Industrial Strategy

Summary

We welcome the Government’s proposals to bring forward a modern, 10-year industrial strategy. It is an essential part of any strategy that ensures the UK becomes the fastest growing economy in the G7.

This is a moment of great opportunity for Britain. Advances in technology will ensure we are about to witness a once a century economic transformation – and Britain goes into this era in a unique position; an open economy at the centre of new trade and defence alliances that unite the world’s largest markets, a home to world-leading science, strong institutions, deep, longstanding traditions of the rule of law and political stability. Yet without the right industrial strategy it will prove impossible for public, private and third sectors to pull together to resolve the stubborn economic challenges of the past and navigate the seminal economic challenges of the future.

This Report sets out a roadmap for an industrial strategy that will work and make the impact the Government wants to make. It also provides a framework by which the Committee will scrutinise the Government’s performance in delivering the industrial strategy over the course of this Parliament.

Three basic insights are at the heart of this Report:

Government must articulate missions of grand challenges in a way that truly galvanises public, private and third sectors pulling together to do things differently.

Britain’s economic institutions and markets – especially in public procurement, energy, skills, the diffusion of innovation and finance – must be modernised for new times. Fail and we will fail to fix either of Britain’s long-standing challenges of low investment and of innovation which fails to diffuse throughout our economy.

Government–central, regional and local–must change the way it works together and with each other if we are to accelerate the pace of change and spend public money in the most effective ways possible.

As such, we set out ten tests for getting industrial strategy right:

Test 1: Is there a clear vision for the Industrial Strategy?

Test 2: Are there clear metrics to help judge progress closing the growth-gap?

Test 3: Are there grand challenges or clear goals to help galvanise a whole-of-government effort to deliver the industrial strategy with the private sector?

Test 4: Are there clear targets for using our trade deals and export teams to deliver a growing share of export markets for priority sectors?

Test 5: Is public procurement being used effectively to deliver the strategy’s goals?

Test 6: Is government improving the private sector’s access to capital to deliver the strategy?

Test 7: Are our energy prices internationally competitive?

Test 8: Are we closing skills gaps for firms in the priority sectors?

Test 9: Is there clear, well-resourced institutional leadership for research and development in each of the growth sectors?

Test 10: Is there leadership from the top, delivering kinetic energy and coherence?

We support the Government’s decision to focus the industrial strategy on sectors of the economy where the UK has a comparative advantage or the ability to build one, as we recognise that the UK needs to prioritise and play to its strengths if it is going to move the dial on growth. However, the industrial strategy and sector plans should be supplemented by a clearer vision of how the UK can contribute to, and economically benefit from, societal challenges that are reshaping the global economy. We recommend the industrial strategy should set a series of grand challenges that help galvanise whole-of-government efforts to boost the priority sectors and stimulate public-private collaboration across a larger part of the economy.

A broken system of public procurement, high energy prices, skills shortages, problems with the diffusion of innovation, troubles accessing finance, coupled with the sheer complexity of key institutions, are holding back growth, deterring investment and hampering the spread of cutting-edge business practice. We have recommended that the Government:

• Transform the organisation of public procurement to help drive UK growth and take down non-tariff barriers and ‘behind the border’ barriers to UK exporters in the growth-driving sectors;
• level the playing field with our international competitors on industrial energy prices;
• devolve responsibility for post-16 technical education and training to local leaders, where they can prove adequate to the ask, and transfer responsibility for skills to the Department for Business and Trade;
• expand the Regulatory Innovation Office to act as clearing house for regulatory conflicts and give businesses a place to report conflicting regulations; and
• introduce legislation to put the Industrial Strategy Council on a statutory footing.

Through the Spending Review, the Government must appropriately fund the strategy and provide clarity about the sum of public expenditure that will be allocated to it and the wider Growth Mission over the remainder of this Parliament. The Government must also set out how it plans to measure the industrial strategy’s contribution to the Growth Mission. The Government must set out how the industrial strategy will contribute to strategic objectives on net zero, regional growth and economic security and resilience and how it will balance these objectives with the need for growth. The White Paper should include a robust framework, with clear targets for the remainder of this Parliament and for the 10-year span of the industrial strategy.

The Government has sent a positive message in their commitment to cross-departmental co-ordination, engagement with regional leadership, and announcement of an Industrial Strategy Council. However, if the industrial strategy is to be successful, this needs to be translated into concrete action when the strategy is published.

There is a lot of optimism from businesses and investors about the potential of the industrial strategy to boost growth. However, the UK’s history of industrial policy is one of inconsistency. This inconsistency has damaged our economic performance, whilst international competition has intensified. The Government and industry need to navigate an increasingly complex, fragmented and volatile global economy. While the Government must remain agile and responsive in such a complex global environment, the price of further inconsistency is high; Government must prioritise giving businesses and investors the stability and certainty they need. In order to hold the Government to account, this report provides a framework, made up of our ten tests above, that will inform our scrutiny of the industrial strategy over the remainder of this Parliament.

1 Introduction

Invest 2035: the UK’s modern industrial strategy

1. In October 2024, the Government published Invest 2035, a Green Paper detailing proposals for a modern industrial strategy. The industrial strategy forms a “central pillar” of the Government’s Growth Mission (see Box 1).¹ The main objective of the industrial strategy will be to support “long-term sustainable growth” in sectors of the economy that have the highest growth potential.² However, the industrial strategy is also intended to support the Government’s strategic objectives to support net zero, improve regional growth and the strengthen the UK’s economic security and resilience.³ In this way, the Government plans for the industrial strategy to not only help drive economic growth, but to help guide the direction of growth in a way that is resilient, inclusive and sustainable.⁴

2. The Government, based on initial analysis, has selected the following eight growth-driving sectors to focus on: advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences and professional and business services.⁵ To support these sectors the Government plans to:

• publish sector plans alongside the industrial strategy;
• focus on places with the greatest potential to support the growth of these sectors, such as city regions and other industrial clusters and strategic sites; and
• create a pro-business environment that addresses barriers to growth that these sectors face.⁶

3. The Government has outlined that the role of the industrial strategy is to provide “targeted policy interventions to drive growth where the UK has, or could develop, a comparative advantage, or to unlock barriers essential for delivering long-term, sustainable, inclusive, and resilient growth.”⁷ In this way, the industrial strategy represents a deliberate attempt to play to, and build on, the UK’s economic strengths. The Government explained that the goal of the industrial strategy is “to capture a greater share of internationally mobile investment in strategic sectors and spur domestic businesses to boost their investment and scale up their growth.”⁸ The consultation on the Government’s proposals closed towards the end of November 2024 and there were over 3,000 responses.⁹ These responses have fed into the industrial strategy White Paper, that is expected to be published imminently.

Our inquiry

4. Our inquiry on industrial strategy was launched on 29 January 2025. This inquiry is the start of a 5-year programme of scrutiny that we will use to hold the Government to account for its performance on the design and delivery of the industrial strategy. We received over 100 submissions to our call for written evidence and have held several oral evidence sessions with witnesses including representatives from leading UK businesses, investors, business groups, trade unions, local leaders, public bodies, academics and entrepreneurs.

5. We undertook a series of field visits to add to the evidence base we have built during our national tour in November last year:

a. Japan, where we met with ministers, parliamentarians, government departments, businesses and business groups (including large multinationals and innovative start-ups), academics and other experts with the aim of understanding better their approach to industrial strategy and learning from it.

b. Scotland, where we met large scale and young innovative defence contractors as part of our work exploring Defence Industrial Strategy (DIS).

c. Northern Ireland, where we also met with defence contractors along with a range of cross-sector business leaders.

6. As part of this work, we have explored three strategic questions:

a. First, we have explored the inter-relationship between the industrial strategy and the Government’s approach to ‘foundational industries’, specifically steel. The steel industry is undergoing a transition to green steel. When the Government entered office it took over responsibility for negotiating support for the replacement of blast furnaces at Tata Steel’s steelworks in Port Talbot and British Steel’s steelworks in Scunthorpe. In February, the Department for Business and Trade launched a consultation to inform its wider strategy for the sector, which is intended to create a long-term future for the UK’s steel industry.¹⁰ We submitted our proposals to the Government’s consultation in April.¹¹ The sector has been hit by the tariffs on steel imports to the US. This had a direct impact on UK steelmakers and also threatened to compound the pressures they already faced from a global oversupply of steel. During the course of our inquiry, the Government has also needed to step in to nationalise British Steel, through the use of the Steel Industry (Special Measures) Act 2025. We look forward to playing our part in scrutinising the delivery and implementation of the forthcoming steel strategy, once it has been published and will continue to scrutinise the management of British Steel and the powers the Government has taken to support this transition through the Act.

b. Second, we looked hard at the Government’s forthcoming Defence Industrial Strategy which will account for one of the single most important public investments in UK industry. The increase in defence spending over this Parliament and beyond underlines the importance of ensuring this strategy contributes to the delivery of the industrial strategy and the wider Growth Mission. We will be looking to continue our scrutiny of the forthcoming DIS over the course of this Parliament.

c. Third, we have opened alongside this Report, an inquiry into the UK’s economic security. We will report our conclusions to Parliament before Summer 2025 but many of the insights gathered have informed this work.

7. Despite the UK’s economic challenges, there is a lot of optimism from businesses, investors and other stakeholders about what the industrial strategy can achieve. During the course of our inquiry, we have regularly heard that expectations for the industrial strategy are high. We hope that the Government can live up to these expectations and we are committed to playing our part in ensuring the Government delivers on them.

A scrutiny framework for a modern industrial strategy

8. In order to effectively hold the Government to account for the implementation of the industrial strategy over the course of the Parliament, we have taken the opportunity of this report, as well as drawing conclusions and asserting recommendations, to set out ten tests for the Government. The purpose of these tests is to focus the Committee’s scrutiny of the strategy and to encourage the Government to make the strategy a success.

2 Industrial strategy in the UK and abroad

UK industrial policy over the years

9. The forthcoming White Paper will be the latest attempt by a UK Government at creating an industrial strategy. Professor Diane Coyle, of the Bennett Institute of Public Policy, explained that an industrial strategy brings together “all the tools governments have to affect the supply-side structure of the economy.”¹² She explained that government can have an industrial strategy “by accident because there are lots of things the Government does that will affect the conditions for business.”¹³ In a speech in 2012, Sir Vince Cable, the then Secretary of Strategy for Business, Innovation and Skills, explained that the Government:

[ … ] shapes the British economy with its decisions every day. It makes many decisions about skills and universities, on research, on technologies, and on infrastructure. Through what it buys, and how it goes about buying it, the regulations that exist, the markets it oversees, and tax policy. All of these send messages to the economy. We can have an industrial strategy by default or design.¹⁴

10. To distinguish it from the normal, everyday business of government, the Institute for Government (IfG) refers to an industrial strategy as a deliberate attempt by government to plan its activities in a strategic way and joined-up way that helps achieve its objectives for the economy.¹⁵ Such a plan can span across large parts of the economy or focus on specific parts of it.¹⁶

11. The UK’s history of industrial policy has been one of inconsistency.¹⁷ This has damaged our economic performance. Governments supportive of more active intervention in the economy have been succeeded by governments that are more sceptical of intervening.¹⁸ These shifts in approach are evident within political parties as well as between them.¹⁹ However, such shifts are not purely reflective of differences in perspectives. The IfG, for example, observed that “crises prompt change.”²⁰ Governments sceptical about intervening in the economy have sometimes decided to do so when faced with a crisis.²¹ Policies have also adapted to fit the economic circumstances governments have had to grapple with. The IfG, for example, suggested that it is “misleading to declare what the ‘right’ suite of economic policies is and judge history in that light. Policies need to be appropriate for their era.”²²

12. Since the global financial crisis, there have been a few attempts at a more interventionist industrial strategy.²³ Most notably towards the end of the Labour Government in the late 2000s then in the second half of the Coalition Government in 2012 and more recently by the Conservative Government in 2017 under Theresa May’s premiership.²⁴ The Conservative Government under Boris Johnson replaced the previous administration’s industrial strategy with its own Plan for Growth. The then Secretary of State for Business, Energy and Industrial Strategy told the House of Commons that a change was needed because the “conditions of 2017 do not apply to 2021.”²⁵ Our predecessors on the Business, Energy and Industrial Strategy Committee, however, argued at the time that many of the long-term challenges that the previous administration’s industrial strategy sought to address remained relevant.²⁶

The UK context

13. Why does consistency matter? It matters because of the signal it sends about the UK to businesses and investors from the UK and across the world. Businesses are investing often over long horizons of between 15–20 years. Professor Diane Coyle told us that when policies chop and change this leads to uncertainty that in turn increases the risk for business.²⁷ It matters now because the UK is in desperate need of investment. Business investment in the UK has lagged behind that of our peers internationally.²⁸ Attracting private investment is critical to addressing the UK’s stubborn economic challenges. Economic growth has stagnated and the UK remains regionally imbalanced, with growth concentrated in London and the South-East.²⁹ Large amounts of private investment are also needed if the UK is going to meet its net zero target and deliver on other strategic priorities.³⁰ Furthermore, the future prosperity of our citizens depends on the nation raising the rate of productivity growth, which in turns requires us to become more innovative. This is important both to improving living standards and to enhancing our national security.

14. The Government, in dealing with the UK’s economic challenges, needs to navigate an increasingly competitive, fragmented and volatile global economy.³¹ The need to address climate change, alongside the rise of new digital technologies such as artificial intelligence, is causing major structural shifts in the global economy that is leading, as Professor Coyle explained, to an “unusual period of industrial disruption.”³² These shifts offer huge opportunities for growth, which the UK is well placed to capture.³³ However, even during the last few months, we have seen how the decarbonisation of steel and the automotive sector have led the Government to need to intervene to smooth the transition for businesses, workers and the communities they are part of. Major economic shocks, such as Covid-19, the energy crisis fuelled by Russia’s illegal war in Ukraine, the tariff policy of our ally the United States and the volatility of the global trading environment³⁴ have exposed the vulnerabilities of small, open economies like ours which depend on complex global supply chains.³⁵ This has led advanced economies to place greater focus on bolstering their resilience. The market alone cannot manage this combination of challenges. Nor can governments acting alone. The public and private sectors together therefore must form new partnerships to address both the stubborn problems of the past and the seminal challenges of the future.

15. To mobilise these new partnerships, governments around the world are developing more active, interventionist industrial policies.³⁶ Competition between countries to attract investment has intensified.³⁷ Other countries, especially large markets such as the United States (US) and the European Union (EU), have introduced large-scale interventions deliberately designed to attract investment.³⁸ The Harrington Review of Foreign Direct Investment, in November 2023, noted that the UK’s competitors are offering generous levels of support, such as subsidies and tax breaks, to attract investment into strategic sectors, such as the semiconductor and clean energy industries.³⁹ The review also heard that UK’s “international peers are more strategic and better organised in attracting globally mobile investment.”⁴⁰

16. In the Green Paper, the Government acknowledged that debate on industrial strategy has been “characterised by advocates of extensive state planning on the one hand, and equally vehement supporters of the private market on the other.”⁴¹ However, it argued that a more pragmatic view of industrial strategy has emerged, which “seeks to place private business, entrepreneurship, and innovation at its heart,” with government, at national and local level, playing a more “strategic and coordinating role.”⁴² Through the industrial strategy, the Government aims to work in partnership with businesses and workers to create the conditions for long-term growth.⁴³ Its view is that the economic shocks and persistent economic challenges only strengthen the case for such an intervention.⁴⁴

Test 1: Is there a clear vision for the Industrial Strategy?

The Government must set out a vision to provide a ‘north star’ against which to steer its industrial strategy. This vision should include clear ambition to decarbonise a fairer and faster-growing economy by transforming the ‘4i’s’ of the British economy; raising the rate of investment; accelerating the spread of innovation; creating a more inclusive economy and helping immunise our country against the risk of geo-political shock.

Case study on industrial strategy in Japan

18. During our visit to Japan, we met with ministers and officials from Japan’s Ministry of Economy, Trade and Industry (METI), who led on Japan’s industrial strategy, nationally and regionally. We heard that Japan is grappling with many of the same problems that lie behind the UK Government’s rationale for a modern industrial strategy. One senior official, for example, mentioned that Japan has also struggled with a shortage of investment and low productivity growth. Japanese companies, since the global financial crisis, have expanded foreign-direct investment (FDI), while domestic investment has been flat. Capital stock in Japan has been below that of many other advanced economies. Growth has been concentrated around Tokyo, with other regions left behind.

19. Throughout our time in Japan, we also heard about the difficult global environment that the Japanese Government and its industries needed to navigate. For example, we were in Japan on “Liberation Day”, when the US administration announced sweeping tariffs on imports to the US. The likely impact on our respective industries was a recurrent theme throughout meetings that week. One official pointed out that Japan, with rising uncertainty across the world, stands out as a relatively stable country.

20. Japan’s approach to industrial strategy has shifted over time, much like the UK’s. Japan adopted a traditional approach to industrial policy focused on fostering and protecting specific industries, which was based on correcting market failures and protecting new industries as they developed. The impressive rise of Japan between 1960s and 1980s has been linked to this approach to industrial strategy. This approach was replaced around the 1990s with a more neo-liberal direction, with a greater emphasis on market mechanisms.

