Call us on:  01933 510 022 

Latest industrial strategy promises R&D focus

The latest industrial strategy has received a mixed response, with many uncertain whether the strategy can live up to its promises and address productivity problems highlighted by the OBR’s recent downgrade of the UK productivity growth forecast.

The latest industrial strategy has promised to address productivity problems highlighted by the OBR’s recent downgrade of the UK productivity growth forecast, aiming to position the UK “at the forefront of the industries of the future”. This industrial strategy replaces last year’s 10 “strategic pillars” with the five foundations of productivity, which include plans for the UK to become the world’s most innovative country by 2030.

Innovation takes centre stage

R&D has certainly become a focal point for the government following the latest Autumn Budget where, the Chancellor promised an additional £2.3 billion investment in R&D as well as an increase in the rate of R&D tax credit for the RDEC scheme to 12%. Though the Chancellor didn’t propose any increase in R&D tax credit rates for the SME scheme, the industrial strategy does state that the government will launch a campaign to raise awareness of this scheme – which is much needed since only a small proportion of those SMEs carrying out R&D are currently taking advantage of the scheme, often due to confusion around what qualifies and the complexities of the scheme.

This industrial strategy includes a £725 million investment in new Industrial Strategy Challenge Fund programmes to “capture the value of innovation”, as well as a push to raise total R&D investment to 2.4% of GDP by 2027, and 3% in the longer term. The whitepaper states that in order for the UK to thrive, we must look ahead and prepare for the future; from this four “grand challenges” have been identified. These challenges rely on businesses, academia and civil society working together to develop new technologies and industries in areas of strategic importance; AI and data, clean growth, mobility and innovation to support an ageing society.

The business environment is set for improvement through the introduction of Sector Deals, which currently target life sciences, construction, artificial intelligence and the automotive sector. These Sector Deals are partnerships between the government and industry on sector-specific issues which aim to boost productivity, employment, innovation and skills.

Sector Deals

Life Sciences

A Sector Deal with the life sciences sector saw both the sector and government agree a set of strategic goals, to ensure that the UK is at the forefront of developing new treatments and medical technologies, as well as strengthening the UK’s reputation for science and research. Greg Clark, Secretary of the State for Business, Energy and Industrial Strategy, spoke about the importance of advancement in science and technology which can lead to earlier and more accurate diagnoses, new treatments and more beneficial care.

Clark also payed tribute to the UK’s leading universities, research institutes and businesses working within this sector.

We are home to many of the most successful global life sciences businesses and we are also a hotbed of new businesses – springing up to bring new discoveries and techniques to a wider market. Our National Health Service is a prized national asset – the nation’s biggest employer and a deep source of learning and of translating discoveries into care.

Greg Clark Secretary of the State for Business, Energy and Industrial Strategy

The deal covers a number of themes, which involve a new state-of-the-art R&D hub in London, a government investment from the Industrial Strategy Challenge Fund of up to £210 million and world-leading clinical trials through new trials platforms.

Artificial Intelligence

This sector deal has been put in place to boost the UK’s global position as a leader in the development of AI technologies. By one estimate, AI will add £232 billion to the UK economy by 2030 – and the UK is already home to a number of globally-renowned AI companies.

The recent review by Professor Dame Wendy Hall and Jérôme Pesenti (‘Growing the artificial intelligence industry in the UK’) describes how increased use of AI could bring major social and economic benefits to the UK. Crediting British computer scientist Alan Turing with launching and inspiring activity to develop AI, Hall and Pesenti cite the UK as the centre for AI expertise.

The latest industrial strategy also identifies AI as one of four “grand challenges” to be addressed, promising to focus on positioning the UK “at the forefront of the AI and data revolution”. Whilst AI can be seen as an industry in its own right, it will also permeate a number of other sectors where it has the potential to create thousands of new jobs.

The Industrial Strategy Challenge Fund is again providing opportunities for development of AI and data-driven innovation for service sectors, as well as seeing the ‘Data to early diagnostics and precision medicine’ programme support enhancements in the power of health data for the fast diagnosis of life-changing diseases.


Earlier this year, the UK government announced  plans to ban the sale of new gas and diesel cars by 2040. This Sector Deal looks to build on the success of the UK automotive sector and support the move to ultra-low and zero emission vehicles. It’s estimated that by 2030, 50% of vehicle production will be electric or plug-in hybrid electric. This explains the announcement of the Faraday Challenge  in June this year, which represents a £246 million commitment to battery development over the next four years.

With the Chancellor announcing a healthy £540 million investment in research and development and charging infrastructure in his latest Autumn Budget, the UK is pushing hard to achieve competitive advantage in this area.

As ever, we are pleased to see the government’s recognition of the crucial role research and development plays in driving the UK economy forward. Read the full industrial strategy white paper.

Contact MPA

If you’re undertaking R&D and would like to know more about funding options or eligibility, get in touch.

Talitha Heaton
Talitha Heaton Marketing Executive

My role in the marketing team is relatively varied – which is something I love about working at MPA. Recently, I’ve worked on our new brand as well as the development of Nova, our new service offering. In marketing, we’re always trying to find better, more effective ways of communicating with innovative businesses across the UK. Our aim is to raise awareness of the support available to these businesses and ensure receiving that support is as easy as possible.