Government unveils Industrial Strategy

9 mins read

The UK government has launched its long-awaited Industrial Strategy with the aim of setting out a long-term vision for how Britain can build on its economic strengths and address productivity performance.

Prime Minister Theresa May first raised the plan in January when she launched proposals for a Modern Industrial Strategy, and a public consultation soon followed with industry.

Launching the plan on Monday, May said: “Our modern Industrial Strategy will shape a stronger and fairer economy for decades to come. It will help create the conditions where successful businesses can emerge and grow, and support these businesses in seizing the big opportunities of our time, such as artificial intelligence and big data, whilst also making sure our young people have the skills to take on the high-paid, high-skilled jobs this creates.

“As we leave the European Union and forge a new path for ourselves, we need to focus on building a better future for our country and all the people who live in it. With the Budget last week, and our Industrial Strategy in the years ahead, we will build a Britain fit for the future.”

The Industrial Strategy paper adds: “Our consultation reinforced the importance of five foundations (see below) of productivity – the essential attributes of every successful economy. Our five foundations align to our vision for a transformed economy – a transformation that is already taking place and will accelerate over the course of the coming decades.

“Through this process we have also identified Grand Challenges which we will set for the UK government and wider economy. These are in response to global forces that will shape our rapidly changing future, and which the UK must embrace to ensure we harness all the opportunities they present.

“Our foundations and Grand Challenges are set out. This strategy also refers to a number of policies that will be added to over time to support the foundations and drive the UK’s transformation.”

In the strategy, the government has identified the four ‘Grand Challenges’ – global trends that it says will shape our rapidly changing future and what the UK must embrace to ensure all opportunities are harnessed, as:

  • artificial intelligence – we will put the UK at the forefront of the artificial intelligence and data revolution
  • clean growth – we will maximise the advantages for UK industry from the global shift to clean growth
  • ageing society – we will harness the power of innovation to help meet the needs of an ageing society
  • future of mobility – we will become a world leader in the way people, goods and services move

The government says that each Grand Challenge represents an open invitation to business, academia and civil society to work and engage with the government to innovate, develop new technologies and ensure the UK seizes these global opportunities.

Business Secretary Greg Clark said: “The way we earn and live our lives as workers, citizens and consumers is being transformed by new technologies. The UK is well-placed to benefit from this new industrial revolution and we start from a position of significant strength. We have a thriving research and science base and are home to a wide range of innovative sectors, from advanced manufacturing and life sciences, to fintech and creative industries.

“The Industrial Strategy is an unashamedly ambitious vision for the future of our country, laying out how we tackle our productivity challenge, earn our way in the future, and improve living standards across the country.”

The White Paper also focuses on the five foundations of productivity – ideas, people, infrastructure, business environment and places. Each foundation is supported by a range of policies that have been designed to provide businesses with certainty and reassurance that the UK will continue to have a competitive edge.


  • raise total R&D investment to 2.4% of GDP by 2027
  • increase the rate of R&D tax credit to 12%
  • invest £725 million in new Industrial Strategy Challenge Fund programmes to capture the value of innovation


  • establish a technical education system that rivals the best in the world
  • invest an additional £406 million in maths, digital and technical education, helping to address the shortage of science, technology, engineering and maths (STEM) skills
  • create a new National Retraining Scheme that supports people to re-skill, beginning with a £64 million investment for digital and construction training


  • increase the National Productivity Investment Fund to £31 billion
  • support electric vehicles through £400 million charging infrastructure investment and an extra £100 million to extend the plug-in car grant
  • boost our digital infrastructure with over £1 billion of public investment

Business environment

  • launch and roll-out Sector Deals – partnerships between government and industry aiming to increase sector productivity; the first Sector Deals are in life sciences, construction, artificial intelligence and the automotive sector
  • drive over £20 billion of investment in innovative and high potential businesses
  • launch a review of the actions that could be most effective in improving productivity and growth of small and medium-sized businesses


  • agree local industrial strategies that build on local strengths and deliver on economic opportunities
  • create a new transforming cities fund that will provide £1.7 billion for intra-city transport
  • provide £42 million to pilot a Teacher Development Premium; this will test the impact of a £1,000 budget for high-quality professional development for teachers working in areas that have fallen behind

To ensure that the government is held to account on its progress in meeting the ambitions set out in the strategy, an Independent Industrial Strategy Council will be launched in 2018 to make recommendations to government on how it measures success.The white paper follows government engagement with industry, academia and business bodies who submitted almost 2,000 responses to the green paper consultation in early 2017.

