New Industrial Strategy for the UK 

What has been announced 

“The world is in a new era.” Those are the opening words of the Government’s Industrial Strategy. To ensure that the UK is well-placed to benefit from the technological advances which are “profoundly reshaping” our economy, the Government argues that a new relationship between business and government is required.

This new relationship will be characterized by a “more muscular approach to government” which is prepared to “back British businesses, invest in our comparative advantage, and take punts in pursuit of growth and productivity.” So what does this “more muscular” approach look like in reality? Here are some of the key announcements.

The centerpiece of the Industrial Strategy is a new British Industrial Competitiveness Scheme. Launching in 2027, this initiative aims to reduce electricity costs by up to £40 per megawatt-hour for more than 7,000 energy-intensive businesses, including those in the automotive and aerospace sectors. Eligibility for this scheme will be confirmed following a consultation, which the Government promises to launch soon.

Continuing its focus on addressing the high-energy costs facing businesses, the Government has also pledged to strengthen the British Industry Supercharger by increasing the discount on electricity network charges for the most energy-intensive industries, from 60% to 90% beginning in 2026, benefiting key sectors such as steel, chemicals, and glass. These measures aim to enhance competitiveness, protect skilled jobs, and enable long-term industrial investment.

Looking across the holistic Industrial Strategy document and the five Sector Plans published, another key pillar to the Government’s approach is enhancing skills and expanding access to talent in high-growth sectors. To address workforce needs, the Government will build on the rollout of shorter-duration and foundational apprenticeships through the Growth and Skills Levy and introduce new Levy-funded short courses in priority areas such as AI, digital, and engineering.

Building on this, the Government is creating a new Global Talent Taskforce, reporting to the Prime Minister’s Office and the Treasury, which will provide a concierge service for top global talent and leverage the UK’s international networks to position the UK as a leading destination for high-skilled individuals. The initiative is accompanied by a £54 million Global Talent Fund to attract around 10 world-class researchers and their teams, covering relocation and research costs over a five-year period.

There is also a clear focus on the transformative role that technology can play in driving economic growth. As well as highlighting previously announced commitments, including the £2 billion for the implementation of the AI Action Plan and the £187 million for tech skills, the Industrial Strategy confirms that £19 million will be spent on a new Semiconductor Centre and the launch of a “Connections Accelerator Service” to speed up grid connections for data centers.

Support for business is also being bolstered through a renewed focus on attracting capital to the UK. The Strategy expands the mandate of the National Wealth Fund (NWF), enabling its £27.8 billion in funding to be deployed more strategically to drive growth in the UK’s frontier industries. The NWF will prioritize investment in Clean Energy, Digital and Technologies, Advanced Manufacturing, and Transport, with an expanded remit to support Defence, Life Sciences, and the Creative Industries, ensuring globally competitive finance is available across key sectors.

The Strategy does not adopt a one-size-fits-all national approach but instead places a strong emphasis on unlocking the economic potential of UK city regions and industrial clusters. Place-based interventions include the creation of a £600 million Strategic Sites Accelerator (with funding starting from 2025/26) to increase the supply of investment-ready land; a £500 million Local Innovation Partnerships Fund to support high-potential clusters; and a £500 million Mayoral Recyclable Growth Fund to enable mayors, particularly in the North and Midlands, to support local investment projects. These efforts are supported by strengthened partnerships with the British Business Bank, the National Wealth Fund, and the Office for Investment, providing more targeted, regionally responsive investment support throughout the UK.

What does it mean 

Today’s Industrial Strategy has been a long time in the making. A key manifesto commitment, it has formed a central part of the party’s plan for Government since before last year’s general election. As expected, growth and investment take center stage, with the Government claiming the Strategy will “make the UK the best country to invest in and grow a business.” While recognizing the volatility of recent international events, it also highlights the possibilities of the future, highlighting in particular Life Sciences, Clean Energy and Artificial Intelligence. Above all, it strikes an optimistic tone as it champions the UK’s position to take advantage of these opportunities and sets out this Government’s achievements in restoring the country’s international standing, bringing political stability and achieving success in recent trade deals.

The foreword, co-signed by the Prime Minister, the Chancellor and the Business Secretary, is noteworthy for its precis of the Government’s approach. It references seizing “the opportunities this new world offers to deliver security, renewal and higher living standards” and calls for a new relationship between business and government, where “government provides the strategic certainty that allows businesses to do what they do best: create wealth.” The trio calls for a “more muscular approach to government” that backs British business, invests “in our comparative advantage” and, perhaps most interestingly, takes “punts in pursuit of growth and productivity.” The foreword reiterates the Government’s commitment to tackling over-regulation, stating that this has led to a country “too regulated to take advantage” of new opportunities. It is a concise summary of the approach of this Government, ostensibly hitting its stride after a tumultuous first year in power, and one that recognizes the challenges ahead but relishes the opportunities to deliver for the country.

Recent world events bring a new dimension to today’s publication, with the Prime Minister telling the BBC that the strategy aims to “stabilize” and help “mitigate” challenges to the UK from abroad. Indeed, the opening line of the foreword puts this front and center. It says, “The world is in a new era. It is more volatile, with new threats to our security and living standards.” It appears to be a recognition from Government of the importance of investment and strategic certainty at home, in the face of global turmoil.

The announcement making the most headlines is the commitment to reduce energy costs for thousands of businesses by up to 25% beginning in 2027 and to streamline grid access for major investment projects. It demonstrates the Government’s understanding of the challenges British businesses have faced over many years, including energy bills and long waits for grid connections—something the Strategy identifies as a barrier to the competitiveness of British firms.

The Government is deeply aware of the more difficult relationship it has had with business since taking office almost a year ago, not least because of measures announced in last autumn’s budget. The Industrial Strategy places partnership with business at its core, making clear only the vital role the Government believes business has to play in the country’s future but also the value it places on its relationship with businesses across the country. Its authors claim this strategy marks “a new era of collaboration between government and high growth industries,” something the Government hopes it can take forward into the years ahead.

In the face of global uncertainty and ongoing political pressure at home, today’s Industrial Strategy marks the end of many months of work for the Government and is a key milestone in its long-term project. Its claim that the Strategy is “robust, strategic, and unashamedly long-term” is laudable, and something often missing from the country’s political debate. 

What happens next 

The Industrial Strategy is a 10-year plan to transform the UK economy. Politics, however, does not work on these timeframes. Those in Number 10 and HM Treasury know that the economic benefits might take time to feed through, but they need to see “cranes in the sky” well before the next election. In the face of short-term policy promises from their opponents, it remains to be seen how much of this publication will move the dial and what difference it will make by the time the country goes to the polls in four years’ time.

Furthermore, while businesses have almost universally welcomed the Strategy, the government still has work to do to reassure industry after a tax-raising budget and new worker protections. Attention has already turned back to where taxes may rise, if—or more likely when—this is required by the Autumn Budget. Global events, including tariffs and new developments in the Middle East, may further dent the economy and curtail the ambitions outlined in this Strategy. Whatever the challenges, the Government knows it has to deliver the change it promised. 

Materials presented by Edelman’s Public & Government Affairs experts. For additional information, reach out to Jonathan.Mitchell@Edelman.com