The UK Government has set out a sweeping plan to make Britain “the best place in the world to start, grow and invest” in advanced manufacturing by 2035—aiming to near‑double annual business investment in the sector from £21 billion to £39 billion while sharpening the country’s edge in six frontier industries.
The plan couples cheaper energy for factories with fresh funding for R&D, automation and skills, alongside a place‑based push to scale regional clusters.
At stake is a sector that already employs around 760,000 people and generates £82 billion in gross value added each year. Advanced manufacturing accounted for £12.9 billion of business R&D in 2023 and £198 billion of goods exports in 2024, with productivity markedly above the economy‑wide average.
Four pillars to change the business environment
The strategy moves on four fronts:
Ease, speed and stability for doing business
From 2027, a new British Industrial Competitiveness Scheme will cut electricity costs for the UK’s most energy‑intensive manufacturers by an estimated £35–£40/MWh to 2030, backed by a 90% uplift in network charging compensation and continued support through the Energy Intensive Industries Compensation Scheme. Government also promises to accelerate grid connections through a new Connections Accelerator Service, consult on expanding corporate power purchase agreements and publish a revised Hydrogen Strategy in 2025.
Scaling innovation and automation
The paper points to up to £4.3 billion of funding for advanced manufacturing, including up to £2.8 billion in R&D programmes over five years. Policy levers range from full implementation of the Automated Vehicles Act to expanding Made Smarter Adoption with up to £99 million for SME tech take‑up, a new £40 million network of Robotics Adoption Hubs, and investment in data‑sharing infrastructure.
Skills
A new partnership with industry via Skills England will steer provision, with over £100 million earmarked for engineering skills in England, shorter‑duration apprenticeships and a sectoral Upskilling and Reskilling programme. An Equality Charter targets 35% female representation in manufacturing by 2035.
Place
The Government will back clusters across the country—84% of manufacturing jobs are outside London and the South East—including £160 million over 10 years for each Advanced Manufacturing‑focused Investment Zone, pilots to cluster the EV supply chain in the North East and West Midlands, and a Strategic Sites Accelerator to ready land for major projects. A map on page 55 highlights priority regions from the Central Belt to the North East, West Midlands and South Yorkshire.
Cheaper energy and sturdier supply chains
Energy remains the Achilles heel for many plants. The British Industrial Competitiveness Scheme is designed to narrow the UK‑EU gap in electricity prices for qualifying industries, while a beefed‑up British Industry Supercharger provides additional relief. A new Supply Chain Centre will analyse critical supply chains and track resilience outcomes, supported by a forthcoming Critical Minerals Strategy and a Steel Strategy.
The finance side is equally muscular: UK Export Finance has £80 billion of capacity, including a new loan guarantee for domestic suppliers selling critical minerals into UK export chains; the National Wealth Fund brings £27.8 billion to crowd in private capital; and the British Business Bank is committing £4 billion of Industrial Strategy Growth Capital to scale advanced manufacturing firms, including larger equity cheques of £40–£60 million for capital‑intensive businesses. Trade facilitation measures—from Digital Trade Corridors to tariff reliefs in recent deals—round out the package.
Six frontier industries: where the money and policy bite
The sector plan concentrates resources on six “frontier” areas where the UK sees the strongest comparative advantage.
Automotive
The goal is to lift UK production to over 1.3 million cars and commercial vehicles by 2035, backed by DRIVE35—£2 billion in capital and R&D funding to 2030 with a £500 million R&D boost—to accelerate electrification and software‑defined vehicles. The updated Zero Emission Vehicle Mandate gives manufacturers more flexibility and confirms sales of full and plug‑in hybrids until 2035; the Government also points to more than 80,000 public chargers already installed and £1.4 billion to support EV uptake. A £150 million extension of the CAM Pathfinder programme and full implementation of the Automated Vehicles Act by 2027 aim to make the UK the first European market for self‑driving services at scale. Targeted export support will focus on North America, Japan, China, India and Western Europe.
