R&D in the 2025 Industrial Strategy

The basics of the Industrial Strategy

The Industrial Strategy is a 10-year strategic plan focused on attracting investment and driving growth in the UK, building on the Government’s Invest 2035 Green Paper published in October 2024. Along with organisations from across the sector, CaSE submitted its recommendations to the Government for the Industrial Strategy.

The Industrial Strategy focuses on backing eight high potential sectors (termed the IS-8) which as a whole have strong links to R&D. These sectors are:

• Advanced Manufacturing
• Clean Energy Industries
• Creative Industries
• Defence
• Digital and Technologies
• Financial Services
• Life Sciences
• Professional and Business Services

Each of these sectors will be supported by their own 10-year plan. At the time of writing, sector plans are available for Advanced Manufacturing, Clean Energy Industries, Creative Industries, Digital and Technologies, and Professional and Business Services.

The current Industrial Strategy Unit in the Department for Business and Trade (DBT) will be transitioned into a permanent delivery unit. Monitoring of the delivery of the Industrial Strategy and the individual sector plans will be overseen by an independent Industrial Strategy Advisory Council.

In the following sections, we dig deeper into what the strategy means for areas of interest for UK R&D.

R&D investment

The Industrial Strategy recognises innovation as one of the most important levers to drive growth in the UK. It states that the previously announced £86 billion investment into UK R&D over the Spending Review period (2026/27-2029/30) will be targeted towards the IS-8 and will aim to leverage private investment into research, technologies, and commercial adaptation.

The strategy aims to focus the UK R&D system on long-term economic growth by targeting public investment towards advancing basic curiosity-driven research; delivering on government priorities; and enhancing innovative company formation and growth. We’re pleased to see the recognition of the important role of R&D and in particular basic research – the foundation that underpins the rest of the UK’s R&D sector. However, the strategy goes on to say that UKRI will be given new objectives and will redirect its programmes and budgets to increase support for the Industrial Strategy and the IS-8. Care should be taken that this is not done at the expense of support for discovery research.

Earlier this year, the Government announced its plans for long-term, ten-year government funding for R&D which took up a variety of CaSE’s recommendations. We’re pleased to see the Industrial Strategy recommit to this policy. It goes on to announce the first recipients of ten-year budgets: the DRIVE35 programme for zero emission vehicles, the National Quantum Computing Centre, the Laboratory of Molecular Biology, and CaSE member the Aerospace Technology Institute. It’s important that the Government continues this positive trajectory to signal to globally mobile private companies and investors that UK R&D is a strong, reliable destination for investment by expanding long-term funding to more organisations across the sector.

Universities

The UK’s universities are a national asset and a powerful engine for driving economic growth across the country by performing cutting-edge research, teaching tomorrow’s skilled workforce and providing a focal point for regional innovation clusters. It is very positive to see recognition of this in the Industrial Strategy and that universities will be important partners for delivery. This sentiment is shared by the UK public – CaSE research has found that a majority (69%) think that the universities in the UK are some of the best in the world, with the same proportion of people regarding this as an important strength for the country.

Universities are under significant financial pressures. To effectively hold their vital role in the R&D system they must be supported by Government to achieve a sustainable financial model across both their teaching and research activities. The Industrial Strategy doesn’t include any information about what steps the Government will take to address this but reiterates that reforms for England’s Higher Education system will be set out in the forthcoming Post 16 Education and Skills White Paper.

Elsewhere, the strategy commits to continued support through Higher Education Innovation Funding, worth £280 million in 2024/25. As England’s primary public funding stream for university innovation, this enables universities to translate their world-leading research into benefits to the economy and society. A 2025 Research England review found that without HEIF, 38% of knowledge exchange activities would not occur, and that every £1 invested in HEIF generates £14.80 in returns for the UK.

Regulatory environment

Forward-looking regulation is a powerful signal to businesses and investors that the UK is an attractive environment for investment. We have also heard from CaSE members that regulation is necessary to ensure consumer confidence in businesses. There must, therefore, be a balance between not stifling first mover advantage while having sufficient regulatory oversight.

It is good to see the Industrial Strategy commit to creating a regulatory environment that supports innovation; however, it does not include much new detail on what this will involve. The strategy makes reference to the Regulation Action Plan published earlier this year that sets out a series of priorities to support an agile and pro-innovation regulatory system. The strategy states that it will build on this Plan including through prioritising regulatory reform for “frontier industries” with a focus on increasing regulators’ capability and agility. CaSE has previously called for action to address regulatory capacity as an area that requires urgent attention. Lack of regulatory capacity can lead to costly delays for businesses, which is a particular issue for small and medium sized businesses. It could also have an impact on business confidence in the UK regulatory environment.

Other measures stated include making the regulatory system easier to navigate, influencing international standards and ensuring that regulation supports and keeps pace with innovation through the Regulatory Innovation Office – all of which CaSE has previously called for.

Driving adoption and uptake

The strategy recognises the importance of leveraging public procurement to drive the adoption and uptake of innovation. It commits to implementing recent measures to support procurement reform, building on the Procurement Act 2023, which came into force in February 2025. These include measures that encourage public bodies to use procurement and a focus on removing barriers for smaller businesses, amongst others. CaSE has previously recommended that the UK Government should consider better leveraging public procurement as a signal to R&D-intensive businesses. This included recommendations to establish more flexible and adaptable procurement pathways to support smaller businesses.

