UPD3 UK Gov’s New Industrial Strategy to Support 5G Mobile and Broadband

The UK Prime Minister, Theresa May, has today launched a new Industrial Strategy that will see additional public investment from a new Industrial Strategy Challenge Fund (ISCF) being put towards the development of future 5G Mobile technology and faster broadband, among other things.

At this stage the seemingly more interventionist strategy is just a wish-list of proposals that are designed to stimulate discussion (Green Paper), rather than a constructive and detailed plan. Inside you’ll find plenty of talk about boosting growth across the United Kingdom and striking new “Sector Deals” to address sector-specific challenges and opportunities, which will focus on a variety of areas such as skills, science, business, robotics, energy and of course 5G Mobile and “digital infrastructure” (e.g. broadband).

The 10 Point Plan (Industrial Strategy)

1. Investing in science, research and innovation

We must become a more innovative economy and do more to commercialise our world leading science base to drive growth across the UK.

2. Developing skills

We must help people and businesses to thrive by: ensuring everyone has the basic skills needed in a modern economy; building a new system of technical education to benefit the half of young people who do not go to university; boosting STEM (science, technology, engineering and maths) skills, digital skills and numeracy; and by raising skill levels in lagging areas.

3. Upgrading infrastructure

We must upgrade our standards of performance on digital, energy, transport, water and flood defence infrastructure, and better align central government infrastructure investment with local growth priorities.

4. Supporting businesses to start and grow

We must ensure that businesses across the UK can access the finance and management skills they need to grow; and we must create the right conditions for companies to invest for the long term.

5. Improving procurement

We must use strategic government procurement to drive innovation and enable the development of UK supply chains;

6. Encouraging trade and inward investment policy

Government policy can help boost productivity and growth across our economy, including by increasing competition and helping to bring new ways of doing things to the UK.

7. Delivering affordable energy and clean growth

We need to keep costs down for businesses, and secure the economic benefits of the transition to a low-carbon economy.

8. Cultivating world-leading sectors

We must build on our areas of competitive advantage, and help new sectors to flourish, in many cases challenging existing institutions and incumbents;

9. Driving growth across the whole country

We will create a framework to build on the particular strengths of different places and address factors that hold places back – whether it is investing in key infrastructure projects to encourage growth, increasing skill levels, or backing local innovation strengths.

10. Creating the right institutions to bring together sectors and places

We will consider the best structures to support people, industries and places. In some places and sectors there may be missing institutions which we could create, or existing ones we could strengthen, be they local civic or educational institutions, trade associations or financial networks.

The aim is to support these areas via a new Industrial Strategy Challenge Fund, which will receive public investment from the new £4.7bn research and development fund. This was tentatively announced as part of last year’s Autumn Statement (this funding will run until 2020-21).

Prime Minister Theresa May said:

“The Modern Industrial Strategy will back Britain for the long term: creating the conditions where successful businesses can emerge and grow, and backing them to invest in the long-term future of our country.

It will be underpinned by a new approach to government, not just stepping back but stepping up to a new, active role that backs business and ensures more people in all corners of the country share in the benefits of its success.”

The Government has of course already committed £400m of public investment (could be worth up to £1.5bn once matched with private investment) to support the roll-out of “full fibre” (FTTH/P) broadband via alternative network ISPs over the next four years, which falls under their new Digital Infrastructure Investment Fund (here).

The DIIF will also be used help build a much bigger fibre “spine” across the UK and to support a coordinated programme of integrated fibre and 5G Mobile trials (the funding rises from £400m to £740m when the 5G pledge is included). On top of that they recently set out the first details for 100% business rates relief on new FTTP/H broadband infrastructure, which will last for 5 years from 1st April 2017 (here).

As such we’d be surprised if broadband and 5G were to be given another major funding boost and so our suspicion is that the existing commitment of £400m may be everything that we can expect to get. However we’ll have to wait and see what the Government decides because it’s possible that more investment could be allocated, which is something that the opposition Labour Party have been promising to do with £25bn (here).

The Government also said that their new strategy will be “driven by the interests of firms and the people they employ” (i.e. individual firms taking the initiative to organise their sectors).

Mike Cherry, Chairman of the Federation of Small Businesses (FSB), said:

“FSB has appreciated being part of the discussions with the Business Secretary since last year to help shape the Industrial Strategy. We are proud to be influencing a major government economic blueprint and particularly pleased with the push on skills, infrastructure and connectivity as important drivers of productivity and industry.

In addition, the moves towards a place-based strategy fit well with the UK small business community. Small firms are often the anchors in our local economies – in cities, towns and villages – right across the country. Finally, we want to continue to see an emphasis on supply chain respect, which underpins the Industrial Strategy announced today but also the Corporate Governance Green Paper.”

All of this is of course on top of the existing £1.6bn+ Broadband Delivery UK programme, which is still working to roll-out “superfast broadband” (24Mbps+) to 97% of the UK by 2020 (estimated coverage is now above 91%). Not to mention the plans for a 10Mbps Universal Service Obligation (USO) for broadband, which is focused on the final 3% of UK premises, and the various commitments to boost current 4G (LTE) coverage to nearly universal levels.

As part of today’s announcement the Government has also released £556 million of additional public funding to 11 Local Enterprise Partnerships (LEPs) in the so-called “Northern Powerhouse” region, some of which may also go towards improving digital infrastructure.

• North Eastern £49.7m
• Cumbria £12.7m
• Tees Valley £21.8m
• York, North Yorkshire, East Riding £23.7m
• Lancashire £69.8m
• Humber £27.9m
• Leeds City Region £67.5m
• Liverpool City Region £72.0m
• Greater Manchester £130.1m
• Sheffield City Region £37.8m
• Cheshire and Warrington £43.3m

UPDATE 3:38pm

Here’s a comment from Virgin Media.

Tom Mockridge, CEO of Virgin Media, said:

“Better broadband infrastructure will help write the next chapter of the UK’s economic growth story.

To do this, Government must keep the door open for private investment and reduce red tape, such as wayleaves.

Broadband builders like Virgin Media can then better help the UK reach its full potential.”

UPDATE 24th Jan 2017

We’ve added a link to the Green Paper above, which covers broadband a number of times.

The paper also reiterates the importance of good broadband connectivity.

Extract from Green Paper

Good digital infrastructure also opens up new opportunities for growth, for example through better connected business and consumers. Research suggests that increased broadband speeds alone could add £17 billion to UK output by 2024 (*65).

Improvements to digital infrastructure will be felt most in rural areas. Supporting the roll-out of fast broadband in rural areas enables new business to locate and grow there. It is estimated that an increase in broadband penetration of 10 per cent yields 0.25 per cent increase in GDP growth (*66).

*65 UK Broadband Impact Study: Impact Report, SQW (November 2013)

*66 Research by Aberdeen and Oxford Universities, https://www.abdn.ac.uk/news/8127/ . Also OECD report across 22 countries: http://tinyurl.com/jmjra9j .

UPDATE 26th Jan 2017

The Labour Party’s Shadow Digital Economy Minister, Louise Haigh MP, has criticised the lack of new investment and called for a bolder ambition.

Louise Haigh MP said:

“Parts of our major cities, swathes of our rural communities and hundreds of thousands of Britain’s small businesses deserve better than the out of date basic broadband the government wants them to put up with.

And with evidence showing superfast will help fire-up the economy, it’s time this government’s ambitions matched those of millions of consumers and small businesses and they committed to delivering superfast broadband for all.”