A year after publishing its Industrial Strategy to revitalise manufacturing, the UK government says it has committed billions of pounds to automation, digital technologies and advanced manufacturing as it seeks to boost productivity, strengthen supply chains and position Britain as a global leader in high-value industrial production.
In its first annual progress report, ministers point to more than £380 billion in private sector investment commitments, £4 billion for the automotive sector through the DRIVE35 programme, £500 million in collaborative manufacturing R&D and expanded support for manufacturers adopting digital technologies.
The update comes as Labour prepares for a change in leadership following Prime Minister Keir Starmer’s announcement that he will step down.
Seeking to reassure businesses that the strategy will outlive the transition, Business Secretary Peter Kyle told Bloomberg Television that companies could be “absolutely certain” a change in leadership “won’t change the fundamentals of the industrial strategy”. Kyle said Andy Burnham, widely expected to succeed Starmer, was already committed to the strategy after seeing its impact while serving as Mayor of Greater Manchester.
The government’s report paints a picture of a manufacturing sector increasingly embracing automation, artificial intelligence and digitalisation in response to geopolitical tensions, supply chain disruption and rising energy costs. Rather than investing simply to increase production capacity, manufacturers are using advanced technologies to improve productivity, resilience and competitiveness, according to the report.
Advanced manufacturing
Advanced manufacturing is one of the Industrial Strategy’s eight priority sectors, with the government aiming to make the UK “the best place in the world to start, grow and invest” in advanced manufacturing by 2035 while almost doubling annual business investment in the sector to £39 billion.
Among the flagship initiatives is the £4 billion DRIVE35 programme, a five-year package designed to support research, development and industrialisation across the UK automotive sector through to 2035. More than £533 million in grants has already been awarded to businesses, alongside a separate £650 million in electric vehicle grants.
The government also highlighted £500 million of collaborative research and development funding through UK Research and Innovation programmes. The funding includes £254 million for aerospace, £56 million for automotive technologies, £22 million for battery innovation, £63 million for sustainable aviation fuel, £24 million for space technologies and £62 million for agri-tech.
Supporting manufacturers to adopt digital technologies also features prominently in the report. Ministers said they have more than doubled the number of manufacturing SMEs able to access the Made Smarter Adoption programme, which helps smaller businesses introduce automation, digital tools and data-driven production systems.
Industrial investments
Major industrial investments announced during the strategy’s first year include a £450 million investment by Nissan to begin production of the next-generation LEAF in Sunderland, supporting around 6,000 jobs, while Agratas is expected to open its Somerset gigafactory during the next phase of delivery, manufacturing lithium-ion battery cells for the UK’s growing electric vehicle industry. The government has also signed a partnership with autonomous driving technology developer Wayve to deepen collaboration on next-generation self-driving technologies as the company continues to expand in Britain.
Alongside investment in technology, the strategy places significant emphasis on developing the workforce needed to operate increasingly automated factories. The report says 28,500 apprenticeship starts were recorded in advanced manufacturing priority occupations during 2024/25, up from 27,600 the previous year, while four Advanced Manufacturing Technical Excellence Colleges have been announced in Wolverhampton, Durham, Newcastle-under-Lyme and Weston-super-Mare.
Looking ahead, ministers said around 10,000 businesses are expected to benefit from the British Industrial Competitiveness Scheme from 2027, reducing electricity costs for eligible manufacturers by an average of around 25%. The government also plans to launch an Advanced Manufacturing Jobs Plan, publish a new UK Space Strategy and introduce an agri-tech exports accelerator programme.
Despite welcoming the government’s long-term commitment to manufacturing, industry leaders say the focus must now shift from policy announcements to implementation.
From policy to implementation
Stephen Phipson, Chief Executive of Make UK, said the Industrial Strategy provides “the right framework” but warned that businesses now need to see delivery at pace.
“Businesses don’t need another reset, instead they need delivery, at pace,” he said. “A key first step should be bringing forward and expanding the British Industrial Competitiveness Scheme so manufacturers across the sector can benefit from competitive energy costs.”
Phipson said high industrial energy prices, business rates and employment costs continue to undermine the UK’s competitiveness, adding that Make UK research found one in four manufacturers have either moved production overseas or are considering doing so because of the country’s high cost base.
Separate research commissioned by Fluke suggests many manufacturers are still waiting for government support to reach them directly. While 61% of UK manufacturers surveyed said they had benefited from the Industrial Strategy in some way, fewer than one in three (28%) reported receiving direct grant funding. The survey also found that 90% of manufacturers said skills shortages were having a direct impact on their organisation, while only 32% had hired or trained staff through government-backed programmes.
Paraic O’Lochlainn, Vice President of eMaint, a Fluke Corporation brand, said the government’s investment in technology and skills was encouraging but argued that the next phase of the strategy must focus on delivery.
“The ambition is there, but turning that ambition into lasting economic growth will depend on how effectively businesses are enabled to act on it,” he said.
