Delivering the new industrial strategy will be a huge test for government

Released on the morning of 23 June, the government’s Modern Industrial Strategy had by early evening attracted remarkably little attention. This was mostly bad luck brought by the distraction of a brewing geopolitical crisis in the Gulf. But another reason is the overwhelming volume of detailed policy unleashed upon the public. Stakeholders were probably still wading through it as the sun went down. 

This white paper, and the five detailed ‘sector plans’ that accompany it, responds to the comprehensive green paper published last autumn (titled Invest 2035).  It contains hundreds of individual interventions, across a swathe of economy-wide policies as well as specific ones aimed at eight growth sectors – the ‘IS-8’ – and some 37 ‘frontier industries’ within them, deemed to have special significance.  

Industry welcomed the biggest headline measure, a large cut in electricity costs for a wide range of manufacturing businesses. But otherwise, a quick verdict on the many measures in the white paper is quite impractical. A better question is whether it works as a strategy. This question can in turn be broken down into three angles. First, is there a clear diagnosis of the problems and a clear approach to solving them? Second, are there actions with the potential to address the problems? And third, is there the governance capability to deliver this multiplicity of policies?

Investment is the running theme and a sectoral lens the distinctive approach

Both before and after the 2024 election, Labour has been clear that raising investment is key to their vision for how to achieve stronger growth. This is apparent in its policy actions: one of the biggest choices the government has made was the decision in the budget to adjust fiscal rules to allow more borrowing and thereby fund increased public capital spending, by over £100bn over the spending review period. 

But most of the heavy lifting must come from business, which is the focus of the industrial strategy. In the white paper, the eight growth sectors are each given a target to greatly increase investment, with the combined aspirations amounting to a near-doubling over 10 years. If achieved, this would come to over £100bn more – a large enough figure to close significantly an amount of under-investment estimated by some economists to run to the trillions. 

In parts, the tool intended to encourage business to these efforts is the government’s own investment, using what they call ‘Catalytic Finance’ from entities like the National Wealth Fund and British Business Bank, which have both been allocated large increases in lending power. 

The other main approach is to improve stability and deliver reform – the other two thirds of the government’s growth mantra, Stability, Investment and Reform. More than just ‘fiscal control’, stability is taken to mean a broader commitment to reduce policy volatility. This includes 10-year plans in a range of areas, like R&D, infrastructure and local growth. The provision of stability is also a guiding principle behind the sector plans where the government sets out numerous, detailed commitments to steady policymaking and reform. 

Essentially, by choosing a sector-focused industrial strategy the government is declaring that it can address the more ‘micro’ causes of uncertainty that impede investment, which often come down to a failure to deliver in narrow areas of policy that are more sector-specific. This is the common approach behind such policies as pensions reform to boost investment in digital companies, or reforms to the Contracts for Difference scheme to increase clean electricity generation. 

It is through this constant reference to the IS-8 that this is properly an Industrial Strategy, rather than just a collection of growth interventions. Throughout the document is a repeated commitment to put the needs of the IS-8 first, be that in allocations of R&D spending, skills provision, finance, infrastructure and regulatory focus. It makes the selection of the IS-8 and the 37 frontier industries much more consequential and justifies the government’s repeated insistence that it has deliberate choices in this strategy. 

The actions taken in the industrial strategy are voluminous 

As argued above, there are so many actions promised as part of this strategy that it is impossible to deliver a comprehensive evaluation. But what is clear is that, compared to previous strategies the volume of commitments devoted to this one is vastly higher. To provide a rough comparison: the Creative Industries Sector Deal from 2019 contained around 10 key policy commitments, while 2025’s Creative Industries Sector Plan has 28. While most sector plans do not map so neatly through time, other rough comparisons suggest the current strategy is bigger than previous ones. For example, the resources granted to the British Business Bank and National Wealth Fund are much higher, and the sheer volume of industries is far more than anything covered by the combined efforts of both predecessor strategies. 

Therefore, while no one should boldly assert a definite verdict, it should be clear that whatever might cause this strategy to fall short, it will not be an absence of policy detail. 

