Government unveils new Industrial Strategy

The Department for Business & Trade has unveiled a new Industrial Strategy, to unlock business investment and create new jobs over the next 10 years. The Government has said that more than 7,000 British businesses are set to see their electricity bills slashed by up to 25 per cent from 2027 under the strategy

The modern Industrial Strategy sets out a ten-year plan which aims to boost investment, create good skilled jobs and make Britain the best place to do business by tackling two of the biggest barriers facing UK industry – high electricity prices and long waits for grid connections.

British manufacturers currently pay some of the highest electricity prices in the developed world while businesses looking to expand or modernise have faced delays when it comes to connecting to the grid.

The Government has said for too long these challenges have held back growth and made it harder for British firms to compete. Today’s announcement marks a decisive shift — with government stepping in to support industry and unlock the UK’s economic potential.

From 2027, the new British Industrial Competitiveness Scheme will reduce electricity costs by up to £40 per megawatt hour for over 7,000 electricity-intensive businesses in manufacturing sectors like automotive, aerospace and chemicals. Hundreds of Scottish businesses could be in line to benefit.

These firms, which support over 300,000 skilled jobs, will be exempt from paying levies such as the Renewables Obligation, Feed-in Tariffs and the Capacity Market — helping level the playing field and make them more internationally competitive. Eligibility and further details on the exemptions will be determined following consultation, which will be launched shortly.

The Government is also increasing support for the most energy-intensive firms — like steel, chemicals, and glass — by covering more of the electricity network charges they normally have to pay through the British Industry Supercharger. These businesses currently get a 60 per cent discount on those charges, but from 2026, that will increase to 90 per cent. This means their electricity bills will go down, helping them stay competitive, protect jobs, and invest in the future.

This will help around 500 eligible businesses in sectors such as steel, ceramics and glass reduce their costs and protect jobs in industries that are the backbone of our economy and will be delivered at no additional cost to the taxpayer. The support for steel manufacturing is crucial as it’s a critical enabling industry for Scotland’s world leading defence and renewable energy sectors.

These reforms complement the Government’s long-term mission for clean power, which is the only way to bring down bills for good by ending the UK’s dependency on volatile fossil fuel markets.

To ensure businesses can grow and hire without delay, the Government will also deliver a new Connections Accelerator Service to streamline grid access for major investment projects — including prioritising those that create high-quality jobs and deliver significant economic benefits.

The Government said: “We will work closely with the energy sector, local authorities, Scottish and Welsh Governments, trade unions, and industry to design this service, which we expect to begin operating at the end of 2025. New powers in the Planning and Infrastructure Bill, currently before parliament, could also allow the Government to reserve grid capacity for strategically important projects, cutting waiting times and unlocking growth in key sectors.”

The Industrial Strategy is a 10-year plan to promote business investment and growth and make it quicker, easier and cheaper to do business in the UK, giving businesses the confidence to invest and create 1.1 million good, well-paid jobs in thriving industries – delivering on this government’s Plan for Change.

Prime Minister Keir Starmer said: “This Industrial Strategy marks a turning point for Britain’s economy and a clear break from the short-termism and sticking plasters of the past.

“In an era of global economic instability, it delivers the long term certainty and direction British businesses need to invest, innovate and create good jobs that put more money in people’s pockets as part of the Plan for Change.

“This is how we power Britain’s future – by backing the sectors where we lead, removing the barriers that hold us back, and setting out a clear path to build a stronger economy that works for working people. Our message is clear – Britain is back and open for business.”

Scottish Secretary Ian Murray visited a new industrial development in East Lothian, on the site of a former coal-fired power station. The redevelopment site is partly funded by an £11 million UK Government investment, and includes the construction of a new interconnecter to take power from the Inchcape offshore wind farm to the National Grid.

Also joint Department for Business and Trade/HM Treasury Minister for Investment, Baroness Poppy Gustafsson, will meet senior figures from Dundee’s life sciences and tech, gaming, and creative sectors later.

Speaking ahead of his visit Mr Murray said: “Scotland is rightly at the heart of the UK Government’s Industrial Strategy with our businesses and expertise integral to further creating jobs and economic growth through the eight sectors identified.

“Advanced manufacturing, clean energy, creative Industries, defence, digital and technologies, financial services, life sciences and professional and business services, Scotland excels at them all. But we have the potential to go much further. And by slashing electricity costs for Scottish businesses, increasing business investment and cutting red tape the UK Government is helping turbocharge the economy, create jobs and put more money in the pockets of working Scots as part of our Plan for Change.

“We have a proud industrial heritage and with this new comprehensive 10 year strategy Scotland and the wider UK has an exciting future.”

