The Labour government has revealed its long-awaited 10-year Industrial Strategy. It includes a number of flagship, economically interventionist policies, such as subsidising energy bills for businesses, as well as plans to invest in the national grid and redouble efforts to boost home-grown technical skills, in partnership with the private sector.
This economic approach, the government says, will support some of the UK’s highest-growth sectors. The industrial strategy backs eight in particular: advanced manufacturing, clean energy, the creative industries, defence, the digital and technologies sector, financial services, life sciences and, finally, professional and business services.
Industrial strategy: energy savings for businesses
The focus on energy will be particularly welcome news to heavy industry. Manufacturers and other resource-intensive businesses have long been painfully aware that energy costs in the UK are high, especially compared with the US and other countries in Europe.
To address this, and boost domestic manufacturing, the UK will intervene in energy costs for sectors such as automotive, aerospace and chemicals, starting from 2027. These sectors will also be exempt from paying energy levies such as the Renewables Obligation, Feed-in Tariffs and the Capacity Market.
A new British Industrial Competitiveness Scheme will cut those costs by £40 per megawatt hour. Other energy-intensive sectors will enjoy reduced electricity network charges via the so-called British Industry Supercharger. This mechanism will grant a 90% discount to such charges.
Meanwhile, the government announced a plan to speed up grid connection for heavy industries through the Connections Accelerator Service, where projects deemed important enough to the national interest will be able to book energy capacity in advance.
Further details on eligibility will be announced pending an upcoming consultation, but the initial announcement has proved popular both with Labour’s traditional support base and with business.
Gary Smith, the general secretary of the GMB union, welcomed the energy cost-cutting as a “big step forward”.
“This is a great opportunity to rebuild our industry, save iconic home-grown sectors like our potteries and bring good jobs home,” Smith said. “The devil will be in the detail, but at long last we have a grown-up strategy that will allow industry to thrive.”
Michael Moore, chief executive of the British Private Equity & Venture Capital Association (BVCA), agrees. “Energy is a significant cost of doing business for many sectors and weighs heavily on private capital firms in deciding where to deploy the vital capital the UK’s high-potential businesses need. Action which addresses the UK’s competitiveness in this important area is positive.”
Tech and the UK industrial strategy: what tech leaders need to know
With a flood of data centre investment and a slush fund for domestic compute capacity, the Labour government has worked to position itself as an emerging AI and technology powerhouse since taking up office.
Fittingly, the industrial strategy provides further details on how the government intends to make this a reality.
A major component here, outlined further in the separate Industrial Strategy Digital And Technologies Sector Plan, is the development of regional clusters that aim to further support existing expertise in those regions – for instance, boosting semiconductor research in Wales and quantum R&D funding in Scotland.
Industrial strategy: tech, engineering and defence skills
A new industry partnership programme, in league with big tech players including Nvidia, Google and Microsoft, aims to train 7.5 million workers in “essential AI skills” by 2030, alongside a series of AI “adoption hubs” located across the UK.
The government previously announced the TechFirst skills programme at London Tech Week and will be injecting £187m in digital skills and AI learning for classrooms. This package includes upskilling 4,000 graduates, researchers and innovators in AI, cyber and computer science.
A further £100m will be invested in engineering skills via the Skills England organisation, while ‘Technical Excellence Colleges’ aim to boost learning in advanced manufacturing, clean energy and digital.
Industrial strategy and the AI Action Plan
The industrial strategy draws attention to the £2bn previously committed to the UK AI Action Plan, plus the Sovereign AI Programme recently teased at London Tech Week.
Additionally, a £500m Sovereign AI Unit will aim to “maximise the UK’s stake in frontier AI”. It’ll work with the British Business Bank to invest in data, compute and talent for UK AI capabilities, partnering with both startups and larger organisations.
An industrial strategy AI adoption fund will facilitate the development of cutting-edge AI in firms that display high-growth potential.
And a new £600m Strategic Sites Accelerator aims to speed up the development of more AI Growth Zones, areas where planning restrictions are relaxed for data centres.
Boosting frontier industries: quantum, semiconductors and cybersecurity
Through the National Quantum Technologies Programme, the government has promised to make the UK an “international pacesetter” for quantum, including through establishing UK Quantum Hubs in Glasgow and Edinburgh.
The domestic semiconductor industry will also receive a boost in funding for skills around design and production, including in materials science.
Industry partners will play an important role in the development of cyber, AI and quantum planning, says the government, through the Quantum Strategic Advisory Board, AI Energy Council, and Cyber Growth Partnership.
The government shouted out the UK’s cyber industry, mentioning Darktrace, NCC Group and BAE Systems in the report as exporters of “world-leading cyber solutions and services”.
“Today’s industrial strategy clearly recognises that you cannot have sustainable economic growth without strong cyber resilience, identifying cyber as a ‘frontier’ industry,” says Mike Maddison, CEO of NCC Group, a cybersecurity firm headquartered in Manchester. “The document highlights the immense potential for the UK to solidify its position as a true global leader in cybersecurity.”
The UK, the report suggests, must work to maintain this edge with regional investment, including the building of a new National Cyber Innovation Centre in Cheltenham, near to the headquarters of GCHQ, the UK’s signals intelligence agency.
Industrial strategy: the bottom line for business leaders
The strategy signals a clear commitment from the UK government towards an interventionist economic policy, funneling government funding into key research areas and encouraging the adoption of innovative tech and tooling.
For UK businesses, the white paper shows a willingness to work hand-in-hand with industry while accelerating collaboration between the public and private sectors in procurement. Big tech will be ecstatic that its major players have the government’s ear in shaping the AI skills curriculum for the future of the country. For smaller firms, development for expertise clusters will likely be encouraging signs for regional development.
It is an ambitious document but, as with every manifesto, the tricky part will be actioning the points within it and translating them into real value.
The Labour government has revealed its long-awaited 10-year Industrial Strategy. It includes a number of flagship, economically interventionist policies, such as subsidising energy bills for businesses, as well as plans to invest in the national grid and redouble efforts to boost home-grown technical skills, in partnership with the private sector.
This economic approach, the government says, will support some of the UK’s highest-growth sectors. The industrial strategy backs eight in particular: advanced manufacturing, clean energy, the creative industries, defence, the digital and technologies sector, financial services, life sciences and, finally, professional and business services.
