As the Government’s Modern Industrial Strategy reaches its first anniversary, we asked Martin Liptrot, Director of Strategy and Partnerships at Downtown, for his assessment of what has become one of the Labour administration’s most significant economic policy initiatives.
“We’ll come to the substance in a moment,” says Martin, “but first, the name. ‘Modern Industrial Strategy’ is certainly functional, though perhaps not especially inspiring. I’m sure it was the title of a text book at a night school class offered at North East London Polytechnic in the eighties?
“It lacks the punch of some of the recent landmark economic programmes in the United States – the Inflation Reduction Act, the CHIPS and Science Act, or the Infrastructure Investment and Jobs Act. Perhaps that’s just reflective of a typically British preference for cool understatement.”
But onto the substance. Published in June 2025, the strategy set out a ten-year plan aimed at increasing investment, improving productivity and strengthening the UK’s competitiveness in an increasingly challenging global economy. At its launch, Prime Minister Sir Keir Starmer described economic growth as the government’s “number one priority” and argued that the strategy would provide businesses with greater certainty over the UK’s long-term economic direction.
A central element of the strategy is its focus on eight high-growth sectors: advanced manufacturing, clean energy, defence, digital technologies, financial services, life sciences, professional services and the creative industries.
“There are few surprises in that list,” says Martin. “These sectors already account for a significant share of UK economic output and represent areas where Britain has established strengths.
“However, setting out clear priorities does provide businesses and investors with greater confidence about where government attention and support are likely to be concentrated over the next decade.”
One of the strategy’s most significant contributions has been its recognition of long-standing structural barriers to investment and growth.
“Whatever reservations I may have about the branding, the strategy correctly identifies several of the UK’s enduring challenges,” Martin says. “High industrial energy costs, planning delays, regulatory complexity and persistent skills shortages have all constrained economic growth for years.”
In its first year, the government has introduced measures aimed at tackling those obstacles. These include support to reduce electricity costs for energy-intensive
industries like steel in South Yorkshire, glassmaking in St Helens, and chemical works in Halton and Tees Valley; expanded access to finance through the British Business Bank, of particular interest to the huge number of ‘scale up’ SMEs across the Northwest; and efforts to streamline aspects of regulation, and investment in workforce development like the recent award of Clean Energy Centre of Technical Excellence to City of Liverpool College, a move welcomed by employers seeking to address recruitment challenges in emerging sectors.
At the heart of the strategy is a commitment to make the UK one of the world’s most attractive destinations for business investment.
“The government’s objective is straightforward,” says Martin. “Increase productivity, encourage innovation and create high-quality employment opportunities across the country.”
Ministers believe the strategy could support the creation of more than one million skilled jobs while strengthening the UK’s position in emerging technologies, advanced manufacturing and clean energy industries.
While such projections remain subject to economic conditions and delivery, there is broad agreement that increasing private investment will be critical to improving the UK’s long-term growth performance.
Perhaps the most politically significant aspect of the strategy though is its emphasis on regional growth and economic rebalancing.
The plan places considerable emphasis on local growth partnerships, investment zones and the development of sector-specific clusters outside London and the South East.
“This is an area that will be of particular interest to businesses across the North and Midlands,” Martin explains. “For many years there has been a recognition that sustainable national growth requires stronger economic performance from city regions and major urban centres beyond London.”
The strategy aligns closely with arguments advanced by metro mayors and regional leaders, who have consistently called for greater devolution of powers over transport, skills, housing and investment.
And with Andy Burnham likely to be in 10 Downing St later this month, the strategy could provide a framework for a broader programme of regional economic development driven by innovation, infrastructure investment and local leadership.
It isn’t just in naming conventions where the UK’s approach contrasts sharply with the more interventionist industrial policies adopted in the United States.
“Recent US administrations have committed hundreds of billions of dollars to manufacturing, infrastructure and clean energy,” Martin notes. “The IRA, IIJ and Chips
Acts goal has been to rebuild domestic production capacity in green energy, electric vehicles, chips and processing power, and support states to invest hard in bridges, roads, ports, IT networks and power grids, strengthening control over strategically important industries.”
The UK’s strategy is more focused on creating attractive conditions for private-sector investment.
“Rather than attempting to outspend larger economies, the UK is seeking to create a competitive environment through regulatory reform, planning improvements, targeted support for innovation and investment in research and development.”
The government points to substantial private investment commitments – nearly £380billion secured since the strategy’s launch – as evidence that this approach is gaining traction.
Martin highlights the UK’s growing use of regulatory “sandboxes” – controlled environments that allow businesses to test products and services with reduced regulatory constraints – as a particular strength.
“For sectors such as financial technology, life sciences, clean energy and advanced manufacturing, shortening the journey from innovation to commercial deployment can be a major competitive advantage.”
Opportunities for the North
Martin believes the North of England is particularly well positioned to benefit from the strategy’s sector-based approach. He acknowledges the debate has a certain rhythm and rhyme with Harold Wilson’s 1963 policy speech on the ‘White Heat of Technology’ but hopes it is more successful when implemented.
“The future of UK industry is unlikely to be defined by a return to large-scale heavy manufacturing,” he says. “Instead, the focus is increasingly on high-value, technology-led activity that creates skilled and well-paid employment.”
The North possesses a range of assets aligned with the government’s priorities, including advanced manufacturing capabilities around Sheffield, life sciences clusters stretching across the M62 corridor, clean energy opportunities centred on the Humber and Mersey, and established strengths in aerospace, defence and advanced materials across Lancashire and Greater Manchester.
“Taken together, these strengths provide a strong foundation for future growth if the right investment and policy support can be sustained.”
Despite the positive early signs, significant challenges remain.
“The first challenge is delivery,” Martin says. “Industrial strategies are often welcomed at launch, but their success ultimately depends on implementation.”
Achieving meaningful improvements in productivity, investment and living standards will require effective coordination between national government, local and combined authorities, educational institutions and the private sector.
A second challenge concerns public finances. Ambitious growth objectives must be balanced against competing pressures on government spending and the need to maintain fiscal credibility.
Finally, the UK faces intense international competition. The United States, European Union, China and several other Asian economies are all pursuing increasingly active industrial policies designed to attract investment in strategic sectors.
“The UK must compete not only on innovation and policy stability but also on skills, infrastructure, energy costs and market access,” Martin says.
Critics have raised concerns that focusing on a limited number of priority sectors risks governments attempting to “pick winners” in a rapidly changing global economy. Others argue that smaller businesses may struggle to benefit if support becomes concentrated among large corporations, universities and major industrial clusters.
Meanwhile, advocates of greater devolution suggest that meaningful economic rebalancing will require further transfers of power and funding to regional leaders if Mayors are to meet the growth targets the strategy suggests.
Perhaps the greatest uncertainty, however, concerns political continuity.
The UK has seen numerous industrial strategies introduced, revised and abandoned over the past two decades, often following changes in government or ministerial priorities. As we head towards our 7th PM in a decade, businesses will therefore be looking for evidence that the strategic direction established during the past year can be maintained over the longer term.
“Ultimately,” Martin concludes, “the success of the Modern Industrial Strategy will not be judged by the quality of its ambitions but by its ability to deliver measurable economic results.
“The first year has established a framework. Next year and the decade ahead will determine whether it can genuinely transform the UK’s economic performance and help unlock the full potential of regions such as the Midlands and North of England.”
