UK Government Announces New Industrial Strategy: Reaction from the Industry

Published on the 23rd June 2025, the UK Government has announced its new 10-year plan to increase business investment and grow the industries of the future within the UK. The first updated industrial strategy since 2017, the plan acknowledges the changing industrial landscape and outlines the Government’s plans to stabilise and benefit a variety of sectors. Most notable for manufacturing is big promises on energy, and we’ll cover the key points and some manufacturing industry reactions in this summary.

A lot has changed since 2017, the date the UK Government last set out its plan for an industrial strategy. Six prime ministers, a change in Government, a global pandemic, supply chain disruptions and shortages, war in Europe and the Middle East – it has been an eventful few years to say the least. This disruption and uncertainty have created issues for industry in the UK, with the global trading environment more unpredictable and supply chains showing fragility, meaning now more than ever, businesses need positivity and a plan for the future. UK industry, in particular the manufacturing sector, needs to secure its future as an essential component of the UK’s modern economy to deliver sustainable economic growth, in sectors that have taken a battering over the past decade.

Published on Monday, the ‘UK’s Modern Industrial Strategy 2025’ sets out to address these issues, laying out a 10-year plan to deliver “strong, secure, and sustainable economic growth to boost living standards for working people in every part of the UK.” The full strategy document is available to download for free from the Government website here, but if you don’t fancy reading a 160-page document, we’ll outline some of the key points that affect the manufacturing industry, and give some plastics-specific reactions we’ve spotted in the last few days.

Lower Energy Costs

The most welcome news for manufacturers is reduced energy costs for big electricity users. Currently, the UK has some of the most expensive industrial energy costs in the developed world, and many sectors of industry have been asking the Government to take action to help with these rising energy bills for many years.

Companies in sectors such as automotive, aerospace and chemicals will be exempted from some green energy levies, which were imposed to pay for green energy programmes, but it has been argued that these levies have instead put British businesses at a disadvantage to competitors abroad. This change is thought to impact over 7,000 energy-intensive businesses, but will not be introduced until 2027, after a two-year consulting period to decide exactly who will benefit. Costs will be cut by up to £40 per megawatt-hour, to give an approximate saving of 25% for manufacturing companies once the scheme begins in 2027.

The 500 most energy-intensive businesses, typically steel, chemicals and fertiliser manufacturers, will see further reductions, seeing discounts increasing from 60% to 90% through the British Industry Supercharger scheme, starting in 2026.

A new ‘connection accelerator service’ will also be launched before the end of 2025, aiming to speed up the connection of new factories, energy generators and homes to the national grid. This should reduce the ‘queue times’ to encourage job creation and economic growth and expansion.

Boosting Skills

Another key issue for the manufacturing sector in recent times has been the growing skills gap, and the 2025 Industrial Strategy has a few mentions of policies aimed at improving home-grown talent.

An extra £1.2 billion has been allocated each year to develop skills and training programmes, to upskill UK workers and to reduce reliance on foreign workers. Support for recruitment and upskilling is welcomed, as the manufacturing sector currently struggles with almost 50,000 active vacancies.

Improved Access to Finance

Improving access to external finance will be welcome news to the small and medium-sized enterprises (SMEs) making up the majority of the UK economy. Currently a barrier to investment and growth for SMEs, the news of an additional £6.6 billion of funding for the British Business Bank, improving access to finance for SMEs, has been welcomed. £4 billion is for a new initiative titled ‘the British Business Bank Industrial Strategy Growth Capital’ and will be invested across eight key industry sectors (more on these below). The remaining £2.6 billion will then be geared towards backing entrepreneurs and startups, supporting smaller, high-growth businesses.

Support for the IS-8 – Key Future Sectors

The main focus of the measures in the industrial strategy is around eight specific sectors. The Government has picked these sectors as important growth areas for the future of UK industry, as well as already having strong foundations, giving a better potential for quicker and sustained growth.

The areas singled out are:

• Advanced Manufacturing (including Automotive and Zero-Emission Vehicles (ZEVs), Battery Technology, Aerospace, Space, Advanced Materials and Agri-Tech)
• Clean Energy
• Creative Industries
• Defence
• Digital & Technologies (including AI and digitalisation)
• Financial Services
• Life Sciences
• Professional & Business Services

Plastics manufacturers are active in many of these sectors, particularly advanced manufacturing, energy, defence and life sciences, so further support for companies operating in these areas is expected to come in the next few years.

Reaction from the Industry

The Industrial Strategy has been largely well-received. The Government is making the right noises and has identified the key areas that are stifling UK industry at the moment, and although a lot of details still need to be ironed out, it’s hoped that the document marks a move in the right direction.

We’ve summarised the response from the manufacturing sector, with a selection of quotes listed below, from prominent voices across the plastics and wider manufacturing markets.

