Technology, regulation and finance: those were the thrust of the measures outlined in the government’s Industrial Strategy, published this week (23 June), following the publication of the Infrastructure Strategy the previous week.

Industrial Strategy: main plans

More money for skills

The strategy included an extra £1.2bn a year for skills programmes by 2028/29, including short courses funded by the Growth and Skills Levy, and additional skills packages aimed at digital, defence and engineering.

More support for SMEs

The Made Smarter programme aims to support more SMEs into adopting new technologies, with business support offered through the Business Growth Service. Public procurement is also being revised to reduce barriers to entry for SMEs.

British Business Bank capacity will increase to £25.6bn, making billions more private capital available to SMEs. This is on top of the £4bn fund for specific sectors within the Industrial Strategy.

Boosts to R&D

R&D spending will increase to £22.6bn per year by 2029/30, specifically to drive innovation across the big eight sectors outlined in the strategy:

• Advanced manufacturing
• Creative industries
• Clean Energy industries
• Digital and technologies
• Professional and business services
• Life sciences
• Financial services
• Defence

More than £2bn will be set aside for AI over the Spending Review period, with £2.8bn for advanced manufacturing over the next decade.

Strategic capital spending

Alongside British Business Bank financing, the government is looking to target its funding through bodies such as the National Wealth Fund and Innovate UK towards its eight key sectors.

For example, the National Wealth Fund’s mandate will expand to ensure its £27.8bn in funding is deployed ‘“more strategically to drive growth”. It has been given instructions to prioritise the clean energy industry, digital and technology, advanced manufacturing and transport sectors, with ‘consideration’ to the role it plays in the defence, life science and creative sectors.

UK Export Finance is also getting an increase in the maximum size of its portfolio, along with £3bn additional direct lending capacity. This means that there is £13bn of lending available to stimulate overseas demand, with at least £3bn allocated to defence.

Innovate UK’s capital will be deployed more strategically across the government’s critical sectors.

Regulatory reform

The strategy sets a target of a 25% reduction in the administrative costs of regulation for businesses, with a reduction in the number of regulators.

This includes changes to allow for the faster development of biotech, AI and autonomous vehicles. Planning is also a target, with the government looking to hire more planners while streamlining the application process and environmental obligations.

Cutting electricity costs (for select businesses)

From 2027, electricity costs will be cut by up to 25% for energy-intensive manufacturing in key growth areas.

Visa and migration reforms

Visa and migration processes will be reformed to attract more global talent to target sectors, including accountancy and audit. The government is setting up a Global Talent Taskforce to help achieve this.

More trade deals (and mutual recognition of qualifications)

The government has laid out its ambitions to create more seamless routes to trade goods and services (again, this includes accountancy and audit services)., This means more free trade agreements with mutual recognition of professional services included, and an easier trading relationship with the EU.

Regional development

More capital funding will be targeted at critical areas, with regional hubs for professional and business services in locations such as Greater Manchester, West Yorkshire, and the West Midlands.

This also links with the government’s Infrastructure Strategy, which was released last week. This is a more comprehensive strategy than those produced by previous governments, covering social infrastructure, such as housing, schools, colleges, hospitals, prisons and courts, as well as economic infrastructure, such as transport, energy, water, waste and digital.

Infrastructure Strategy overview

The Industrial Strategy commits £725bn to a 10-year minimum funding period, which should provide certainty and stability for public and private investors.

It introduces a new housing investment bank, funding for initial project development, a speed up of approval processes and greater use of standard designs, a revised Green Book, a new approach to mega projects that aim to improve governance, and the new National Infrastructure and Service Transformation Authority (NISTA), which will help to guide delivery of the strategy across government.

Objectives within the strategy include:

• 35 hospitals, three new prisons, and 750 school rebuilding projects over 10 years;
• 300,000 electric vehicle charging points;
• 43-50GW of offshore wind, 27-29GW of onshore wind and 45-47GW of solar by 2034/35; and
• nine new reservoirs over five years.

Public-private partnerships will play a big part in delivering these measures. While there is new money for infrastructure investment as outlined in the Autumn Statement and Spending Review, it is not enough to do everything the government wants to do, so more investment will be needed in the future in order to fully deliver on the strategy. 

The focus is broadly on big projects rather than smaller, rolling infrastructure improvements. With recent projects such as HS2 going so drastically off schedule, there will be pressure on the government to improve delivery, which will be no mean feat.

“Infrastructure is an essential prerequisite of a successful modern economy, providing the foundations for business confidence to invest, improving productivity and rising growth,” Iain Wright, ICAEW Chief Policy and Communications Officer, said.

“But for far too many decades infrastructure in the UK has not had the right priority. For every successfully delivered infrastructure project like the 2012 Olympics, projects have been delayed, cancelled or have become eye-wateringly expensive, or large parts of the UK have been infrastructure investment deserts, starving regions of their economic potential.

“The announcement is welcome, and hopefully provides confidence for investors and entrepreneurs to see the UK as the best place to grow a business. But the key factor is how quickly the intention in the strategy moves to spades in the ground, providing the essential boost to growth needed.”

More on the announcements

• Industrial Strategy: four changes to boost professional services
• Government reveals ambitions for key sectors