongside our world-class higher
education system
`
` Invest an additional £406m in maths,
digital and technical education, helping
to address the shortage of science,
technology, engineering and maths
(STEM) skills
`
` Create a new National Retraining
Scheme that supports people to re-skill,
beginning with a £64m investment for
digital and construction training
Infrastructure
`
` Increase the National Productivity
Investment Fund to £31bn, supporting
investments in transport, housing and
digital infrastructure
`
` Support electric vehicles through
£400m charging infrastructure
investment and an extra £100m to
extend the plug-in car grant
`
` Boost our digital infrastructure
with over £1bn of public investment,
including £176m for 5G and £200m
for local areas to encourage roll out
of full-fibre networks
Business Environment
`
` Launch and roll-out Sector Deals –
partnerships between government
and industry aiming to increase sector
productivity. The first Sector Deals are
in life sciences, construction, artificial
intelligence and the automotive sector
`
` Drive over £20bn of investment
in innovative and high potential
businesses, including through
establishing a new £2.5bn Investment
Fund, incubated in the British
Business Bank
`
` Launch a review of the actions that
could be most effective in improving the
productivity and growth of small and
medium-sized businesses, including how
to address what has been called the
‘long tail’ of lower productivity firms
Places
`
` Agree Local Industrial Strategies that
build on local strengths and deliver on
economic opportunities
`
` Create a new Transforming Cities
fund that will provide £1.7bn for
intra-city transport. This will fund
projects that drive productivity by
improving connections within
city regions
P̀rovide £42m to pilot a Teacher
Development Premium. This will test
the impact of a £1000 budget for
high-quality professional development
for teachers working in areas that
have fallen behind
`
We will ensure our Industrial Strategy will endure by creating an
independent Industrial Strategy Council that will assess our progress
and make recommendations to the government.
Industrial Strategy White Paper
12
The challenge for the future
The United Kingdom is a successful, competitive, open economy.
We have many strengths on which
we can build, and some weaknesses
we need to address. As we leave the
European Union we need to raise
our game at home and on the world
stage. This can be done if we seize the
opportunities of the years ahead – and
it is essential if the British people are
to enjoy prosperous lives with fulfilling
work and high quality public services.
At the same time, the world is changing
in fundamental ways. Technological
innovations are transforming how we
live and work. The proportion of older
people in our society is growing. The
way we generate and use energy is
changing rapidly.
The Industrial Strategy sets out how
we are building a Britain fit for the
future – how we will help businesses
create better, higher-paying jobs in
every part of the United Kingdom with
investment in the skills, industries and
infrastructure of the future. It ensures
that our country and its citizens
can embrace and benefit from the
opportunity of technological change.
Technological innovations are transforming how we live and work
13
Our vision is for:
`
` the world’s most innovative economy
`
` good jobs and greater earning
power for all
`
` a major upgrade to the UK’s
infrastructure
`
` the best place to start and grow
a business
`
` prosperous communities across
the UK
To achieve this, we must ensure
every part of our country realises its
full potential. We are taking action
now, including making the biggest
ever increase in public investment in
research and development, establishing
a new fund to drive productivity by
improving connections within city
regions, and agreeing Sector Deals
which will drive transformation in
investment and productivity across
the economy.
This Industrial Strategy is for the long
term. It provides a policy framework
against which major private and public
sector investment decisions can be
made with confidence. It is a strategy
that is being implemented with, not
just for, British enterprise – with the full
involvement of innovators, investors,
job creators, workers and consumers
in England, Scotland, Wales and
Northern Ireland.
It is also a strategy that recognises and
respects the devolution settlements of
Scotland, Wales and Northern Ireland.
With many of the policies that can
drive productivity being devolved, it
is a strategy that necessarily brings
our work together with that of the
devolved administrations as we work
in partnership to get the best possible
outcome for every part of the UK.
The strategy set out in this paper is the
work of many people, businesses, local
leaders and institutions. It builds on
nearly 2,000 formal responses to the
public consultation on our Green Paper,
Building our Industrial Strategy1, from
all types of organisation, sectors of the
economy, groups of businesses and
individuals – and many thousands of
contributions through our programme
of engagement throughout the UK over
the last 10 months.
Industrial Strategy White Paper
14
Our approach
Our consultation reinforced the importance of five foundations
of productivity – the essential attributes of every successful
economy.
These are Ideas, People,
Infrastructure, Business Environment
and Places. Our focus on them
responds to the detailed feedback to
the Green Paper.
Our five foundations align to our
vision for a transformed economy – a
transformation that is already taking
place and will accelerate over the
course of the coming decades:
.
Our five foundations
Ideas
the world’s most innovative
economy
People
good jobs and greater
earning power for all
Infrastructure
a major upgrade to the UK’s
infrastructure
Business Environment
the best place to start and
grow a business
Places
prosperous communities
across the UK
Through this process we have also
identified Grand Challenges which we
will set for the UK government and
wider economy. These are in response
to global forces that will shape our
rapidly changing future, and which the
UK must embrace to ensure we harness
all the opportunities they present. The
Grand Challenges commit to:
`
` put the UK at the forefront of the
artificial intelligence and data
revolution;
`
` maximise the advantages
for UK industry of the global
shift to clean growth;
`
` become a world leader in shaping
the future of mobility; and
`
` harness the power of innovation
to help meet the needs of an
ageing society.
Our foundations and Grand Challenges
are set out in the sections that follow.
This strategy also refers to a number of
policies that will be added to over time
to support the foundations and drive
the UK’s transformation.
15
We will:
Ideas
`
` raise total research and development
(R&D) investment to 2.4 per cent of
GDP by 2027;
`
` increase the rate of R&D tax credit
to 12 per cent;
`
` invest £725m in new Industrial
Strategy Challenge Fund programmes
to capture the value of innovation;
People
`
` establish a technical education system
that rivals the best in the world to
stand alongside our world-class higher
education system;
`
` invest an additional £406m in maths,
digital and technical education,
helping to address the shortage of
science, technology, engineering and
maths (STEM) skills;
`
` create a new National Retraining
Scheme that supports people
to re-skill, beginning with a
£64m investment for digital and
construction training;
Infrastructure
`
` increase the National Productivity
Investment Fund to £31bn, supporting
investments in transport, housing and
digital infrastructure;
`
` support electric vehicles through
£400m charging infrastructure
investment and an extra £100m to
extend the plug-in car grant;
`
` boost our digital infrastructure with
over £1bn of public investment,
including £176m for 5G and £200m
for local areas to encourage roll out
of full-fibre networks;
Business Environment
`
` launch and roll-out Sector Deals –
partnerships between government
and industry aiming to increase sector
productivity. The first Sector Deals
are in life sciences, construction,
artificial intelligence and the
automotive sector;
`
` drive over £20bn of investment
in innovative and high potential
businesses, including through
establishing a new £2.5bn Investment
Fund, incubated in the British
Business Bank;
̀launch a review of the actions that
could be most effective in improving
the productivity and growth of
small and medium-sized businesses,
including how to address what has
been called the ‘long tail’ of lower
productivity firms;
`
Industrial Strategy White Paper
16
Places
`
` agree Local Industrial Strategies that
build on local strengths and deliver on
economic opportunities;
`
` create a new Transforming Cities fund
that will provide £1.7bn for intra-city
transport. This will fund projects
that drive productivity by improving
connections within city regions; and
`
` provide £42m to pilot a Teacher
Development Premium. This will test
the impact of a £1000 budget for
high-quality professional development
for teachers working in areas that
have fallen behind.
These policies, alongside the many
others set out in this document, are the
first strategic actions of a long-term
approach to transform our levels of
productivity and our earning power
as a nation, as businesses, as places,
and as individuals. We are ready to
be judged on our performance in
implementing them.
We will agree Local Industrial Strategies that identify
and build on strengths across the country
17
Building on our strengths
The UK is a fundamentally strong economy, with widely admired
institutions and some of the world’s leading businesses and
universities.
We have some of the highest
employment rates in Europe2. We are
a location of choice for businesses at
the cutting edge of innovation and
technology, attracting more overseas
investment in R&D than many major
countries, including Germany,
France and China3.
Our flexible labour market, high levels
of employment and competitive
environment – with high standards and
a dependable rule of law – make us a
great place to do business.
Source: United Nations Conference on Trade and Development (2017) World Investment
Report 2017
Inward foreign direct investment
$400
$300
$200
$100
$0
UK inward investment compared to other countries
USD billions2016
2007
USAUKChinaHong KongNetherlandsSingaporeBritish Virgin IslandsBrazilAustraliaCayman IslandsIndiaRussian FederationCanadaBelgiumItaly
Industrial Strategy White Paper
18
We are ranked seventh globally in the
World Bank’s Ease of Doing Business
Index4. Our strengths are many and
diverse: from our scientific and financial
prowess to the vitality of our cultural
and artistic life.