Industry responds:

“By working in strong partnership with national and local government, we have created a very positive example of Industrial Strategy in action for the off-shore wind industry in the Humber which is creating a new and vibrant local economy. Through today’s Industrial Strategy announcement we are optimistic that through greater investment in R&D, and especially through the application of advanced industrial digital technologies like AI and robotics, we can support many more new and existing manufacturing industries - raising productivity and creating thousands of new highly skilled and well paid jobs,” Juergen Maier, chief of Siemens UK

“The introduction of a new Industrial Strategy is key to supporting efforts to improve productivity and invest in not just current industries, but those of the future which are set to radically change the ways in which people live and work. The white paper acts as a good foundation for a new partnership with industry where government and business can ensure consistency in policy thinking and implementation to ensure the UK is world leader in these new technologies. And by introducing independent scrutiny of the progress of these plans, the government is signalling that there will be a strong focus on measuring delivery which boardrooms will recognise and welcome,” Terry Scuoler, chief of EEF

"Nine in ten firms see a modern Industrial Strategy as vital to improving living standards in the face of Brexit uncertainty and a sombre economic outlook. This announcement shows the Government has its eye firmly on the horizon, not just the next few yards. We welcome the recognition that success will require urgent action in partnership with business. This is the route to raising living standards in every corner of the country. The hard work starts now. Today’s announcement must be the beginning of a strategic race, not a tactical sprint. And it needs to last. This is a time for consistency and determination, not perpetual change with the political winds. The creation of an independent council with teeth to monitor progress will help this. The CBI urges the Government to continue on this road, moving fast from strategy to action. Two important tests of success will be that all regions and nations have successful industrial strategies, and that it is supported and not harmed by Brexit. There must be no missed turns on the path to UK 2030,” Carolyn Fairbairn, director general of CBI

“FSB has been delighted to work with the Business Secretary Greg Clark as he delivers this government’s first Industrial Strategy. The UK’s 5.5 million small businesses have a huge role to play, if we are to increase productivity across the economy, and in every sector. This is the only way to achieve sustained wage growth and higher living standards. We particularly welcome the focus on improving technical skills, new physical and digital infrastructure and increased research and development. Local industrial strategies and local investment such as the new Strength in Places Fund are also very welcome steps,” Mike Cherry, national chairman of Federation of Small Businesses

“Chambers of Commerce have been working actively with government to develop the Industrial Strategy, and we are pleased that the concerns and ideas of business communities across the country have been listened to. Businesses will welcome the sense of mission that infuses the Industrial Strategy, as well as its assessment of the challenges and opportunities that the UK faces, particularly as both businesses and government look to forge a new path beyond the European Union. We have been clear that harnessing the potential of our cities, towns and counties is crucial to make our country more competitive and prosperous, and so chamber business communities will cheer the focus on places to boost productivity in local economies. Over the coming months, it is crucial that the government listens to the full range of business voices when developing local and sector-based deals, so that firms of all sizes and sectors can buy into the Strategy for years to come,” Adam Marshall, director general at BCC

“If the Government wants the UK to be a global centre for R&D, it should stop tinkering and make more meaningful adjustments. The industry was looking for a rise of 4% in R&D tax relief to 15%. Instead, it’s stuck with a raise of 1%. This might look good on paper as it’s actually a 9% rise in the rate of relief overall, but this isn’t change on a scale that will supercharge the potential in our economy as many would wish. The message is positive but yet again ministers are talking about R&D as if it’s all just about cutting-edge firms when the majority of companies that could benefit belong to more traditional industries. Not enough businesses know it’s not all about space travel and driverless cars, but a new pint of beer or menu for a restaurant too. Lots of companies don’t realise they are entitled to this kind of relief and it’s often the smaller firms with tighter balance sheets that would benefit the most so this rhetoric has to change,” Mark Tighe, chief of Catax [Comment added at 11:15]

