Prime minister Rishi Sunak has announced far-reaching departmental changes, including the creation of a new Department for Science, Innovation & Technology (DSIT).
DSIT is created from science and technology part of the Department for Business, Energy and Industrial Policy (BEIS) and from the digital element of the Department for Digital, Culture, Media and Sport (DCMS). “Having a single department focussed on turning scientific and technical innovations into practical, appliable solutions to the challenges we face will help make sure the UK is the most innovative economy in the world,” the government says. Michelle Donelan, formerly DCMS secretary, is DSIT’s first secretary of state.
Parts of BEIS are joined with the Department for International Trade (DIT) to create a new Department for Business and Trade (DBT), under Kemi Badenoch – formerly trade secretary. It will “support growth by backing British businesses at home and abroad, promoting investment and championing free trade”, the government says. The term Industrial Strategy appears, finally, to be laid to rest.
A new Department for Energy Security and Net Zero (DESNZ) is created, under former BEIS secretary Grant Shapps. It is tasked, Number 10 says, “with securing our long-term energy supply, bringing down bills and halving inflation”. The initial announcement gives no detail regarding net zero.
Accompanying ministerial announcements include the moves to DSIT, logically, of science minister George Freeman from BEIS and of former BEIS minister Paul Scully from DCMS to DSIT – both keeping their portfolios. BEIS ministers Nus Ghani and Kevin Hollinrake are confirmed in post. One significant change is that Andrew Bowie, the latest in a succession of exports ministers, is moved to ESNZ.
Comment from Jack Semple (EAMA Secretary)
The creation of DSIT reflects Sunak’s keen interest in radical innovation and start-ups. Donelan gave a brief speech on UK technology two weeks ago, in which she focused on Sunak’s priorities of people, money (capital), ideas and “the right regulation”.
Moving digital out of DCMS addresses what can be seen as a long-standing eccentricity, in having digital and semi-conductor policy alongside culture, media and sport rather than BEIS. The long-anticipated semi-conductor strategy – it has been two years in preparation so far – is now expected to be published by DSIT and to focus on working with strategic allies around the world.
DSIT will give the innovation community cabinet representation at a critical time. The UK remains frozen out of Horizon Europe, the EU’s huge innovation programme, and a decision must be taken on moving forward on a different path, with appropriate funding. There is also vigorous debate about changing the way the sector works, to make it more strategic and inter-disciplinary, which are seen as strengths of the US system; and about how universities and other bodies must work more productively with businesses.
Science minister George Freeman last said that the UK must reform and invest more to achieve its potential of becoming a science superpower. “We need to stop being the incubator for Nasdaq,” he said, adding that “the City is doing quick tech, not long-term science and technology”. Speaking at an event organised by the Conservative think tank, Onward, he called for more funding for the Catapult network, including the High Value Manufacturing Catapult, which is seen as a valuable resource by other countries, including Japan.
Freeman seems to have taken to championing engineering, which, he said, is too often the poor relation in STEM (science, technology, engineering and mathematics). At the same event, Dr Clive Hickman, chief executive of the Manufacturing Technology Centre (MTC), called for the government to establish a new position of “chief manufacturing officer” or of “chief engineering and manufacturing officer”. He also called for a change to Catapult rules, to allow them more freedom to re-invest. (Hickman noted that IPG Photonics of the US, which has invested £15 near the MTC, says Coventry will become “the laser capital of Europe”.)
Vital to UK economy will be how successfully DSIT and Business and Trade can combine to help create long-term retained value through manufacturing, at which the UK has been woefully poor. There has been a fault line in government policy between innovation and UK manufacturing that it is essential to overcome.
Business and Trade secretary Kemi Badenoch is the business department’s fourth secretary of state in six months and has several important projects to complete. Manufacturing is not mentioned in the announcements from Number 10, but industry minister Nus Ghani is thought to have a Manufacturing Investment Prospectus (MIP) more or less ready for publication. The MIP was promised by former BEIS minister Lee Rowley (now at the Levelling Up department) last March and it has been delayed by frequent changes of ministers. It will be a follow-up to the Levelling UP White Paper’s imperative to “reverse the historic decline in manufacturing in the UK”.
Badenoch has responsibility, also, for deciding what to do next with UKCA policy. A new Product Safety Review consultation is expected shortly. She also takes the reigns at a critical time for the Retained EU Law (Revocation and Reform) Bill, the significance of which remains hotly disputed as it goes through the House of Lords.
Bringing business and trade into one department means Badenoch now has responsibility for developing the Trade and Co-operation Agreement (TCA) with the EU, as well as trade relations with countries in other parts of the world, which she had at DIT. She also takes responsibility for supply chain – a subject area which should be integral to both domestic and trade policy. In an evidence session with the international trade committee in November, she rather pointedly shut down questioning on supply chain issues, noting that they were matters for BEIS.
While at DIT, Badenoch signalled that she was revisiting the issue of support for exports. EAMA has argued that UK export ambition has both reduced and narrowed and that a rethink is urgently needed. We await news of who will succeed Andrew Bowie as exports minister.
Badenoch is free-trader, inclined to remove tariff and other barriers where possible. She has said that a priority is for the UK to accede to the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership).
Shapps’ new DESNZ echoes the former Department of Energy and Climate Change, created in 2008 and scrapped in 2016, when it became part of BEIS. It is unclear how its net zero remit will interact with other departments, especially DSIT and DBT. However, on energy, expectations of industrial energy prices are a critical issue for manufacturing firms investing in the UK. Government must clarify its aims and strategy to ensure the UK remains competitive.