Chancellor ‘committed to industrial strategy’ as he wields axe on BIS

George Osborne
George Osborne
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THE CHANCELLOR insisted he was committed to an “active and sustained” industrial strategy in spite of his decision to slash spending on the Department for Business Innovation and Skills by 17 per cent over the next four years.

George Osborne promised to prioritise key growth and productivity objectives by protecting science funding and maintaining support for innovation and the automotive and aerospace industries.

He said spending on the network of Catapult centres would increase and confirmed plans to replace innovation grants with £165m worth of loans to businesses.

Instead of handouts, the Government will introduce new finance products to support innovation after studying the success of schemes in France, Finland and the Netherlands.

Business leaders raised concerns over the move.

Andy Caton, president of the Bradford Chamber of Commerce, said: “Moving from grants to loans for those involved in science and research could affect innovation and the country’s place in the global economy.”

Carolyn Fairbairn, director-general of the CBI, said firms will be reassured by the protection of the science budget, the Catapult network and support for automotive and aerospace industries, which underpin important productivity gains in key sectors.

“But we will need to scrutinise any shift from grants to loans for Innovate UK which could dampen bold and game changing innovation, particularly among smaller businesses,” she added.

Lee Hopley, chief economist at manufacturers’ organisation the EEF, said: “Government can grease the wheels of successful innovation with money and by encouraging collaboration across business and the science base.

“The switch away from some grants may well prove to be a canny move to maintain the number of companies that can be aided with government support and by providing an escalator of funding options.

“But this needs to go hand in hand with access to the expertise and partnering opportunities that were part and parcel of previous schemes.”

She welcomed the support for Catapult centres, which are not-for-profit, independent specialist centres which connect businesses with the UK’s research and academic communities and include the AMRC and Nuclear AMRC in South Yorkshire. Ms Hopley said: “Maintaining the balance of funding between Government and the private sector will help ensure the UK continues to encourage the kind of collaboration that will help innovators traverse the ‘valley of death’.

“The priority now is to keep the existing centres at the cutting edge of technology and expand the network as and when additional resources become available.”

The Chancellor said science funding of £4.7bn will be protected in real terms and will follow recommendations made by Sir Paul Nurse in his independent review calling for a greater strategic focus on research spending.

He also promised to protect funding for the core adult skills budgets creating five national colleges, including the National College of High Speed Rail in Doncaster and said he will continue to provide support for the key subjects of science, technology, engineering and mathematics in higher education.

The department must make an overall saving of £2.4bn in 2019-20.