We have many creative and innovative
businesses and we are strong in
key sectors, from automotive and
aerospace to food and drink and
creative industries. We have millions
of jobs in financial, professional and
business services, which are also our
country’s biggest exporters5. We are
at the cutting edge of technologies
such as satellites and synthetic
biology. Countries are keen to invest
in our education and learn from our
discoveries in health care. The UK ranks
in the top five in the Global Innovation
Index6. We need to make the most of
these strengths so that we can be at the
forefront of emerging technologies and
industries in the years ahead.
The UK also contains some of the
world’s most attractive places to
live, work, invest and be entertained.
London is a world-leading hub for
financial services, creative industries,
tech businesses and more; a global
city which continues to be a magnet
for international businesses and talent.
In recent years the UK’s ‘Core Cities’,
including Birmingham, Manchester and
Glasgow7, have seen their economies
transformed, while many smaller cities
and towns such as Milton Keynes,
Oxford and Cambridge have been
hotspots for job creation. We must
promote growth through fostering
clusters and connectivity across cities,
towns and surrounding areas.
19
Addressing our weaknesses
For all these strengths, we have an urgent need to improve. In
recent decades we have not made the most of our export potential,
invested too little, and have not nurtured some of the skills we need.
Too many of the UK’s cities outside
the capital underperform against
the national average. We cannot
tackle our problems unless we openly
acknowledge them and accept we
all share the responsibility for
addressing them.
Our analysis and the responses to our
Green Paper point to some important
weaknesses in the UK economy that we
are determined, unflinchingly,
to correct.
In particular, Britain’s productivity
has long lagged behind that of our
competitors8. At a time of astonishing
technological advance, output per hour
worked in the British economy has been
weak since the financial crisis9.
Source: Data based on analysis of ONS national accounts and ASHE data (courtesy of Professor
Paul Gregg, the University of Bath). *Hourly earnings is defined as mean compensation per
employee hour.
Hourly earnings and output per hour, index: 1993=100
150
140
130
120
110
100
90
80
70
60
50
Hourly earnings
Output per hour
2015
2010
2005
2000
1995
1990
1985
1980
1975
Rising wages depend on growing productivity
Industrial Strategy White Paper
20
We are proud of our flexible labour
market that has delivered jobs for
millions and we have achieved near
record employment rates10, but this
must now be accompanied by the
sustained higher productivity that is
the essential requirement for higher
wages. Unless we improve productivity
while holding on to high employment,
we cannot raise living standards and
quality of life for all our citizens.
Our relatively weak productivity
performance is, to a significant degree,
a problem of composition:
we have some of the most productive
businesses, people and places in
the world but also a ‘long tail’ of
underperformance. Britain’s top
businesses are among the most
admired in the world, but if the long
tail of lower productivity persists,
it will hold back UK growth, wages
and living standards11.
By addressing the disparities we can
improve our overall productivity and
earning power.
Taking action now
These are challenges that have been recognised by previous
governments - we can learn from their successes as well as try to
avoid their mistakes.
We successfully rebuilt our automotive
industry by deliberately attracting
investment from abroad, notably from
Japan and more recently from India
and continental Europe.
The initiatives of previous governments
such as the advanced manufacturing
strategies, the Eight Great
Technologies, and the Catapult network
have all contributed to our international
reputation. These are strengths we
can draw on and they present further
opportunities to improve productivity
and create good new jobs. The very
speed of technological change and
the convergence of technologies
present enormous opportunities.
We are a nimble economy and we
can move quickly to take advantage
of innovations. We also have smart
consumers who reward entrepreneurs
developing new products and services.
We know that the earliest adopters of
new technologies are able to reap the
greatest rewards in terms of additional
jobs and increased revenue.
21
GDP per hour worked, 2016, index: UK=100
Germany
France
US
Italy
UK
Canada
Japan
40 50 60 70 80 90
100
110
120
130
140
Country UK productivity relative to other G7 countries
The role of government
We have learned from previous attempts at industrial strategy –
what has worked, and what has not.
It is important to have a clear
understanding of what a government
can and cannot do. We believe
in the power of the competitive
market - competition, open financial
markets, and the profit motive are
the foundations of the success of the
UK. Indeed the best way to improve
productivity is to increase exposure
to competition.
But governments have a responsibility
that extends beyond promoting
competition. We have to work
systematically through the factors
responsible for higher productivity and
earning power – the five foundations of
Ideas, People, Infrastructure, Business
Environment and Places that are central
to this White Paper.
Source: ONS (2017) International Comparisons of Labour Productivity.
Industrial Strategy White Paper
22
Governments in successful economies
have recognised their strategic
power and leadership role, allowing
them to coordinate and convene
efforts to develop and disseminate
new technologies and industries.
Individuals, businesses and researchers
are motivated by ambitious missions
– global and national challenges that
need to be tackled by breaking down
traditional barriers and finding new
ways of doing things. From sequencing
the human genome and tackling Aids
to hosting the 2012 Olympics, we have
seen successive governments identify
ambitious missions that drive new
endeavours.
Governments can make long-term
investment that no single commercial
or academic player can take alone.
The modern nation state is the most
powerful means we have of pooling
risk. We are willing to take these risks,
which means accepting not all will
work out successfully. An industrial
strategy that avoids risk is no
industrial strategy at all.
We have studied previous attempts
at industrial strategy, which have had
successes as well as failures. One lesson
is that governments cannot do this
on their own, instructing and planning
but never listening or consulting. So
our Industrial Strategy is a partnership
with businesses, workers, universities
and colleges, local government and
the devolved administrations where we
work together to achieve our goals.
From sequencing the human genome to hosting the London 2012
Olympic and Paralympic Games, we have seen successive governments
identify ambitious missions that drive new endeavours
23
Grand Challenges
It is not enough just to look at the economy we have. We must
make preparations for the economy we need to become.
We need to be acutely aware and
take advantage of the world-changing
trends which will shape Britain in the
decades ahead. This is where the
government must provide the strategic
leadership set out above to support the
development of new technologies and
position the UK at the forefront of the
industries of the future.
In this Industrial Strategy we propose a
number of Grand Challenges. These are
developments in technology that are
set to transform industries and societies
around the world, and in which the
UK – if we muster our forces across
sectors – has the opportunity to play
a leading global role.
These Grand Challenges are an
invitation to business, academia
and civil society to work together to
innovate and develop new technologies
and industries in areas of strategic
importance to our country. We set them
out in more detail in the next chapter.
Following extensive consultation during the consultation for our
Green Paper, our four Grand Challenges will be:
putting the UK at the forefront
of the artificial intelligence
and data revolution;
maximising the advantages
for UK industry from the
global shift to clean growth;
being a world leader in shaping
the future of mobility; and
harnessing the power
of innovation to help meet the
needs of an ageing society.
Industrial Strategy White Paper
24
Global Britain
The decision to leave the European Union was not a decision to
retreat from the world.
In fact we need to embrace it – to trade
more not less. We must remain an open,
liberal market economy. There are
opportunities to be gained upon leaving
the EU. The opportunity to become
more protectionist is not one of them.
Britain’s future has to be one of free
trade with the whole world, including
with the rest of Europe.
The EU accounts for the largest
proportion of UK trade12. The size
and proximity of the EU single market
and our close connections with it
mean the EU will always be a major
trading partner.
The government believes it is
overwhelmingly in our mutual interest
to agree a comprehensive and
ambitious UK-EU economic partnership
that enables the most free and
frictionless trade possible with minimal
disruption to business. We should be
optimistic and ambitious about what
we can achieve, as we share the same
beliefs in free trade, rigorous and fair
competition, strong consumer rights
and high standards.
There will, inevitably, be uncertainty
while we determine the precise nature
of our future trading arrangement with
Britain’s future has to be one of free trade
25
the EU. To minimise this, we are seeking
to agree an implementation period, of
around two years, to allow business
time to adapt to the new arrangements.
This will ensure that no one has to go
through two sets of changes, and will
allow businesses to make decisions
once there is greater certainty about
the final outcome.
Our Industrial Strategy is designed
to place us at the forefront in finding
solutions to both UK and global
emerging trends and challenges. As
set out in our paper Preparing for
Our Future Trade Policy13, we will
reach out to old friends and new
allies in expanding access to markets,
supporting our businesses to export,
and welcoming investment and
collaboration from emerging and
established partners from across the
globe. The International Monetary
Fund projects that above 80 per cent
of world growth is likely to come from
outside the EU in the near future14; we
need to be ready for the opportunities
such growth will bring. We are in
discussions with a number of countries
about future options, including full Free
Trade Agreements. But Free Trade
Agreements are not the only tools
at our disposal.
We aim to put in place mechanisms
to improve trading relations and remove
barriers affecting UK businesses, and
we will work closely with the devolved
administrations as we forge new and
deeper trade relationships around
the world.
Our Industrial Strategy will be flexible
to take account of developments in
negotiations between the UK and the
EU or changes in the global economy.
While our Industrial Strategy will
adapt, we will always be consistent in
maintaining the principles of an open
economy and fair competition that
creates the conditions for businesses
to thrive.
Industrial Strategy White Paper
26
Partnership with the devolved administrations
The truly generational challenges and opportunities to which our
Industrial Strategy responds apply throughout the UK.
