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The conference highlighted cross-sector connections, shared learning, and common challenges.

Three major themes came out of this year’s engaging conference

• The interconnectedness of sectors
• How different sectors can learn from each other
• How different sectors share several common cross cutting challenges

The interconnectedness of sectors

The historically medium-high growth, and high GVA/hour worked sectors of the UK Economy can be arranged as shown in diagram below to illustrate how sectors are interconnected and have important co-dependencies. These connections are important when we think of the resiliency of the country.

In the green and yellow boxes, we find the medium to high growth sectors with high GVA’s per hour worked that have endured over the past 25 years. Some sectors such as Insurance, and Information services have grown at a greater rate than the economy as a whole, while others such as the manufacturing sector have grown at a lower rate.

These sectors can be arranged in the form of supply chains from raw materials through to their final value-added products that are shipped to customers. In the physical world we ship out via, trucks, trains, planes and ships, whereas in the increasingly important virtual world we ship our data in and out via telecoms and space. These supply chains are supported by other important sectors.

The physical supply chains require support from the Energy, Water, Sewage and recycling industries, in addition they rely on Civil Engineering support for infrastructure and construction.

The virtual supply chains are requiring increasing support needs in the provision of secure digital and AI systems. In the future Cyber-Physical systems will require this cyber security support too as the virtual and physical worlds become more integrated in autonomous systems such as vehicles for example.

Sectors in the green boxes are those that CSEP is currently studying, and the yellow boxes represent those to come. However, we are conscious that this analysis of Office and National Statistics (ONS) data based upon SIC code structures can miss certain sectors such as the hidden gem of HealthTech Sector that we have found in CSEP’s work. This is why we need to investigate more deeply and reveal the high value sectors of the future that do not appear readily in the current SIC code structures.

The red boxes are problematic for the resilience of our supply chains. The red box sectors represent shrinking or low GVA per hour worked sectors, yet they are critical in supporting our high growth sectors. They represent a dilemma for us, should make or buy the outputs from these sectors, or what can we do to attract these sectors back to country. In this respect energy prices will be one of the main challenges as we heard from several sectors during the conference.

UK industry pays some of the highest electricity prices in the World. This is a huge comparative disadvantage for the country. On a GVA basis, the Energy sector has outperformed the UK economy as a whole over the past 25 years largely due to price increases. However, it has done so at the expense our manufacturing sectors, and especially the more energy intense prime material producers. We heard this clearly in the Fine Chemicals discussion. The conference audience of over 170 people from Industry, Government and Academia voted the Energy Sector as the most important area for future CSEP work.

The drive for net zero and the elimination of fossil fuels will also exacerbate the raw material supply pressures on our manufacturing sectors. Our current hydrocarbon refineries disappear in a fossil fuel-free world. We will need to find net zero versions of our hydrocarbons in the future and technology breakthrough is needed here, alternatively we need to look at preserving some fossil fuel-based hydrocarbon production to provide the raw materials until such a solution is found.

How different sectors can learn from one another?

Throughout the conference we saw several examples of how sectors could learn from one another, for example

Accelerator and export approaches from the Semiconductor Sector can be applied to other sectors. More broadly we learnt from the Semiconductor Sector how well conceived and executed innovation ecosystems can create new companies that can be scaled rapidly and compete on the international stage.

Battery pack and electric motor designs are common challenges for EV’s in both aerospace and automotive, so can they leverage their respective capabilities to urgently address the EV car weight problem, and for automotive experience to inform the cabin design of future air taxis?

Also, we might ask what the Automotive Sector can learn from the Tech Sector as disruption and Software Defined Vehicles (SDV) become the future of cars?

Finally, SDV and autonomous vehicles are cyber physical systems that are the next frontier of growth for Cyber Security sector, so how can these sectors work together to create global leadership for the UK Cyber Security Sector?

Cross-sectoral common challenges

Several common cross-cutting themes emerged during the conference discussions and these are summarized in the diagram below.

High electricity prices will challenge the UK’s ability to make Sustainable Aircraft Fuel (SAF) and hydrogen in the aerospace sector. They are also challenging Fine Chemicals and may they also challenge the energy hungry data centres that are the subject of many recent UK investment announcements. Can Tidal help to supply more, and lower cost zero carbon electricity?

Regulatory simplification has begun to be addressed in the HealthTech sector, and it is also needed in Fine Chemicals. The exciting prospect of “Regulation for competitive advantage” has also emerged as a new idea to be embraced, and we heard the possibilities of this in the Aerospace and Automotive sector discussions.

Manufacturing helps us to continue to build our skills and capabilities. It is through this practice that we learn and innovate. We must not neglect the attraction of children to STEMB subjects at schools and we need to pay more attention to the future technician population and celebrate manufacturing if we are to continue to grow. We also need to urgently grow new skills in the fast-growing area and increasingly critical area of Cyber Security.

Financing is also a recurring theme. The lack of funds needed to scale and the required technical skills to manage and direct such funds requires attention. The UK underperforms relative to the US in this respect. This subject needs to be addressed.