Chancellor of the Exchequer Rachel Reeves said: “The UK has some of the most innovative businesses in the world and our Plan for Change has provided them with the stability they need to grow and for more to be created.

“Today’s Industrial Strategy builds on that progress with a ten-year plan to slash barriers to investment. It’ll see billions of pounds for investment and cutting-edge tech, ease energy costs, and upskill the nation. It will ensure the industries that make Britain great can thrive. It will boost our economy and create jobs that put more money in people’s pockets.”

Business and Trade Secretary Jonathan Reynolds said: “We’ve said from day one Britain is back in business under this government, and the £100 billion of investment we’ve secured in the past year shows our Plan for Change is already delivering for working people.

“Our Modern Industrial Strategy will ensure the UK is the best country to invest and do business, delivering economic growth that puts more money in people’s pockets and pays for our NHS, schools and military.

“Not only does this Strategy prioritise investment to attract billions for new business sites, cutting-edge research, and better transport links, it will also make our industrial electricity prices more competitive.

“Tackling energy costs and fixing skills has been the single biggest ask of us from businesses and the greatest challenge they’ve faced – this government has listened, and now we’re taking the bold action needed. Government and business working hand in hand to make working people better off is what this Government promised and what we will deliver.”

Energy Secretary Ed Miliband said: “For too long high electricity costs have held back British businesses, as a result of our reliance on gas sold on volatile international markets.

“As part of our modern industrial strategy we’re unlocking the potential of British industry by slashing industrial electricity prices in key sectors.

“We’re also doubling down on our clean power strengths with increased investment in growth industries from offshore wind to nuclear. This will deliver on our clean power mission and Plan for Change to bring down bills for households and businesses for good.”

The Supercharger and British Industrial Competitiveness Scheme will be funded through reforms to the energy system. The government is reducing costs within the system to free up funding without raising household bills or taxes and intends to also use additional funds from the strengthening of UK carbon pricing, including as a result of linking with the EU carbon market.

The Government said it has set out an intention to link emissions trading systems, as part of our new agreement with the European Union to support British businesses. Without an agreement to do this, British industry would have to pay the EU’s carbon tax.

It adds that it intends to link its carbon pricing system with the EU’s, ensuring that money stays in the UK—which allows it to support British companies and British jobs through these schemes.

The Strategy’s bold plan of action includes:

• Slash electricity costs by up to 25% from 2027 for electricity-intensive manufacturers in our growth sectors and foundational industries in their supply chain, bringing costs more closely in line with other major economies in Europe.
• Unlocking billions in finance for innovative business, especially for SMEs by increasing British Business Bank financial capacity to £25.6 billion, crowding in tens of billions of pounds more in private capital. This includes an additional £4bn for Industrial Strategy Sectors, crowding in billions more in private capital. By investing largely through venture funds, the BBB will back the UK’s most high-growth potential companies.
• Reducing regulatory burdens by cutting the administrative costs of regulation for business by 25% and reduce the number of regulators. 
• Supporting 5,500 more SMEs to adopt new technology through the Made Smarter programme while centralising government support in one place through the Business Growth Service.
• Boosting R&D spending to £22.6bn per year by 2029-30 to drive innovation across the IS-8, with more than £2bn for AI over the Spending Review, and £2.8bn for advanced manufacturing over the next ten years. This will leverage in billions more from private investors. Regulatory changes will further clear the path for fast-growing industries and innovative products such as biotechnology, AI, and autonomous vehicles.
• Attracting elite global talent to our key sectors, via visa and migration reforms and the new Global Talent Taskforce.
• Deepening economic and industrial collaboration with our partners, building on our Industrial Strategy Partnership with Japan and recent deals with the US, India, and the EU.
• Revolutionising public procurement and reducing barriers for new entrants and SMEs to bolster domestic competitiveness.
• Supporting the UK’s city regions and clusters by increasing the supply of investible sites through a new £600m Strategic Sites Accelerator, at six locations to be chosen across the UK, enhanced regional support from the Office for Investment, National Wealth Fund, and British Business Bank, and more, including  with the Scottish Government to support the Edinburgh-Glasgow Central Belt.
• Strengthening existing “Industrial Strategy Zones” – in Scotland these are the Forth Green Freeport, Cromarty Firth Green Freeport, Glasgow City Region and the North East Scotland Investment Zones – with an enhanced offer of streamlined planning, better-targeted investment promotion, support for accessing concessionary finance and coordinated support on skills.
• Delivering AI Growth Zones to attract investment in AI infrastructure in strategic locations across the UK, including Scotland, with support for planning, access to energy, and partnerships with the private sector.
• Growing high-potential innovation ecosystems through the Local Innovation Partnerships Fund, with at least £30m for Scotland, building on UK-wide public R&D investment and Innovate UK’s joint action plans with devolved governments.
• Identifying and securing the right financing for investment projects in Scotland with the National Wealth Fund, working with the Scottish National Investment Bank.  
• Using a British Business Bank Cluster Champion in Glasgow City Region, with deep expertise and local knowledge, to coordinate investment-readiness programmes, strengthen financial networks, and connect high-potential firms to investors.