In addressing these issues we recognise
and respect the devolution settlement
and the empowerment it has offered
the people of Scotland, Wales and
Northern Ireland. There are important
aspects of the five foundations of
Ideas, People, Infrastructure, Business
Environment, and Places that are
associated with policies that are
devolved, and we are committed to
working in partnership across all four
nations to reach the best possible
outcome for every part of the UK.
Our Union offers a unique opportunity.
The UK government and the devolved
administrations can each learn from
each other in areas of common interest.
For example, Scotland has made great
strides in energy efficiency and has
one of the most effective systems for
translating advances in life sciences
into improved patient care. Wales’s
Sêr Cymru programme is attracting
leading scientific talent matched to its
innovation strengths. Northern Ireland
is fostering a burgeoning cybersecurity
business and research community.
Wales’s Sêr Cymru programme is designed to attract the highest calibre
candidates to work in research groups in Welsh universities, such as Cardiff
27
Devolution has never meant that the
UK government does not exist to serve
the people and the economies of the
devolved nations. This is exemplified
in the funding we provide throughout
the UK to support innovation
excellence, and next generation digital
infrastructure to connect urban and
rural communities, and in the promotion
of our national strengths as part of the
GREAT campaign.
We also know that it is collaboration
between our governments that results
in some of the most powerful actions
taken within the devolved nations. The
six City Deals agreed in Scotland and
Wales are testament to the impact
that partnerships within the devolved
nations can achieve. These deals
have yielded ambitious investments
driven by priorities identified by
communities themselves, with a £1.6bn
UK government investment bringing
forward more than £3bn in funding
from other partners. And we remain
committed to further ambitious City
and Growth Deals across Wales,
Northern Ireland and Scotland.
The Scottish Government and the
previous Northern Ireland Executive
have also recently published industrial
and economic strategies and the Welsh
Government is to do the same in the
coming weeks.
These publications reflect ambitious
thinking for each economy and identify
priorities that align fundamentally with
the five foundations of this Industrial
Strategy, whether in Scotland’s focus
on innovation and entrepreneurship
or Northern Ireland’s emphasis on
inclusive growth.
In our Green Paper we committed
to working with the devolved
administrations as part of ministerial
forums. This joint working has proven
valuable, and as we implement our
long-term strategy we will recommit
to that partnership, seeking to tackle
our shared opportunities with a focus
on: addressing our shared Grand
Challenges; making Sector Deals work
for businesses across the UK; ensuring
that our institutions collaborate for
maximum impact; and working together
on priorities for places.
Industrial Strategy White Paper
28
A strategy for the long term, with benefits now
The responses to the consultation showed us that people and
business want confidence that our Industrial Strategy will endure
– that it is a framework they can use for decision making and that
it can be expected to last.
The best way to secure this is for
the strategy to command the widest
possible support. We must earn this
through the quality of the decisions we
take and by sharing the evidence on
which they are based. Yet commitment
must not mean inflexibility – we need
systems that adjust to new evidence
and new challenges.
One key to this is data. Governments
must practise what they preach about
the opportunities of the data revolution.
That means being innovative in how
we collect and analyse economic data.
To support evaluation and further
understanding of the economy, we aim
to make the UK the best understood
major economy. We will be developing
a joint programme of work with the
Office for National Statistics, academics
and other stakeholders that will identify
the gaps in our evidence base. The UK
government also stands ready to work
with the devolved administrations,
where appropriate, to ensure the
strongest possible data is held and
used across the UK; in particular as we
continue to transfer powers from the
29
UK to the Scottish Parliament in line
with the Scotland Act 2016. We want to
make more micro-level data available
so people can study and understand
our economy. This will enable us to
improve significantly how we identify
strengths and weaknesses in specific
parts of the country. It will provide a
shared evidence base on which we
can build our Industrial Strategy.
We must have the right reporting
mechanisms in place to ensure we
achieve our ambitions. The Economy
and Industrial Strategy Cabinet
Committee, chaired by the Prime
Minister, will remain responsible for
our strategic vision and for driving
delivery across government.
We will create an independent Industrial
Strategy Council that will develop
measures to assess and evaluate
our Industrial Strategy and make
recommendations to the government.
The Council will have access to relevant
government data and will be funded
to commission specific evaluation
projects as appropriate. It will be
drawn from leading business men
and women, investors, economists
and academics from across the UK.
The real test of a successful strategy
is the consequences it has for the
lives of our fellow citizens. That must
mean more good jobs and better
pay. We are committed to high
quality jobs for all UK citizens: that
is why we will be responding to and
building on the recommendations
of the Matthew Taylor Review to
ensure that employment rights
are protected and workers can
benefit from new technology.
By addressing these challenges we will
be able to achieve the central objective
of our Industrial Strategy – to improve
living standards and economic growth
across the country. This strategy is
our long-term plan to ensure that
people in all parts of the UK are able
to lead fulfilling and prosperous lives,
and that we can all make the most
of the opportunities that lie ahead.
Industrial Strategy White Paper
30
Grand
Challenges
31
The fourth
industrial revolution
is of a scale, speed
and complexity that
is unprecedented
Industrial Strategy White Paper
32
Grand Challenges
We will set Grand Challenges to put the United Kingdom at the
forefront of the industries of the future.
The world is undergoing a technological
revolution. Artificial intelligence (AI)
will transform the way we live and
work, from the way we diagnose and
treat cancer to the security of online
transactions. This fourth industrial
revolution is of a scale, speed and
complexity that is unprecedented. The
first industrial revolution mechanised
production using water and steam
power; the second created mass
production using electric power; the
third automated production using
electronics and information technology.
This fourth revolution is characterised
by a fusion of technologies that is
blurring the lines between the physical,
digital and biological worlds15. It will
disrupt nearly every sector in every
country, creating new opportunities
and challenges for people, places and
businesses to which we must respond.
This is not the only seismic global change
to which the UK needs to respond.
We owe it to ourselves and future
generations to lower carbon emissions
and move towards cleaner growth; we
are facing a fundamental demographic
shift as our population ages; and we are
on the cusp of a profound shift in how
we move people, goods and services
around our towns, cities and countryside.
We need to make the most of the global
market opportunities these changes
present. We must also embrace the
technological advances that improve
productivity across many sectors, as
well as the quality of our everyday lives.
A truly strategic government must do
more than just fix the foundations: it
must also plan for a rapidly changing
future, look to shape new markets and
industries, and build the UK’s competitive
advantage. The public and private
sector must work with universities,
researches and civil society to put the
UK at the forefront of these revolutions,
breaking down conventional barriers
within and between business sectors
and academic disciplines. This is what
the Grand Challenges will achieve.
History shows governments around
the world have taken advantage of
global challenges. In the 1970s, the
UK government was instrumental in
developing the North Sea oil and gas
industry. More recently, thanks to
tailored public support, the UK has built
the largest off-shore wind capacity of
any country16 and developed world
class gene sequencing technologies.
Overseas, Germany’s Industrie 4.017 is
an example of a government helping
prepare the country to take advantage
of major trends, while in the United
States the Defense Advanced Research
Projects Agency (DARPA) and other
33
‘A truly strategic
government must
do more than just
fix the foundations:
it must also plan for
a rapidly changing
future.’
public research institutions
have played a significant role
in developing the technologies
behind the internet and
smartphone, spurring the
growth of entire new markets.
Other countries are already
looking to capitalise upon the
fourth industrial revolution.
Japan, for example, has
deliberate strategies to
prepare for and to embrace
these transformational
changes in technology.
The ability to meet our
Grand Challenges rests
on broad capabilities. The
DARPA programme has been
effective because it is part of
a much wider research and
development (R&D) effort.
Our capacity to act nimbly
and effectively depends
on maintaining capacities
across a wide range of
technologies and disciplines.
We can engage now with the
challenge of AI because of
previous investments in high
performance computing.
Similarly, we can rise to the
challenge of an ageing society
because we have already
invested in resources such as
the UK Biobank, which tracks
the health information of
500,000 volunteers18, and we
have a lead in understanding
the interaction between
genes and environment.
We must continue to
support a broad range
of key capabilities and
emerging technologies.
We also need to be clear
where our distinctive
advantages lie. We will build
on our existing strengths,
from cybersecurity, machine
learning, microelectronics
design and composite
compound chip technology
to biotechnologies and life
sciences such as genetics
and cell therapies. At the
same time we must develop
new strengths in emerging
sectors. We must do this
as a partnership between
businesses, scientists,
investors, educators and
policy makers to take
full advantage of the
transformational potential
of these trends to improve
people’s lives, their work and
the nation’s productivity.
This partnership must be
UK-wide, embracing our four
nations. The UK government
needs to work in collaboration
with the governments and
businesses of Scotland, Wales
and Northern Ireland. Just as
we committed in the Green
Paper to holding ministerial
forums with each devolved
administration, we will work
together to rise to each of
the Grand Challenges.
Industrial Strategy White Paper
34
What are the Grand Challenges?
