£4.5bn boost turbocharges manufacturing innovation, sustainability and productivity
21 November 2023
The UK Government has unveiled a £4.5 billion investment plan for the manufacturing sector.
Announced on 17 November 2023, the funding is set to span over five years, starting from 2025, and benefit eight key sectors across the UK.
The investment aims to offer long-term certainty for industries, encouraging sustained investment. With a focus on sectors vital for economic growth, energy security, and ‘levelling up’, this initiative aligns with the broader goal of making the UK an ideal destination for starting, growing, and investing in manufacturing.
Of the allocated funds, over £2 billion has been earmarked for the automotive industry, while aerospace is set to receive £975 million. These funds will support the manufacturing, supply chain, and development of zero-emission vehicles.
The Government has also committed to extend the Connected and Automated Mobility Research and Development programme, with plans to invest up to £150 million in the scheme between 2025-26 and 2029-30. Alongside the recent announcement of a new Automated Vehicles Bill, this will help the UK to achieve its ambition to lead the way in its deployment of self-driving vehicles.
Meanwhile, the upcoming release of the UK's first Battery Strategy (due to be announced later this week) is expected to outline the Government’s plans to achieve a globally competitive and sustainable battery supply chain by 2030.
A hydrogen industry task force has also been announced, delivered in partnership with the Hydrogen Innovation Initiative and Innovate UK, has also been announced. It will seek to accelerate the manufacture of hydrogen propulsion systems.
Mike Hawes, SMMT Chief Executive, described the funding as a “vote of confidence” in the automotive industry. “Coming on the back of almost £20 billion committed by the sector in next-generation plants and technologies this year alone, it is indicative of the scale of investment such support can leverage and the result of substantial collaboration between Government and the industry,” Hawes said.
“It will deliver benefits not just for the automotive sector, but for the whole country in terms of growth, high-value jobs and productivity. It also sends a powerful signal that the UK is open for business.”
In addition, £960 million has been allocated for the Green Industries Growth Accelerator, aimed at boosting clean energy manufacturing. This investment will support the expansion of home-grown clean energy supply chains, with a focus on carbon capture, electricity networks, hydrogen, nuclear, and offshore wind.
Chancellor of the Exchequer, Jeremy Hunt, emphasised that the funding aims to support sectors where the UK already excels or has the potential to lead the way on a global scale.
“Britain is now the eighth largest manufacturer in the world, recently overtaking France,” Hunt said. “To build on this success, we are targeting funding to support the sectors where the UK is or could be world-leading.”
“Our £4.5 billion of funding will leverage many times that from the private sector, and in turn will grow our economy, creating more skilled, higher-paid jobs in new industries that will be built to last.”
The investment recognises the crucial role that the manufacturing sector plays in the UK’s economy, accounting for over 43 percent of all UK exports and employing around 2.6 million people.
However, according to the latest S&P Global/CIPS UK Manufacturing PMI figures, October saw production levels in the sector fall for the eighth successive month, the longest sequence of continual contraction since 2008-2009.
As such, the announcement has provided a welcome boost to the struggling yet ambitious sector. Brian Holliday, Managing Director of Siemens Digital Industries UK, and Co-Chair of Made Smarter, said that it will infuse manufacturers with “the confidence to invest in innovation, productivity and sustainability”.
To support small and medium-sized manufacturing businesses, the Government plans to expand the Made Smarter Adoption programme, which seeks to help SMEs adopt cutting-edge digital technologies that have the potential to lower carbon emissions and enhance productivity.
The scheme will be rolled out to all English regions in 2025-26, with the aim to make it available across the whole of the UK from 2026-27.
This programme is vital if the sector is to address its “recent challenges of weak overall productivity and investment,” claimed Holliday.
Stephen Phipson, CEO of Make UK, also welcomed the commitment to making Made Smarter a national scheme, saying: “Made Smarter has already transformed thousands of companies in the North East, North West, West Midlands and Yorkshire and the Humber, and now it can help turbo-charge industrial digitalisation in SMEs across the whole of the country.
“The end-to-end specialist support the programme delivers has successfully helped smaller businesses dramatically boost productivity, improve energy efficiency, drive growth, upskill roles and deliver new jobs in digital skills to create workforces of the future which will allow Britain’s smaller manufacturers to continue to grow and remain globally competitive,” Phipson said.