MPs criticise UK industrial fund over failure to focus on results

An influential group of MPs have sharply criticised one of the government’s flagship programmes to improve productivity and living standards, calling for an “overhaul” of the Industrial Strategy Challenge Fund.

The fund, which has invested £1.2bn in 1,600 projects since its launch in 2017, was created to raise the UK’s performance in four areas: mobility, clean growth, artificial intelligence and data, and the ageing society.

However it was unable to demonstrate clearly its value to the economy or the taxpayer, according to a report published on Friday by the House of Commons public accounts committee.

Meg Hillier, the committee’s chair, said the fund suffered the same problems as similar Whitehall programmes by being “too focused on inputs, on ticking boxes and distributing funds”, rather than on outcomes.

“Throwing more taxpayers’ money at the UK’s notorious, long-term productivity and opportunity problems, yet again without a clear, integrated plan or measures of proof that it’s working, reinforces the strong and unfortunate impression of government by announcement. Show us the government by results,” Hillier added.

The Industrial Strategy Challenge Fund was one of the primary vehicles designed to raise the UK’s rate of research and development spending to the government’s target of 2.4 per cent of national income by 2027.

The Department for Business, Energy and Industrial Strategy (Beis), which sponsors the fund, had not explained how it would meet its targets or why the spending would benefit the UK, the committee report said.

The report added that it had “concerns about the fund’s clarity of purpose including the multiple projects now being funded”. In particular, it said the fund was too concerned with measuring the inputs of what was being spent rather than what was achieved with the money, such as the creation of high productivity jobs.

Another concern was a lack of focus, with productivity objectives diluted with other government aims of driving the transition to net zero and levelling up the regions. This would “make the assessment of performance more difficult”, the committee report said.

The committee called on Beis to clarify by this autumn “what it expects the fund to deliver”, including its impact on jobs and the economy in the short, medium and long term.

The committee also criticised the delays in awarding grants, highlighting that it had taken Beis and the Treasury 72 weeks to pick the challenges that would receive funding in 2019-20 and a further 31 weeks to approve individual projects.

“We heard from one organisation that meaningful work has yet to start on some projects for which those responsible had started to bid for funding as early as 2018,” the committee report said.

The committee also criticised the geographic distribution of projects that received funding, concluding that parts of the UK were being overlooked by UK Research and Innovation, the grant distributing body that managed the fund. Some 63 per cent of the money allocated had gone to projects based in London, the South East and the West Midlands, the report said.