“At the core of the Made Smarter proposals are the principles of providing leadership and ambition to industry across Britain. UK businesses have done exactly that over recent months, as we sought to develop practical solutions geared to making the most of the fourth industrial revolution. We welcome today’s White Paper – it is a meaningful set of steps toward embracing digital across Britain, helping to resolve the country’s productivity puzzle. But there is still a long way to go and more work to do – we must focus our energy now on concrete next steps so this urgent work can begin,” Olly Benzecry, managing director of Accenture UK [Comment added at 11:20]

“If we want to stay competitive in an increasingly challenging world, we need to help companies and individuals build a culture of re-skilling and up-skilling; embracing lifelong learning, so we are best placed to take the advantages of automation and lead with the best jobs, in the new world. As part of this review, we calculated that we need to up-skill a million workers. Today’s announcements get us a step closer to developing a national action plan to build a workforce fit for the future,” Phil Smith, chairman of Cisco for the UK & Ireland [Comment added at 11:20]

"Much to welcome in #IndustrialStrategy. Biggest barrier to success is @educationgovuk resistance to devolution of post-16 skills policy," Andy Burnham, Labour Mayor for Greater Manchester on Twitter [Comment added at 11:40]

“This is a White Paper made up of re-announced policies and old spending commitments, showing once again that this is a government short on details and new ideas. Nothing in the White Paper will help give businesses the certainty or incentives they need to invest in the face of the government’s catastrophic handling of Brexit. What detail there is concentrates on a few elite industries in which Britain already has an advantage, and will do nothing to help the millions of people who work in low productivity and low wage sectors such as retail, hospitality and social care, or those based outside the “Golden Triangle” made up by London, Oxford and Cambridge. After the Budget last week, the government’s economic credibility has been shot to pieces. This White Paper falls far short of the change of direction needed to improve our dire productivity, income and GDP growth. Labour’s Industrial Strategy set out a radical programme of investment and genuine partnership between industry and government, to build an economy for the many, not just the few,” Rebecca Long-Bailey, Labour’s Shadow Secretary for Business, Energy and Industrial Strategy [Comment added at 12:25]

“We welcome the Industrial Strategy, the importance that the Government has placed on it is a positive sign for UK manufacturing. We are pleased that the Government has recognised that one of the biggest problems of industrial policy in the UK has been that it has buffeted by day-to-day political considerations and has therefore agreed with the proposal of the MTA, among others, to establish an independent Industrial Strategy Council. We look forward to working with the new body to evaluate the success of the Industrial Strategy, and hold Government accountable over it, over the months and years to come. We are pleased that the Strategy identifies the Catapults, in particular the High Value Manufacturing Catapult, as one of the most successful innovations of recent years and pledges to improve their funding. The Strategy also highlights the Made Smarter Report, which anticipates a Sector Deal for Industrial Digitalisation. The MTA is very supportive of Made Smarter which has the potential to make a real difference to the uptake of, productivity boosting, digital technologies. We were disappointed however that the White Paper has not carried through the reference in the Green Paper to the importance of Government supporting Trade Shows. In sectors such as Manufacturing Technology these are essential forums for companies to enter, and sustain themselves, in markets,” James Selka, chief of the MTA [Comment added at 17:20]

“On the surface the Industrial Strategy looks like great news for industry and seems to focus on all of the areas that will help us improve our competitiveness, including emerging technologies, training and development and support for growth sectors. The UK is well placed right now to show ambition and the strategy has to successfully engage Government, academia and industry, especially the SMEs that remain the lifeblood of our manufacturing base. My only concern is the ‘how’. It’s very easy to put a nice document together that says all the right things…I want to understand some of the detail behind the practical application and how it will be rolled out. Most important of all, I want all the political parties to get behind the Industrial Strategy and not see it as an election bargaining chip," Tony Hague, chairman of the Manufacturing Assembly Network (MAN) and MD of PP Control & Automation [Comment added at 17:20]