Batteries
The Battery Innovation Programme (formerly Faraday) is funded to £452 million to 2030, supporting next‑generation chemistries and safety, alongside £12 million via the High Value Manufacturing Catapult for novel active materials and solid‑state electrolytes scale‑up. The plan anticipates battery passports and higher recycled content requirements, and flags the role of 23–27 GW of grid‑scale storage by 2030 in delivering clean power. The sector’s regional centre of gravity remains the West Midlands and North East.
Aerospace
With a new generation of ultra‑efficient narrow‑body aircraft on the horizon, the Aerospace Technology Institute programme is extended with up to £2.3 billion to 2035. The Government will also underpin a domestic Sustainable Aviation Fuel industry through a mandate, revenue certainty mechanism and grants under the Advanced Fuels Fund, and support advanced air mobility (drones and eVTOL) via the Future of Flight programme and regulatory reforms.
Space
Expect a more focused push on five capabilities—satellite communications; PNT; in‑orbit servicing, assembly and manufacturing; space domain awareness; and space data architecture—with up to £80 million targeted over five years and up to £135 million across commercial programmes to crowd in private capital. The UK will lean on City of London strengths to become a global hub for space finance and expand its Space Regulatory Sandbox (Rendezvous and Proximity Operations moving to Stage 2).
Advanced materials
Phase 1 of a new National Materials Innovation Programme brings £50 million to coordinate industry‑academia networks, fund pilot lines, and accelerate Materials 4.0 (AI‑assisted discovery, design and verification). A Defence Materials Centre of Excellence in Manchester and open‑access carbon‑fibre development lines in Cheshire sit alongside moves to explore materials passports and lifecycle standards as part of a 2025 Circular Economy Strategy.
Agri‑tech
With the agri‑food chain contributing £147 billion GVA, the Farming Innovation Programme will allocate at least £200 million to 2030, backed by blended‑finance Investor Partnerships and an ADOPT fund to validate ROI for on‑farm automation. An Agri‑Tech Export Accelerator will help UK firms break into priority markets.
Clusters and places: spreading growth
If the strategy has a single highlight, it’s the ring of high‑potential clusters stretching from the Edinburgh–Glasgow Central Belt (space, aerospace and advanced materials) across the North East (automotive, batteries, space) and West Midlands (automotive, batteries, agri‑tech) to South Yorkshire (aerospace, materials) and Belfast City Region.
Investment Zones get £160 million each over 10 years; Freeports remain part of the toolkit; and Government will partner with mayoral authorities on pilot EV‑supply‑chain clusters in the North East and West Midlands to create a replicable blueprint.
Governance, metrics and what to watch
Delivery is always the test with the plan actually naming senior officials to each policy stream, while the Industrial Strategy Council will monitor progress against six core metrics (exports, business investment, GVA, productivity growth, labour market earnings, and the number of large home‑grown firms).
For advanced manufacturing specifically, success will be judged by lower energy costs, fewer supply‑chain disruptions and more major investments; faster R&D‑led productivity; and a stronger, more inclusive skills pipeline.
Business take: credible direction, execution risk
For boardrooms and SME owners alike, three points stand out. First, the energy‑cost relief looks material for eligible plants; if implemented cleanly, it narrows a chronic competitiveness gap.
Second, the funding architecture—NWF, BBB, UKEF, and targeted R&D pots—addresses the UK’s “valley of death” problem between lab and factory, though firms will watch how quickly cheques translate into purchase orders and capex.
Third, the regional dimension is unambiguous: supply chains and skills will be built where firms already cluster, and public money will pursue momentum.
The strategy’s breadth is also a risk. Prioritisation inside each frontier sector—and steady policy on charging, planning and skills—will determine whether the UK converts strong science into scaled manufacturing at pace. Still, by knitting together cheaper energy, patient capital, pro‑innovation regulation and local delivery, Whitehall is giving advanced manufacturers a clearer runway than they have had in years. Now industry has to land the planes.
Read more:
UK’s modern industrial strategy puts advanced manufacturing at the heart of 2035 growth
