The government is to highlight five key areas where the UK needs to improve its performance when it reveals on Monday the details of a new industrial strategy designed to increase productivity.

Greg Clark, the business secretary, will announce the creation of an independent watchdog to monitor progress made in boosting innovation, upgrading infrastructure, increasing the level of workplace skills, ensuring that the strength of the City is reflected in funds for companies and spreading prosperity to all parts of the country.

A white paper to be published by Clark will also reveal that the government intends to set up long-term strategic deals in four sectors seen as having growth potential: construction, life sciences, automotive, and artificial intelligence.

New investment in the UK by the US-owned life sciences company Merck, known as MSD in Europe, creating 950 jobs, shows the benefits of the sort of partnership between Whitehall, the private sector and universities the government wants to create in its four sector deals, he will say.

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“Our life sciences sector is one of the UK’s fastest developing industries, with a turnover in excess of £64bn, employing 233,000 across the UK.

“MSD’s commitment today, and the wider sector deal investment we have secured, proves the process outlined in the industrial strategy can give companies the confidence and direction they need to invest in the UK. It will ensure Britain continues to be at the forefront of innovation and represents a huge vote of confidence in our industrial strategy.”

The white paper’s focus on five core areas follows extensive consultation since the publication of a green paper at the start of the year. Clark believes the need for an industrial strategy has been made all the more pressing by last week’s budget, in which the Office for Budget Responsibility halved its forecast of the UK’s long-term productivity trend to 1%. The white paper will note that the need for the UK to seize available opportunities has been made more important by the Brexit vote.



Philip Hammond, the chancellor, announced plans in the budget to raise UK spending on research and development from 1.7% to 2.4% of national income by 2027, a fillip to Clark’s goal of fostering new ideas and turning them into commercial products. The government thinks extra spending on R&D could mean bout £80bn of additional investment in advanced technology in the next decade.

But Clark also wants the white paper to concentrate on some of the other factors he believes explain the gulf between UK productivity and that of countries such as Germany. In particular, he wants the white paper to focus on Britain’s poor skills record, its under-investment in infrastructure and on narrowing the productivity gap not just between the south-east and the rest of the UK but also within regions themselves.

Clark has also been receptive to the idea proposed by the CBI that there should be an independent industrial strategy commission – based on the OBR model – to provide an objective assessment of progress towards the white paper’s goals.

The paper will identify four grand challenges, global trends that the government sees as shaping the future: artificial intelligence; clean growth; an ageing society; and future mobility from driverless cars to drones.

Industrial strategy went out of fashion in the Conservative party after the defeat of the 1974-9 Labour government by Margaret Thatcher. But Clark believes a new approach based on competition rather than on picking winners will help address Britain’s long-term problems.

The business secretary believes the government has a role to play in putting UK companies at the vanguard of the new wave of technologies such as robotics and genomics, but he also thinks the white paper can help improve productivity in more traditional sectors, such as food and drink.



“We are at one of the most important, exciting and challenging times there has ever been in the history of the world’s commerce and industry,” Clark will say.



“We are renowned for innovation and discovery, with some of the best universities and research institutions in the world producing some of the most inventive people on earth.

“We have commercial and industrial sectors – from advanced manufacturing to financial services; from life sciences to the creative industries – which are competitive with the best in the world.

“But any serious strategy should address the weaknesses that stop us achieving our potential, as well as our strengths, and this industrial strategy does that. Britain’s productivity performance has not been good enough, and is holding back our earning power as a country.

“So this industrial strategy deliberately strengthens the five foundations of productivity: ideas, people, infrastructure, business environment and places.”