21. Since 2021, Japan has introduced a mission-orientated approach that uses a public-private partnership to promote investments to address societal challenges. The industrial strategy is focused on missions linked to societal challenges, such as the green transition, the digital transition, globalisation and economic security, inclusive growth and a healthy society. To arrive at these grand challenges and missions, one senior official told us that there was a process which looked at 1) whether the issue was a global one or not 2) whether or not the area was a strength for Japan and 3) the longevity of the issue. To be a mission the grand challenge needed to be a ten-year issue. The selection of societal challenges and missions informed decisions about which sectors of the economy to focus on.

22. Since this new approach was introduced, the Japanese Government has introduced a suite of related policies, such as the GX Promotion Act in 2023, which provided an upfront investment of approximately twenty trillion yen over ten years to attract private investment in decarbonisation. Other developments include a 5-year plan for startups, support for reskilling, multi-year financial support for artificial intelligence and semiconductors and other innovations. We heard that that government support has helped attract private investment and increase the accumulation of capital across Japan in a range of industries such as batteries, semiconductors, biopharmaceuticals and other sectors.

23. More broadly, there was a general recognition that, like the UK, Japan is a medium-sized economy that sits outside, yet close to, major economic blocs. Most of those we spoke to emphasised the importance of trade and partnerships between like-minded countries. There was general recognition that the UK and Japan could benefit from a deeper partnership and collaboration on industrial strategy.

3 Growth Mission

The Growth Mission

24. The industrial strategy forms a central pillar of the Government’s Growth Mission (see Box 1).⁴⁵ A key part of this mission is for the Government to achieve the highest rate of sustained growth in the G7 by the end of the Parliament.⁴⁶ However, the Government is not yet on course to meet this target. By the end of the decade, the International Monetary Fund (IMF), for example, predict that the UK will grow more slowly than the US and Canada, the two fastest growing G7 economies.⁴⁷ The IMF have noted that while an “economic recovery is underway” growth over the medium-term is “still forecast to remain subdued” at below levels seen before the global financial crisis due to the UK’s weak productivity.⁴⁸ The Prime Minister and the Secretary of State for Business and Trade have both indicated that the Government remains committed to outperforming these forecasts.⁴⁹

25. The Government has not yet explained the precise contribution the industrial strategy will make to the Growth Mission, including its target to have the highest rate of sustained growth in the G7. Based on the evidence we have heard, the industrial strategy, if successfully executed, can make a sizeable contribution to enable the UK to become the fastest growing economy in the G7.⁵⁰ There is optimism about the UK’s economic potential, despite the economic challenges the UK faces and the difficult global environment it now needs to navigate.

Box 1: The Growth Mission

The Government has set itself five national missions, one of which is to kickstart economic growth. This is referred to as the Growth Mission. The Government has described the Growth Mission as its number one mission. As part of this mission, the Government’s aim is to achieve the highest rate of sustained growth in the G7 by the end of the Parliament, with “more people in good jobs, higher living standards and productivity growth in every part of the United Kingdom.” The Plan for Change provided further clarity on the headline measure for the Growth Mission and the metrics that will be used to assess progress against it. By the end of the Parliament, the Government plans to deliver “higher living standards in every part of the United Kingdom” with higher Real Household Disposable Income (RHDI) per person and Gross Domestic Product (GDP) per capita. GDP per head will also be tracked at a regional level to help “drive prosperity across the country.” The Growth Mission consists of the following several pillars: Economic and fiscal stability Investment, infrastructure and planning Place (e.g. regional growth) Industrial strategy and trade Innovation Net Zero

Source: HM Government, Plan for Change: Milestones for mission-led government, CP 1210, December 2024; HM Treasury, Autumn Budget 2024: Fixing the Foundations to Deliver Change, HC 295, 30 October 2024

26. It will take time for the benefits of policy changes made through the industrial strategy to boost the economy.⁵¹ TheCityUK acknowledged that industrial strategies are a long-term endeavour and that “meaningful progress will take time to show results.”⁵² Professor Diane Coyle told us that “short-term forecasting in such an uncertain world is very difficult”, but that “there is certainly scope to increase the economy’s potential growth rate over the long term,” which is the main driver of living standards.⁵³ Professor Coyle added that:

To me, getting that potential growth rate up is the real target, because that is what drives living standards and the quality of life for people in this country, over not just the next two years but the next five and 10 years.⁵⁴

Sustainable, inclusive and resilient growth

27. The Green Paper stated that the industrial strategy will also help the Government to “balance short- and long-term considerations to deliver growth that is sustainable, inclusive, and resilient.”⁵⁵ The Government plans for the industrial strategy to contribute to net zero, regional growth and the UK’s economic security and resilience.⁵⁶ The Government has not been clear how it plans to make trade-offs between these objectives. Commentators have pointed out that the objectives around net zero, economic security and regional growth appear to be positioned as subsidiary objectives.⁵⁷ The Bennett Institute for Public Policy has suggested that the Government should make it explicit that growth is being “pursued to achieve Net Zero, regionally balanced growth and security/resilience rather than to secure higher growth per se.”⁵⁸ However, Lord Mandelson, when he appeared before our predecessor committee as a former Secretary of State for Business in February 2024, argued that growth needed to be the “fundamental first-order challenge.”⁵⁹

Measuring performance

28. The Government has established an Industrial Strategy Advisory Council to oversee the industrial strategy. The evidence we have received indicates that the Government should look to develop a robust and broad framework to assess the performance of the industrial strategy. This must go beyond standard measures of economic performance.⁶⁰ ADS, a trade association for the aerospace and defence industry, told us that it is important to track “not only headline growth in turnover, productivity, and exports, but also the diffusion of innovations through supply chains, progress in decarbonisation, and the regional distribution of newly created jobs.”⁶¹ On the wider objectives of the industrial strategy, the Green Alliance suggested that the Government should be looking to track emission reductions, the presence of clean industries within the economy, the extent to which supply chains are secure and also whether the industrial strategy is successful at bringing “jobs and good incomes to low wage areas.”⁶²

Test 2: Are there clear metrics to help judge progress closing the growth-gap?

What gets measured gets managed. The Government should therefore set out clear metrics to help judge whether the Industrial Strategy is working and contributing in the way its hopes to (a) improving overall economic growth, (b) delivering the Prime Minister’s objective of raising per capita real disposable income (c) improving the comparative advantages of the priority sectors, (d) raising investment rates (e) improving productivity growth, (f) ameliorating regional inequalities and (g) de-risking the economy.

4 Growth-driving sectors and grand challenges

Government approach

32. The Government has chosen to adopt a deliberately targeted industrial strategy that focuses on sectors of the economy in which the UK has a comparative advantage over competitor economies, or the potential to build one.⁶³ The Secretary of State told us that in order to move the dial on growth the Government must prioritise its support to industry.⁶⁴ The Government, for example, has been clear that the UK, as an open, medium-sized economy, needs to prioritise and target resources carefully to areas that deliver the greatest growth benefit.⁶⁵ Others have echoed the need for the Government to prioritise and focus on where it can successfully compete internationally.⁶⁶ The Institute for Government (IfG), in 2021, argued that the UK, outside of the EU, is a “medium-sized country in a vastly larger global economy” and therefore it “cannot attempt to cover every base economically” and “must choose where to focus resources.”⁶⁷ Others have made a similar point. Professor David Edgerton from Kings College London, for example, told us that one of the problems with the debate around industrial strategy is that there is a tendency to think of a “particular nation as if it were the world as a whole” rather than part of a world where there are “other countries, competitors and competitors’ techniques too.”⁶⁸ He added that:

in the UK industrial policy is sometimes argued for on the grounds that the Biden administration did it, or China does it. But the USA and China (and the EU) have scope for developing industrial policies the UK simply does not have. It is worth recalling that even the massive United States is no longer self-sufficient in critical manufacturers, and that reshoring production, with no guarantee such policies would work, involves placing massive tariffs on overseas production. The UK is in a radically different position.⁶⁹

33. The UK has a diverse set of strengths, predominately in service industries but also in certain goods.⁷⁰ These areas of strength have developed over time due to a variety of factors.⁷¹ The UK’s cultural openness, the quality of education in creative subjects and the role public broadcasters (e.g. the BBC and Channel 4) have played in shaping the market have all contributed to the success of the UK’s creative industries.⁷² Research by the Resolution Foundation and the Centre for Economic Performance observed that the UK’s strengths, or areas of revealed comparative advantage, have been “quite stable over time”, especially over the last decade.⁷³ This is not unique to the UK; other advanced economies also have persistent economic strengths too.⁷⁴ Moreover, the UK’s strengths also present potential to develop comparative advantages in other adjacent industries.⁷⁵ In the Green Paper the Government argued that:

Path dependency is critical–few sectors have moved from below average productivity in 1997 to above average productivity in 2022 and vice versa …. Therefore, the industrial strategy should focus on innovating and capturing opportunities in those sectors where we have strengths and capabilities, or where there is evidence that these can be built.⁷⁶

34. When it comes to tackling some of the UK’s economic challenges, there are potential risks with targeting sectors of the economy that are the highest performing sectors. The Centre for Urban and Regional Development Studies (CURDS) at Newcastle University, for example, argued that a “narrow sectoral focus will only reproduce, if not also reinforce, uneven development.”⁷⁷ CURDS suggested there is a risk the “focal point of development could–once again–be primarily focused on London and the southeast, with a substantially smaller degree of increased investments in northern urban centres (e.g. Birmingham, Edinburgh, Manchester).”⁷⁸ This, the Centre added, is because targeting specific sectors is “fundamentally a path-dependent process.”⁷⁹ The Resolution Foundation, for example, point out that the Government’s ‘growth-driving sectors’ are “unsurprisingly, mostly located in richer parts of the country.”⁸⁰ However, some of the growth-driving sectors have clusters in various parts of the country. The Bennett Institute for Public Policy at the University of Cambridge has pointed out that another risk is that focusing on the highest performing sectors may not be good use of public money because these sectors may already be “performing close to their potential or the performance frontier” meaning that government intervention might not deliver much benefit over and above what these firms could achieve themselves.⁸¹

Growth-driving sectors

35. Many of the growth-driving sectors identified in the Green Paper (see Table 1), or industries within them, have been longstanding strengths of the UK and a focus of previous sectoral policies. However, these sectors are very broad and contain multiple industries within them. Pharmaceuticals, medical devices and biotechnology all fall under the life sciences, although technological changes are blurring the boundaries between them.⁸² Within such sectors there will be tensions between where the Government chooses to focus resource (e.g. between emerging technologies and sectors and more established ones). There are also substantial overlaps between these sectors. Advanced manufacturing overlaps with other growth-driving sectors, such as defence and the life sciences. Make UK, a manufacturing trade body, told us that the “complexity of modern manufacturing supply chains, or more accurately networks, is such that it is difficult to clearly demarcate between individual sectors.”⁸³ The Bennett Institute for Public Policy argued that the presence of these overlaps between sectors and lack of clear definitions of each one:

[ … .] makes it impossible to estimate the contribution of each to overall GDP and to assess the validity of the assumption implicit in the Green Paper that improvements in the performance of the sectors induced by the Strategy could be of a scale that would transform the long-term growth of the total economy or achieve growth across the regions.⁸⁴

36. Throughout the course of our inquiry, we have heard from companies across the growth-driving sectors that the Government has identified. Among these sectors, there is a lot of support for the Government’s sectoral framework.⁸⁵ Many of these industries are optimistic about the opportunities for growth.⁸⁶ However, there are industries within some of the growth-driving sectors that face tough, and increasingly more intense, competition globally. Talking about the challenges for the automotive industry, Alan Johnson, Senior Vice President for Manufacturing, Supply Chain and Purchasing for Nissan’s Africa, Middle East, India, Europe and Oceania region, told us that “ultimately, the UK is not a competitive place to be building cars today.”⁸⁷ Representatives of the life science sector also emphasised that global competition for investments in the industry has intensified, especially since the Covid-19 pandemic.⁸⁸ Shaun Grady, Chair of AstraZeneca PLC, told us there is a “real danger” of the UK “falling behind.”⁸⁹ Mr Grady, for example, cited that between 2013 and 2023 growth in foreign investments in the industry in Australia (400%), France (377%) and Germany (350%) far exceeded the growth in investment in the UK (37%).⁹⁰ He added that “the number of people employed in medicine manufacturing in the UK grew by 3%. It was up 70% in Ireland, 33% in Spain and 14% in Germany.”⁹¹ UK Finance told us that:

Despite our strengths, the UK’s globally pre-eminent position is not assured. Major domestic and international trends–such as an uncertain and evolving regulatory and fiscal environment, global economic fragmentation, deployment of new technologies, demographic change, weak financial literacy, and the climate crisis–present risks and opportunities. The ability of our sector to support growth, and grasp new opportunities, faces significant constraints. In particular, the existing regulatory framework for UK financial services is highly complex, and insufficiently stable and predictable, encouraging excessive risk-aversion.⁹²

37. In the Green Paper, the Government outlined the process it had adopted to identify the growth-driving sectors it plans to focus on and also how it planned to select sub-sectors within these categories.⁹³ Lord Willetts, President of the Resolution Foundation, has argued that it makes sense for the Government to “start with a small number of key business sectors which pass some key tests such as research-intensive, high value-added, and with the potential to grow fast.”⁹⁴ However, he added that the Government should be open to “adding more in the future if sectors organise themselves and come up with good proposals.”⁹⁵ The 2017 industrial strategy led by the Rt Hon Greg Clark MP, the then Secretary of State for Business, Energy and Industrial Strategy, started off with a series of deals for a small number of sectors, but also had a process which allowed sectors to bid for a deal. Our predecessors on the Business, Energy and Industrial Strategy Committee noted that some sectors “welcomed the galvanising potential” sector deals could “have for a sector, and the increased engagement with Government they can bring.”⁹⁶

Table 1: Examples of sectoral policies in the UK

Government	Policy	Sectors
Labour Government, 2024–	Invest 2035	The eight growth-driving sectors in the Green Paper include: advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services.
Conservative Government, 2022–2024	Growth Sectors	The then Chancellor of the Exchequer, Rt Hon Jeremy Hunt MP, identified five growth sectors–digital technology, green industries, life sciences, advanced manufacturing, and creative industries–as sectors where the UK wanted to capture a growing share of growing global markets.
Conservative Government, 2017–2021	Sector Deals	Sector Deals were initially introduced for four sectors: automotive, artificial intelligence, the life sciences and construction. By the end of 2018, the then Conservative Government had introduced deals for aerospace, rail, nuclear and the creative industries.
Coalition Government, 2010–2015	Key Sectors	The Coalition Government’s industrial strategy focused on the following 11 key sectors: aerospace, agricultural technologies, automotives, construction, the information economy, international education, life sciences, nuclear, offshore wind, oil and gas and professional and business services.

Grand challenges and missions

38. Grand challenges are societal challenges, such as climate change, whereas missions are specific goals that contribute to the addressing these challenges. Professor Mariana Mazzucato, Professor in Economics of Innovation and Public Value at University College London, emphasised that “a transformational strategy allows all sectors, and asks all sectors, to do their part.”⁹⁷ She explained that:

Rather than focusing on structuring modern industrial strategy around sectors and subsectors, industrial policy should be oriented around bold goals that will catalyze innovation and investment across multiple sectors. These goals, or “missions”, should be aligned with critical policy priorities, in areas such as health, climate, housing and digital inclusion, enabling the government to direct innovation, investment and ultimately growth towards goals that matter to people and planet. This approach to industrial strategy recognizes that decisions about how to foster growth and shape economies cannot be separated from social, environmental, and health priorities. Mission-oriented industrial policy shifts the focus from sectors to a focus on problems that investment and innovation from many different sectors are needed to solve.⁹⁸

39. The industrial strategy introduced under Theresa May’s administration in 2017 coupled a focus on specific sectors with a series of overarching grand challenges and missions (See Table 2).⁹⁹ The Rt Hon Greg Clark, when he appeared before our predecessors in February 2024, described the approach to grand challenges as “picking races” rather than “picking winners.”¹⁰⁰ The then Conservative Government explained that the grand challenges were chosen because they represented “developments in technology that are set to transform industries and societies around the world, and in which the UK–if we muster our forces across sectors–has the opportunity to play a leading global role.”¹⁰¹ Professor Mariana Mazzucato explained that the idea behind the strategy’s challenge on sustainable mobility was to “start thinking about all the different investments and innovations” that were required not simply on transport but in other related industries, such as green steel.¹⁰²

Table 2: 2017 Industrial Strategy: Examples of Grand Challenges and missions

Grand challenge	Mission
AI and data–put the UK at the forefront of the AI and data revolution.	Use data, artificial intelligence and innovation to transform the prevention, early diagnosis and treatment of chronic diseases by 2030.
Ageing society–harness the power of innovation to help meet the needs of an ageing population.	Ensure that people can enjoy at least five extra healthy, independent years of life by 2035, while narrowing the gap between the experience of the richest and poorest.
Clean growth–maximise the advantages for UK industry from the global shift to clean growth.	At least halve the energy use of new buildings by 2030.
Future of mobility–position the UK as a world leader in how people, goods and services move.	Put the UK at the forefront of the design and manufacturing of zero emission vehicles, with all new cars and vans having effectively zero emissions by 2040.