Philip Law, Director General of the British Plastics Federation:

“We welcome the Industrial Strategy! It gives prominence to the role of manufacturing in the UK, which plastics are at the heart of, being the country’s third largest manufacturing sector by employment. We are pleased to see ‘materials’ recognised as ‘foundational industries’ — something the British Plastics Federation has been calling for. So many aspects of the Industrial Strategy depend upon plastics: Advanced Manufacturing, Defence, Digital Infrastructure, Clean Energy, to name but a few.

“Plastics are crucial to national security in numerous ways, and this Industrial Strategy should also provide opportunities to sharpen our competitive edge internationally too. There is of course more detail for the government to work out and we will continue fighting for our members to receive their fair share of support.”

Stephen Phipson CBE, CEO of Make UK:

“Today is one of the most important days for British industry in a generation. In launching the modern industrial strategy white paper, Jonathan Reynolds has demonstrated the Government’s commitment to honour its promises and tackle the major structural problems that have blighted UK manufacturing for so long and we congratulate him for doing so.

“Make UK has led the campaign for a new industrial strategy for many years, highlighting the three major challenges that were diminishing our competitiveness, hampering growth and frustrating productivity gains: a skills crisis, crippling energy costs and, an inability to access capital for new British innovators.

“The strategy announced today sets out comprehensive and well-funded plans to address all three of these structural failings. Clearly, there is much to do as we move towards implementation, but this will send a message across the Country and around the world that Britain is back in business.”

Judson Smythe, Managing Director of MGS Technical Plastics:

“This is fantastic news for the manufacturing sector. Well done all!

“The government is providing a stable platform upon which manufacturers can thrive.”

Tufan Erginbilgic, CEO of Rolls-Royce: 

“The UK Government’s plans to reduce energy costs for electricity-intensive businesses in manufacturing sectors – including aerospace – will be welcome across the supply chain. Also welcome is the Government’s commitment to the vital research which keeps the UK’s aerospace industry at the forefront of innovation, through the extension of the Aerospace Technology Institute (ATI) programme to 2035.

“Our collective ambitions are clear. There is enormous potential to drive UK growth, exports, skills and jobs together throughout the decades ahead. We should all act to implement the Industrial Strategy effectively and at pace in support of the UK’s economic growth and sovereign aerospace and nuclear capabilities.”

John Harrison, General Counsel and Head of Public Affairs, Airbus:

“Airbus welcomes the UK’s modern Industrial Strategy. Having worked closely with the Government to help shape this plan, we are delighted to see it deliver a long-term vision, built on a genuine partnership with industry.

“The firm long-term commitment to the full innovation lifecycle, from R&D in the Aerospace Technology Institute to a focus on commercialisation and supply chain resilience, provides the confidence and stability needed to fuel innovation and anchor high-value manufacturing in the UK for decades to come. The significant new investment in skills is also critical, creating a strong pipeline of engineering and digital talent, which will be the foundation for developing the sustainable technologies of the future, from hydrogen-powered aircraft to next-generation space systems. We stand ready to help turn this ambitious strategy into a reality for British industry.”

Charles Woodburn, Chief Executive, BAE Systems:

“The UK’s modern Industrial Strategy rightly recognises the importance of investing in skills and developing a workforce for the future. The UK’s defence sector is a powerhouse of skilled employment and training. Across the supply chain, it’s critical that we continue to invest in our people, just as much as we invest in technology, to ensure we can deliver the capabilities our armed forces need to stay ahead in an era of increasing instability.

“That’s why, this year alone, BAE Systems is recruiting more than 2,400 new apprentices and graduates across the UK and we recognise the importance of government, industry and academia working together to develop the talent needed to support this critical high-growth sector.”

PlastikCity’s Summary

So, while many of the final details need to be confirmed, and some benefits, such as the electricity cost cuts, unfortunately, don’t start until 2027, the new industrial strategy has been widely welcomed by the UK’s manufacturing sector. If these consultation periods could be shortened, it would be good news for thousands of firms with immediate energy savings, but at least a light at the end of the tunnel in regards to energy, which has been a significant burden for so many businesses. This is the most immediately pressing concern, with any improvements on the 2027 target likely to relieve a lot of pressure on energy-intensive manufacturers.

Investment in skills is also good news, as skills shortages and an ageing workforce are one of the most common themes of discontent amongst the plastics manufacturers that I visit. Let’s hope these funding numbers can be spent in the right areas, and encourage youngsters into apprenticeships or other training programmes, with the focus industries including advanced manufacturing, AI and defence piquing the interest of budding engineers.

Finally, with SMEs making up 99% of all businesses in the UK, further support and access to finance to enable investment are welcomed. Some commenters have claimed the SME support does not go far enough, and we need to make sure these funds are made directly available to SMEs rather than other government bodies, so we hope to see this progress well over the next few years.

We’d like to take the opportunity to thank the organisations and the businesses that have been championing the need for an industrial strategy for the last few years, and we hope, along with the rest of the commenters above, that having a focused strategy and underlying plan for UK industry will bring benefits to a variety of sectors, including UK manufacturing, over the next ten years.

What are your thoughts on the proposals? We’d love to hear some comments over on our LinkedIn page.

Written by Will Clarke. Read more news from PlastikCity Here.

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