The Department for Business, Energy and Industrial Strategy should move more of its workforce outside the south east of England to break its London-centric mentality and ensure all regions benefit from efforts to boost the economy, a group of MPs have said.
The department has done too little to ensure the so-called sector deals it has agreed with industry groups benefit the whole of the UK, the BEIS Select Committee said in a report that warned the government against “shutting out” some industries from the deals.
The report, published today, welcomed evidence that BEIS was working to include the devolved administrations in the deals, but warned: “We are concerned that the BEIS’s London-centric workforce risks the department failing to recruit staff with experience outside of the south east and failing to engage with business around the UK.”
It said the department should employ a greater proportion of its staff, particularly those working on policy issues, outside London and the south east.
“An industrial strategy working in the interests of the whole country needs to be supported by a diverse UK-wide organisation that will enable the whole of the UK to [prosper],” the MPs said.
In a further effort to ensure regions benefit from the deals, the committee said the government must require an analysis of regional benefits as part of the negotiation process for each deal. It should then publish the analyses alongside the deals, and measure regional impact as part of the review process for each.
So far, according to the report, the government has failed to demonstrate any analysis of how sector deals could be used to tackle specific challenges related to regional disparities.
Industrial strategy 'not doing enough for the ‘everyday economy’
Since November 2017, when the government published its industrial strategy white paper, the government has published eight sector deals, each aiming to increase productivity and investment in a specific industry, including the life sciences, construction, the creative industries and aerospace. As of the end of 2018, three more as-yet unnamed industries were negotiating deals.
The deals have had a hefty focus on R&D, underpinned by both business investment and government funding through the Industrial Strategy Challenge Fund.
The government has said any indsutry can seek a sector deal, but the report argued that departments had been too slow to strike so-called “sector deals” for those beyond the most innovative industries.
“The government have not indicated whether the list of sectors seeking a deal is shrinking or growing, but the slow progress in achieving deals beyond the pioneer sectors [those included in the early deals], and the lack of clarity in what might be possible, is in the interests of neither business nor government,” it said.
The committee said the deals struck to date showed a bias towards the most innovative industries, to the detriment of areas such as retail and hospitality. The government “should not allow its pursuit of [innovative] sectors to dilute the work needed to improve our least productive sectors and to reduce the long tail of unproductive businesses”, it said.
In a statement accompanying the report, BEIS committee chair Rachel Reeves said the industrial strategy “isn’t doing enough for the ‘everyday economy’, in sectors such as retail and hospitality where millions of Brits are employed”.
"The government’s ‘open door’ offer to industry isn’t being delivered upon in these neglected sectors and the government needs to be much clearer about the criteria for sector deals and engage more actively and decisively to make these happen.”
The MPs urged the government to confirm whether sector deals are still open to every sector of the economy, and to what extent it is willing to engage with industries pursuing a deal. “The government should provide a roadmap for sectors seeking a deal, making clear the milestones and timescales for reaching a deal,” it added.
Critically, the government must ensure that “no sector that has approached it with a credible offer is shut out of the sector deals process”, the MPs said.
The Department for Business, Energy and Industrial Strategy said it has "already agreed ten sector deals with a range of industries", including the aerospace, construction and offshore wind sectors and would consider the select committee’s findings and respond in due course.