Source: HM Government, Industrial Strategy: Building a Britain fit for the future, November 2017

Test 3: Are there grand challenges or clear goals to help galvanise a whole-of-government effort to deliver the industrial strategy with the private sector?

Strategy requires choices and effective coordination of resources over time. The government should make clear choices about the sectors prioritised by the industrial strategy, but complement this with a select number of grand challenges designed to galvanise whole-of-government collaboration with the private sector to ensure the targeted sectors do indeed succeed.

5 International and Domestic markets

42. The best possible demand conditions are mission critical to the success of the industrial strategy. This will require the forthcoming trade strategy to ensure that trade deals and trade promotion make a big contribution to the success of the industrial policy–and it will require nothing less than a transformation of a broken system of Government procurement. We should be clear: The UK’s gross spending on public sector procurement of over £400 billion is possibly the single biggest lever available to the Government in delivering industrial policy success.¹⁰³ This will be of particular importance to two of the industrial strategy sectors; defence and life sciences, where the Government is by far and away the largest customer.

International Markets

43. The Green Paper sets out the importance of trade as a driver of economic growth, stating:

openness to global markets gives firms access to better, cheaper, and a wider variety of inputs to their production processes, while also expanding the markets into which firms can sell products. This encourages firms to scale up domestic production, increasing the overall level of output in the economy, as well as creating efficiencies from economies of scale and learning from a broader range of companies.¹⁰⁴

44. The Green Paper states that “to deliver the industrial strategy, the Government will build international partnerships that support growth-driving sectors, and help to manage the geopolitical risks and opportunities affecting growth”.¹⁰⁵ The Government also plans to publish a trade strategy which is expected imminently.¹⁰⁶ The Government has said that the two strategies will be aligned to help businesses overcome barriers and maximise trade for the growth driving sectors and across the whole economy.¹⁰⁷ Clare Barclay, Chair, Industrial Strategy Advisory Council, confirmed to us that it was an ambition for the Council to provide advice on what kind of trade strategy would be needed to help the industrial strategy to deliver growth.¹⁰⁸ However, she said that it was too early to say which areas of trade were within her remit.¹⁰⁹

45. While we welcome these commitments, the UK’s current trading position and the rapidly changing global landscape present challenges as well as opportunities. The Green Paper outlines that “growth in UK trade has been weak in recent years, with UK trade intensity down by 2.5 percentage points in the 12 months to June 2024” (compared to its pre-COVID-19 (2018) level).¹¹⁰ The Green Paper notes that a stronger UK services trade has offset a weaker goods trade and that “trade barriers”, ranging from product specific prohibitions to differences between UK and partner country regulations and standards, “inhibit key industries from trading”.¹¹¹ In 2023, the Department for Business and Trade’s national survey of registered businesses’ exporting behaviours found that just under 31 per cent of businesses had exported goods and/or services in the past 12 months, and 18 per cent had never exported before but believed that they could.¹¹²

46. We heard a mixed story on export success across the growth driving sectors identified by the Government. The professional and business services sector, for example, represented 21 per cent of total UK exports in 2023.¹¹³ The sector’s export total of £185 billion was second only to the US.¹¹⁴ Miles Celic, Chief Executive Officer, TheCityUK, told us that exports in management consultancy have almost doubled over the last 10 years, and that legal services had seen 80 per cent growth over the same period.¹¹⁵ The life sciences sector, however, painted a different picture. We heard that investment in exports is growing far faster in other countries than in the UK.¹¹⁶ Shaun Grady, Chair, AstraZeneca, told us that UK pharmaceutical exports from 2013–2023 grew by only 16 per cent, falling well short of international comparisons (294 per cent in Belgium and 222 per cent in Canada).¹¹⁷

47. The international trade environment has also become significantly more complex since the publication of the Green Paper.¹¹⁸ This was exemplified by the recent impact and uncertainty of US tariffs. With the UK exporting over £60 billion worth of goods to the US in 2023, the potential shock of US tariffs on UK manufacturers is clear.¹¹⁹ Stephen Phipson CBE, Chief Executive Officer, Make UK, also emphasised that it was difficult to know exactly what the demand reduction because of tariffs would be as the second-order effect with the EU could be substantial.¹²⁰ Further evidence highlighted broader economic impacts. As Stevan Randjelovic, Head of Public Policy and Industry Affairs at WPP, a major communications company, told us, tariffs can trigger a decrease in consumer confidence. In turn, companies become unwilling to spend and the economy’s ability to grow is impacted.¹²¹ The fast-changing trade environment, however, also presents potential new avenues for growth. While details are still to emerge on the recent announcements of the UK-India Free Trade Agreement, US-UK Economic Prosperity Deal, and UK-EU agreement, these agreements and future trade negotiations have the potential to play a significant role in the future of the growth driving sectors.¹²²

48. In this unstable context, evidence to the inquiry made clear that it is crucial for the forthcoming trade strategy and industrial strategy to be closely aligned. More specifically, witnesses called for future trade policy to reflect the industrial strategy’s eight growth driving sectors. Audrey Yvernault, Vice-President, Global Corporate Government Affairs and Policy at pharmaceutical company GSK, told us that it is “very important for the trade strategy to work very closely alongside the sector plan” for life sciences and ensure that companies are supported in “addressing market access barriers across the world”.¹²³ The wish for a sector-specific focus in trade policy was echoed by Steve Bates OBE, Chief Executive, The BioIndustry Association. He argued that the horizontal approach to trade policy that has sometimes been adopted by Government can lead to a failure to engage with very important sector-specific issues.¹²⁴

49. Evidence we received more widely called for a close relationship between industrial and trade policy. Miles Celic argued that, as the UK is often competing with countries that have far larger domestic markets, exports are more significant to the UK than to many of its competitors. He described the connection between the trade strategy and industrial strategy as “so important”.¹²⁵ Professor Diane Coyle told us that the UK should seek to help the sectors earmarked by the industrial strategy to export by enabling them to continue growing and to increase their pace of growth.¹²⁶

50. Evidence we received also highlighted the importance of pursuing free and fair trade and maximising opportunities presented by trade agreements. Particularly in the advanced manufacturing sector and the automotive sub-sector, witnesses called for free and fair trade, as well as openness and global co-operation.¹²⁷ And, prior to the announcement of a US-UK Economic Prosperity Deal on 8 May 2025, the majority resisted calls for retaliatory tariffs.¹²⁸ Further evidence emphasised the potential growth that future trade agreements presented. Pointing to the significance of Mutual Recognition Agreements and Digital Economy Agreements, witnesses said that trade agreements do not necessarily need to be full FTAs for the UK to benefit from them.¹²⁹

51. We also heard about the importance of furthering export support. This was particularly clear in the defence sector. John Howie MBE, Chief Corporate Affairs Officer, Babcock, called for a “joined-up Government approach to export support”, and said that it is an area “where the UK lags behind countries such as France, Italy and the US”.¹³⁰ Oriel Petry, Senior Vice President, Airbus UK, told us that there is “opportunity for that export support, particularly in defence and for defence equipment to be more aligned and have a Government to Government wrapper”.¹³¹ Finally, we heard that there are specific bureaucratic issues that could be resolved to help support exports. Peter Stephens, Director, UK Government Partnerships, ARM, told us that a two-month timeline to get an export licence between the UK and India, would be reduced to zero if they were based in the United States.¹³² He said that there were lots of things like this which do not cost anything, but would quickly help to ease the burden on businesses.¹³³

52. Finally, we heard clear concern from the food and drink manufacturing sector.¹³⁴ Traditionally, export promotion of UK food and drink has been a vitally important way in which the UK boosts exports and promotes ‘brand Britain’ on the global stage. In the Green Paper, it was not clear whether food manufacturing was part of the definition of the ‘advanced manufacturing’ sector. Budweiser Brewing Group told the Committee that it would be “missed opportunity” for the sector to not be included within the industrial strategy.¹³⁵ We believe it should be, and that the UK’s trade promotion strategy should continue to work hard to support the export of this vital part of our advanced manufacturing industry.

Test 4: Are there clear targets for using our trade deals and export teams to deliver a growing share of export markets for priority sectors?

Growing our share of global exports in the eight priority markets is a key test of the industrial strategy’s success. UK trade strategy and export support services should prioritise this growth. The industrial strategy will fail if it fails to deliver a bigger market share for UK firms in global export markets. This is a clear benchmark we will use to monitor progress.

Domestic Markets

56. The Green Paper outlines that procurement has a “crucial role in boosting investment and growth through facilitating competition and enabling market entry, supporting the research and innovation ecosystem, as well as delivering infrastructure, public services, and national security”.¹³⁶ This is an understatement. Gross spending on public sector procurement was £407 billion in 2023/24 across the UK.¹³⁷ This is £1 in every £7 of UK economic output.¹³⁸ For public procurement to be used effectively it needs to be closely aligned both to the forthcoming industrial strategy and the wider growth mission. There also needs to be greater certainty in long-term demand signalling and barriers facing SMEs bidding for public contracts need to be addressed.

Public procurement and Industrial Strategy

57. The Green Paper states that the Government will use the legal framework created by the Procurement Act 2023 to deliver economic growth, raise standards and deliver greater social value.¹³⁹ In February 2025, the Government published a National Procurement Policy Statement which, alongside the Procurement Act, is designed to set a “strategic direction for procurement in line with the government’s missions–including economic growth in support of industrial strategy objectives.”¹⁴⁰ Andrew Forzani, Government Chief Commercial Officer, Cabinet Office (Government Commercial Function) told us that at the heart of the procurement priorities are public sector contracting authorities “running their procurements and working with the market to generate economic growth and to take regard of SMEs”.¹⁴¹ Maria Eagle, Minister for Defence Procurement and Industry, told us that “the whole point of procurement is to try and make sure we get what we need”, and “the whole point of the industrial strategy is to make sure we can do better and not waste as much money as we have in the past”.¹⁴²

58. The Government and opposition parties have embraced steps to support UK businesses and local suppliers through government procurement.¹⁴³ However, under public procurement rules, contracting authorities cannot directly mandate that goods originate from the UK or specific places within the UK. Favouring British suppliers or exclusively buying British goods would conflict with the UK’s international obligations.¹⁴⁴ UK’s international agreements also require that goods, services and suppliers from partner countries (‘treaty state suppliers’) are not discriminated against and are treated as favourably as domestic goods, services and suppliers when they bid for contracts covered by these agreements.¹⁴⁵ The Government Chief Commercial Officer explained how procurement from UK suppliers was being supported in the context of the steel industry. He told us that they have worked with the Department for Business and Trade and the steel industry to make a catalogue of steel produced in the UK available to all public procurement buyers and there was ongoing consultation to further this with a “comply-or-explain” process; companies would have to declare UK steel content and describe why it might not be procured from the UK (if it is able to be).¹⁴⁶

59. Evidence we received, however, made clear that wholesale reform is required to ensure we are maximising the impact of procurement spending on delivering the industrial strategy and the wider growth mission. Under questioning, the Government Chief Commercial Officer said his team:

a. Could not say how many jobs public procurement supports or how it corresponds directly to economic growth;¹⁴⁷

b. Are not setting targets for how much of procurement spend should go into the eight sectors prioritised by the industrial strategy;¹⁴⁸

c. Do not collect specific data on spend of public procurement in each of those eight sectors;¹⁴⁹

d. Do not collect adequate information on government supply chains. When asked about the detail held on supply chain information, the Government Chief Commercial Officer said “we have it in patches. We have it in areas where we have major programmes and where there is that specialism” ¹⁵⁰; and

e. Do not provide anything like enough long-term information about government demand signals to industry and suppliers. He estimated that, while the procurement pipeline had notices that extended up to five years in advance, 80 per cent were in the next 12 months.¹⁵¹ Although the Government Chief Commercial Officer acknowledged that this is “one of the key things around economic growth”, he told us that most departments still set their budgets on an annual basis.¹⁵² He acknowledged that there are areas where central Government needs to “get better at forward planning for the market”.¹⁵³ He told us, however, that they are “very much encouraging Government departments to make long-term planning and spending commitments”.¹⁵⁴

60. It would appear that there is a very significant opportunity for the industrial strategy to be transformed through a connection to the £407 billion engine-room of public sector purchasing. The Government Chief Commercial Officer stated:

The commercial and procurement work, and the people who are responsible for it, are too far removed from the industrial strategy and the industrial policy work. We have done some work trying to support the work of the industrial strategy and the eight sector boards. It is closer in some areas than others, but it is not close enough. In terms of some of the opportunities and themes that we have just been talking about, such as better standardisation and the ability to harness the way that we procure, it is still not joined up closely enough with policy.¹⁵⁵

61. Evidence we received suggested how public procurement could be better aligned to the growth mission and industrial strategy. Professor Marianna Mazzucato argued that it was crucial that we “set the priorities” and then use “procurement policies” alongside public loans, guarantees, and subsidies, to help steer our investments so that we are actually achieving the transformations that we want.¹⁵⁶ She told us that there is a need to be ambitious and have innovation outcomes that require outcomes-oriented procurement.¹⁵⁷ Paul Morris, Head of Government Affairs, Vodafone, similarly called for “procuring to innovate” to produce smart ways of encouraging small businesses to do small things.¹⁵⁸ He argued that while this may increase up front costs, it would create future savings and broader benefits.¹⁵⁹ Finally, and most simply, we heard that organisational changes could further align procurement policy with the industrial strategy; The Government Chief Commercial Officer agreed that the connection between procurement and industrial strategy might improve if he were to be added to the Industrial Strategy Council.¹⁶⁰

62. There is a particular opportunity in both the defence and life sciences sectors to use Government procurement more effectively to transform sectoral success. Defence contractors told us that the short-term nature of significant contracts means that they do not invest what they would like in building up their UK business. Adam Forgiel-Jenkins, Managing Director of Government Relations, BAE Systems told the Committee that critical for the defence industry is a “long-term line of sight, so anything that gives us confidence into the future will allow us to invest in people, plant, machinery and capability”.¹⁶¹ Chris Daniels, Co-Founder and Chief Commercial Officer of Flare Bright, an aerospace SME, added that the MoD “annualization of budget, which is a lack of strategy, is a real problem for SMEs”.¹⁶² He told the Committee that his SME have “done very well out of the MOD despite the MOD, not because of it.”¹⁶³

63. Equally, we heard clear evidence from the life science sector that NICE’s reluctance to license innovative medicine is directly affecting their decisions to invest in production capability elsewhere. Tom Keith Roach, UK Country President, AstraZeneca, told the Committee that they see “more innovative medicines withdrawing from the NICE process because they simply cannot meet that standard”.¹⁶⁴ He added that as “a life science investor”, it is hard for him “to champion the UK as a destination for new R&D or manufacturing or clinical trials if it is impossible for me to bring that innovation to patients.”¹⁶⁵

Procuring from SMEs

64. Evidence we received also highlighted the challenges faced by SMEs in the context of public procurement. We heard that across central Government, the baseline direct spend to SMEs is only 11 per cent.¹⁶⁶ The Government Chief Commercial Officer made clear that recent steps had been taken to increase this. He told us that Government departments are now allowed to reserve procurements up to a certain value for SMEs only, if they wish to, and that departments were now for the first time being asked to set three-year direct-spend SME targets.¹⁶⁷ However, he also confirmed that “no single Government target” had been set for the fraction of public spending going to SMEs and that the reserved procurements were for “lower-value procurements”.¹⁶⁸ We also heard the specific efforts being made to support defence SMEs. The Director General for Defence Equipment and Support told us that the MoD is engaging internally to address behaviours which can hamper SME success and is addressing the complexity of working in defence by introducing a new Commercial Pathway for SMEs.¹⁶⁹

65. While evidence we received acknowledged some progress, we heard that challenges remain. Antony Walker, Deputy Chief Executive Officer, techUK said that despite progress in trying to make public procurement frameworks open and friendlier to SMEs, “the reality is that SMEs continue to struggle to compete in terms of public procurement”.¹⁷⁰ We heard that innovation, particularly in the defence sector, is stifled by the lack of follow up funding. The Government Chief Commercial Officer told us that the biggest barrier experienced in defence procurement was the lack of multi-year budgets.¹⁷¹ Speaking from prior experience as Director General Commercial, Ministry of Defence, he said that innovation programmes and projects got to concept phase but most of them could not find the budget to continue.¹⁷² Chris Daniels told us that Defence and Security Accelerator funding gets SMEs started, but there is no easy way of following up on that.¹⁷³

66. We heard that further challenges are posed by the length of procurement processes. John Howie MBE, Chief Corporate Affairs Officer, Babcock International, said that “the flash to bang time from setting a requirement to placing a contract is twice as long as it needs to be on average” and while this is fine for a national champion, it can be a challenge for an SME or mid-cap company.¹⁷⁴ We heard that inefficiencies like this had knock-on effects for where defence SMEs were able to locate and grow. Chris Daniels told us that because the defence market is so inefficient, SMEs have to be based in close proximity to defence procurement and MoD locations.¹⁷⁵ The issues concerning length of processes are not limited to the defence sector. Andrew New, CEO, NHS Supply Chain, told us that “creating a new set of framework agreements will probably still take around 15 months” and “once a supplier is approved to supply through that framework, further competition is normally conducted in six to eight weeks”.¹⁷⁶

67. Professor Mazzucato made clear to us that more could be done to shape procurement to support SMEs. She pointed to the American example of SBIR (Small Business Innovation Research) which sets a target for Departments (between 3 and 5 per cent of its budget) to procure innovative solutions from small and medium enterprises, and told us that while “we have SBRI (Small Business Research Initiative) here [ … ] it has been underused”.¹⁷⁷ Stian Westlake, Executive Chair, Economic and Social Research Council, UK Research and Innovation, told us that the Cabinet Office was now taking what used to be called Small Business Research Initiative and linking it to mainstream procurement.¹⁷⁸ He told us that this was very important, and the opportunity could be extended by tying the Government’s missions and Plan for Change through to public procurement. Finally, we heard the impact that reshaping procurement to have a focus on UK products could have. Stephen Phipson told us that “industry is not looking for a subsidy. It is looking for a preference for using UK products because it is economically beneficial”.¹⁷⁹

68. Evidence to the Committee has suggested areas where bureaucratic burdens for SMEs can be lessened. Salford Business School have called for standardised and streamlined tender documentation which also maintains transparency regarding processes.¹⁸⁰ ADS told us that reducing up-front financial requirements and restrictive contract terms would encourage a wider range of firms to contribute new ideas.¹⁸¹ The Minister of State for Defence Procurement and Industry told us that the conflict in Ukraine had shown the UK can do procurement much faster with the right process.¹⁸² She told us that procurement would now be segmented “to enable us to speed up and get what we need faster”.¹⁸³

Test 5: Is public procurement being used effectively to deliver the Industrial Strategy’s goals?

