The government has unveiled its new Industrial Strategy, a long-term plan that aims to revitalise the economy and provide support and confidence to businesses in key growth sectors.
The strategy includes reducing green energy levies on select manufacturing industries to lower the cost of bills, investments in new training and apprenticeship schemes and additional funding for state-owned investors.
The Industrial Strategy launch has been met with a mixed reception. While some have celebrated its attempt to provide a stable and consistent strategy for businesses, there are also concerns over its priorities.
Clarity at last
There have been more than a few government economic strategies over the past decade, so, for many, the introduction of what Labour claims will be a reliable 10-year strategy is itself commendable.
The end to the “chop-and change approach” marks the “turning of a page” for UK economic policy, offering “much-needed consistency, clarity and certainty for businesses”, according to Harry Quilter-Pinner, executive director at the Institute for Public Policy Research.
“No industrial strategy pleases everyone. But this government’s clear focus on clean energy, defence and advanced manufacturing shows it’s serious about going green to boost the economy and create good jobs outside of London.
“The test now is whether this 10-year strategy moves from PDF to process. It must drive decisions across government and be backed with funding beyond the current spending review. It can’t just sit on a shelf as a job well done,” Quilter-Pinner added.
The independent think-tank worked closely with the government when developing the Industrial Strategy.
Overlooks small businesses
There are plenty of policies within the strategy that will support large-scale manufacturers, particularly regarding reducing the financial burden of energy costs.
However, George Holmes, managing director at Aurora Capital, questioned whether this support would be felt by the vast community of small businesses in the UK.
“For smaller firms also battling high bills, long waits for grid connections and squeezed margins, it’s hard to feel like this is a strategy for them,” said Holmes.
“These businesses are vital to local economies and supply chains across the country, yet they have been left waiting for the trickle-down. The government talks about partnership with business, but the detail shows that focus remains heavily on large corporations.”
The strategy did include a funding boost for the British Business Bank, which will be redirected to SME investments throughout the UK, but Holmes argued these investments “won’t offset rising costs or provide the energy certainty many firms need to plan ahead”.
British Business Bank funding is a ‘major win’
Despite the aforementioned concerns, expanding the financial capabilities of the British Business Bank has proven a popular decision.
Chancellor Rachel Reeves had previously announced the state development bank would be powered up with new funding and operational freedom in the Spending Review. Monday’s Industrial Strategy has provided details on the extent and aims of its funding boost.
“A major capital boost and more freedom for the British Business Bank was the major win from the Spending Review for UK growth,” said Michael Moore, chief executive of the British Private Equity and Venture Capital Association (BVCA).
Read more about the £6.6bn funding boost here.
Quantum funding is a ‘half-measure’
The strategy included a significant amount of additional financial support to drive the development and adoption of quantum computers.
As an extremely complex and resource-intensive sector, quantum requires significant patient capital, and while this new funding can be seen as a win for the industry, the figures have been described by Sam Hields, a partner at tech VC OpenOcean, as a “half-measure”.
“Quantum represents precisely the kind of asymmetric opportunity demanding patient capital and substantial, sustained investment far beyond initial public commitments,” Hields said.
“Other nations, like France and Germany, are investing significantly into quantum R&D, and without a clear scale-up pathway and stronger demand signals, this level of investment risks falling short of establishing a meaningful UK presence in the global quantum market.”