We have taken evidence from our Green
Paper consultation, and worked with
scientific leaders – the Government
Office for Science, UK Research and
Innovation (the Research Councils and
Innovate UK), the Council for Science
and Technology and the national
academies – to identify four Grand
Challenges. We will:
`
` put the UK at the forefront of the
artificial intelligence and data
revolution;
`
` maximise the advantages for UK
industry from the global shift to
clean growth;
`
` become a world leader in shaping
the future of mobility; and
̀harness the power of innovation
to help meet the needs of an
ageing society.
`
We must not expect that every
individual action will bring guaranteed
or immediate success. Through inviting
competing proposals and ideas, the
government will identify, support and
fund a range of promising projects.
We must not let a fear of failure make
us unimaginative or risk averse. The
government must be willing to back
a broad portfolio of risky initiatives
rather than be constrained by the
possibility of individual failures.
To respond to the Grand Challenges,
business, academia, civil society and
We will build on our strengths, including in cybersecurity machine learning,
microelectronics design and composite compound chip technology
35
‘Business,
academia, civil
society and the
government must
engage together,
bringing their
expertise and
entrepreneurial
spirit, to drive us all
towards success.’
the government must work
together, bringing their
expertise and entrepreneurial
spirit, to drive us all towards
success. By setting out
strategic visions and a
positive role for government
we hope to attract the
engagement of some of
the brightest minds from
across the private and public
sectors. For each Grand
Challenge, we will ask leading
figures from industry and
academia to act as expert
advisors, led by a ‘Business
Champion’. Working
alongside ministers, these
figures will be responsible for
engaging a diverse range of
industry voices and raising
the profile of the challenge.
They will advise on how to
make the most of the global
opportunity it presents and
review how we can work
together to respond to it –
such as improving supply
and increasing demand
in nascent markets, and
ensuring that innovations
can diffuse and scale. We
will look to appoint Business
Champions and external
advisers in early 2018.
We will ensure that the
government makes the
most of all its policy levers
to achieve success. Levers
include regulations, funding
and Sector Deals.
We will also direct the
government’s convening
power, promote exports
and inward investments,
and build consumer trust
in new technologies. Where
appropriate, teams will
develop ‘missions’ to tackle
the Grand Challenges. They
involve tackling specific
problems, such as reducing
carbon emissions by a given
percentage over a specific
year period19, using well
defined and concrete goals
to allow progress to be
monitored and assessed,
and the option to change
course when appropriate.
Progress on each Grand
Challenge will be regularly
reviewed to ensure that
policies are having the
desired impact, we are
focusing on the correct
issues, and we are
aware of any changes
in the UK’s advantage
over other countries.
In the next section we set
out some early priorities
for each of the four Grand
Challenges. These will be
developed in more detail
with the Grand Challenge
teams over the coming
months including setting
missions where appropriate.
Industrial Strategy White Paper
36
Growing the AI & Data-Driven Economy
We will put the UK at the forefront of the AI and data revolution.
Artificial intelligence and machine
learning are general purpose
technologies already starting to
transform the global economy. They can
be seen as new industries in their own
right, but they are also transforming
business models across many sectors
as they deploy vast datasets to identify
better ways of doing complex tasks –
from helping doctors diagnose medical
conditions more effectively to allowing
people to communicate across the
globe using instantaneous speech
recognition and translation software.
Embedding AI across the UK will create
thousands of good quality jobs and
drive economic growth. A recent study
found digital technologies including AI
created a net total of 80,000 new jobs
annually across a population similar to
the UK20. By one estimate, AI could add
£232bn to the UK economy by 203021.
We start from a position of strength.
The UK is already a world leader
in AI, with the building blocks to
make significant advances. We
have some of the best research
institutions in the world and
SecondHands is a research project led by Ocado Technology that aims to design
a collaborative robot that can offer help to maintenance technicians working in
Ocado’s highly automated grocery warehouses
37
globally-recognised
capability in AI-related
disciplines, including maths,
computer science, ethics
and linguistics. We have
substantial datasets in
public institutions where
AI can be explored safely
and securely. We have
great strengths in the
underpinning technologies,
from ARM’s microchips
to the microcomputers
of Raspberry Pi. UK
innovators push boundaries
in robotics and the
internet of things. These
strengths are the result
of academic excellence,
research ingenuity, smart
business decisions, and
investment by previous
governments of different
political persuasions.
As with previous
revolutionary technologies,
these changes cannot
be resisted and it would
be irresponsible to fail
to prepare. Meeting our
Grand Challenge means
maximising the opportunities
created by AI and advanced
data technologies, and
responding to the potential
impacts on society. It
is a call for businesses,
research institutions and the
government to work together
throughout the UK to invest
in these technologies,
encourage their adoption
and set standards in secure,
trusted use of data.
The AI and data-driven economy
Artificial intelligence: technologies with the ability
to perform tasks that would otherwise require
human intelligence, such as visual perception, speech
recognition, and language translation
Machine learning: a type of AI that allows computers to
learn rapidly from large datasets without being explicitly
programmed
Data-driven economy: a digitally connected economy
that realises significant value from connected, large-
scale data that can be rapidly analysed by technology to
generate insights and innovation
‘Embedding AI
across the UK will
create thousands
of good quality jobs
and drive economic
growth. AI could
add £232bn to the
economy by 2030.’
Industrial Strategy White Paper
38
Cumulative average growth rate (CAGR), 2010-2016
Global venture capital investment in artifi cial intelligence
2010
2011
2012
2013
2014
2015
2016
£2.5
£2.0
£1.5
£1.0
£0.5
£0.0
57% CAGR
GBP billionsWe must ensure that Britain is among
the first countries to ensure that
everyone benefits from this revolution.
An early response to this challenge is
the Artificial Intelligence Sector Deal,
responding to the review by Professor
Dame Wendy Hall and Jérôme Pesenti,
Growing the AI Industry in the UK22.
In consultation with a range of
people with expertise in this area,
we have identified four priorities for
this Grand Challenge:
We will make the UK a global
centre for artificial intelligence
and data-driven innovation
We will build on our world-class
research by working with industry
to develop innovative uses of AI and
advanced analytic technologies through
the Industrial Strategy Challenge Fund*.
For example, through the Industrial
Strategy ‘Next generation of services’
project we will invest in developing
applications of AI and data-driven
innovation for service sectors; and,
through the ‘Data to early diagnostics
and precision medicine’ programme
we will invest to enhance the power of
health data to diagnose life-changing
diseases at the earliest possible stage
and develop precision treatments
to cure them.
* All wave 2 programmes are subject to final
business case, when further details on
funding will be made available
Source: Hall, W. and Pesenti, J. (2017) Growing the Artificial Intelligence Industry in the UK.
Growth is cumulative average growth rate 2010 to 2016
39
We will also support
businesses with regulation
that stimulates and facilitates
innovation. Building on
the ‘sandbox’ approaches
that the Financial Conduct
Authority and Ofgem, the
energy regulator, have
successfully implemented,
we are establishing a
£10m Regulators’ Pioneer
Fund to support UK
regulators to develop
innovative approaches to
emerging technologies.
We will foster, attract and
retain the best and brightest
research talent. The Alan
Turing Institute will become
the national research
centre for AI, supporting
new Turing Fellowships.
We will invest £45m to
support additional PhDs in
AI and related disciplines,
increasing numbers by at
least 200 extra places a
year by 2020-21, aiming to
expand the numbers in UK
universities year-on-year
into the next decade.
We will also develop people’s
skills to keep up with the
speed of technological
change by supporting
universities and businesses
to develop an industry-
funded masters programme,
with an initial scale of over
200 places. We will also work
with industry to explore how
best to train cross-discipline
professionals to apply AI in
their specialist areas, for
example through conversion
courses and continuing
professional development.
We will support
sectors to boost their
productivity through
artificial intelligence
and data analytic
technologies
A major source of
productivity improvements
comes from making the most
of AI and machine learning
across the economy. We
are working with industry
to establish an industry-led
AI Council that can take
a leadership role across
sectors. The AI Council
will be supported by a new
government Office for AI.
In partnership with industry
and academia, these bodies
will champion research and
innovation, stimulate demand
and accelerate uptake across
all sectors of the economy.
The office, working with the
AI Council, will lead work to
increase awareness of the
advantages of advanced data
analytic technologies and
promote greater diversity
in the AI workforce.
‘We will build on
our world-class
research by working
with industry to
develop innovative
uses of AI and
advanced analytic
technologies
through the
Industrial Strategy
Challenge Fund.’
Industrial Strategy White Paper
40
To support rapid adoption of AI
technologies at scale, the Office for
AI will work initially with six priority
business sectors: cybersecurity; life
sciences; construction; manufacturing;
energy; and agricultural technology.
The office will work in partnership
with the new GovTech Catalyst to
ensure the public sector can benefit
from these technologies. It will also
collaborate with partners to promote
adoption, for example through the
Digital Catapult’s ‘Machine Learning
Garage’ programme launching in
January. This programme will provide
low-cost access to high quality machine
learning computation power for start-
ups, and support businesses of all
sizes with expertise on cost-effective
machine learning computation.
