Scrapped by the Boris Johnson government in 2021,[1] the last UK Industrial Strategy policy document was issued by the Theresa May government in 2017[2]. The contrasting ambition of a ten year plan comprising the Labour Government's 'UK's Modern Industrial Strategy'[3] issued on 23 June merits praise of itself. This Strategy also is embedded within the Government's Spending Review 2025 (SR 25) thus ensuring that there are long term committed funds to ensure the realisation of the industrial objectives found in the plan.

In an uncertain geo-political environment, the UK is not alone in seeking to give business a firmer grounding in which to plan and invest. Across the Channel, the EU is still digesting the Draghi Report – 'a competitiveness strategy for Europe',[4] issued in December last year. This makes for sobering reading as to the impediments to EU competitivity (some of which are shared with the UK) and which now forms the strategic framework for the European Commission's five-year mandate. [5]

Targeting growth

Following on from the Green Paper of November 2024, the Strategy continues to focus on eight sectors – referred to as the 'IS-8' and which are considered to be best placed to create wealth, employment and higher wages. The launch of the Strategy includes specific sector plans for five areas, Advanced Manufacturing, Creative Industries, Clean Energy Industries, Digital and Technologies and Professional and Business Services, with Life Sciences, Financial Services and Defence to follow. These sectors represent 32% of UK GDP.[6]

The Strategy also identifies so called 'frontier industries' within these sectors[7] (previously called subsectors)[8] and which will receive particular attention and support. For instance, with respect to Advanced Manufacturing, this includes Aerospace; Advanced Materials, Agri-tech, Automotive, Batteries and Space. Life Sciences are Pharmaceuticals and Medical Technologies, while Digital and Technologies are Artificial intelligence, Engineering Biology, Advanced Connectivity Technologies, Quantum Technologies, Semiconductors and Cyber Security. Defence will comprise Drones and Autonomous Systems, Combat Air, directed energy weapons, Complex weapons and Maritime capabilities.

What is the Industrial Strategy?

How this is to happen is set out in the 160 page-Strategy Paper which is accompanied by a 40-page technical analysis summarising its consultation methodology and conclusions from respondents.

The IS-8 will receive much of the government support of which particular highlights include:

Cheaper energy prices

Consultation revealed that energy prices and grid connection delays were barriers to competitive industry activity and increased electrification. The Government recognised that such firms pay twice the European average for electricity last year. And so it announced that approximately 7000 energy intensive manufacturing businesses in the frontier sectors will have reduced energy costs. This will be achieved by exempting eligible businesses from the costs of the Renewables Obligation, Feed-in Tariffs and the Capacity Market. Who will benefit from the scheme will be determined following a consultation to commence shortly. The Government will also ensure that strategic investment projects will obtain accelerated dates for grid connections by some five to seven years. At the moment, some wait more than a decade. Under the Clean Energy Superpower Mission, there will be clean energy investment and the UK will strengthen its connection to the EU energy market.[9]

Regional growth and clusters

A welcome part of the plan is the promotion of growth throughout the UK and migrating away from a London-centric view. Regional hubs and investment zones will be established across the country and will support local innovation ecosystems and supply chains. Planning reforms, such as the Planning and Infrastructure Bill, will aim to fast-track infrastructure and innovation zones in these areas and local procurement and investment frameworks will be adapted to support regional SMEs and anchor institutions.

Skills training

All sector plans emphasise the expansion of apprenticeships, short courses and AI/digital skills training through to supporting lifelong learning and modular education. Employment law reforms are being considered to support flexible, high-quality jobs and skills passports and recognition of professional qualifications are being developed to facilitate mobility and international trade. Regional talent pipelines will be created with diversity and inclusion a main factor as part of the decentralisation process.

Trade and international cooperation

The Strategy Paper notes that global demand for the IS-8 increased by 46% in the past 10 years – twice as much as other sectors. The paper states that the Government will 'engage strategically with a wide range of partners, using the most modern trade tools, helping businesses to export and attract investment, building resilience through cooperation and being assertive about our own interests and the importance of a rules-based international system upholding the principles of open and fair trade'. When these aspirations are measured up with the recent UK trade deals Strategy Paper references, they fall far short. Somewhat disingenuously, the Paper mentions the US-UK deal –which in fact comprises four pages of a non-legally binding document. The preferential tariffs and quotas granted also have raised concerns with the EU, in particular as to whether the deal is compatible with the most favoured nation principle – so critical to the international rules-based trading order. For India, this agreement has yet to be made public, and as for the EU – the clichéd elephant in the room is that under the May/Johnson redlines, the UK opted to exit the EU Single Market and the Labour Government to date has held to those redlines. Anything short of that is thin gruel indeed by comparison.

Agile regulation

In March 2025, the UK Government issued its Regulation Action Plan with the vision of ensuring that the UK regulatory system supported growth and was targeted and proportionate, transparent and predictable and adapts to keep up with innovation. The Government now commits to reducing the administrative costs of regulation by 25% by the end of the current Parliament. To that end, the Government is considering reforms where processes hold back growth and investment. This includes an overhaul of the UK planning system. Priority for regulatory reform will also be given to the frontier industries. In particular, the Government singles out the competition regime, company law, and national security processes for attention to ensure that they support the competitiveness of these industries.

What does the Strategy mean for business?

The Strategy Plan represents a comprehensive cross-government and sectoral effort to set the UK economy on the right footing for the future. It addresses investment, innovation and growth but crucially, also faces up to the legal and regulatory challenges to allow the UK to grow and prosper in the global economy. It provides a comprehensive framework to enable the UK to build resilience, foster innovation, and secure long-term prosperity.

As a sector-focused international law firm, Gowling WLG is looking forward to supporting business as it unfolds and seeing the positive impacts it will bring throughout the UK and for our trading partners.

Footnotes:

[1] This issued instead a new 'Plan for growth' - HM Treasury, 'Build back better: Our plan for growth', March 2021, CP 401.
[2] HM Government, 'Industrial strategy: Building a Britain fit for the future', 2017, Cm 9528.
[3] Closed consultation - Invest 2035: the UK’s modern industrial strategy"
[4] The Draghi report on EU competitiveness
[5] An EU Compass to regain competitiveness and secure sustainable prosperity
[6] See page 115 of the Industrial Strategy Paper
[7] See page 116 of the Industrial Strategy Paper
[8] Closed consultation - Invest 2035: the UK’s modern industrial strategy"
[9] See page 29 to the Industrial Strategy Paper