UK Government Publishes Industry Strategy Green Paper

Among the key points made at the British Coatings Federation’s conference in May was that the expected swing to a Labour government in the UK would view green technologies much more favorably than the outgoing Conservative one.

A few months into the Starmer government have yielded a raft of new policies and initiatives that will potentially reflate the UK economy, and that point has been proven. Action by the government on the part of industry has been swift, hopefully bringing to an end to years of stagnation and low growth.

Accentuating the Positive

In October the government published its Industrial Strategy Green Paper under the heading Invest 2035: The UK’s Modern Industrial Strategy. This 66-page document heralds a 10-year plan whereby the government proactively shapes industry and economic growth against the backdrop of globally shifting economic and environmental landscapes and other challenges, not least of which has been an 11% drop in investment in the UK since 2016, further compounded by the economic setbacks of the lockdown periods, Brexit, energy price peaks and a globally rife cost-of-living crisis. The strategy and the document set out by the government respond clearly to UK industry needs.

Since the turn of the millennium, one-third of the UK’s highest-productivity industries have accounted for two-thirds of overall productivity growth. The new strategy aims to support eight growth-driving industry sectors where the UK is already flourishing and stands to be even further ahead of the game in the future; these proposals include both the manufacturing and service industries. The eight sectors have been singled out as follows:
• Advanced manufacturing
• Clean energy industries
• Digital and technologies
• Defence
• Creative industries
• Life sciences
• Financial services
• Professional and business services

Four Relevant Areas for the Chemical/Coatings Sector

Digital and technologies: the UK is performing extremely well in this area and is third only to China and the USA when measured by the value of its “tech ecosystem” which is worth more than US$ 1 trillion.

The UK was also placed third in 2023 for attracting investment in digital and technology areas, when it was ahead of France and Germany. Furthermore, digital trade is now helping to offset an ongoing decline in export trade, which has fallen in recent years.

Digital trade accounted for more than half of UK exports in 2020 and more international co-operation in this area (such as the ongoing UK-Singapore Digital Economy Agreement) would increase further the UK’s standing in the world’s digital sector. (Notably, the UK remains a weak exporter of goods for several reasons, which include product-specific prohibitions, regulatory and standards-related matters. Many UK firms plainly shun the whole concept of exportation, much to the irritation of successive UK governments in the face of weak GDP growth.)

Advanced manufacturing per se is obviously a major part of UK industry growth but in essence the definition of advanced manufacturing here amounts to “Industry 4.0” as an umbrella term that encompasses high-tech industrial processes, artificial intelligence, green energy etc. as the embodiment of modern, 21st-century manufacturing processes that are digitalised, lean and ecologically sound.

That said, the report highlights the strengths of the UK aerospace sector as a prominent example of a strong manufacturing sector (and a demanding one in terms of high-tech coatings technology).

Net zero objectives inhabit the intersection of clean energy and advanced manufacturing. The govt perceives this as a major area of UK manufacturing investment and will seek to improve UK competitivity in this area. Other countries have performed better in terms of subsidies and incentives; barriers need to be removed in the UK if industry is benefit more effectively in this area.

Clean energy: this sector is especially attractive as 90% of the world’s GDP is now being shaped by net zero ambitions. Low-carbon industries are more lucrative than fossil fuel industries because the growth multipliers that arise from them are considerably greater. Although the UK has enjoyed some success in this area already, it trails behind many European countries (Germany, Denmark, Sweden) in terms of how renewable-based jobs have multiplied. Barriers cited include high investment, strong international competition and a shortage of skills.

Energy is a doubly important area in terms of industry overheads and profitability, separate again from the fact that carbon energy is no selling point at all. Energy prices for industry in Germany and France are typically 30-35% cheaper than in the UK, so the imperative for government to drive input prices downwards in order to enhance UK competitiveness on the global stage becomes undeniable.

The only way to do this is to accelerate industry’s transition away from fossil fuels (decarbonization) and the Starmer government has already eliminated barriers to the construction of more onshore windfarms, given the green light to 2 GW of solar energy and paved the way – on a domestic basis – for more than 11 million homes to be supplied with clean energy.

UK Leads in Innovation but Lags in Absorption

One of the key factors that the report highlights is that the UK was ranked fifth out of 133 countries in the World Intellectual Property Organisation’s Global Innovation Index for 2024, but ranked 31st in terms of knowledge absorption, the pull-through of digital technologies and innovation lagging considerably.

As the government seeks to drill down further to put more meat on the bones of its strategy, it plans to prioritise specific subsectors in each area with a view to identifying barriers to growth, and much of this will be accomplished at regional and expert levels.  Similarly, sector plans will also identify industries that are ‘foundational’ and provide critical inputs to other sectors, such as the coatings industry.

Response on Behalf of Coatings Industry

The British Coatings Federation, which has undertaken extensive work in the highlighting the coatings industry as a prominent foundational industry for other sectors in the coatings chain, welcomed the publication of the document.

Tom Bowtell, CEO of the British Coatings Federation commented on the report by saying, “We welcome the publication of the Green Paper and the vision for a holistic and long-term UK industrial strategy. In particular, we are pleased to see the recognition of the importance of ‘foundational’ sectors – such as coatings – in the strategy.

“It is also pleasing to see a joined-up approach with references to a need for a pro-business regulatory environment,” Bowtell added. “This latter is fundamental to those businesses working in the chemicals sector and where we need to see, finally, workable and proportionate post-Brexit regulatory regimes put in place, especially for UK REACH. BCF looks forward to responding to the consultation, and talking with government, to set out how the coatings sector can help deliver on the positive plans for a strong and growing domestic UK manufacturing base. We already have a positive story to tell but with the right policies we can, collectively – government and industry working together – make British manufacturing an even greater success.”