As the global market expands, we
will increase our export support for
AI and data businesses. The Global
Entrepreneur Programme will look
to increase its focus on attracting
AI and data-led businesses to
establish headquarters in the UK.
We will lead the world in safe and
ethical use of data and artificial
intelligence giving confidence and
clarity to citizens and business
AI and data are already creating
enormous opportunities for us to
understand more about everything,
from our health to what we like to
buy. But it is vital that we remove
barriers to innovation and ensure
that data is used in a way that is
both safe and fair to individuals.
The UK will take an international
leadership role by investing £9m
in a new Centre for Data Ethics
and Innovation. This world-first
advisory body will review the existing
governance landscape and advise the
government on how we can enable and
ensure ethical, safe and innovative uses
of data, including AI. This will include
engaging with industry to explore
establishing data trusts to facilitate
easy and secure sharing of data. We
will consult widely in due course on
the detailed remit for this new centre.
We will also strengthen overall data
security, reinforcing the UK’s position
as a global centre for cybersecurity. We
will develop detailed recommendations
over the next six months.
We will help people develop the
skills needed for jobs of the future
AI and data analytics will change jobs
and businesses, and we want people
to be able to capitalise on these
opportunities. Our Industrial Strategy
builds on our work to develop people’s
skills, investing an additional £406m
in maths, digital and technical skills
in England. This includes investing
£84m over the next five years to
deliver a comprehensive programme
to improve the teaching of computing
and drive up participation in computer
science. We will up-skill 8,000
computer science teachers and work
with industry to set up a new National
Centre for Computing Education.
41
We will also promote a new
adult digital skills entitlement
to support basic training and
our new National Retraining
Scheme will help people
re-skill and up-skill as the
economy changes, including
as a result of automation.
This scheme will be informed
by career learning pilots,
which are testing barriers to
adults engaging in learning,
and the National Retraining
Partnership. Initially it will
focus on priority skills,
including digital. As a first
step, we will invest £30m
to test the use of AI and
innovative education
technology (edtech) in
online digital skills courses.
We also need to build an
evidence base about how
technological change may
affect different sectors,
groups and places. Building
on the work of Skills Advisory
Panels and local Digital Skills
Partnerships in England, the
government and industry will
explore how data analytics
can be used to improve
our understanding of
employer demand for skills.
One of the many applications of AI and data analytics
technologies is to enable more efficient use of energy
and resources. For example, intelligent algorithms
applied to data on atmospheric conditions and soil
moisture could dramatically reduce the amount of water
needed for agriculture. Actions to support our first
Grand Challenge will complement the second challenge
we have identified – maximising the advantages to UK
industry of the global shift to clean growth.
‘AI and data are
already creating
enormous
opportunities for us
to understand more
about everything,
from our health to
what we like to buy.’
Industrial Strategy White Paper
42
Clean Growth
We will maximise the advantages for UK industry from the
global shift to clean growth – through leading the world in the
development, manufacture and use of low carbon technologies,
systems and services that cost less than high carbon alternatives.
The move to cleaner economic growth
– through low carbon technologies and
the efficient use of resources – is one
of the greatest industrial opportunities
of our time. By one estimate, the UK’s
clean economy could grow at four times
the rate of GDP23. Whole new industries
will be created and existing industries
transformed as we move towards a
low carbon, more resource-efficient
economy. The Paris Agreement of 2015
commits countries to revolutionising
power, transport, heating and cooling,
industrial processes and agriculture.
The effect of these changes will be
felt by businesses throughout
the economy, and will involve the
reallocation of trillions of pounds of
public and private finance towards
the pursuit of cleaner growth.
Stowe Global Coal Index and global green bonds issuance
Shift of global investment towards the clean economy
2011
2012
2013
2014
2015
2016
2017
160
120
80
40
0
8000
6000
4000
2000
0
Billion USDGlobal green bond issuance
Stowe Global Coal Index
Source: Climate Bonds Initiative (2017); Stowe Global Indexes. *2017 green bond issuance is estimated.
The Coal Index takes the last data of each month from Jan 11 to Oct 17
43
The UK has been at the
forefront of encouraging the
world to move towards clean
growth. We are determined
to play a leading role in
providing the technologies,
innovations, goods and
services of this future. We
want to support our strong
automotive, aerospace and
construction industries
to increase their share of
global markets as they shift
to clean energy sources
and efficient new materials.
We want UK businesses to
lead the development of
new markets in areas such
as smart energy systems
and the ‘bio-economy’
– the use of renewable
biological resources from
land and sea to produce
food, materials and energy.
We also want everyone to
feel the benefits of clean
growth, so we will work to
create a future where our
cities benefit from cleaner
air, our businesses from
enhanced resource security
and our countryside from
regenerated natural capital.
The UK is already one of the
most successful countries
at growing our economy
while reducing emissions. We
have cut emissions by more
than 40 per cent24 since
1990, while our economy
has grown by two thirds25.
Our recently-published
Clean Growth Strategy26
sets out our ambitious
proposals for continuing
this progress through the
2020s. We have world-
leading capabilities in areas
including electric vehicle
manufacture, offshore wind,
smart energy systems,
sustainable construction,
precision agriculture and
green finance. With business,
academia, the government
and civil society working
together, we can do more.
We will aim to maximise UK
businesses’ share of the
global markets as they are
transformed by the shift
to clean growth, and make
our country one of the best
places in the world to develop
and sell clean technologies.
We will increase our support
for innovation so that the
costs of clean technologies,
systems and services are
reduced across all sectors,
and we will collaborate
on international initiatives
such as Mission Innovation
– a global partnership for
clean energy research and
development – to bring
‘The move to
cleaner economic
growth – through
low carbon
technologies
and the efficient
use of resources
– is one of the
greatest industrial
opportunities of
our time.’
Industrial Strategy White Paper
44
The UK has been at the forefront of the global move
towards clean growth, with projects such as the
Blyth wind farm in the north east of England
45
‘Our long-term
goals are to make
clean technologies
cost less than
high carbon
alternatives, and
for UK businesses
to take the lead in
supplying them to
global markets.’
the best minds together
to accelerate progress.
We will align our policies,
regulations, taxes and
investments to grow the
markets for these new
innovations so that they are
successfully commercialised
in the UK. Our long-term
goals are to make clean
technologies cost less than
high carbon alternatives,
and for UK businesses to
take the lead in supplying
them to global markets.
We will take action to
establish and extend UK
leadership in the following
early priority areas:
We will develop smart
systems for cheap
and clean energy
across power, heating
and transport
Smart systems transform
our ability to use clean
energy cost-effectively, and
so will be in high demand
globally. We are good at
designing such systems. A
national electricity grid was
a great British technical
achievement. Now we
are setting ourselves the
challenge of remodelling it so
it can handle many different
sources of clean energy,
and use new technologies
to store energy and manage
demand. We will launch
a new Industrial Strategy
‘Prospering from the energy
revolution’ programme
to develop world-leading
local smart energy systems
that deliver cheaper and
cleaner energy across power,
heating and transport,
while creating high value
jobs and export capabilities.
Our world-leading Smart
Systems and Flexibility Plan27
will build on the rollout of
smart meters to grow the
markets for these systems
and technologies in the UK.
We will continue to work
closely with the nuclear and
offshore wind industries
to further drive down the
costs of clean power, while
building UK supply chains.
We will also continue to
explore the long-term
options for clean heating
and the many potential uses
of low carbon hydrogen.
We will transform
construction techniques
to dramatically
improve efficiency
A rapidly urbanising world
needs buildings that can be
constructed and operated
more efficiently. Our
new Industrial Strategy
‘Transforming Construction’
programme will take full
Industrial Strategy White Paper
46
advantage of new technologies to
provide safer, healthier and more
affordable places to live and work that
use dramatically less energy to build
and run. It will ensure UK businesses
develop world-leading capabilities in
integrating construction, digital energy
and efficiency technologies – the
kind of system integration at which
the UK excels. We have launched
a call for evidence on additional
measures to build a market for energy
efficiency among homeowners.
This will incentivise greater private
investment in household and
commercial building energy efficiency,
to grow the markets for these types
of buildings and technologies.
We will make our energy-
intensive industries competitive
in the clean economy
Global markets for clean and efficient
industrial fuels, processes and materials
are growing rapidly. We are investing
£162m in innovation for low carbon
industry, and developing a new strategy
for the bio-economy. We will work with
industry to stimulate further market
investment in clean and efficient
technologies and process, including
through all manufacturing Sector
Deals, and through developing a
new scheme to support investment
in industrial energy efficiency.
This scheme will help large businesses
install measures that will cut their
energy use and bills, as well as improve
their productivity. This will build on the
2050 Decarbonisation Action Plans
that we have agreed with seven of
the most energy-intensive sectors.