Public procurement is one of the most important levers in delivering the industrial strategy. Government must publish clear ambitions for using taxpayers’ money to drive domestic demand across the eight growth driving sectors, whilst also reducing the barriers to SMEs to public procurement and ensuring value for money.

6 Government support for crowding-in investment

73. It is widely acknowledged that the core of the Government’s economic challenge is to raise the level of investment in the UK economy. As such, the industrial strategy must transform our ability to attract internationally mobile investment and encourage businesses to invest.¹⁸⁴ This aim reflects the fact that most of the investment that supports the industrial strategy, and other parts of the Growth Mission, will come from the private sector. For this reason, the Government is focused on how to crowd-in investment¹⁸⁵ that help deliver the aims of the industrial strategy. John Godfrey from TheCityUK told us that the UK has:

[ … ] very significant pools of capital that can be deployed in support of the industrial strategy … ..For example, there are £2.6 trillion of pensions, plus annuity funds and a substantial amount of dry powder in private equity, and so on. The firepower exists. What we need is to develop the right mechanisms to deploy that in support of the industrial strategy.¹⁸⁶

74. The Government has emphasised the importance of using government support to crowd-in investment. Lord Livermore, the Financial Secretary to the Treasury, told us that the Government, across the Growth Mission, has two main ways that it is planning to crowd-in investment. One is through the National Wealth Fund and the other is through the new fiscal framework that has enabled the Government to increase capital spending.¹⁸⁷ When it comes to the role of public and private investment, John Flint, CEO of the National Wealth Fund, told us that “the difficult debate is who is taking the risk and who is getting the reward.”¹⁸⁸ He explained that:

There is lots of jargon and labels for this—’blended finance’, and so on—but we need to be clear. If we need to get a project over the line, if we need to develop a new industry or a new technology, who is taking the risk at what stage? Where are the rewards going? That is the eternal question for this challenge and it is, intellectually, very stimulating. If we struggle, it will be because we are not able together, between the public sector and the private sector, to have a really good, honest, robust conversation about how we do that.¹⁸⁹

75. The Government, however, is looking to attract investment within an increasingly competitive global environment. The Harrington Review pointed out that some of the UK’s international rivals are better organised at crowding-in strategic investments than the UK and offer generous support in the form of subsidies and other incentives to help do so.¹⁹⁰

Financial institutions

76. The Green Paper acknowledged that the UK has “a complex landscape of public and private business finance providers and institutions.”¹⁹¹ On the public side, the UK has institutions, as such as the British Business Bank, UK Export Finance, the National Wealth Fund and others. Government departments also play a role through grant funding and other financial support mechanisms. There were no obvious gaps. For example, when it comes to delivering the industrial strategy, John Flint, Chief Executive Officer, National Wealth Fund told us “the toolkit is very comprehensive … . There is not much missing.”¹⁹² Despite recognising the complexity of the system ministers were not of the view that it would be beneficial to consolidate these institutions. When we asked ministers about the merits of merging the British Business Bank and the National Wealth Fund, they told us that they would expect the two bodies to be coordinated, but they did not see a case at this time to merge them.¹⁹³ Lord Livermore, the Financial Secretary to the Treasury, told us these institutions:

are focused on different parts of the market, different parts of a firm’s life and journey, so have very different skills within their organisations. Ensuring co-ordination between them matters, but I do not necessarily know at this point that merging them would make a difference.¹⁹⁴

77. Feedback to the Harrington Review, however, suggested that there could be merit in consolidating the state-owned finance institutions into one, partly to reduce the complexity for business by providing a “single front door for state finance support.”¹⁹⁵

Access to finance

80. Despite the UK’s strengths at research and innovation, new startups and spinouts from UK universities struggle to scale-up and commercialise in the UK partly due to struggles they experience in accessing the finance needed to support their growth. The British Private Equity and Venture Capital Association told us that the UK has a strong ecosystem in place to help fund the early stage of a company’s growth.¹⁹⁶ However, it is often at the “scale-up stage” when UK companies choose to “seek investments from the US and elsewhere.”¹⁹⁷ The British Private Equity and Venture Capital Association emphasised that there is a “significant investment gap in the UK.”¹⁹⁸ The Harrington Review noted that the UK:

with the right support in place, the UK has an opportunity to become a ‘scale-up nation’ with its strength in Intellectual Property protection; start-ups; its highly respected regulatory regime; market size; and the depth of its capital markets.¹⁹⁹

81. The Green Paper explained that the British Business Bank offers support to help businesses scale-up. Louis Taylor CBE, Chief Executive Officer, British Business Bank, told us the bank can only provide support up to £15million. Mr Taylor told us the bank would like to be able to provide further funding.²⁰⁰ Mr Taylor explained that “writing a bigger cheque, rather than a smaller cheque, is the less difficult thing to do than to set up a new capability to look at whether to write that cheque at all.”²⁰¹

The Office for Investment and the UK’s investment offer

84. The Harrington Review noted that the UK’s international competitors are often better organised and more strategic at attracting internationally mobile investment.²⁰² In the Green Paper, the Government explained that an “expanded” Office for Investment, which operates as the UK’s investment promotion function, will provide “a seamless journey” for the “most important international and large domestic investors” by “convening departments to ensure “levers are pulled to unlock barriers.”²⁰³

85. John Godfrey from TheCityUK told us that investors can sometimes find it “hard to find the right investible opportunities that are described and presented to investors in a way that investors will understand.”²⁰⁴ He added that it is “is very hard to find really good, professional and compelling prospectuses” that set out promising investments within regions.²⁰⁵ He told us that:

There are multiple ideas, and multiple cities and regions trying to promote themselves as investible, making their case for an economic investment to go there, but, if you sit down and say, ‘I’m an asset manager. I have £500 million I want to put to work in the north-west’—or the north-east or the midlands, wherever it may be—“Can you please tell me what are the five things I could invest in?²⁰⁶

Government support

87. The Government has not set out how much public money, in total, will go towards supporting the industrial strategy over this Parliament. When we heard from ministers they did not want to pre-empt the outcome of the Spending Review, which is due to have an impact on interventions within the industrial strategy.²⁰⁷ In any case, the Government told us that the industrial strategy is not just about the amount of public money that the goes into it. There are interventions the Government can, and is planning to, make that do not require fiscal support.²⁰⁸ Ministers told us they do not plan to set an overall budget, or funding pot, for the industrial strategy.²⁰⁹ The Secretary of State stressed that “these things fail if they are judged by the input that you put into them and compare with other countries.”²¹⁰

88. Previous attempts at industrial strategy, however, have involved large sums of public money. The Industrial Strategy Council, in 2020, estimated that £45 billion (2% of GDP) was set aside for the industrial strategy.²¹¹ However, most of the funding was directed at only a few areas: housing, transport and research and development.²¹² This meant most of the 142 policies within the strategy has “very limited, and in some cases no, funding associated with them”.²¹³ The Council suggested that because of this it was “very unlikely” that many of the policies would have “sufficient scale to make a material impact.”²¹⁴ One of the challenges for the forthcoming industrial strategy will be ensuring the increase in defence spending can be used to drive growth in other adjacent growth-driving sectors, such as advanced manufacturing.

89. There are a variety of ways of providing financial support. Analysis by the OECD, for example, suggests that the UK spends a similar amount of GDP to France on industrial policy, yet in the UK support is predominately focused on tax incentives.²¹⁵ Professor Stephanie Rickard from the London School of Economics has pointed out that one of the downsides of tax incentives is that the total costs are uncertain, unlike grants and loans for which the upfront costs are clear.²¹⁶

Test 6: Is Government improving the private sector’s access to capital in ways that help deliver the industrial strategy?

The Industrial Strategy must help the Government deliver its goal of a higher UK investment rate. This requires us to (a) simplify business access to finance, (b) grow the supply of scale-up finance, (c) build a bigger pipeline of term-sheet ready co-funded investment opportunities, and (d) optimise public investment between tax credits, support for finance institutions, grants and contracts. We will scrutinise the government’s progress against each of these criteria.

7 Pro-business environment

92. If the industrial strategy is to succeed, we will need a more pro-business environment in the UK.²¹⁷ Based on initial feedback, the Green Paper outlined broad areas where the Government is looking to make changes: people and skills, energy and infrastructure, the regulatory environment, innovation and others. The Government has already taken action to address key barriers to growth, but this is against a difficult backdrop of sectoral concern. The Adam Smith Institute’s (ASI) Business Confidence Survey average score was just 2.6/10, ‘a sign of considerable private sector frustration with the UK’s current direction of travel’ according to ASI, underscoring business concern over growth projections.²¹⁸ Reforms to aspects of the business environment are often referred to as horizontal policies because they apply (in theory) across the whole of the economy. However, in practice, it is difficult to escape the prioritising of reforms that benefit some parts of the economy over others, especially when resources are limited.²¹⁹

93. The Green Paper did not go into much detail about the specific options the Government is considering or the extent to which the Government will prioritise addressing the barriers to growth faced by the eight growth-driving sectors. The Government said that it will “consider the effectiveness of both cross-cutting polices and targeted solutions, for growth driving sectors.”²²⁰ This approach has come under criticism. For example, the Resolution Foundation commented that the Green Paper “contains very little detail” about how policies in these areas “will be tailored and deployed, and at what scale.”²²¹

94. The relative importance of different aspects of the UK’s business environment varies between sectors depending on the specific characteristics of those sectors. However, feedback to the Harrington Review provided a general sense of the overall strengths and weaknesses of the UK’s business environment. These broadly reflect the feedback we have received and are set out in Table 3 below.

Table 3: Examples of the strengths and weaknesses of the UK’s business environment

Strengths	Areas where the UK’s competitiveness is under pressure	Weaknesses
University level-skills R&D Protection of intellectual property	Regulation and infrastructure Tax Visas Access to finance Applied technical skills	Planning Good connections Energy prices

Source: Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023

95. One of the key observations from the Harrington Review, however, was that there are several areas where the UK’s competitiveness is under pressure.²²² In line with this, GSK emphasised that while the UK has a baseline environment that is “pretty competitive” there is now “just so much more competition globally.”²²³ Nissan told us that:

The Sunderland plant is one of the most efficient, well-run manufacturing plants in the Nissan world, but, by the time you pay for your electricity and gas, you pay your staff their wages, you pay national insurance and all that stuff, we are just way too expensive.²²⁴

96. Businesses and investors are looking for a predictable business environment that is globally competitive and supportive of innovation. Improving the aspects of the business environment will involve addressing often long-term complex challenges such as skills.²²⁵ The Harrington Review recognised that creating a more pro-business environment is likely to cut across other legitimate interests.²²⁶ However, the review stated that investors recognised this complexity and were of the view that in many cases relatively small adjustments could have a substantial impact on investment.²²⁷ In this chapter we focus on the three key sets of institutions::

• Energy;
• Skills; and
• Delivering and diffusing innovations.

Energy costs

97. Our energy market is delivering energy which is too expensive.. The Green Paper, for example, noted that “access to cheap and reliable energy is an influential determinant of business competitiveness and an important consideration for internationally mobile investment.”²²⁸ UK industry is also currently the third largest emitting part of society and needs to decarbonise if the UK is going to reach net zero.²²⁹ The Climate Change Committee (CCC) suggested that “there is a potential competitive advantage for UK industry in decarbonising early” because “domestic and global demand for high-carbon goods is set to fall, and low-carbon production will be the only way to stay competitive.”²³⁰ Most of industry currently relies on gas.²³¹ However, the CCC expect that the majority of industry decarbonisation by 2040 and 2050 will come from electrification.²³²

98. When it comes to electricity prices the UK is an outlier internationally, with industrial electricity prices 46% above the median in the International Energy Agency.²³³ Industrial electricity prices are substantially above the European average for businesses of all sizes, but much worse for those with a high demand for energy.²³⁴ For example, between January and July 2024, electricity prices (per KWh) were over 150% higher than the European average for the largest users of electricity.²³⁵

99. The UK’s high electricity prices are damaging the ability of UK businesses to compete, attract investment and decarbonise.^{236 237} Make UK told us that “high energy costs are eroding the competitiveness of energy-intensive industries.”²³⁸ We heard from Nissan that its “plant in Sunderland pays more for its electricity than any other Nissan plant in the world.”²³⁹ The transition to a homegrown supply of clean energy means the long-term picture is more optimistic. However, the Harrington Review noted that the “current disparity” in prices is having a “dampening effect” on investment.²⁴⁰ Jaguar Land Rover said that “additional support as the auto sector electrifies” will help ensure the industry stays competitive while it waits for “renewable energy supply to come online.”²⁴¹

100. The Government has recognised this problem and the need to tackle it.²⁴² The Secretary of State, for example, was clear that the UK’s energy prices are among the most “prohibitive pressures” on UK industries and investment in the UK.²⁴³ The Government already provides some support to industry. The British Industry Supercharger scheme, for example, is designed to support energy-intensive industries to remain internationally competitive. Other countries subsidise industrial energy prices by putting more of the costs on consumers.²⁴⁴ In the Green Paper, the Government sets out that it is “considering reform of wholesale electricity markets” and engaging with stakeholders as it “looks to act on the specific issue of industrial electricity prices.”²⁴⁵ Ministers reassured us that the Government is looking to act to address this problem. In doing so, the Secretary of State suggested that the Government is looking to make sure that such actions go to the “places that need it the most.”²⁴⁶ However, ministers did not specify the extent to which electricity prices need to come down to improve the UK’s competitiveness or which sectors the Government plans to prioritise.

Test 7: Are our energy prices internationally competitive?

The success of the industrial strategy will owe much to the Government’s success in reducing industrial energy prices. We will scrutinise this as part of our work when judging the Industrial Strategy’s success.

