Delivering the Integrated Review ambition through smart Industrial Strategy

In an increasingly volatile geo-political and geo-economic context, and with rapidly evolving technology, this approach makes eminent sense. Delivering it across multiple government departments and the enterprises that support them will, however, be challenging. Successfully implementing the innovative and adaptive enterprise needed to realise this ambition will require a smart Industrial Strategy that engenders those characteristics.

As a minimum, this will require enterprise-level thinking that will set the direction for three core areas:

Determine which elements of the industrial base need to be adaptive

The review demonstrates a strong commitment to the UK as a cyber power and to maintaining the nuclear deterrent. The former is a fast-moving sector that will require agility and the rapid development of new ideas to maintain an adaptive edge over the UK’s adversaries. With many organisations in this space, a degree of free market dynamics can be used to actively encourage innovation and entrepreneurialism.

In contrast, capability development in the nuclear sector is slower and there are fewer players, which favours structure and stability. A partnering approach with organisations may be more appropriate and would enable the UK to maintain and build domestic capabilities.

Assess the degree to which different sectors drive prosperity and levelling up

The Integrated Review states that “true prosperity depends on levelling-up of opportunity” and sharing the benefits of economic growth across the UK. As the UK levels up, it will be vital to balance each region’s existing strengths (industrial, scientific, academic) with building or distributing capabilities to new areas to generate growth. This will avoid the concentration of investment in historic centres of excellence, while avoiding spiralling costs from building entirely new ecosystems of infrastructure and skills development. Coherent industrial strategy is needed across affected sectors if the desired capability development, growth and levelling up is to be achieved – this will necessarily extend beyond the traditional defence and security sector.

Balance the domestic and international focus of the industrial base

Marking a departure from the previous decade’s mantra of ‘competition by default’, the Integrated Review moves towards an approach that seeks to safeguard and nurture industries that are deemed critical to the UK’s future security and prosperity – for example, securing the UK’s “status as a science and tech superpower by 2030”. However, it also acknowledges the growing importance of bilateral government-to-government collaboration in certain key areas – for instance, in space and cyber-security. International collaboration provides opportunities for the UK to strengthen relationships through commercial cooperation and direct foreign investment; as well as to diversify the UK’s trade links, thereby improving economic resilience. A smart Industrial Strategy can balance these two drivers and identify which elements of industry are subject to international competition or cooperation; and which are to be retained or developed domestically.

The Integrated Review presents industry with long-awaited direction on priority areas for the UK Government; both in terms of the sectors, capabilities and technologies to focus on, and also the adaptive approach needed to build resilience in an increasingly volatile world. With the right investment and senior leadership, the Industrial Strategy can set out the detail required to provide industry with clarity on how to best realise this ambition.