The volume of commitments will severely test the government’s delivery capacity

A mass of policy detail is not necessarily an indicator of muddled thinking. The problems that the strategy means to address are vast and varied, and an honest attempt at solving them will be so too. For those engaging with the industrial strategy, the task is not to evaluate the whole of it, but just the parts relevant to their sector or policy. The huge amount of policy on offer would indicate a bigger problem if it stemmed from an undiscriminating approach. But the successful efforts to focus on 37 selected sectors has proven a good defence against that risk.

Nevertheless, with so many actions committed to it, the most important question is how easily this strategy can be managed. The government is clearly aware of this issue, and in the sector plans has set out accountability tables listing specific policy actions, with the Senior Responsible Officers (SROs) named for each specific action. Each of the plans is clearly owned by a relevant sponsoring department (DCMS has culture; DESNZ has clean energy; DSIT has digital, and so on). This provides a measure of structure, although it then raises the question of how easily a secretary of state with multiple other policy agendas can be made to feel responsible for delivery to one of his cabinet peers, the business secretary. The experience of previous industrial strategies is that the number one issue for the business department is seldom near the top of the list for others like Defra, MHCLG or DCMS. 

The challenge of cross-departmental working is repeated at lower levels. For the plans published so far, the policy actions vary greatly in where they sit. In the case of the digital and technologies sector, all apparently sit with DSIT, but for the plans sponsored by DBT (advanced manufacturing and professional and business services), only about a third of the actions are owned by its own senior staff, with the rest spread across other departments like the Ministry of Justice and Department of Education. Managing effective cross-departmental lines of accountability like this will be a real innovation, if achieved, and likely require the occasional deployment of the power of No10. 

'Sectors', 'clusters' and 'industries' could make for a complicated strategy

The other challenging governance matter is how to render the cornucopia of sectors, clusters, industries and policy promises comprehensible to outsiders looking for an opportunity. Securing business commitment is core to this strategy. The government’s major answer is to treat engagement as a key theme, with sections titled “creating an enduring partnership with business” in the main document and individual sector plans concerned with how to make it work. In fact, the volume of engagement promised in these various documents is quite dizzying – the digital technology sector, for example, mentions seven different councils, panels, boards and partnerships to guide their plan. 

The promise to keep engaging with business will no doubt be welcomed. But once the strategy is launched and the focus moves onto implementation, constant engagement through various councils, panels and taskforces is only effective if there is a practical purpose to it. It must be connected to the published commitments, rather than just an exercise in handling stakeholders to mitigate the risk of adverse public comment. 

Finally, a key advantage of this strategy is the commitment to monitor its success – detail on which is contained throughout each sector plan, with the overall responsible body the Industrial Strategy Advisory Council. This will be difficult; it is the nature of interventions aimed at boosting the supply side that their impact takes time to be felt. Since sectors and frontier industries will benefit from the combined effect of different policy actions, the task of measuring what is and isn’t working will be doubly hard. Therefore, it is important that the process of monitoring allows reasonable time. Most of the milestones give 2035 as their target year, but the ISAC needs to consider useful intermediate targets, like business commitments to invest, to keep an eye on progress.  

This industrial strategy is an improvement on what has come before

On paper this industrial strategy is an improvement on its predecessors in most regards. As the IfG has urged, a good strategy needs sharp edges around it, that embody a clear sense of what is and is not included, and which enable what happens within the perimeter to be forceful and committed. The white paper has achieved that and generated a long list of concrete commitments for officials to push through. While it covers a great deal of ground, there is some consistency across its various parts, with commitments to monitoring, senior responsible officers, and the theme of investment running throughout the whole strategy. Unlike previous incarnations, the whole government appears committed to the approach. 

Against this, the strategy represents a daunting delivery challenge, requiring quite unprecedented levels of cross-departmental working. There is little cash to oil the wheels: beyond the help with electricity prices, it is hard to discern much new money on offer. But none of the previous strategies had much to throw around either. Most businesses when they choose to complain about UK policy making do not mention a paucity of handouts, but the infuriating policy inconsistency they must navigate around. If only policy would stay the same for a few years in a row, then they might finally open their wallets, they say. Perhaps now we will find out.