Workforce and skills

103. A skilled workforce is central to a successful economy. For example, in the Green Paper the Government noted that between 2001 and 2019 “around a third of average annual UK productivity growth was attributable to an expansion of skills available in the workforce.”²⁴⁷ The major structural transformations of the global economy, namely the green and digital transitions, are reshaping businesses and the skills employers need.²⁴⁸ These transitions present opportunities for the UK to raise living standards and provide good jobs across the country. However, capturing these opportunities will require the skills system to adapt.²⁴⁹

104. Substantial skills shortages across the economy are acting as a barrier to growth and are deterring investment in the UK. The Recruitment and Employment Confederation, based a monthly survey of “hard to fill” vacancies, told us that there are “endemic permanent and temporary labour shortages” across many of the growth-driving sectors.²⁵⁰ The Association of the British Pharmaceutical Industry (ABPI) told us that the “pharmaceutical industry faces persistent shortages of scientific, data and digital, and core working skills, many of which are highly specialised and needed in combination.”²⁵¹ The Green Alliance, based on a survey conducted by Public First, found that 79% of investors said the businesses that they invest in have “experienced problem because of skills shortages in the recruitment of their domestic workforce.”²⁵² The Green Alliance added that 25% of the investors in the survey “decided not to invest in a UK business as a result of skills shortages.”²⁵³ We heard that skills shortages vary between regions and, therefore, require an approach that is sensitive to local needs.²⁵⁴

105. Employers need a skills system that is flexible and responsive to their needs, including emerging gaps in skills.²⁵⁵ We heard about the importance of putting the needs of employers at the centre of the skills system.²⁵⁶ The skills system must be responsive to the need to upskill and reskill employees for the changing nature of work.²⁵⁷ The decision to replace the Apprenticeship Levy with a Growth and Skills Levy is broadly welcomed²⁵⁸, although many would like to see greater flexibility in the type of training that is eligible.²⁵⁹ Some of the growth sectors emphasised the importance of ensuring that the UK remains able, open, and appealing, to global talent, especially while domestic skills shortages take time to address.²⁶⁰ The evidence we received suggests that there is a strong case to further devolve responsibility for skills to local leaders. Through the English Devolution White Paper the Government has already proposed to devolve more responsibility for education and training locally.²⁶¹ Mayors told us that the full responsibility for education and training post-16 should be devolved.²⁶² However, we note that a significant minority of English residents are not covered by mayoral authority areas. Andy Burnham, the Mayor of Greater Manchester, told us:

you can create stronger technical education pathways when you can work with the actual employers in your city region who will be employing the young people or older workers who will come through. We are the only ones who can create those meaningful pathways and who can commission colleges according to the actual sectoral strengths of our economy, yet that is still being resisted.²⁶³

Test 8: Are we closing skills gaps for firms in the priority sectors?

The industrial strategy will not suceed if business does not have the right skills for the opportunities available. We will therefore seek to monitor evidence of skills gaps in the eight priority sectors in order to help judge the Industrial Strategy’s success.

108. In the Green Paper, the Government stated that the “accelerating the rate of innovation and increasing the adoption and diffusion of those ideas, technologies, and processes is an essential step for growing the productivity of our growth-driving sectors”.²⁶⁴ The Green Paper pointed out that the UK has “many strengths from which to build”, such as the Made Smarter programme and the UK’s Catapult Centres, but acknowledged that “there is further to go.”²⁶⁵

109. Innovation is a strength of the UK due to its world-class research institutions. It is widely recognised that UK startups and spinouts from UK universities struggle to scale-up and commercialise in the UK. Part of the problem is accessing the financing they need to scale-up. However, we heard that there are other ways the Government can help. Royal Academy of Engineering, for example, suggested that the Government should consider “increasing the provision of high-quality open-access infrastructure for scale-up and commercialisation in priority subsectors.”²⁶⁶ They added that:

While the UK does have some open-access infrastructure, more needs to be done to ensure this is fit for purpose for use by industry, in terms of availability, accessibility, affordability, compatibility with industrial and commercial standards and processes, and staff experience.²⁶⁷

110. The UK has a network of Catapult Centres that aim to support businesses to innovate by providing R&D facilities and technical expertise. These centres came out of the technology and innovation centres introduced under the New Labour Government, following recommendations of the then Technology Strategy Board.²⁶⁸ Policy Exchange said that these centres were largely based on Fraunhofer Centres in Germany.²⁶⁹ Professor Mazzucato told us that the UK “massively” underspends on the Catapult Centres and suggested the way these centres are structured is not as ambitious as in the German system.²⁷⁰ The Royal Academy of Engineering commented that the UK could learn lessons from Germany and other countries (e.g. Finland) who have systems that “successfully bridge the gap between R&D and commercialisation.”²⁷¹ Professor Mazzucato told us:

In the Fraunhofer institutes, the scientists do not ask industry what they need; they think together about what the future of the auto industry might look like. There is real dynamism between the science and industrial communities.²⁷²

111. On the diffusion and adoption of technology, the Government has some schemes such as the Made Smarter programme, which aims to support manufacturing firms by helping them digitalise. We received evidence that the programme is working well.²⁷³ The Government has allocated more funding to the Made Smarter programme in 2025–26.²⁷⁴ However, more broadly, the process through which the Government plans to accelerate the diffusion and adoption of technologies is not clear. Professor Diane Coyle suggested that some diffusion occurs through supply chains. She explained that “leading companies will ask their suppliers to adopt new technologies once they have done so themselves. So that is a supply-side way that diffusion spreads.”²⁷⁵ Sir Charlie Mayfield, Member of the previous Industrial Strategy Council and Founder and Chairman at Be the Business, emphasised the importance of considering the behavioural aspects of diffusion and adoption, especially in trying to promote new technologies and processes among SMEs.²⁷⁶

Test 9: Is there clear, well-resourced institutional leadership for research and development in each of the growth sectors?

The industrial strategy must raise the rate of productivity in the eight priority sectors. That requires raising levels of innovation and diffusing innovation more effectively. We will therefore scrutinise whether there is clear institutional leadership of R&D in each of the eight sectors, backed by appropriate investment.

8 Governance, oversight and accountability

115. A variety of public bodies are involved in the design and implementation of industrial policy in the UK, including HM Treasury, the Department for Business and Trade, plus various other Government departments, arms-length bodies, agencies and expert councils. The industrial strategy, led by the Department of Business and Trade, brings together the work of several Government departments across the eight growth-driving sectors. Within these sectors and sub-sectors, there is a complex web of challenges that range across departmental responsibilities. This was summarised by Mike Hawes, Chief Executive at Society of Motor Manufacturers and Traders, in the context of the automotive sector, a likely sub-sector of advanced manufacturing:

If you look at the challenges that have been borne out by this discussion, we have been talking about regulation. A lot of that regulation comes from the Department for Transport. You are looking at energy costs, which is going to sit with DESNZ. You are looking at, ‘Can we support the consumer?’ That is coming from Treasury. You are looking at industrial strategy, which, by definition, is DBT-led. You are looking at skills, which is education.²⁷⁷

116. A joined-up Government approach to the delivery of industrial policy has been an aspiration of previous Governments, but one that has been difficult to deliver. The Rt Hon Sir Vince Cable, in October 2016, told the then Business Energy and Industrial Strategy Committee that in his experience as Business Secretary some Government departments were positive and engaged, whereas other bits of Government “did not engage”.²⁷⁸ The Rt Hon. the Lord Mandelson has commented that senior officials and Secretaries of State can be “very possessive and very protective” of their policies and resources.²⁷⁹ Lord Mandelson said that to implement industrial policy effectively:

You need the commitment of the Chancellor, the support of the Prime Minister and the willingness of the Prime Minister at the end of the day to arbitrate between Ministers in case of disagreements. You need that. Whitehall needs to get the message that this is a top priority, that this is a key focus and interest of the Prime Minister and that he or she means business. That is absolutely essential.²⁸⁰

Regulation

117. Evidence we received showed areas where the current regulatory landscape creates barriers to investment. Jordan Cummins, Interim Chief Policy and Campaigns Officer, Confederation of British Industry (CBI) said that, while the UK’s “stability of regulation” had previously attracted investment, regulation is now an area where the cost of compliance is particularly high.²⁸¹ The challenges posed by the regulatory landscape were acute in evidence received from the professional and business services sector. Steven Randjelovic described the perception and reality around the UK enacting regulations as a main barrier to investment and said that this is fuelled by a “continuous flow of new regulations”.²⁸² Miles Celic explained that the growing lack of regulatory stability has been a “drag factor” and was resulting in the diversion of investment to other parts of the world.²⁸³

118. We also heard that the lack of certainty and strategic direction in regulation was a barrier. Lord Livermore, Financial Secretary to the Treasury, told us that “regulatory uncertainty is a big issue, as is lack of clarity”.²⁸⁴ He added that “[businesses/inward investors] talk about regulation being a black box. Regulation just emerges and they do not feel that they have sight of that”.²⁸⁵ The importance of regulatory frameworks in providing direction, moreover, was highlighted in the context of the clean energy sector. Rob Salter-Church, Director of Regulation for National Grid Electricity Transmission, explained that the regulatory framework has dictated past investment by having to wait for specific triggers.²⁸⁶ Alistair McGirr, Group Head of Policy and Advocacy at energy company SSE, responding to the statement that businesses’ inability to access power was a total failure of the regulatory environment, said that it was “a lack of strategic foresight”.²⁸⁷

119. Steps have been taken to address challenges in the regulatory landscape. In her first Mansion House speech in November 2024, the Chancellor of the Exchequer stated the UK has been regulating for risk, but not regulating for growth, and set out a plan to rebalance the system.²⁸⁸ The Government has launched the Regulatory Innovation Office, within the Department for Science, Innovation and Technology, which aims to support regulators to update regulation, speed up approvals, and ensure different regulatory bodies work together smoothly.²⁸⁹ Baroness Gustafsson of Chesterton CBE, Minister for Investment, Department for Business and Trade and HM Treasury, told us that this allowed for “tactical examples of the system operating against itself” to be passed into an office that will apply common sense to shape it and make it work.²⁹⁰ In March 2025, the Government published a regulation action plan. Lord Livermore told us that this followed “several roundtables with regulators, talking to [regulators] about these issues”.²⁹¹ He said that the action plan, jointly led by the Treasury and Cabinet Office, has “a one lead regulator model” to prevent having multiple regulators giving conflicting views.²⁹² He told us that this is an agenda the Government wants to take further.²⁹³

120. Evidence we received explored how regulation could be shaped more effectively. First there was a clear emphasis on the need for the UK to regulate for growth. John Godfrey described this as a “further deregulation or proportionate regulation approach” and echoed the Chancellor’s message “to regulate for growth, as opposed to regulating for risk”.²⁹⁴ The desire to regulate for growth was echoed across a number of sectors. Rob Salter-Church called for a “growth-focused regulatory framework”, explaining that Ofgem had important decisions to make on the next price control framework and the sector needed to see a “regulated framework that can attract the capital to the UK to be able to invest”.²⁹⁵ In the life sciences, Professor Sir John Bell, President, Ellison Institute of Technology, who authored the Life Sciences: industrial strategy in 2017²⁹⁶, said that a regulator that “is on the front foot” could “really drive the industry”.²⁹⁷ However, we did also hear about the risk of excessive de-regulation. Ramon Kaur, Director of Policy and Public Affairs, EY UK told us that 50 per cent of the respondents that they speak to value the legal and regulatory regime of the UK and that there is a “balance to be had”.²⁹⁸

121. Coupled with a desire to regulate for growth, evidence to the inquiry also called for greater clarity in regulatory policy and join up with wider Government policy. Louise Kingham, Head of Country UK and SVP Europe, BP, emphasised that “to get investment to flow” in the clean energy sector there needed to be join up between the National Wealth Fund, GB Energy, several Departments and a number of regulators.²⁹⁹ This was echoed by Miles Celic who explained that having “a real clarity between what Government is doing on a cross-departmental basis, what Government is doing working hand in hand with regulators and other public bodies, and how it is working with the private sector in furtherance of the delivery of its targets on growth is absolutely central”.³⁰⁰ The desire for clarity extended to suggestions for how the Government could simplify the landscape for emerging businesses. Antony Walker, Deputy Chief Executive Officer of techUK, suggested the potential of providing a “concierge service” to help high growth potential companies navigate their way through regulation.³⁰¹ He explained that they are often working at the intersection of different markets, which can throw up novel challenges and issues.³⁰²

Whitehall

124. For this industrial strategy to succeed, there will need to be clear cross-Whitehall co-ordination in its design and implementation, and it will need support and direction from the highest levels of Government. The whole of Government will have to be joined up in the delivery of the strategy and have clear objectives to meet. Regional leadership and devolution will also play a key role in ensuring that the strategy is delivered. Finally, the Industrial Strategy Council will need to monitor the progress of the strategy and steer its development over the course of the Parliament.

125. We welcomed the willingness of Ministers across Government, from Department for Business and Trade, His Majesty’s Treasury, Department for Education, Department of Energy Security and Net Zero, and Ministry of Defence, to give oral evidence to the Committee over the course of the inquiry. Ministers told us that work had been done to ensure that there was already a joined-up approach to the design of the industrial strategy. The Secretary of State for Business and Trade emphasised that the current Government was demonstrating a unique approach:

Even when the UK briefly had an industrial strategy under Greg Clark, which I have said was a good piece of work, I have never seen before the joined-up approach to trying to deliver on this that I believe we have here.³⁰³

126. Sarah Jones, Minister of State for Industry, Department for Business and Trade and Department for Energy Security and Net Zero, explained that “different Departments own different parts of these [eight] sectors but the industrial strategy is being pulled together with a team of people, including people from all the different Government departments, in DBT”.³⁰⁴ She added that the Industrial Strategy Advisory Council is helping and that No. 10 and the Treasury were “very much involved in these conversations”.³⁰⁵ She told us that she was working with the Financial Secretary to the Treasury to look at each sector and make sure “we are all moving in the same direction”.³⁰⁶ However, Maria Eagle, Minister of State for Defence Procurement and Industry, Ministry of Defence, made clear that while Ministers (in this case between MoD and DBT) do their best to make sure their strategies “tie up”, “most of the links … are at official level”.³⁰⁷ In Spring Statement 2025, the Government announced a new Defence Growth Board, chaired by the Defence Secretary and Chancellor. It was subsequently confirmed that the Secretary of State for Business and Trade is a member of the Growth Board.³⁰⁸

127. The Government has also set out its intention to work in a more joined-up way with local leadership. The Green Paper states that in the development of the strategy, the Government would engage with “devolved governments, elected mayors, and other local leaders, including through the Council of the Nations and Regions, and Mayoral Councils, to galvanise regional and place-based growth opportunities, and align where appropriate”.³⁰⁹ While we were told that Mayors had engaged with civil servants on the industrial strategy and met the Industrial Strategy Advisory Council, we also heard that there had only been one meeting of the Council of the Nations and Regions and the Mayoral Council.³¹⁰

128. Finally, the Government has committed to establishing a statutory, independent and evidence led Industrial Strategy Council, reporting to the Business and Trade Secretary and the Chancellor of the Exchequer. The Green Paper said that the Council will be responsible for informing and monitoring the development and delivery of the industrial strategy over the long term.³¹¹ The Government, however, has not yet legislated to establish this as a statutory body. In the interim, the Government has introduced an Industrial Strategy Advisory Council, comprised of fifteen UK business leaders, academics, policy experts and trade union leaders, to ensure that the strategy is developed with independent expert advice.³¹²

129. Evidence we received, however, outlined areas where Government is not yet aligned in its delivery on industrial policy. In the advanced manufacturing sector, Brian Holliday, Managing Director, Digital Industries, Siemens plc, told us that Siemens were having “quite different conversations with DSIT, DBT, DfE, DESNZ and the Treasury” and called for a way of “organising conversations with the firms and contributors in the UK to be joined up a bit more”.³¹³ Steve Turner, Assistant General Secretary, Unite the Union, emphasised “that you cannot have a successful strategy without Treasury, without skills and education” but described “a real disconnect in Government”: “they are fiefdoms. They close their doors and they are not interested in listening to other departments”.³¹⁴ We heard further specific concerns on the lack of a joined-up approach to skills policy in other sectors. Ramon Kaur, Director of Policy and Public Affairs, EY referenced “different soundings” from the Department for Business and Trade and the Department for Education on apprenticeships and told us that there is “still a little bit of Government thinking that becomes quite siloed along departmental lines”.³¹⁵

130. Despite these criticisms, we also heard examples of where Government departments had demonstrated close co-ordination. This was most evident in the life sciences sector. Sir John Bell, President, Ellison Institute of Technology, pointed to the cross-departmental Office for Life Sciences as a reason why the life sciences sector had been successful.³¹⁶ He argued it had done an “amazing job of … getting people to look at problems together across Government”.³¹⁷ Steve Bates OBE, Chief Executive, The BioIndustry Association, echoed this, telling us that he hoped “people [in all sectors] would look at the Office for Life Sciences and the Life Sciences Council as a way in which to do these things”.³¹⁸

131. We heard a range of views on further work that could be done to ensure that Government departments and other relevant bodies are aligned in the delivery of the industrial strategy. John Godfrey described being “properly joined up” as “not just between Government departments and institutions, but across different policy areas”.³¹⁹ This was echoed by Professor Diane Coyle, Bennett Professor of Public Policy at the University of Cambridge and Co-Director of the Bennett Institute for Public Policy, who explained that the effectiveness of spending on the industrial strategy would come down to the “joining-up of Government policies which we have also not seen for a long time”.³²⁰ One solution we heard to address this was a call for greater devolution. Kim McGuiness, North East Mayor, told us that where Government naturally works in “departments and silos”, combined authorities are thinking in “a joined-up, place-based way”.³²¹ She told us that Mayors “run very joined-up organisations” and people in the organisations are thinking simultaneously about “job creation, skills, transport and housing”.³²²

132. Further evidence we received pointed to the need for the industrial strategy to set out clear priorities and targets to help align work across Government departments. Paul Morris, Head of Government Affairs, Vodafone, described the “objective of the strategy” in part as “to make Government priorities out of the strategy, so that when you get to Departments, they have to know that is their priority”.³²³ Alan Johnson, Senior Vice-President for Manufacturing, Supply Chain and Purchasing AMIEO, Nissan Motor Corp, described the need for the industrial strategy “to provide a framework that can be properly deployed and cascaded, such that you get consistency across the different Departments”.³²⁴ This plea for cohesion was echoed by Brian Holliday who called for Skills England to sit “directly alongside” other topics of “innovation, energy, energy prices, and access to finance as critical enablers to deriving growth from the industrial strategy”.³²⁵ He emphasised that “all these threads need to come together in a way that feels much more joined up at a whole-of- Government level”.³²⁶

133. In this context, we heard about the role that the Industrial Strategy Council and the interim advisory Council would play in helping to align Government departments in its consideration of cross-cutting priorities. Clare Barclay told us that “if growth is the main agenda and the industrial strategy council is there to support it” then she would need “to make sure that is made a priority across all the Departments”.³²⁷ She explained that the Advisory Council was “working across a complex set of workstreams that take in the priority focus for growth and cross-cutting themes like regulation, skills, access to finance and so on, and then intersects that with place”.³²⁸ The Advisory Council’s work on place, finally, was picked up by Andy Burhnam, Mayor of Greater Manchester, who argued that the Industrial Strategy Council could be brought together with the Council of the Nations and Regions. He said that if the two pieces of infrastructure were brought together and put it in delivery mode, “it would be tremendously exciting”.³²⁹

Test 10: Is there leadership from the top, delivering kinetic energy and coherence?

