How the UK Industrial Strategy Will Boost Manufacturing
The UK government has introduced a new 10-year Industrial Strategy designed to cut energy costs, unlock investment and support more than 7,000 manufacturers.
The plan focuses on energy-intensive industries, supply chain resilience and targeted backing for growth sectors.
Described by Prime Minister Keir Starmer as “a turning point for Britain’s economy”, the strategy puts manufacturing at its core.
In particular, the government outlines changes that aim to improve cost competitiveness, increase production capacity and strengthen industrial foundations.
Energy cost reform targets core sectors
A key feature of the strategy is the British Industrial Competitiveness Scheme. From 2027, eligible manufacturers could receive reductions of up to £40 per megawatt hour on electricity bills.
These businesses will also be exempt from paying the Renewables Obligation, Feed-in Tariffs and the Capacity Market levy. The aim is to cut energy bills by as much as 25%.
About 500 of the most energy-intensive firms will be eligible for deeper assistance through the British Industry Supercharger scheme.
From 2026, discounts on electricity network charges will increase from 60% to 90%. Industries set to benefit include steel, ceramics and glass – key parts of the broader manufacturing supply chain.
Business and Trade Secretary Jonathan Reynolds confirms the scheme meets industry demand. “Tackling energy costs and fixing skills has been the single biggest ask of us from businesses,” he says. “This government has listened and now we’re taking the bold action needed.”
The strategy confirms that the measures will not be funded by taxpayers or higher household energy bills. Instead, the government will use energy system reforms to support industrial development without increasing public spending.
To back factory growth and reduce delays, the strategy introduces a new Connections Accelerator Service.
Scheduled to launch by the end of 2025, it aims to speed up energy grid access for new industrial projects. By addressing delays in grid connection, manufacturers will be better positioned to expand operations and maintain production output.
Strategic investment in sector growth
Alongside energy reform, the strategy commits £1bn in new funding across eight sectors where the UK already has competitive strengths. These include advanced manufacturing, clean energy, digital technology, creative industries and life sciences.
Five specific sector strategies are already published. For advanced manufacturing, £4.3bn is allocated, with £2.8bn for research and development over five years.
Part of this funding aims to increase vehicle production to 1.35 million units and lead progress in zero-emission flight.
Clean energy receives a separate £1bn boost through the Great British Energy fund to strengthen domestic supply chains. The digital and technology sectors receive more than £2bn to implement the Artificial Intelligence Action Plan. Another £187m is earmarked to train one million people in technical skills.
There is further investment in regional innovation hubs.
Northern Ireland will receive support for cybersecurity, Scotland for quantum research and Wales for semiconductor development. The government will also release further strategies for defence, financial services and life sciences.
Chancellor Rachel Reeves says the strategy is “a plan that will boost our economy and create jobs that put more money in people’s pockets.” The strategy builds on the Invest 2035 green paper, which promotes regional growth and a more secure economy.
Skills, research and factory infrastructure
Workforce development is a central part of the new strategy. The government will spend £1.2bn each year on skills training by 2028–29, aiming to create 1.1 million high-wage jobs over the next decade.
Plans include reducing the UK’s dependence on overseas labour and reforming visas to bring in top global talent.
Research funding is set to increase, with the R&D budget reaching £22.6bn annually by 2030. Artificial intelligence will receive £2bn, while quantum computing gets £670m and engineering biology £380m.
These funds support developments in medicine, sustainable food and emerging technologies.
To speed up construction and reduce delays, the government will hire more planners and change the approval process for industrial infrastructure. This includes data centres, which have gained importance since being classified as critical national infrastructure in September 2024.
The government’s approach aligns with manufacturing sector concerns. Stephen Phipson, Chief Executive of industry body Make UK, identifies energy costs, a skills gap and restricted capital access as structural problems the strategy aims to address.
Claire Hu Weber, Vice President of International Markets at Fluke Corporation, warns that energy pricing alone is not enough. “Without a dramatic acceleration in grid connection times, we risk bottlenecks that stall progress toward net zero,” she says, highlighting the importance of operational reliability and training as essential parts of the solution.
For manufacturing leaders, the long-term strategy signals a commitment to rebuilding industrial strength through investment and reform.
From steelworks to semiconductors, it sets out plans for sustainable growth and competitiveness.
Vishavjeet Sodhi, Head of Heating & Cooling Business UK IRL at LG Business Solutions, sums up the sector’s challenge: “There is an acute need to upskill and reskill the workforce... We need a workforce that is fit for purpose – one that can deliver on the Government’s vision for the future.”
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