What does the UK’s new industrial strategy mean for universities?

It is unclear what Theresa May’s policy will mean in practice, but it could draw universities into the heart of economic planning

August 31, 2016
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Strategic vision: a sound strategy needs ‘the full-hearted participation’ of the ‘people who live and breathe business, research, science and innovation’, says Greg Clark

Parliament is still in recess, and Westminster is waiting for the new prime minister Theresa May to flesh out her agenda for government. But even amid summer headlines about the Olympics, there are strong indications that universities and science are going to play a much bigger role in the government’s economic vision than they have for many years.

On 21 August, the final day of the Rio Games, The Sunday Times’ front page declared that the new administration would apply Team GB’s principle of backing “excellence” to the wider economy.

Greg Clark, the new business secretary who oversees the university research budget, said that Ms May’s new industrial strategy would recognise “our strengths – from science to the creative industries – and making sure they are nurtured and encouraged”. “Special emphasis” would be placed on helping “hi-tech firms in university towns – where different regions already have a competitive edge”, the newspaper reported.

It is thus far unclear what a “proper industrial strategy”, as Ms May put it in a speech shortly before becoming prime minister, might mean in policy terms. MPs on the Business, Innovation and Skills Select Committee have launched an inquiry into the new approach, looking at questions such as how much the government should intervene in the market, how it decides which sectors to support, and what can be learned from other countries.

However, Mr Clark set out some of the overriding principles of the new strategy in a speech at the end of July to the Royal Society.

He said that the principles of “excellence”, “agility”, “collaboration between disciplines and sectors”, “the importance of place” and “openness and internationalism” would inform the new plan.  

“We should form this strategy together, because it is obvious that no successful strategy can be drawn up without the full-hearted participation of the people who know their industries, their prospects, their technologies and their strengths; the people who live and breathe business, research, science and innovation,” he told the assembled scientists. 

One of the problems Mr Clark may have to confront is how to both fund “excellence” and make sure investment does not go to already wealthy areas of the country. In UK research, for example, research funding has historically been distributed on the basis of excellence, but this, say some critics, has led to concentration in the golden triangle of London, Oxford and Cambridge.

If the government decides to encourage industrial clusters around high-performing university departments, there are still enough excellent universities outside the golden triangle to “at least correct the North-South divide”, Vince Cable, who was business secretary in the coalition government between 2010 and 2015, told Times Higher Education.

However, such an approach would mean the “Blackpools and the Hartlepools” of the UK could miss out, he cautioned. Another danger is that cities without a university feel pressured to convert an already well-performing further education college into a university to attract an industrial cluster. It is “dangerous to become too obsessed with the university campus”, he said.  

As business secretary, Mr Cable introduced Catapult centres, where businesses and scientists work together on late-stage research and development with the explicit aim of creating new products and services for the market.

Catapults are billed as a British version of the much more extensive – and much longer-established – Fraunhofer network in Germany. Founded shortly after the Second World War, the Fraunhofer system has grown to include 67 centres and research institutes distributed relatively evenly across Germany. More than 70 per cent of the network’s funding comes from contract research, with the rest drawn from federal and state governments.

So far, three of the UK’s 11 Catapult centres are based in London (covering future cities, cell therapy, and the digital economy) and one is in Cambridge (precision medicine), but there are others in Cheshire (medicines discovery), Birmingham (energy systems) and Milton Keynes (transport systems).

“We did have some messy arguments about location,” said Mr Cable, as the “Oxbridge/London axis is formidable”.

“Where we were quite weak was the geographical dimension which Greg [Clark] is now trying to address,” he said of previous attempts to push forward an industrial strategy.

One option for the new administration is to expand the Catapult network. “They are about long-term sector development, and it is still too early to judge them, but they look like a useful intervention,” said David Bailey, professor of industrial strategy at Aston Business School.

However, despite what appears to be “broad political support” for the centres, Professor Bailey said they needed to be better funded “with a long-term commitment from government – as the Commons Science and Technology Committee noted in 2013, Catapult centres may be under pressure to become self-financing too quickly”.

This points to another of the challenges Mr Clark flagged up in his speech to the Royal Society – how to make sure there is a “long-term, predictable and sustained approach to policymaking”, as he put it.

The previous, ardently pro-free market business secretary, Sajid Javid, took a “wrecking ball” to many aspects of Mr Cable’s industrial strategy, said Professor Bailey. At the end of 2015, Mr Javid scrapped the Business Growth Service, a programme that had included the Manufacturing Advisory Service, which offered consultancy and training to manufacturers.

But his replacement marks a return to the pro-industrial strategy attitude of Mr Cable, and Labour’s Lord Mandelson before him. So there is now “on a very modest scale” a “small degree of continuity of industrial policy. That needs to be built on,” said Professor Bailey.

Whether this will have any impact on the work of ordinary academics remains to be seen. So far, efforts to make “third stream” activities such as commercialising research and offering consultancy services to business as important to academic faculty as teaching and research seem to have met with limited success.

One recent study, drawing on 27 anonymous interviews with academics and managers, found that many academics saw third-stream work as a “distraction”, and one lecturer had “never heard” of such activities. 

Researchers who see their role as advancing fundamental understanding, regardless of its impact, may feel anxious if the government sees scientific research as playing a major role in rejuvenating economic growth.

However, such an agenda does at least mean that the government’s “post-Brexit” settlement should include a “positive deal” for universities, because they are being seen as an important part of any new plan to galvanise British industries, said Neil Carberry, director for people and skills at the CBI. “Universities should feel positive about an industrial strategy agenda,” he said. 

In a statement to THE, Mr Clark said that “the UK is world-renowned for our pioneering scientific advancements and exciting innovations grown from a strong university and research base, and I want to ensure that future successes are just as transformational.

“By protecting the science and innovation budgets, UK universities will help develop a skilled workforce for the future, attract international talent and investment, and support our goal of being the best place in Europe to innovate and grow a business.

“Our industrial strategy will ensure this sector continues to play a crucial role in supporting businesses and driving innovation and economic growth across the UK." 

david.matthews@tesglobal.com

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