We will grow the markets for innovative farming
technologies and techniques such as the use of drones
47
We will put the UK at
the forefront of the
global move to high-
efficiency agriculture
Rising global demand for
food and water is increasing
the need for agriculture
that produces more from
less. Our new ‘Transforming
food production: from farm
to fork’ programme will
put the UK at the forefront
of advanced sustainable
agriculture. Over the
coming years,as we replace
the Common Agricultural
Policy, we will increase the
incentives for investment
in sustainable agriculture,
helping to grow the markets
for innovative technologies
and techniques. With
powers set to return from
the EU, the UK government
is in discussions with the
devolved administrations
over future arrangements.
Our work will develop in
line with the outcome
of those discussions.
We will make the UK
the global standard-
setter for finance that
supports clean growth
We will extend the UK’s
global leadership in green
finance – building on our
world-leading financial sector
– working with industry
through our new Green
Finance Taskforce.
We are now working with
the British Standards
Institution and the City of
London’s Green Finance
Initiative to develop the
world’s first green financial
management standards.
We use an enormous amount of energy to move people
and goods from place to place: around 40 per cent
of the UK’s total final energy use28. Developing UK
leadership in low carbon transport is therefore a shared
priority with our Future of Mobility Grand Challenge.
We will invest in innovation to develop clean technologies
across road, rail, aviation and maritime transport.
‘We are investing
£162m in innovation
for low-carbon
industry, and also
developing a new
strategy for the
bio-economy.’
Industrial Strategy White Paper
48
The Future of Mobility
We will become a world leader in shaping the future of mobility.
We are on the cusp of a profound
change in how we move people, goods
and services around our towns, cities
and countryside. This is driven by
extraordinary innovation in engineering,
technology and business models.
Significant investments are being made
in the electrification and automation of
road vehicles, in the modernisation of
rail services to deliver higher capacity,
speed and connectivity, and in the
development of autonomous aerial and
marine transport. New market entrants
and new business models, such as
ride-hailing services, ride sharing and
‘mobility as a service’, are challenging
our assumptions about how we travel.
These technologies can transform
public transport. The UK’s road
and rail network could dramatically
reduce carbon emissions and other
pollutants, congestion could be
reduced through higher-density use
of road space enabled by automated
vehicles, and mobility could be
available when we want it, where
we want it and how we want it.
New electric car registrations
UK electric car ownership has increased rapidly since 2010
40
30
20
10
0
1.5%
1.0%
0.5%
0.0%
2010
2011
2012
2013
2014
2015
2016
ThousandsNew registrations (LHS)
% of total new cars (RHS)
Source: Department for Transport (2017) Vehicles statistics. *Electric car includes plug-in hybrids,
100% electric, range extended electric and fuel cell electric cars
49
‘New market
entrants and new
business models,
such as ride-hailing
services, ride
sharing and mobility
as a service, are
challenging our
assumptions about
how we travel.’
We have significant strengths
in many of the most relevant
areas of research and
development, including
artificial intelligence and
complex vehicle engineering.
We have dynamic businesses
developing new mobility
solutions, and innovative,
strong and diverse
automotive, rail, maritime
and aviation sectors. We
have a long history of
bringing transport innovation
to the world. We also have
strengthening leadership
at a local level, with mayors
in English cities and City
Deal Boards in Scotland and
Wales actively pursuing new
ways to address the complex
transport needs of our cities.
As the UK has the highest
percentage of the population
living in urban areas in the
OECD we are well placed
to contribute to these
challenges of urbanisation29.
We will build on the
innovative work of the
Office for Low Emission
Vehicles, the Centre for
Connected and Autonomous
Vehicles and the Transport
Catapult to look across the
road transport system for
opportunities to improve
customers’ experience, drive
efficiency and enable people
to move around more freely.
We will work with a full range
of stakeholders across the
UK to deliver this challenge.
The government wants to see fully self-driving cars
on the UK roads by 2021
Industrial Strategy White Paper
50
We have identified four early priorities:
We will establish a flexible
regulatory framework to
encourage new modes of transport
and new business models
Mobility has always depended on
standards. Our regulatory environment
must evolve with the times to support
the emergence of new technologies and
new business models. We will ensure
we continue to have one of the most
open environments in the world for
transport innovation and new services
by undertaking a thorough regulatory
review of all relevant legislation.
The government wants to see fully
self-driving cars, without a human
operator, on UK roads by 2021. We will
therefore make world-leading changes
to the regulatory framework, including
updating our code of practice for
testing automated vehicles to allow
developers to apply to test their vehicles
nationwide without a human safety
operator and carrying out a project
with the Law Commission to set out
proposals for a long-term regulatory
framework for self-driving vehicles.
We will seize the opportunities
and address the challenges of
moving from hydrocarbon to
zero emission vehicles
For zero emission vehicles to become
universal the right framework is needed.
Building on the work of the Faraday
Battery Institute and the Office for Low
Emission Vehicles programme, we have
announced a package to support the
transition to zero emission vehicles.
This includes a new £400m Charging
Infrastructure Investment Fund
(£200m from the government to
be matched by private investors);
£100m new funding for the plug-
in car grant; £40m R&D funding
(matched by industry) for new charging
technologies including on-street and
wireless projects; and a commitment
that the government will lead the
way, making 25 per cent of all cars in
the central government department
fleet ultra-low emission by 2022.
Building on these commitments, in
the coming months we will publish a
strategy on government support for
the transition to zero emission road
transport, ensuring the UK continues to
be a world leader in the development,
manufacture and use of these vehicles.
51
‘We will ensure we
continue to have
one of the most
open environments
in the world
for transport
innovation and
new services by
undertaking a
thorough regulatory
review.’
We will prepare for a
future of new mobility
services, increased
autonomy, journey-
sharing and a blurring
of the distinctions
between private and
public transport
The future mobility
marketplace is likely to
operate differently to
the transport system of
today. We will consult with
industry and others on the
government’s role to support
this, and publish a Future
of Urban Mobility strategy
within the next 12 months.
The National Infrastructure
Commission (NIC) will also
launch a new innovation
prize to determine how
future roadbuilding should
adapt to supporting self-
driving cars, with the West
Midlands, a UK centre of
expertise on connected
and autonomous vehicles,
being a key testing location
for the best entries. We will
also be investing £5m from
the 5G Testbeds and Trials
programme for an initial
trial, starting in 2018, of 5G
applications and deployment
on roads, including helping
to test how we can maximise
future productivity benefits
from self-driving cars.
We will explore ways to
use data to accelerate
development of new
mobility services
and enable the more
effective operation of
our transport system
We will continue to invest
in R&D and testbed
infrastructure for
connected and autonomous
vehicles. We will explore
how simulated digital
environments can support
and accelerate development
of self-driving technology
through an R&D competition
to be launched by the
Centre for Connected and
Autonomous Vehicles,
the first R&D competition
of its kind in Europe.
One of the main groups benefiting from this revolution
is older people who may no longer be able to drive or
have other difficulties with mobility. Our fourth challenge
is focused on meeting the particular needs of an
ageing society.
Industrial Strategy White Paper
52
Ageing Society
We will harness the power of innovation to help meet the needs of
an ageing society.
The UK population is ageing, as it is
across the industrialised world. We
are living longer than ever before; we
have historically lower birth rates; a
large cohort of people – the so-called
‘baby boomers’ born after the Second
World War – are reaching retirement30.
One in three children born in the UK
today can expect to live to 10031.
The prospect of longer lives will
require people to plan their careers
and retirement differently. Ageing
populations will create new demands
for technologies, products and services,
including new care technologies,
new housing models and innovative
savings products for retirement. We
have an obligation to help our older
citizens lead independent, fulfilled lives,
continuing to contribute to society.
UK population and proportion of population aged 65 and over
By 2046 almost 1 in 4 people will be 65 years old and over
MillionsUK population (RHS)
Aged 65 or over (%, LHS)
1976 1986 1996 2006 2016 2026 2036 2046
40%
30%
20%
10%
0%
80
60
40
20
14.2%
24.8%
Source: ONS (2017) “Population estimates”
*2016-based population projections are used
53
Innovation in age-related
products and services can
make a significant difference
to UK productivity and
individuals’ wellbeing, and
will find a growing global
market. Ageing also presents
significant challenges to the
economy, including greater
caring demands on those of
working age and increased
health and social care costs.
Without action, an ageing
population could reduce the
size of our workforce and
lead to lower productivity.
If we succeed, we will create
an economy which works for
everyone, regardless of age.
A new generation of British
businesses will be thriving in
the growing global market
for age-related products
and services. Older people
will be able to lead fuller,
more independent lives,
increasingly supported by
smart home technologies,
wearable devices and tech-
enabled health and care
services. British businesses
will have redesigned jobs
and workplaces to better
use their older workers’
experience, enabling
individuals to keep active
and stay in work. Workers
will have more flexibility
to help balance their work
with caring responsibilities.
Younger generations will be
able to plan for their longer
careers with confidence.
‘One in three
children born in
the UK today can
expect to live to
100. The prospect
of longer lives will
require people to
plan their careers
and retirement
differently.’