Conflicting regulations and lack of joined up government will slow the success of the industrial strategy. We will therefore monitor examples of regulatory conflict in order to judge whether the government is making progress at reducing these ‘regulatory red flags’.

Ultimately, making judgements about trade-offs and injecting into Government the right level of kinetic energy to move the machine of government forward can only come from the Prime Minister, and so we will scrutinise how often the Prime Minister engages with the Industrial Strategy Council

Conclusions and Recommendations

Industrial strategy in the UK and abroad

1. We welcome the Government’s proposals to bring forward a modern, 10-year industrial strategy that provides businesses and investors with certainty, stability and a solid foundation upon which to invest and grow. A more active partnership between Government, business, trade unions and local leaders is needed to address the stubborn economic challenges of the past and help business navigate the seminal challenges of the future. The Government must remain agile and responsive to what is a dynamic global environment. However, the price of further inconsistency is high. Delivering this strategy successfully will be a whole-of-government endeavour and we look forward to playing our part by holding the Government to account for its performance. (Conclusion, Paragraph 17)

Growth Mission

2. We welcome the Government’s plans to bring forward an industrial strategy as a central pillar of its Growth Mission. The direction of growth matters, so we are pleased that the Government intends to use the industrial strategy to help the economy grow in a way that is inclusive, resilient and sustainable. (Conclusion, Paragraph 29)

3. The industrial strategy must clarify how the Government plans to balance any tensions between maximising the headline rate of growth, supporting new sectors and existing jobs in industry, and achieving its net zero, economic security and regional growth objectives. (Recommendation, Paragraph 30)

4. We recognise that ‘what gets measured gets managed’. The forthcoming industrial strategy and sector plans must set out how their economic contribution to the Growth Mission and the Government’s strategic objectives will be measured. To track the progress of the industrial strategy, we recommend the Government sets a robust framework, with clear targets for the remainder of this Parliament and for the 10-year span of the industrial strategy, along with clear metrics. The framework should allow Parliament and the Industrial Strategy Advisory Council to assess how the industrial strategy is contributing to the Growth Mission as well as the strategy’s contribution to inclusive growth, net zero and the UK’s economic security and resilience. Key targets must be set for each of these objectives and enshrined in public spending agreements between the Treasury and individual departments to ensure that public spending across government is supporting the Industrial Strategy. The Industrial Strategy Advisory Council should conduct an annual progress review against these targets, and this review should be reported to Parliament. This framework should be reflected in plans for each of the growth-driving sectors, while also allowing for sector-specific metrics and targets. (Recommendation, Paragraph 31)

Growth-driving sectors and grand challenges

5. We recognise that the UK needs to prioritise and play to its strengths if it is going to move the dial on growth. We support the Government’s decision to focus the industrial strategy on sectors of the economy where the UK has a comparative advantage, or the ability to build one. However, the industrial strategy and sector plans should be supplemented by a clearer vision of how the UK can contribute to, and economically benefit from, societal challenges that are reshaping the global economy. (Conclusion, Paragraph 40)

6. We recommend that the Industrial Strategy Advisory Council works quickly to specify some selective grand challenges designed to galvanise whole-of-government efforts to boost the priority sectors set out in the Industrial Strategy. The challenges should be designed in a way to help transform public-private collaboration across a larger part of the economy and stimulate greater potential for growth. (Recommendation, Paragraph 41)

International and Domestic markets

7. In a rapidly developing and uncertain global trade environment and with an ongoing pipeline of trade negotiations, it is crucial that the industrial strategy and trade strategy are closely aligned. Having chosen eight growth-driving sectors as the focus of the industrial strategy, the Government must now ensure that these sectors are supported to maximise their growth opportunities from future trade. (Conclusion, Paragraph 53)

8. We recommend that the Government develops its forthcoming trade strategy with the industrial strategy and makes sure that it enables the 8 growth-driving sectors to grow exports, including in the food and drink sector. We also recommend that the Government publishes a 10-year plan for working to take down non-tariff barriers and ‘behind the border’ barriers to UK exporters in the growth driving sectors. (Recommendation, Paragraph 54)

9. We recommend that Department for Business and Trade teams based abroad are given a clear framework, which they report to Parliament, for how they can support export opportunities for each of the growth driving sectors, in the most important UK markets accounting for 80% of UK export growth. This framework should specify (a) DBT’s estimate of potential export growth opportunity for priority sectors over the decade to come, (b) DBT staff resource on the ground (c) objectives for trade barrier removal and (d) trade promotion budget and activities. (Recommendation, Paragraph 55)

10. Public procurement if used effectively is amongst the most important tools to drive the industrial strategy. However, for this to be the case, the Government needs to ensure that procurement policy joined at the hip with the industrial strategy and wider growth mission. The Government needs to procure in ways that incentivise private sector investment, encourage innovation and therefore provide very clear long-term demand signals. The Government also needs to ensure that the current barriers facing SMEs are addressed. (Conclusion, Paragraph 69)

11. We recommend that alongside the industrial strategy, the Government publishes a clear estimate of the number of jobs in the eight growth driving sectors that are supported by public procurement as well as the contribution of procurement spend to the economic growth of the sectors. We recommend that the Government Chief Commercial Officer sits on the Industrial Strategy Council and provides to Parliament a clear ten- year plan, reported annually, on the way in which public procurement will help deliver on the ambitions of the industrial strategy. This should include clear performance data. This plan and these annual reports should be signed off by the Secretary of State for Business and Trade. (Recommendation, Paragraph 70)

12. To support SMEs to innovate and to continue to grow, we recommend that multi-year framework contracts are available for SMEs in the sectors in which the state is the biggest customer, such as defence and life sciences. We also recommend that the Government set a target for how much of public procurement spend is direct spend to SMEs. (Recommendation, Paragraph 71)

13. To ensure that there is sufficient long term demand signalling, we recommend that Government Departments increase the proportion of public contract opportunities in their pipeline that are five to ten years out. . We also recommend that the Government update its public procurement strategy to include a comply-or-explain process for declaring why products are not procured from the UK. (Recommendation, Paragraph 72)

Government support for crowding-in investment

14. The UK has a complex system of public finance institutions. We accept that different businesses, depending on where they are on their journey, will need different types of financial support. However, our view is that there would be merit in providing a single front door for companies looking for government support. (Conclusion, Paragraph 78)

15. We recommend, in line with the Harrington review, that the Government should consolidate the public finance institutions, especially the National Wealth Fund and the British Business Bank, preferably into a single body to simplify the system for business and investors looking for government support, together with the reforms we set out below. (Recommendation, Paragraph 79)

16. The industrial strategy needs to provide ways to unlock finance that allows UK startups, spinouts and other firms to commercialise to scale-up and commercialise their innovations in the UK. Far too many promising companies are leaving for the US and other countries. (Conclusion, Paragraph 82)

17. The industrial strategy must set out measures that will be used to help firms access the funding they need to scale-up and commercialise in the UK. As an initial step, we recommend that the Government increase the amount of support the British Business Bank can provide to help firms scale-up. (Recommendation, Paragraph 83)

18. We welcome the Government’s plans to expand the Office for Investment. To help drive strategic investments across the country, we recommend that a reformed and expanded Office for Investment should be build a team to work with Mayoral Combined Authorities and newly created strategic authorities capable of building a ‘term-sheet ready’ prospectus of investments in our regions, in the eight priority sectors listed by the Industrial Strategy. (Recommendation, Paragraph 86)

19. The intensity of global competition between countries to attract internationally mobile investment reinforces the importance of ensuring that the Government uses the financial resources it has allocated carefully and effectively. Without a clear budget, Parliament will not be in a position to effectively hold the Government to account for the way public money is spent. (Conclusion, Paragraph 90)

20. We recommend that through the Spending Review the Government provides clarity about the sum of public expenditure that will be allocated to the industrial strategy and the wider Growth Mission over the remainder of this Parliament. (Recommendation, Paragraph 91)

Pro-business environment

21. High electricity prices in the UK are deterring investment and hurting the ability of UK industries to compete internationally and decarbonise. (Conclusion, Paragraph 101)

22. We recommend that the industrial strategy must include measures that level the playing field with our international competitors on industrial energy prices. Priority should be given to leading sectors, and other foundational industries, in which high energy prices have the greatest impact on the ability of UK-based businesses to compete and attract investment. As an initial step, we recommend the Government consider extending the British Industry Supercharger scheme. (Recommendation, Paragraph 102)

23. Skills shortages are holding back growth and deterring investment across large parts of the economy, including within the UK’s growth-driving sectors. The skills system is too fragmented and inflexible. The needs of employers must be at the centre of the UK’s approach to training. Local leaders are best placed to know the needs of local employers and work with training providers to adapt provision accordingly. (Conclusion, Paragraph 106)

24. We recommend that:

• Skills England commission and publish an analysis of the skills gaps across the eight growth-driving sectors and report to Parliament within six months. This should include an estimate of the current and future skills gaps across these sectors over the course of the 10-year period of the industrial strategy and provide recommendations on the funding and policy changes needed to fill these shortfalls, including funding gaps for courses that need to be filled.
• The Government’s plans in the English Devolution White Paper to devolve more responsibility for skills to local leaders should go further. Responsibility for technical education and training post-16 should be devolved, to the maximum possible extent to Mayoral Combined Authorities and newly created Strategic Authorities, once they have demonstrated capability to manage local systems.
• Responsibility and funding for skills policy at a national level should be transferred to the Department for Business and Trade. This will help ensure national skills policy is more attuned to the needs of employers and is more aligned with the Government’s industrial strategy and growth mission.
• The Minister for Skills should be a joint ministerial role across the Department for Business and Trade and the Department for Education to ensure there is a coordination between the two departments, as people transition from school to post-16 education and training. (Recommendation, Paragraph 107)

25. The UK has strengths in research, development and innovation (RDI) but the Government struggles to effectively support companies, including startups and scale-ups, to commercialise their innovations domestically. We have heard that the UK has a complicated landscape of institutions to support RDI and that this landscape needs to be reviewed. (Conclusion, Paragraph 112)

26. We recommend that the Department for Business & Trade and Department for Science, Innovation and Technology now conduct a review of the UK’s public research and innovation institutions to ensure they are in alignment with the industrial strategy and that there is clear institutional leadership of research and development for the eight priority sectors, for example by ensuring a lead Catapult in each sector. In particular, the Government should focus on ensuring that the UK has an effective system in place to help UK firms commercialise their innovations in the UK. We recommend the review looks at the lessons the UK can learn from institutions in other countries, such as Fraunhofer Centres in Germany. (Recommendation, Paragraph 113)

27. We welcome the further support the Government has provided for the Made Smarter programme this year. We recommend that the Government provide further support in the Spending Review to substantially scale-up the programme. (Recommendation, Paragraph 114)

Governance, oversight and accountability

28. The regulatory landscape for businesses needs to be simplified. We welcome the Government’s commitments to regulate for growth, and attempts to offer clarity through the regulation action plan and regulatory innovation office. However, we agree with Lord Livermore that the Government should take this agenda further and we believe that the Government could and should do more. (Conclusion, Paragraph 122)

29. We recommend that the Regulatory Innovation Office should be expanded to act as a clearing house for regulatory conflicts and give businesses a place to report conflicting regulations. We recommend that this expanded Regulatory Innovation Office sits within the Cabinet Office and is resourced appropriately to carry out this expanded role. We recommend that the Government publishes a list of the series of projects that the single lead regulator model will be tested through and commits to publishing an assessment of the new model’s impact. A minister from the Department for Business and Trade should help oversee the Regulatory Innovation Office and should be tasked with presenting for resolution examples of regulations from either government departments or regulators, which conflict or which are incoherent, given the growth objectives. (Recommendation, Paragraph 123)

30. The Government has sent a positive message in their commitment to cross-departmental co-ordination, engagement with regional leadership, and announcement of an Industrial Strategy Council. However, if the industrial strategy is to be successful, this needs to be translated into concrete action when the strategy is published. (Conclusion, Paragraph 134)

31. First, and as a priority, we recommend that the Government introduces legislation to put the Industrial Strategy Council on a statutory footing, alongside the publication of the industrial strategy. We also recommend that the Industrial Strategy Council meets with Combined Authority Mayors on a quarterly basis. (Recommendation, Paragraph 135)

32. Finally, it is crucial that the industrial strategy and the wider growth mission has clear support from the Prime Minister. As such we recommend that the Prime Minister chairs quarterly sessions of the Growth Mission Board and that progress on the industrial strategy is reviewed at each such meeting that he chairs. (Recommendation, Paragraph 136)

Formal Minutes

Tuesday 3 June 2025

Members present

Liam Byrne, in the Chair

Antonia Bance

Alison Griffiths

John Cooper

Sarah Edwards

Charlie Maynard

Gregor Poynton

Joshua Reynolds

Matt Western

Industrial Strategy

Draft Report (Industrial Strategy), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 136, read and agreed to.

Summary agreed to.

Resolved, That the Report be the Seventh Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available (Standing Order No. 134)

Adjournment

Adjourned till Tuesday 24 June at 2.00pm

Witnesses

The following witnesses gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.

Tuesday 11 February 2025

Professor Diane Coyle, Bennett Professor of Public Policy, University of Cambridge, Co-Director, Bennett Institute for Public Policy; Professor Mariana Mazzucato, Professor in Economics of Innovation and Public Value, University College London (UCL), Founding Director, Institute for Innovation and Public Purpose (IIPP), University College London (UCL); Sir Charlie Mayfield, Member of the previous Industrial Strategy Council, Founder and Chairman, Be the BusinessQ1-22

Clare Barclay, Chair, Industrial Strategy Advisory Council, President of Enterprise and Industry EMEA, MicrosoftQ23-79

Kate Bell, Assistant General Secretary, Trade Union Congress (TUC); Jordan Cummins, Interim Chief Policy and Campaigns Officer, Confederation of British Industry (CBI)Q80-110

Tuesday 4 March 2025

Sir John Bell, President, Ellison Institute of Technology; Steve Bates OBE, Chief Executive, The BioIndustry Association; Audrey Yvernault, Vice President, Global Corporate Government Affairs and Policy, GSKQ111-151

Miles Celic, Chief Executive Officer, TheCityUK; Stevan Randjelovic, Head of Public Policy and Industry Affairs, WPP; Ramon Kaur, Director of Policy and Public Affairs, EY UKQ152-173

Peter Stephens, Director, UK Government Partnerships, ARM; Paul Morris, Head of Government Affairs, Vodafone; Anthony Walker, Deputy Chief Executive Officer, Tech UK; Steve Brierley, Founder and CEO, RiverlaneQ174-202

Tuesday 18 March 2025

Rajesh Nair, Chief Executive, Tata Steel UK; Jon Bolton, Chair, Materials Processing Institute, Co-Chair, Steel Council; Allan Bell, Chief Commercial Officer, British Steel; Alasdair McDiarmid, Assistant General Secretary, CommunityQ203-256

Mr Adam Forgiel-Jenkins, Managing Director of Government Relations, BAE Systems; John Howie MBE, Chief Corporate Affairs Officer, Babcock International; Oriel Petry, Senior Vice President, Airbus UK; Chris Daniels, Co-Founder and Chief Commercial Officer, Flare BrightQ257-354

Shaun Grady, Chair, AstraZeneca plc; Tom Keith-Roach, UK Country President, AstraZeneca plcQ297-354

Wednesday 26 March 2025

Sarah Jones MP, Minister of State, Department for Business and Trade, Minister of State, Department for Energy Security and Net Zero; Neil Johnson, Director, Materials in the Business Group, Department for Business and Trade; Rt Hon Maria Eagle MP, Minister of State for Defence Procurement and Industry, Ministry of Defence; Barnaby Kistruck OBE, Director of Industrial Strategy, Prosperity and Exports, Ministry of DefenceQ355-444

