As is almost inevitably the case with government announcements, it was not easy to assess how much of Sir Keir Starmer’s long-awaited industrial strategy was new when it was unveiled earlier this week. In particular, and unsurprisingly, there were questions about both the amount of the money pledged and whether it also was new — or merely recycled from elsewhere.
Nevertheless, its existence is at least an acknowledgement that it is not enough for Sir Keir and his Chancellor, Rachel Reeves, to keep talking about growth and that they need to show some action and provide some incentives. This seems to have found favor with at least some in business who were involved in the development of the policy. For example, both Sarah Walker, chief executive for the U.K. and Ireland at technology giant Cisco, and Daniel Pell, her counterpart at the people and financial management software company Workday, welcomed the initiative, at least partly on the grounds that it had been — in Pell’s words — “built through consultation with business.”
Essentially, the strategy sets out to boost eight key sectors — the IS-8 — that the U.K. Government expects to deliver faster than average growth and higher pay for workers. These sectors are advanced manufacturing, creative industries, clean energy, digital technologies, professional and business services, life sciences, financial services and defence.
The focus on areas that are already deemed successful is bound to upset those in other industries that have missed out on special treatment. Reports point to how the retail and hospitality sectors have been hit hard by recent changes to employers’ taxes and argue that they also suffer from the high energy prices that are being targeted for the chosen sectors. And then there are the supporters of the beleaguered agricultural sector. But for recognising that there are certain parts of the economy that merit support because they are successful rather than because they are struggling, ministers deserve some credit. In the past, too many governments of different political persuasions have wasted public money on industries and individual companies that were never going to compete internationally.
That said, there are a lot of details that will have to be got right if this strategy is to fare any better than its predecessors. A key element is the much talked-about issue of the British worker. Policy makers fret about lack of productivity while employers complain of skills shortages. Meanwhile, many would-be employees are disincentivised by the poor levels of pay. Not only have spikes in inflation meant that in real terms pay for many has dropped in recent years, but the benefits available to many can make people feel it is not worthwhile to go to work. This is a key reason why the current U.K. Government’s attempts to reform the welfare state, which are putting it at odds with some of its own MPs and supporters, are so crucial.
Another over-riding concern is technology. Ministers can still seem to regard it as something somewhat fanciful that involves only a few businesses. But, as Cisco’s Walker pointed out in a statement reacting to the announcement of the industrial strategy, “As well as being one of the eight growth driving sectors, the role of technology will be key across the board.”
The strategy talks about spending more than £1 billion ($1.37 billion) a year on skills by 2028-29, including reforming apprenticeships so that, for instance, short, targeted courses within sectors qualify. This is something that has long been lobbied for by those involved in digital training and should be welcomed.
But the bigger issue, of course, is AI. Like technology in general, this will pervade all sectors before long. As Pell pointed out in his statement, the Government does have an AI Opportunities Action Plan. But, such is the pace of change, that plan is going to have to be implemented in short order if the country is not to be left behind.
According to Cisco research, only a tenth of U.K. organizations are fully prepared to harness AI’s potential. However, a study recently published by the enterprise software company Salesforce suggests that U.K. companies are leading the way on agentic AI adoption. Nearly four out of five leaders reported that their companies were already using AI agents.
While the company is calling for a national digital skills platform to help resell and train the workforce in what is required to succeed in the AI world, it is hard to escape the conclusion that the process needs to start much earlier in individuals’ lives.
Already, schools and colleges in the U.K. — like their counterparts around the world — are grappling with students using AI in fair and sometimes not so fair ways. But, rather than pushing against the tide, educators could be harnessing AI to enhance the learning experience — and improve results.
A glimpse of what might be possible was offered earlier this month by Efekta Education Group, a technology-led spin-off from Education First, which claims to be the world’s largest private education company. With a track record in teaching children and employees of some of the world’s largest companies English as a foreign language, it is offering two AI products — one to help teachers deal with the administrative work that takes up so much of their day and the other to provide students with an AI tutor to help make students more engaged and to provide the personalized learning that research has shown improves results. For the moment, the company is sticking to the language training that it has grown up on, but it has plans to move into sciences and mathematics. Imagine if something like this were adopted in the national curriculum. Then the U.K. really might be on a path to being a digital powerhouse.