Ageing populations will create new demands for
technologies, products and services
Industrial Strategy White Paper
54
Many countries are grappling with this
challenge, most notably Japan. There
are some distinctive British opportunities
which build on our strengths. These
include powerful health datasets in the
NHS, world-leading design institutes,
the artificial intelligence research
community, a strong life sciences
sector and the financial services
industry. Making the most of these
advantages could turn the ageing
challenge into a global opportunity.
We will take action to and extend UK
leadership in four early priority areas:
We will support new products
and services for the growing
global population of older people,
meeting important social needs
and realising the business
opportunity for the UK
Globally, there are likely to be two
billion people over the age of 60 by
205032. UK businesses must take
advantage of markets created by this
rise in older consumers. Doing this
could also improve people’s quality of
life. Through a forthcoming Industrial
Strategy ‘Healthy Ageing’ programme
we will invest in innovation to help
older people maintain their chosen
lifestyle, and stay independent for
longer. We will explore opportunities
to work with UK businesses to
encourage emerging consumer
markets, and the development of
innovative products and services
that support people throughout their
working life and into retirement. This
could include new finance products or
partnering with the retail tech sector
to identify barriers to the development
and diffusion of new products.
We will support sectors to adapt to
a changing and ageing workforce
As people lead longer, healthier lives,
they will need to save and work for
longer to ensure they have a secure
retirement. With an ageing workforce
and fewer people entering the labour
market from education and training,
employers will need a more flexible
labour market that can accommodate
older workers. The government will
continue to build on the Fuller Working
Lives Strategy and has already
appointed a Business Champion
specifically for older workers. This
signals our commitment to work with
employers to promote the benefits
of older workers to employers across
England – in terms of their strategic
approach and practical advice. We
will also encourage industries to
lead in adapting their workplaces
to the requirements of an ageing
workforce. To help realise the potential
in the labour market, including
amongst women, older workers,
carers and disabled people, we will
work with business to make flexible
working a reality for all employees
across Britain and to inform the
evaluation of the Right to Request
Flexible Working regulations.
We will leverage our health data
to improve health outcomes and
UK leadership in life sciences
The NHS generates powerful datasets
that could be harnessed in a safe,
fair and secure manner to develop
55
‘There are some
distinctive British
opportunities
which build on our
strengths… Making
the most of these
advantages could
turn the ageing
challenge into a
global opportunity.‘
new tools to diagnose
and treat illness earlier. In
response to Professor Sir
John Bell’s life sciences
review33, the government
will be working to develop a
number of regional Digital
Innovation Hubs. These
hubs will support the use of
data for research purposes
within the strict parameters
set by the National Data
Guardian. Health and social
care are devolved but the
technological challenges and
benefits can be supported
and seized across the UK.
Through the Industrial
Strategy ‘Data to early
diagnostics and precision
medicine’ programme,
we will invest to continue
to explore the application
of data for better, more
innovative health and care.
We will support care
providers to adapt
their business models
to changing demands,
encouraging new models of
care to develop and flourish
The government’s forthcoming
Green Paper on care and
support in England will respond
to the wide challenges facing
the social care sector, setting
out proposals for long-term,
sustainable reform. The
Industrial Strategy can play
a role in supporting the
care sector to adapt for the
future. We will support the
care sector to innovate and
develop new business models,
including by making better
use of emerging technology
through the Industrial Strategy
Challenge Fund. We will also
encourage care businesses
to access the opportunities
provided by the strengthened
Growth Hub network.
Next Steps
What we have outlined here
is just the start. Over the
months ahead we want to
work in partnership with
businesses, universities,
researchers and civil society
on these Grand Challenges.
All four are ambitious – and
they are difficult. Success is
not guaranteed. But trying
to tackle them is not just
worthwhile, it is essential. If we
can rise to these challenges
we will have equipped
our country for a future
that is not just prosperous
but also socially and
environmentally responsible.
Industrial Strategy White Paper
56
Ideas
57
Our ability to
innovate – to develop
new ideas and
deploy them - is one
of Britain’s historic
strengths
Industrial Strategy White Paper
58
Ideas
To be the world’s most innovative economy
Our ability to innovate – to develop
new ideas and deploy them – is one of
Britain’s great historic strengths, from
the jet engine and the bagless vacuum to
MRI scanners and the World Wide Web.
We are a global leader in science and
research: top in measures of research
excellence and home to four of the top
10 universities in the world.
We need to do more to ensure our
excellence in discovery translates
into its application in industrial and
commercial practices, and so into
increased productivity. The government
and the private sector need to invest
more in research and development
(R&D). We need to be better at turning
exciting ideas into strong commercial
products and services. And we must
do more to grow innovation strengths
in every part of the UK, as well as
maintaining our position as a global
leader in science and innovation.
Through our Industrial Strategy, Britain
will take a leading role in a new industrial
revolution as significant as the last. We
will drive change through the biggest
increase in public investment in R&D in
our history. We will ensure the UK is the
best place for innovators, and through
our Grand Challenges we will drive
partnerships between the best minds in
science and business throughout Britain.
Key policies include:
`
` Raising total R&D investment to
2.4 per cent of GDP by 2027
`
` Increasing the rate of R&D tax
credit to 12 per cent
`
` Investing £725m in new Industrial
Strategy Challenge Fund
programmes to capture the value
of innovation

59
Innovation is about new ideas,
new ways of doing things,
new products and services,
new technologies and new
business models. It can come
from radical transformation
or incremental improvements;
from within a business or
from a new insurgent; from
a major scientific advance or
the application of a known
technology in a new process.
Our ideas are crucial to the
productivity improvements
that boost our earning power.
Our ability to innovate – to
develop new ideas and deploy
them – is one of Britain’s
historic strengths. We are a
nation of innovators: from Sir
Frank Whittle’s jet engine to
Sir Tim Berners-Lee’s World
Wide Web; from Sir James
Dyson’s bagless vacuum
cleaner to the automatic
kettle of Russell Hobbs. The
UK is rated one of the most
innovative countries in the
world – an ‘innovation leader’
in the 2017 European
UK fi eld-weighted citation impact across
research fi elds
The UK research base across research fi elds
Humanities
Business
Social
sciences
Engineering
Physical sciences
Clinical sciences
Mathematics
Environmental
sciences
Biological
sciences
Health & medical
sciences
2.0
1.5
1.0
0.5
0.0
2006
2010
2014
World Average (=1.0)
‘We will drive
change through the
biggest increase in
public investment
in research and
development in our
history.’
Source: Elsevier (2017) “International comparative performance of the UK
Research Base 2016”. A field-weighted citation impact of 1.0 represents
world average
Industrial Strategy White Paper
60
Innovation Scoreboard and 23 per cent
above the EU average performance34.
We are recognised as a global leader in
science and research, top in measures
of research excellence35 and home
to four of the top ten universities in
the world36. We punch above our
weight in delivering high-quality,
impactful and diverse research work.
We have leading-edge research and
development (R&D) in many sectors
and industries, including but not
limited to life sciences, aerospace,
automotive, technology, energy and
the creative industries. We also have
world-class service sectors including
in law, accounting, financial services,
advertising, architecture and insurance.
We have a lively and thriving start-up
environment. We produce and attract
some of the most talented people in
the world and draw in proportionally
more internationally mobile R&D
than other large countries37.
While we score well on measures of
research and innovation, we need
to do more to ensure this translates
into improvements in earning power.
According to the UK Innovation Survey,
just over half of our businesses are
classed as innovative38, meaning there
is significant potential to raise our game.
There are four key challenges that
this Industrial Strategy will address.
Over half of UK firms are innovating.
Of those firms:
51% used new business practices.
38% used
new methods
of organising
their work.
36%
introduced
new products.
30% changed their
marketing concepts
or strategies.
25%
innovated in
their processes.
Based on UK Innovation Survey Data 2015. Survey only includes enterprises with 10+ employees
61
Our first challenge is that
neither the government nor
the private sector is investing
enough in R&D. This holds
back the productivity of
both public services and
business. It means the UK
risks losing out in the race to
develop the technologies and
innovations that will shape
the businesses and markets
of the future. We invest less
in R&D than most of our
competitors – 1.7 per cent of
GDP compared to 2.8 per
cent in the United States and
2.9 per cent in Germany39.
Even after allowing for the
structure of our economy
– which is dominated by
services rather than the
traditionally R&D-intensive
sectors like manufacturing –
we still invest comparatively
little40. Business investment
in R&D in the UK is relatively
low41. R&D performed in
businesses is concentrated
in a small number of big
businesses and in a small
number of sectors such as
pharmaceuticals, motor
vehicles and technology42.
Indeed, just over three
quarters of private R&D
investment in the UK is driven
by 400 businesses43. Fewer of
our small and medium-sized
enterprises (SMEs) introduce
new products and processes
than their European
competitors44. Furthermore,
the latest data shows that
the UK’s strength in research
is being challenged by
emerging economies45.
R&D is an example of public
spending stimulating rather
than displacing private
spending: economies
with high levels of public
investment in R&D also
typically have high levels
of private investment46.