Tuesday 22 April 2025

Professor David Greenwood, Chief Executive Officer, Warwick Manufacturing Group; Brian Holliday, Managing Director, Digital Industries, Siemens UK; Stephen Phipson CBE, Chief Executive Officer, Make UKQ445-491

Markus Gr¸neisl, Chief Executive Officer, BMW (UK) Manufacturing Ltd; Steve Turner, Assistant General Secretary, Unite the Union; Alan Johnson, Senior Vice President, Region Manufacturing, Supply Chain & Purchasing, Nissan AMEIO; Mike Hawes, Chief Executive, Society of Motor Manufacturers and Traders (SMMT)Q492-535

Alistair McGirr, Group Head of Policy and Advocacy, SSE; Rob Salter-Church, Director of Regulation, National Grid; Louise Kingham CBE, Head of Country, UK, BP plc, Senior Vice President, BP plcQ536-584

Tuesday 29 April 2025

Andy Burnham, Mayor of Greater Manchester, Greater Manchester Combined Authority; Kim McGuinness, North East Mayor, North East Combined Authority; Howard Dawber, Deputy Mayor, Business and Growth, Greater London AuthorityQ585-615

Kitty Ussher, Head of Group Policy Development, Barclays; John Godfrey, Managing Director for Public Affairs, Policy and Research, TheCityUK; Louis Taylor, Chief Executive Officer, British Business Bank; John Flint, Chief Executive Officer, National Wealth FundQ616-650

Stian Westlake, Executive Chair, Economic and Social Research Council, UKRI; Mike Biddle, Executive Director for Net Zero, Innovate UK (UKRI); Matt Clifford CBE, Chair, Advanced Research and Invention Agency (ARIA); Professor Ben Morgan, Chief Executive, Advanced Manufacturing Research CentreQ651-667

Tuesday 13 May 2025

Andrew Forzani, Government Chief Commercial Officer, Cabinet Office; Andrew New, Chief Executive Officer, NHS Supply ChainQ668-718

The Lord Livermore, Financial Secretary to the Treasury, HM Treasury; The Baroness Gustafsson CBE, Minister of State (Minister for Investment), HM Treasury, Minister of State (Minister for Investment), Department for Business and Trade; The Rt Hon. the Baroness Smith of Malvern, Minister for Skills, Department of Education, Minister for Women and Equalities, Department of Education; Rt Hon Jonathan Reynolds MP, Secretary of State for Business and Trade, Department for Business and TradeQ719-769

Published written evidence

The following written evidence was received and can be viewed on the inquiry publications page of the Committee’s website.

IND numbers are generated by the evidence processing system and so may not be complete.

1 ADS GroupIND0011

2 Air Products LtdIND0075

3 Angel TrainsIND0031

4 Association of British HealthTech IndustriesIND0007

5 Association of CollegesIND0076

6 British Beer and Pub AssociationIND0043

7 British Insurance Brokers’ AssociationIND0085

8 British Printing Industries FederationIND0102

9 British Private Equity and Venture Capital AssociationIND0098

10 British Screen ForumIND0110

11 Bruntwood SciTechIND0052

12 Budweiser Brewing Group UK & IrelandIND0040

13 BusinessLDNIND0047

14 CIMAIND0010

15 Centre for CitiesIND0050

16 Centre for Inclusive Trade Policy (CITP); and UK Trade Policy Observatory (UKTPO)IND0079

17 Centre for Sectoral Economic Performance - Imperial College LondonIND0036

18 ChargeUKIND0103

19 Chartered Management Institute (CMI)IND0058

20 Chemical Industries AssociationIND0086

21 City of London CorporationIND0042

22 City-Region Economic Development Institute (City-REDI), University of BirminghamIND0059

23 Construction Industry Training BoardIND0038

24 Country Land and Business Association (CLA)IND0074

25 Critch, Dr Nathan (Research Associate, University of Manchester); Diamond, Professor Patrick (Professor of Public Policy, Queen Mary University of London); Luke, Dr Darcy (Research Associate , University of Manchester); Richards Professor David (Professor of Public Policy, University of Manchester); Warner, Dr Sam (Lecturer, University of Bristol); and Westwood, Professor Andy (Professor of Government Practice, University of Manchester)IND0017

26 DJIIND0027

27 Dalton Nuclear Institute, The University of ManchesterIND0101

28 Dixon, Dr Neil (Reader/Associate Professor , The University of Manchester)IND0021

29 Driffield, proffessor Nigel (Professor and Deputy Pro-vice chancellor, Warwick University)IND0003

30 Druckman, Professor Angela (Emerita Professor of Sustainable Consumption and Production, University of Surrey); Gallant, Dr Benjamin Neil (Research Fellow, University of Surrey); Liu, Dr Lirong (Senior Lecturer, University of Surrey); and Mair, Dr Simon (Lecturer in Sustainability, University of York) IND0063

31 Edgerton, Professor David (Hans Rausing Professor of the History of Science and Technology and Professor of Modern British History, Kings College London)IND0111

32 Engineering Construction Industry Training BoardIND0084

33 EricssonIND0097

34 Federation of Small BusinessesIND0099

35 Green AllianceIND0073

36 GuildHEIND0094

37 Hardaker, John (Retired Aircraft and Aero and Marine Engine Development Engineer)IND0033

38 Hardaker, Professor Carolyn (Head of Fashion and Textiles, De Montfort University)IND0025

39 Hitachi EnergyIND0035

40 IBMIND0108

41 ISPAIND0029

42 Ilzetzki, Dr. Ethan (Associate Professor of Economics, London School of Economics)IND0112

43 Imperial College LondonIND0104

44 Independent Networks Co-operative Association (INCA)IND0057

45 Industrial Communities AllianceIND0009

46 Institute of Chartered Accountants in England and WalesIND0087

47 Institute of Materials, Minerals and MiningIND0095

48 Institute of PhysicsIND0092

49 Institution of Mechanical EngineersIND0023

50 International Air Transport Association (IATA)IND0048

51 Jaguar Land RoverIND0105

52 Law Society of ScotlandIND0062

53 LendleaseIND0032

54 Lim, Dr Kean Fan (Reader in Economic Geography, Newcastle University)IND0037

55 Local Government AssociationIND0093

56 Logistics UKIND0088

57 London Chamber of Commerce and IndustryIND0030

58 Make UKIND0064

59 Manchester Airports GroupIND0013

60 Marine Energy CouncilIND0054

61 Mazhikeyev, Dr Arman (Senior Research Associate - Productivity Forum, Loughborough University Business School)IND0046

62 Mineral Products AssociationIND0071

63 NCC GroupIND0006

64 National Biofilms Innovation CentreIND0091

65 National GridIND0106

66 National GridIND0115

67 Northern Ireland Productivity ForumIND0051

68 OpenreachIND0065

69 Pemberton, Professor Simon (Professor of Human Geography, Keele University)IND0034

70 Positive Money UKIND0067

71 PragmatIC SemiconductorIND0041

72 Premier LeagueIND0068

73 Queen Mary University of LondonIND0026

74 Recruitment & Employment ConfederationIND0039

75 RenewableUKIND0109

76 Renukappa, Professor Suresh (Professor of Sustainable Smart Innovation , University of Wolverhampton); Starr, Dr Sean (Apprenticeship Lead, University of Wolverhampton); Stride, Mr Mark (Research Scholar, University of Wolverhampton); Subbarao, Mr Chandrashekar (Research Scholar , University of Wolverhampton); Suresh, Professor Subashini (Professor of Knowledge Management , University of Wolverhampton); and Veenith, Professor Tonny (Clinical Director of Research, Royal Wolverhampton NHS Trust, Wolverhampton, UK)IND0069

77 Renukappa, Professor Suresh (Professor of Sustainable Smart Innovation, University of Wolverhampton); Starr, Dr Sean (Apprenticeship Lead , University of Wolverhampton); Stride, Mrs Nici (Digital Marketing Manager, Prime Plc, Worcester, UK); Suresh, Professor Subashini (Professor of Knowledge Management, University of Wolverhampton); and Veenith, Professor Tonny (Clinical Director of Research, Royal Wolverhampton NHS Trust, Wolverhampton, UK)IND0072

78 Rickard, Professor Stephanie (Professor, London School of Economics)IND0024

79 Royal Society of BiologyIND0090

80 Royal Society of ChemistryIND0012

81 Russell GroupIND0022

82 SCI - The Society of Chemical IndustryIND0082

83 SageIND0089

84 Salford Business School, University of SalfordIND0061

85 Startup CoalitionIND0113

86 Tank Storage AssociationIND0020

87 Tata Steel UKIND0060

88 The Alliance for Intellectual PropertyIND0080

89 The Association of Investment CompaniesIND0001

90 The Association of the British Pharmaceutical IndustryIND0015

91 The Glasshouse International Centre for MusicIND0077

92 The Law Society of England and WalesIND0028

93 The Royal Academy of EngineeringIND0045

94 The Wine and Spirit Trade AssociationIND0100

95 TheCityUKIND0014

96 UK FinanceIND0055

97 UKHospitalityIND0056

98 UKRI National Interdisciplinary Centre for Circular Chemical EconomyIND0004

99 United Kingdom Accreditation ServiceIND0081

100 Universities UKIND0044

101 Universities for North East EnglandIND0053

102 Vertical AerospaceIND0049

103 Virgin AtlanticIND0107

104 Vishay IntertechnologyIND0096

105 Vodafone UKIND0016

106 West London AllianceIND0019

107 Women’s Budget GroupIND0018

108 Zhang, Dr Dongna (Assistant Professor in Economics and Finance , Northumbria University)IND0005

109 techUKIND0070

List of Reports from the Committee during the current Parliament

All publications from the Committee are available on the publications page of the Committee’s website.

Session 2024–25

Number	Title	Reference
6th	How to strengthen UK-EU relations: Policy Priorities for the Summit	HC 908
5th	How to strengthen UK-EU relations	HC – 814
4th	Post Office Horizon scandal redress: Unfinished business: Government response	HC 778
3rd	Make Work Pay: Employment Rights Bill	HC 370
2nd	Priorities of the Business and Trade Committee	HC 423
1st	Post Office and Horizon scandal redress: Unfinished business	HC 341
1st Special	Make Work Pay: Employment Rights Bill: Government response	HC 932

---

Footnotes

1 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

2 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

3 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

4 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

5 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

6 In looking to make changes to the UK’s business environment the Government has said it “will consider the effectiveness of both cross-cutting polices and targeted solutions, for growth driving sectors.” See Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

7 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

8 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

9 HM Treasury, DBT, Government launches Industrial Strategy Advisory Council to boost growth and living standards, 17 December 2024

10 Department for Business and Trade, The steel strategy: the plan for steel, February 2025

11 Business and Trade Committee, Letter to the Secretary of State for Business and Trade relating to a plan for Steel, 1 April 2025

12 Q8 [Professor Coyle]

13 Q8 [Professor Coyle]

14 Department for Business, Innovation and Skills, ‘Industrial Strategy: Cable outlines vision for future of British industry’, Sir Vince Cable’s speech at Imperial College London, 11 September 2012

15 Wilkes G (2020) How to design a successful industrial strategy, Institute for Government, p.12

16 Wilkes G (2020) How to design a successful industrial strategy, Institute for Government, p.12

17 D. Coyle, A. Muhtar (2021) UK’s Industrial Policy: Learning from the Past? Productivity Insights Paper No. 002, The Productivity Institute; Policy Exchange, Where now for UK industrial policy? Lessons from the past, and from other countries, January 2024;

18 Policy Exchange, Where now for UK industrial policy? Lessons from the past, and from other countries, January 2024

19 D. Coyle, A. Muhtar (2021) UK’s Industrial Policy: Learning from the Past? Productivity Insights Paper No. 002, The Productivity Institute.

20 Wilkes G (2020) How to design a successful industrial strategy, Institute for Government

21 Policy Exchange, Where now for UK industrial policy? Lessons from the past, and from other countries, January 2024; ECIPE, Industrial Policy in Europe Since the Second World War: What Has Been Learnt?, January 2012.

22 Wilkes G (2020) How to design a successful industrial strategy, Institute for Government, p.15

23 Policy Exchange, Where now for UK industrial policy? Lessons from the past, and from other countries, January 2024

24 Policy Exchange, Where now for UK industrial policy? Lessons from the past, and from other countries, January 2024

25 HC Debate [Budget Resolutions and Economic Situation] 9 March 2021, vol. 690, col.679

26 Business, Energy and Industrial Strategy Committee, First Report of Session 2021–22, Post-pandemic economic growth: Industrial policy in the UK, HC 385, 28 June 2021

27 Q8 [Professor Coyle]

28 Dr Dongna Zhang (Assistant Professor in Economics and Finance at Northumbria University) (IND0005); British Insurance Brokers’ Association (IND0085)

29 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

30 Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023

31 Dr Dongna Zhang (Assistant Professor in Economics and Finance at Northumbria University) (IND0005); Industrial Communities Alliance (IND0009); Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023; British Insurance Brokers’ Association (IND0085), Q181[Antony Walker], Q187 [Antony Walker]

32 Professor Dame Diane Coyle (IPO0073)

33 Curran et al., (2022) Growing Clean: Identifying and investing in sustainable growth opportunities across the UK. Resolution Foundation and CEP; J De Lyon, R Martin, J Oliveira-Cunha, A Shah, K Shah, G Thwaites & A Valero, Enduring strengths: Analysing the UK’s current and potential economic strengths, and what they mean for its economic strategy, at the start of the decisive decade , The Economy 2030 Inquiry, April 2022

34 International Monetary Fund, Toward a Better Balanced and More Resilient World Economy, 17 April 2025

35 Institute of Materials, Minerals and Mining (IND0095)

36 OECD, “An industrial policy framework for OECD countries: Old debates, new perspectives”, OECD Science, Technology and Industry Policy Papers, No. 127, OECD Publishing, May 2022; International Monetary Fund, The Return of Industrial Policy in Data, January 2024

37 Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023

38 Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023

39 Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023

40 Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023

41 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

42 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

43 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

44 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

45 HM Government, Plan for Change: Milestones for mission-led government, CP 1210, December 2024; HM Treasury, Autumn Budget 2024: Fixing the Foundations to Deliver Change, HC 295, 30 October 2024

46 HM Government, Plan for Change: Milestones for mission-led government, CP 1210, December 2024; HM Treasury, Autumn Budget 2024: Fixing the Foundations to Deliver Change, HC 295, 30 October 2024

47 IMF, World Economic Outlook Database [accessed on 23.05.2025]

48 IMF, United Kingdom: Staff Concluding Statement of the 2025 Article IV Mission, 27 May 2025

49 Business and Trade Committee, Oral evidence: The work of the Department for Business and Trade, HC 450, Tuesday 26 November 2024, Q4 [Jonathan Reynolds]; Liaison Committee, Oral evidence: Evidence from the Prime Minister, HC 530, Thursday 19 December 2024

50 London Chamber of Commerce and Industry (IND0030) Dr Dongna Zhang (Assistant Professor in Economics and Finance at Northumbria University) (IND0005) Professor Suresh Renukappa (Professor of Sustainable Smart Innovation at University of Wolverhampton); Dr Sean Starr (Apprenticeship Lead at University of Wolverhampton); Professor Subashini Suresh (Professor of Knowledge Management at University of Wolverhampton); Mrs Nici Stride (Digital Marketing Manager at Prime Plc, Worcester, UK); Professor Tonny Veenith (Clinical Director of Research at Royal Wolverhampton NHS Trust, Wolverhampton, UK) (IND0072) , SCI – The Society of Chemical Industry (IND0082)

51 SCI – The Society of Chemical Industry (IND0082)

52 TheCityUK (IND0014)

53 Q3 [Professor Coyle]

54 Q3 [Professor Coyle]

55 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

56 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

57 University for Cambridge and Bennett Institute for Public Policy, Making sense of Labour’s modern industrial strategy, January 2025; IfG, Invest 2035: a promising launch for the industrial strategy, 14 October 2024

58 University for Cambridge and Bennett Institute for Public Policy, Making sense of Labour’s modern industrial strategy, January 20254

59 Business and Trade Committee, Oral evidence: Industrial policy, HC 440, Tuesday 20 February 2024, Q25 [Lord Mandelson]

60 CIMA (IND0010) ADS Group (IND0011)

61 ADS Group (IND0011)

62 Green Alliance (IND0073)

63 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

64 Q723 [Jonathan Reynolds]

65 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

66 Policy Exchange, Where now for UK industrial policy? Lessons from the past, and from other countries, January 2024; Wilkes G (2020) How to design a successful industrial strategy, Institute for Government, p6;

67 Wilkes G (2020) How to design a successful industrial strategy, Institute for Government, p6

68 Professor David Edgerton (Hans Rausing Professor of the History of Science and Technology and Professor of Modern British History at Kings College London) (IND0111)

69 Professor David Edgerton (Hans Rausing Professor of the History of Science and Technology and Professor of Modern British History at Kings College London) (IND0111)