The plan focuses on 8 sectors where the UK is already strong and there’s potential for faster growth: Advanced Manufacturing, Clean Energy Industries, Creative Industries, Defence, Digital and Technologies, Financial Services, Life Sciences, and Professional and Business Services. Each growth sector has a bespoke 10-year plan that will attract investment, enable growth and create high-quality, well-paid jobs.

Commenting on the strategy Railway Industry Association (RIA) Chief Executive Darren Caplan said: “The Railway Industry Association (RIA) notes the Industrial Strategy published by the Department for Business & Trade (DBT) today, and Prime Minister Sir Keir Starmer’s comments that the Government is backing eight specific sectors, including life sciences, advanced manufacturing, digital and technology, defence, clean energy, finance, professional and business services and the creative industries, with a view to intervening to ensure these sectors get comparative advantage.

“Whilst there is some mention in the Industrial Strategy for rail – and we and our members welcome the direction of the Government’s recent Spending Review and Infrastructure Strategy when it comes to large rail projects – we remain concerned that this Strategy does not include transport and rail as significant enablers to growth, either for the eight specific sectors mentioned or for UK industry and the economy more widely.

“Rail is a large and growing industrial sector in its own right, supporting some 640,000 jobs, £43bn GVA and providing over £14bn Treasury revenues annually; and for every pound spent in rail, £2.50 is generated in the wider economy, and for every rail job created in rail, four jobs are supported beyond rail too. Rail is also a potential exports enabler – whilst exports forms a key component of the Industrial Strategy announced today, there is little mention of transport-related exports, even though UK Export Finance has helped secured major overseas rail project contracts for the UK.

“So we would urge the DBT to work with the railway industry in the months ahead to ensure rail has a driving role to help facilitate growth in both our and the other specific sectors mentioned in the Government’s Industrial Strategy – whether advanced manufacturing, digital technology, or professional and business services – and to also recognise the role rail can play in helping thousands of large and SME UK businesses sell their goods, services and expertise oversees, ultimately to the benefit of UK plc.” 

Kate Jennings, CEO of ACE Group, said: “It is hugely welcome that professional services are recognised as a growth sector in the new Industrial Strategy. As a component of that, the UK’s engineering and consultancy sectors are quietly indispensable.

“Our sector has made huge strides to meet the aims outlined in the strategy, to be the world’s most trusted advisers to global industry.  We provide not just design and delivery, but strategic thinking, governance frameworks and innovation – in short, the tools and trust needed to build future economies.

“Following last week’s Infrastructure Strategy and today’s £100m investment in engineering skills, alongside 65,000 new courses in engineering and digital, investors now have greater certainty and a clearer framework to drive business growth across the UK.

“We welcome the strategy’s ambition to harness British excellence. What’s vital now is ensuring continuity, not just in policy, but in procurement, skills investment, and export support. We have the knowledge, the networks and the track record. Let’s now turn that into delivery.”

Ben Brittain, Director of Public Affairs at ACE Group, added: “The Industrial Strategy represents a long-overdue framework to recognise and grow UK capability, align capital, innovation and skills. It is a moment to cement Britain’s comparative edge in infrastructure-led growth. With a robust well of domestic expertise, the sector is ideally placed to deliver on national ambitions, whether in modernising transport and digital systems or scaling up clean energy technologies, both at home and abroad.

“We don’t merely design bridges or buildings; we design and unlock the outcomes to create thriving communities and sustainable infrastructure. If this strategy enables more of that, we’re not only contributing to Britain’s growth story, but we’re also influencing how infrastructure is delivered globally and ensuring British expertise and excellence sits at the heart of that.”

Emma Schloes, Chair of ACE Group’s Emerging Professional Network, said: “Today’s announcement marks a pivotal step in strengthening the UK’s industrial base. The investment in engineering skills, including the investment of £100m sends a clear signal that government recognises the critical role of talent in driving innovation and long-term productivity. For emerging professionals, this strategy offers not just opportunity, but confidence in a future built on technical excellence and sustained industrial ambition.”

Download article