The UK’s Department for Business and Trade (DBT) must address weaknesses in how it supports key industries if the government is to maximise the impact of its forthcoming Industrial Strategy, according to a new National Audit Office (NAO) report.
The report, published today, warns that DBT lacks a clear overview of government spending on business support, struggles with transparency in decision-making, and faces difficulty influencing other departments to implement pro-business policy changes.
NAO head Gareth Davies stated: “DBT was created to provide a ‘front door’ to the UK’s key industries, supporting government’s priority mission of growing the economy. It has made early headway, and now needs to build on its approach to supporting industry and make transparent, informed decisions about where best to deploy its resources.”
The government announced its new Industrial Strategy in October 2024, identifying eight key growth sectors intended to boost economic output and productivity. While DBT has successfully merged teams from the former Department for Business, Energy and Industrial Strategy (BEIS) and the Department for International Trade (DIT) since its formation in 2023, the NAO warns that it has yet to develop a comprehensive view of how much is being spent to support industry, making strategic resource allocation difficult.
The report highlights that DBT has not assessed its industry sector strategies collectively, meaning it lacks a clear framework for weighing the trade-offs between different business support decisions. This, the NAO argues, makes it difficult for businesses and stakeholders to understand why some industries receive more government backing than others.
The NAO also notes that despite government’s ‘mission-driven’ approach to economic growth, DBT often struggles to influence other departments to implement policy changes that benefit UK businesses. Additionally, a lack of clarity over which department businesses should approach for support has led to frustration among some companies.
To improve its effectiveness, the NAO recommends that DBT:
- Reviews its operating model for supporting key industries under the new Industrial Strategy
- Clarifies the metrics and trade-offs used in prioritising business support decisions
- Collates spending data more effectively to provide a clearer view of government investment in industry
- Uses more evidence-based decision-making when designing industry support programmes
- Improves its monitoring and evaluation mechanisms to assess the effectiveness of business support initiatives
The success of the Industrial Strategy will depend on DBT’s ability to work effectively with other government departments and industry stakeholders to deliver targeted, high-impact interventions that drive long-term economic growth.
Image credit David Pearson, CC BY-SA 2.0 <https://creativecommons.org/licenses/by-sa/2.0>, via Wikimedia Commons.
You’re not going to boost economic output and certainly not productivity by building warships and armoured vehicles. Even combat aircraft are marginal. We need to stop looking at our military industrial base as job creation program / business venture and start looking at it as providing the weapons we need to defend ourselves and our Allie’s.
Welders are far far better paid and more economically productive working on oil drilling or offshore wind farms than they will ever be in military shipyards. Exports should be seen as a way to boost production numbers to maintain an industrial base for defence purposes not developing self sustaining export industry.
This all requires continuous government subsidy, it’s not productive and it will certainly never be profitable either but it’s vital.
Hardly any politicians have real world experience these days, so many straight out of university where they studied politics go virtually straight into politics so they haven’t a clue. Rayner and Streeting are good examples then Reynolds and Reeves of course who worked for a while but maybe not at what they claimed. Across the house there are virtually no MPs who understand industry so we are doomed if we are relying on them to come up with a strategy.
A continuous drumbeat of military equipment from British factories would give manufacturers the opportunity to invest in skills and capital and by doing so improve the efficiency of production and reduce costs. I wouldn’t care if the MOD ordered 12 ships but only needed 10 if that meant keeping production going. Having 2 more ships than you need gives the MOD the opportunity of selling off the first two of the class when ships 11 and 12 arrive allowing them to recycle the cash and save on midlife update costs by maintaining a younger fleet.
We need politicians who can see further than the next election and Treasury officials who can see beyond the next financial year. Failing that we need a leader who can scare both of these useless types into behaving.
We used to build ships to go straight to reserves. Building more than you can crew would allow the RN to sustain greater active numbers – rotate the ship not the crew. Alternatively, over ordering would allow the earliest in class to be sold off when the last can replace them. The longer production runs ought to reduce unit costs and earlier replacement of the oldest hulls should reduce the need for expensive and disruptive major rebuilds. But to achieve this we need a 20 year plan.
The big problem HMG has around being ineffective is that the politicians will never ever just leave the structures alone for any length of time. There is a very good evidence base that says complex organisations take around 5 years to become good at what they do..every time you change them or merge them in a significant way they will spend around 5 years to get good at what they do again. So the fact the DBT is not very effective is not a supprise as it’s only existed for around 18 months..what the hell does anyone expect.
This constant rebuild has been the scourge of the big public sector services for a generation now..I will use the NHS as an example and specifically the functions of planning, organising and purchasing of services and pubic health for populations of around 1 million ( county or city level )
2001- 2011 creation of PCT..these had 10 years and essentially almost all of them had become very good services..and by 2010 the NHS was considered in most studies that compared health systems to be the most or second most efficient, equitable and essentially effective health system in the world ( look it up)
2011-2013 the PCT were merged into cluster essentially creating uber PCTs of populations up to 2 million..losing lots of local knowledge and managers of local systems..we began to see a steady decline in effectiveness as these organisations were busy re-organising themesleves not..doing their job which was each year fine turning what healthcare they were buying for their population.
2013-2022 possibly one of the most disastrous episodes in the history of the NHS the creation of CCGs..now each PCT was cut into about 8-10 CCGs buying the healthcare of around 100,000 people or a town or two..the public health element was given to local councils, Primary care was looked after by a new national organisation call NHS England ( that also oversaw the CCGs) and most of the expertise and knowledge from the PCTs were moved into organisations called Commissioning support organisations that were at first at county level and the CCGs would buy services from them so essentially what one organisation had done for 1 million people now up to 13 organisations would do ranging from national level organisations, organisations that had never been involved in healthcare and organisations to small to really operate..the next decade saw years of mergers as Small CCGs were recognised as being to small and constantly merged , Commissioning support organisations ( which although NHS were self funding from billing for services ) were found to be to small and kept going bust and needed to be constantly merged..NHSE was found to be to big to effectively buy and manage Primary Care and that was handed back to the CCGs around 7 years after they had sacked all their experts in the field…public health was something councils did not understand and because they also keep changing g has never recovered.
2023 due to the whole set up constantly changing and no organisation being competent because it did not exists for more than a year or so without a forced change..the government created ICBs..all new completely different way of doing it essentially getting all the providers that the NHS contracts and buys from to come together and contract and buy from themselves..
2025..new reforms and the whole lot changes again..
What we have seen because of this is the steady collapse of the NHS..now a lot of that is to do with the funding and that fact we only pay the NHS £3000 per person per year..when every other comparable European system ( France,Germany etc) pays around £5000..but even if we had paid…the organisations that are there to plan the services against need, commission and pay for the care are completely unable to to their jobs because the government forces them to restructure every couple of years and they spend all their time and energy doing that.
The UK needs an industrial strategy that nurtures and develops key strategic assets and capabilities to retain wealth and Knowledge in the UK. Leaving to others is not an option. Heavy armour, warships, advanced aircraft, drones, directed energy weapons, software etc. etc., all need to be done by the UK (Gov or private industry) and not just by re-badged foreign companies. Also stop all our smaller defence companies being taken over by overseas hedge funds and competitors.
Policy makers and ministers don’t have a clue so that at the expense of defence and the industrial base they will rather waste billions convincing all that they do.