70 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024; J De Lyon, R Martin, J Oliveira-Cunha, A Shah, K Shah, G Thwaites & A Valero, Enduring strengths: Analysing the UK’s current and potential economic strengths, and what they mean for its economic strategy, at the start of the decisive decade, The Economy 2030 Inquiry, April 2022

71 J De Lyon, R Martin, J Oliveira-Cunha, A Shah, K Shah, G Thwaites & A Valero, Enduring strengths: Analysing the UK’s current and potential economic strengths, and what they mean for its economic strategy, at the start of the decisive decade, The Economy 2030 Inquiry, April 2022

72 J De Lyon, R Martin, J Oliveira-Cunha, A Shah, K Shah, G Thwaites & A Valero, Enduring strengths: Analysing the UK’s current and potential economic strengths, and what they mean for its economic strategy, at the start of the decisive decade, The Economy 2030 Inquiry, April 2022

73 J De Lyon, R Martin, J Oliveira-Cunha, A Shah, K Shah, G Thwaites & A Valero, Enduring strengths: Analysing the UK’s current and potential economic strengths, and what they mean for its economic strategy, at the start of the decisive decade, The Economy 2030 Inquiry, April 2022

74 J De Lyon, R Martin, J Oliveira-Cunha, A Shah, K Shah, G Thwaites & A Valero, Enduring strengths: Analysing the UK’s current and potential economic strengths, and what they mean for its economic strategy, at the start of the decisive decade, The Economy 2030 Inquiry, April 2022

75 J De Lyon, R Martin, J Oliveira-Cunha, A Shah, K Shah, G Thwaites & A Valero, Enduring strengths: Analysing the UK’s current and potential economic strengths, and what they mean for its economic strategy, at the start of the decisive decade, The Economy 2030 Inquiry, April 2022

76 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

77 Dr Kean Fan Lim (Reader in Economic Geography at Newcastle University) (IND0037)

78 Dr Kean Fan Lim (Reader in Economic Geography at Newcastle University) (IND0037)

79 The Centre explained that “identifying and ‘placing’ sectors that could generate new growth are usually dependent on the pre-existence of supporting infrastructure and labour markets.” Dr Kean Fan Lim (Reader in Economic Geography at Newcastle University) (IND0037)

80 The Resolution Foundation, The art of strategy: How to make a success of the Government’s new Industrial Strategy, December 2024

81 University of Cambridge and Bennett Institute of Public Policy, Making sense of Labour’smodern industrial strategy, January 2025

82 Centre for Sectoral Economic Performance – Imperial College London (IND0036)

83 Make UK (IND0064)

84 University of Cambridge and Bennett Institute of Public Policy, Making sense of Labour’s modern industrial strategy, January 2025

85 The Law Society for England and Wales (IND0028), DJI (IND0027), Angel Trains (IND0031), Imperial Centre for Sectoral Economic Performance (CSEP) (IND0036), Vertical Aerospace (IND0049), Premier League (IND0068); RenewableUK (IND0109); CIMA (IND0010); ADS (IND0011)

86 ADS Group (IND0011), Tech UK,Driving technology adoption across the economy is the key to the success of the Industrial Strategy, December 2024; Q113 [Audrey Yvernault], Q152 [Miles Celic], Q152 [Stevan Randjelovic], Q152 [Ramon Kaur], Q175 [Paul Morris], Q176 [Antony Walker]

87 Q514 [Alan Johnson]

88 Q133 [Audrey Yvernault]; Q338[Tom Keith-Roach]

89 Q339 [Shaun Grady]

90 Q339 [Shaun Grady]

91 Q339 [Shaun Grady]

92 UK Finance (IND0055)

93 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

94 Resolution Foundation, How to do industrial strategy: A guide for practitioners, April 2025

95 Resolution Foundation, How to do industrial strategy: A guide for practitioners, April 2025

96 Business, Energy and Industrial Strategy Committee, Seventeenth Report of Session 2017–19, Industrial Strategy: Sector Deals, HC 663, 12 March 2019

97 Q7 [Professor Mazzucato]

98 UCL Institute for Innovation and Public Purpose, Response to Department of Business and Trade Green Paper: Invest 2035, December 2024

99 HM Government, Industrial Strategy: Building a Britain fit for the future, November 2017

100 Business and Trade Committee, Oral evidence: Industrial policy, HC 440, Tuesday 20 February 2024,Q31 [Greg Clark]

101 HM Government, Industrial Strategy: Building a Britain fit for the future, November 2017

102 Q7 [Professor Mazzucato]

103 House of Commons Library, Procurement statistics: a short guide, Research Briefing 9317, 30 August 2024 p.3. This figure for 2023/24 includes all public sector procurement, including procurement of goods and services by one public sector body from another.

104 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

105 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

106 On 24 April 2025, the Minister for Trade Policy and Economic Security said that the Government aimed to publish the trade strategy “in the coming weeks”. (HC Deb, 24 April 2025, Col 529WH)

107 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024;

108 Q66

109 Q64

110 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

111 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

112 Department for Business and Trade, DBT National Survey of UK Registered Businesses 2023 Report, 29 August 2024 (of £500,000+ turnover businesses), p.6

113 Q154

114 Professional and Business Services Council, About the PBSC | PBSC; Q154

115 Q154

116 Q338

117 Q339

118 The Green Paper was published on 14 October 2024.

119 Office for National Statistics, UK trade with the United States 2023, 17 January 2025

120 Q447

121 Q163

122 Announced on 6 May 2025, 8 May 2025, and 19 May 2025.

123 Q129

124 Q129

125 Q154

126 Q8

127 Q453; Q506; Q507

128 Q453; Q454; Q503; Q504

129 Q164; Q129

130 Q277

131 Q289

132 Q195

133 Q195

134 IND0040

135 IND0040

136 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

137 House of Commons Library, Procurement statistics: a short guide, Research Briefing 9317, 30 August 2024 p.3. This figure for 2023/24 includes all public sector procurement, including procurement of goods and services by one public sector body from another.

138 The UK’s gross spending on public sector procurement was £407 billion in 2023/24 across the UK. The UK’s GDP at year-end 2024 was £2,851 billion in cash terms. Gross spending on public sector procurement therefore equates to £1 for every £7 in UK gross domestic product.

139 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024; The Procurement Act 2023 received Royal Assent on 26 October 2023.

140 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024; Cabinet Office, National Procurement Policy Statement, 13 February 2025

141 Q688

142 Q394

143 HC Deb 5 February 2025 c748; HC Deb 8 April 2025 c706; Public Bodies: Procurement, PQ 44243, 22 April 2025; for the similar position of the Conservative government see House of Commons Library, Procurement Bill 2022–23, Research Briefing, 5 January 2023, p.73

144 This includes the World Trade Organization, Agreement on Government Procurement (GPA) and UK Government, UK-EU Trade and Cooperation Agreement, 30 April 2021 [cf. Crown Commercial Service, National Procurement Policy Statement, 13 February 2025, p2: “Nothing in this Statement should conflict with the Government’s international trade obligations, obligations under other legislation, or with their obligations to procure goods, works and services in an open, fair, and transparent manner whilst guarding against fraud and corruption”.]

145 Procurement Act 2023, s 90; Cabinet Office, Guidance: Treaty State Suppliers, 14 January 2025

146 Q696

147 Q672; He told us: “some sectors might have that information, in terms of how directly it corresponds to economic growth, but, in my role as the person responsible for the Government commercial function, that is not information that I am familiar with”.

148 Q700

149 Q675

150 Q685

151 Qq680-681

152 Q676

153 Q681

154 Q676

155 Q709

156 Q13

157 Q10

158 Q188

159 Q188; Q190

160 Q709

161 Q271

162 Q273

163 Q273

164 Q342

165 Q343

166 Q689

167 Q692; Q688

168 Q693; Up to £139,000 for goods and services and £5.5 million for construction.

169 IND0116

170 Q190

171 Q718

172 Q717

173 Q286

174 Q286

175 Q286

176 Q692

177 Q13

178 Q655

179 Q470

180 IND0061

181 IND0011

182 Q361

183 Q394

184 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

185 This refers to the process by which public sector investment can help to attract private sector. Public sector investment can help reduce the risks for investors. The National Wealth Fund, for example, has a target to attract £3 of private investment for every pound it invests. However, public sector investment can also crowd-out private investment, if there is limited capacity within the economy..

186 Q616 [John Godfrey]

187 Q768 [Lord Livermore]

188 Q624 [John Flint]

189 Q624 [John Flint]

190 Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023

191 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

192 Q623 [John Flint]

193 Q761 [Jonathan Reynolds],

194 Q759 [Lord Livermore]

195 Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023

196 British Private Equity and Venture Capital Association (IND0098)

197 British Private Equity and Venture Capital Association (IND0098)

198 British Private Equity and Venture Capital Association (IND0098)

199 Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023

200 Q621-622 [Louis Taylor]

201 Q621 [Louis Taylor]

202 Department for Business and Trade and HM Treasury, the Harrington Review of Foreign Direct Investment, November 2023

203 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

204 Q617 [John Godfrey]

205 Q617 [John Godfrey]

206 Q617 [John Godfrey]

207 Q733 [Lord Livermore], Q739 [Jonathan Reynolds]

208 Q768 [Lord Livermore]

209 Q766 [Jonathan Reynolds]; Q768 [Lord Livermore]

210 Q766 [Jonathan Reynolds]

211 Industrial Strategy Council, Annual Report, February 2020

212 Industrial Strategy Council, Annual Report, February 2020

213 Industrial Strategy Council, Annual Report, February 2020

214 Industrial Strategy Council, Annual Report, February 2020

215 Criscuolo, C. et al. (2023), “Quantifying industrial strategies across nine OECD countries”, OECD Science, Technology and Industry Policy Papers, No. 150, OECD Publishing, Paris, https://doi.org/10.1787/5f2dcc8e-en.

216 Professor Stephanie Rickard (IND0024)

217 The business environment refers to features of the economy that are amenable to policy change. These include the availability of skills, the flexibility of the labour market, the regulatory environment, the tax system, the planning regime and the presence of infrastructure.

218 Adam Smith Institute, Adam Smith Institute Business Confidence Survey 2025, March 2025

219 Government Office for Science, International industrial policy experience and lessons for the UK, October 2013

220 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

221 Resolution Foundation, The art of strategy: How to make a success of the Government’snew Industrial Strategy, December 2024

222 Department of Business and Trade and HM Treasury, Harrington Review of Foreign Direct Investment, November 2023

223 Q133 [Audrey Yvernault]

224 Q534 [Alan Johnson]

225 Department of Business and Trade and HM Treasury, Harrington Review of Foreign Direct Investment, November 2023

226 Department of Business and Trade and HM Treasury, Harrington Review of Foreign Direct Investment, November 2023

227 Department of Business and Trade and HM Treasury, Harrington Review of Foreign Direct Investment, November 2023

228 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

229 Climate Change Committee, The Seventh Carbon Budget, February 2025

230 Climate Change Committee, The Seventh Carbon Budget, February 2025

231 Q463 [Stephen Phipson]

232 Climate Change Committee, The Seventh Carbon Budget, February 2025

233 Department for Energy Security and Net Zero (2025) International Industrial energy prices. Industrial electricity prices in the IEA (QEP 5.3.1)

234 Department for Energy Security and Net Zero (2025) International Industrial energy prices. Quarterly: Industrial electricity prices in the EU for small, medium, large and extra large consumers (QEP 5.4.1 to 5.4.4).

235 Department for Energy Security and Net Zero (2025) International Industrial energy prices. Quarterly: Industrial electricity prices in the EU for small, medium, large and extra large consumers (QEP 5.4.1 to 5.4.4).

236 Arman Mazhikeyev (IND0046), Tata Steel UK (IND0060), Mineral Products Association (IND0071), The Society of Chemical Industry (IND0082), MakeUK (IND0064), Chemical Industries Association (IND0086), British Printing Industries Federation (IND0102); Q461 [Stephen Phipson]

237 Q461 [Stephen Phipson]

238 MakeUK (IND0064)

239 Q529 [Alan Johnson]

240 Department of Business and Trade and HM Treasury, Harrington Review of Foreign Direct Investment, November 2023

241 Jaguar Land Rover (IND0105)

242 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024;

243 Q729 [Jonathan Reynolds]

244 Department of Business and Trade and HM Treasury, Harrington Review of Foreign Direct Investment, November 2023; Q730 [Jonathan Reynolds]

245 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

246 Q730 [Jonathan Reynolds]

247 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

248 Q478 [Professor Greenwood]; Institution of Mechanical Engineers (IND0023); Association of Colleges (IND0076); Chemical Industries Association (IND0086); Chartered Accountants in England and Wales (IND0087); Q168 [Stevan Randjelovic], Q526 [Mike Hawes]; Logistics UK (IND0088); TheCityUK (IND0014), Dr Dongna Zhang (IND0005)

249 Recruitment and Employment Confederation (IND0039); IBM (IND0108);

250 Recruitment and Employment Confederation (IND0039)

251 Association of the British Pharmaceutical Industry (IND0015)

252 Green Alliance (IND0073)

253 Green Alliance (IND0073)

254 Dr Darcy Luke, Dr Nathan Critch, Professor Patrick Diamond, Professor David Richards, Dr Sam Warner, Professor Andy Westwood (IND0017)

255 Recruitment and Employment Confederation (IND0039), BusinessLDN (IND0047)

256 BusinessLDN (IND0047); Logistics UK (IND0088)

257 Q478 [Professor Greenwood], TheCityUK (IND0014), Hitachi Energy (IND0035), Institution of Mechanical Engineers (IND0023), Recruitment and Employment Confederation (IND0039)

258 TheCityUK (IND0014), City of London Corporation (IND0042), MakeUK (IND0064), Q168 [Stevan Randjelovic]

259 The City of London Corporation (IND0042), UK Finance (IND0055), British Insurance Brokers’ Association (IND0085), Arman Mazhikeyev (IND0046), Chartered Management Institute (IND0058); British Private Equity and Venture Capital Association (IND0098), British Screen Forum (IND0110

260 TheCityUK (IND0014), UK Finance (IND0055), City of London Corporation (IND0042), Royal Academy of Engineering (IND0045), UK Finance (IND0055), Premier League (IND0068), The Institute of Physics (IOP) (IND0092), British Private Equity and Venture Capital Association (IND0098)

261 Ministry of Housing, Communities and Local Government, English Devolution White Paper, December 2024

262 Q592– Q593 [Howard Dawber]; Q593 [Kim McGuinness]

263 Q600 [Andy Burnham]

264 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

265 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

266 The Royal Academy of Engineering (IND0045)

267 The Royal Academy of Engineering (IND0045)

268 Policy Exchange, Where now for UK industrial policy? Lessons from the past, and from other countries, January 2024

269 Policy Exchange, Where now for UK industrial policy? Lessons from the past, and from other countries, January 2024

270 Q15 [Professor Mazzucato]

271 The Royal Academy of Engineering (IND0045)

272 Q15 [Professor Mazzucato]

273 Q463 [Stephen Phipson]

274 HM Treasury, Autumn Budget 2024: Fixing the Foundations to Deliver Change, HC 295, 30 October 2024

275 Q14 [Professor Coyle]

276 Q6 [Sir Charlie Mayfield]

277 Q535

278 Oral evidence taken by the Business, Energy and Industrial Strategy Committee on 11 October 2016, Q5

279 Oral evidence taken by the Business, Energy and Industrial Strategy Committee on 15 December 2016, Q464

280 Oral evidence taken by the Business, Energy and Industrial Strategy Committee on 15 December 2016, Q466

281 Q85, Q86

282 Q162

283 Q155

284 Q745

285 Q745

286 Q558

287 Q572

288 UK Government, Chancellor fires up financial services sector to drive growth, 14 November 2024; UK Government, Mansion House 2024 Speech, 14 November 2024

289 UK Government, Game-changing tech to reach the public faster as dedicated new unit launched to curb red tape, 8 October 2024

290 Q744

291 Q745

292 Q745

293 Q745

294 Q633

295 Q577

296 Life Sciences Industrial Strategy

297 Q127; Sir John Bell added that he was optimistic that the Medicines and Healthcare products Regulatory Agency would get the necessary support it needs from government and its new leadership would take it to a new level.

298 Q169

299 Q577

300 Q166

301 Q196

302 Q196

303 Q740

304 Q379

305 Q379

306 Q379

307 Q378

308 Q379; Defence Growth BoardDefence Growth Board, PQ 42300, 3 April 2025

309 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

310 Q614

311 Department for Business and Trade, Invest 2035: the UK’s modern industrial strategy, October 2024

312 Industrial Strategy Advisory Council - GOV.UK; [Membership of the Advisory Council is listed here: Membership - Industrial Strategy Advisory Council - GOV.UK]

313 Q490

314 Q535

315 Q170

316 Office for Life Sciences is a joint unit of the Department of Health and Social Care and the Department for Science, Innovation and Technology.

317 Q148

318 Q151

319 Q644

320 Q15

321 Q595

322 Q595

323 Q202

324 Q535

325 Q476

326 Q477

327 Q34

328 Q31

329 Q615