In the UK every £1 of
public investment on R&D
attracts around £1.40 of
private investment47.
Our second challenge is
improving our ability to turn
exciting ideas into commercial
products and services and
capture their maximum value.
Our world-class science and
research does not always
feed through to world-leading
home-grown businesses.
There have been major
breakthroughs made in UK
universities and research
labs bought up by global
businesses – from magnetic
resonance imaging in the
1970s, lithium-ion batteries
in the 1980s, monoclonal
antibodies in the 1990s and
genetic sequencing in the
last decade. All of these
are pioneering UK ideas
being developed elsewhere
or bought by businesses
from overseas. Within R&D,
the ‘D’ for development
needs a particular boost.
‘R&D is an example
of public spending
stimulating rather
than displacing
private spending…
In the UK every £1 of
public investment on
R&D attracts around
£1.40 in private
investment.’
Industrial Strategy White Paper
62
Much of our innovation tends to be in
areas such as software and branding,
including marketing and advertising48,
which often require less patient capital
to fund them. We are good at low-cost
innovation and flexible start-ups but the
long and patient process of getting a new
technology to market is difficult. As a
result many of our innovative businesses
are nimble, flexible and imaginative
but do not grow to be substantial, big
or strong. There are exceptions, but in
general British businesses’ R&D tends
to favour quick routes to market, rather
than long development times, and
selling businesses to growing them.
Our third challenge is to build research
and innovation excellence across the UK.
There is world class R&D and innovation
across the UK, from excellent research
in university departments and public
research organisations to investments
from leading businesses. We need to
capitalise on these strengths and foster
the local ecosystems that can support
innovation and sustained growth.
The Science and Innovation Audits49 – led
by consortia of business, universities
and Local Enterprise Partnerships
in England and relevant agencies in
the devolved nations – are revealing
distinct local and regional strengths and
opportunities for collaboration across
the UK. But they are also exposing the
barriers an area can face in building
its strengths into an ecosystem that
attracts investment and talent – such
as access to skills or knowledge and the
capacity of businesses to innovate.
Gross domestic expenditure on R&D by source of fi nancing as a
proportion of GDP, 2015
UK’s spending on research and development compared to other countries
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
KDRISRCHESWEJPNAUTDNKDEUFINUSABELOECDFRASVNISLNLDCZENORCANGBRIRLESTHUNITALUXPRTNZLESPSVKPOLGRCTURLVAMEXCHLNon-government fi nanced
Government fi nanced
Source: OECD (2017) “OECD Economic Surveys: United Kingdom 2017”. *2014 data for France, Ireland, Italy,
Portugal and OECD aggregate. 2013 data for Belgium, Israel, Luxembourg and Sweden. Non-government
financed includes finance from higher education, which may be partly government-financed; and from the
rest of the world, which may include foreign and supranational government finance
63
Our fourth challenge is to
ensure the UK remains a
world leader in global science
and innovation collaboration.
A total of 17 per cent of UK
R&D investment is financed
from abroad50 and half
of UK R&D performed in
business was by overseas-
owned businesses51.
Half of all UK research
publications in 2014 were
internationally co-authored
– a share that has increased
every year since 2010 –
with these articles tending
to score more highly on
excellence and impact52.
This demonstrates that
international collaboration is
vital to our continued success.
But UK leadership is being
challenged by emerging
economies and competition
grows for research talent
and private investment.
For us to remain a leading
R&D nation, we will need
to capitalise on our strong
reputation and continue to
attract the top talent from
around the world, including
from EU member states.
We must ensure we remain
connected to other leading
international sources of ideas
and have the capacity to
absorb the advances they are
making, working closely with
the devolved nations to make
the most of strengths and
opportunities across the UK.
We need to make strategic
choices to maximise our
international collaborations
to support UK priorities and
the Grand Challenges.
If we address all this together
we will be stronger not just
in R&D and wider innovation,
but in maximising the
productivity and earning
power benefits for businesses
and people throughout the
country. By 2030 we want the
UK to be the most innovative
country in the world: a
home to the most dynamic
businesses at the cutting
edge of new technologies
and processes, and which
supports all businesses to
adopt new ways of working
to help them prosper. This
means investing in R&D
and the skills needed in a
changing work environment
to maximise the rewards
and benefits innovation can
bring to everyone in the UK.
‘By 2030 we want the
UK to be the most
innovative country
in the world: a home
to the most dynamic
businesses at the
cutting edge of new
technologies and
processes.’
of total UK
R&D
investment
17%
is financed from abroad
Industrial Strategy White Paper
64
A nation of innovators
1668
Sir Isaac Newton
invented the reflecting
telescope
1825
George Stephenson invents
the passenger railway
1843
Ada Lovelace
created one of the
first computer
programmes
1880
Joseph Swan started
manufacturing and selling
light bulbs
1926
John Logie Baird was the first
to transmit moving pictures
1967
Sir Godfrey Hounsfield conceives
the idea for the CT Scanner
1978
First successful birth of a
child after IVF treatment
2004
Discovery and isolation of a single
free-standing atomic layer of carbon
(graphene) at Manchester University
65
2011
Saturn Bioponics develop the world’s first
three-dimensional crop growing system
2012
Susannah Clarke revolutionised joint replacements
by using 3D printed technology allowing personalised
joint replacement with fewer complications
2013
Surrey Satellite Technology’s S-band radar
system, NovaSAR, which revolutionises
navigation and surveillance communications
wins an Innovation award from the Institution of
Engineering and Technology (IET)
2015
Oxford Nanopore launch MinION a portable
DNA sequencing USB device for on-the-go
RNA/DNA sequencing which can be used to
monitor viruses like Ebola or trace antibiotic
resistance without the need for large scale
computing infrastructure
2015
DeepMind’s AlphaGo defeats the
reigning Go European Champion
becoming the first programme to
defeat a professional player, giving
us deeper understanding of the power
and flexibility of machine learning
2016
Double Negative wins its third
Academy Award for its pioneering
visual effects work on sci-fi
psychological thriller Ex Machina
2017
Richard Henderson awarded the Nobel
Chemistry Prize for developing cryo-
electron microscopy for the high-
resolution structure determination of
biomolecules in solution
Industrial Strategy White Paper
66
Our approach
Investing in R&D to transform our economy.
For the UK to become the most
innovative country in the world we
need a generational increase in public
and private R&D investment. In this
strategy we commit to reach 2.4
per cent of GDP investment in R&D
by 2027 and to reach 3 per cent of
GDP in the longer term, placing us in
the top quartile of OECD countries.
If we meet this target we will
transform our economy. It could
increase public and private R&D
investment by as much as £80bn over
the next 10 years, with much wider
benefits across the UK economy.
We could see a dramatic change
in the use of R&D by industry,
with our businesses creating the
next generation of technologies to
revolutionise productivity in all sectors
from construction and agriculture
to manufacturing and the creative
industries. This will raise the standard
of living and establish UK leadership
in global markets. The UK will lead
the way in the R&D driving our Grand
Challenges: in artificial intelligence and
data-driven technology, clean growth,
the ageing society and mobility.
Our Grand Challenges will be driven by R&D in artificial intelligence and data-driven
technology, clean growth, adapting to an ageing society and future mobility
67
‘Our vision for
a knowledge-
led economy is
underpinned by
world-leading
research, world-
class facilities
and international
collaborations that
push scientific
frontiers and attract
the brightest talents.’
Our vision for a knowledge-
led economy is underpinned
by world-leading research,
world-class facilities and
international collaborations
that push scientific frontiers
and attract the brightest
talents, from Nobel Prize
winners to ambitious
graduate students.
‘Innovation clusters’ will
form and grow around our
universities and research
organisations, bringing
together world-class
research, business expertise
and entrepreneurial drive.
These clusters can create
thousands of skilled jobs
in R&D, innovation and
wider sectors, driven by
the growth in science,
technology, engineering
and maths (STEM) skills led
by new teachers and more
doctorates. These skilled
people and businesses
must be located throughout
the UK, growing research
and innovation strengths
throughout England, as
well as in Scotland, Wales
and Northern Ireland.
Increasing investment in
R&D to 2.4 per cent of GDP
in a decade is ambitious
and will require concerted
effort by the government
and business. As a first step
we will invest an additional
£2.3bn over what was
previously planned in
2021/22, raising total
public investment in R&D
to approximately £12.5bn
in that year alone. This
investment will see public
R&D spending increase as
a share of GDP every year.
It means that we will have
raised public investment in
R&D from around £9.5bn
last year (2016/17) to around
£12.5bn in 2021/22.
This is an extra £7bn over
five years – the biggest ever
increase in public funding
of R&D. We will invest
strategically in technologies
and ideas closer to market
to drive UK competitiveness,
while also continuing to fund
the curiosity-driven research
that is fundamental to the
quality of our work and
ensures our place as a world-
leading knowledge economy.
We will work with industry
in the coming months to
develop a roadmap for
meeting this target. This
will provide a framework to
drive business investment
in R&D and focus on key
sectors, technologies
£12.5bn
public investment in
R&D in 2021/22 alone