There is also commitment to build commercial skills in government, with the creation of an in-house Business Academy. In our Industrial Strategy submission we highlighted that a culture of risk aversion within government can hinder access to the most innovative solutions. This commitment is therefore a welcome initiative to strengthen officials’ knowledge of R&D-intensive businesses and how they operate.

Infrastructure

As previously announced, gigafactories, laboratories and data centres will be allowed to opt in to be designated Nationally Significant Infrastructure Projects, helping to fast-track their planning process. Elsewhere, the recently published Infrastructure Strategy recognised the importance of considering both R&D infrastructure and wider infrastructure such as housing and water, to support regional R&D growth, in line with consistent recommendations from CaSE.

Business and scale-ups

The strategy included elements that will impact R&D-intensive businesses. CaSE has previously called for stability in Government policy on R&D tax credits and we were pleased to see that these were included in the list of existing support for businesses that will be maintained. Also included in this list of current support were the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS), and Venture Capital Trust (VCT) scheme.

While it is welcome that these schemes are being extended, the strategy does not include any updates to the thresholds that limit the amounts VCTs can invest through these schemes. In our Industrial Strategy submission, CaSE recommended that these schemes be updated to ensure they remain relevant to the current investment landscape.

The section ‘Creating an enduring partnership with business’ sets out a series of measures to improve support for small and medium enterprises (SMEs), including introducing a simplified digital interface to improve access to essential information for businesses at all stages of growth: the Business Growth Service, expected in summer 2025. This is a great first step in establishing clear signposting of all the information R&D-intensive businesses need, including relevant funding calls and regulatory content, and is a service that CaSE has previously called for in our Backing Business R&D report. The DBT must now build on and strengthen this offer through consultation with the sector to ensure its new digital interface remains up to date and is robustly serving the UK SME community. The strategy also highlights the existing Growth Hub network as an avenue to improve access to advice and support for SMEs in England.

Prior to the publication of this Industrial Strategy the UK Government had announced welcome actions to support spin outs and start-ups, which are another vital component of the UK R&D system. This includes implementing recommendations from the independent review of university spin-out companies and improving access to finance through commitments to support the British Business Bank in increasing its overall financial capacity to £25.6 billion.

The Industrial Strategy includes many announcements relating to SMEs and scale-ups, which is positive as the scale up stage has been reported as a particular gap in the landscape. However, with university finances under significant pressure, financial support for spinouts and start-ups could be increasingly under threat. CaSE will continue to advocate for greater support for R&D-intensive universities and businesses of all growth stages.

International talent

For UK R&D to drive economic growth across the country, it is essential that the sector has a skilled workforce. The Government’s 2021 People and Culture Strategy estimated that the R&D sector will need an additional 150,000 researchers and technicians by 2030 to sustain its ambitions for R&D. Attracting international talent to the UK is essential to fill these skill gaps, in addition to the benefits they bring in the form of new knowledge and expertise to spark innovation in the UK. It is therefore welcome to see commitments in the Industrial Strategy to make the UK more attractive to international talent. CaSE’s 2024 public attitudes research showed that a majority would prefer universities in the UK to recruit the best global talent, even if it means more immigration to the UK.

Many people also believe that UK universities employing international researchers brings wider benefits to the UK, including a diversity of ideas and culture along with improved opportunities to collaborate and benefits to the economy.

The strategy includes several eye-catching commitments to attract the best talent from overseas to the UK. A new Global Talent Taskforce, reporting to the Prime Minister’s Office and the Treasury, will aim to attract top talent to the UK and identify ways to make the UK a more attractive destination. It is a real positive that it reports directly to the Prime Minister and Chancellor, a signal of the high importance placed on this by the Government. There will also be a new £54 million Global Talent Fund with an aim to attract 10 world-class researchers and their teams to the UK over the next five years. Also, new Turing AI Global Fellowships will specifically target overseas researchers and will provide £25 million of multi-year funding for AI research at UK institutions.

These come in addition to reforms to existing visa routes, including reforms to the Global Talent visa to make it more accessible to “promising” talent; a review of the Innovator Founder visa to improve access for students at UK universities; and a planned doubling of qualifying universities for the High Potential Individual visa. The UK Government will also exempt certain occupations, which are considered to be crucial to the Industrial Strategy, from planned increases to the threshold for the Skilled Worker visa. All the exempt occupations given as examples in the Industrial Strategy are relevant to the UK’s R&D capabilities, such as laboratory, computer-aided design, IT, and engineering technicians, data analysts, and welders.

While these are positive changes, they leave a range of large barriers to attracting international talent to the UK unaddressed, including upfront visa costs that are substantially higher than other comparable research-intensive countries and visa policy that makes it hard for international researchers to build a life in the UK. We look forward to working with the Government to make the necessary changes to the Global Talent visa to make it more streamlined and accessible and would urge Government to look again at reducing the very high upfront costs of the visa system. It is also important that the new taskforce looks to attract the top people at all research career stages.

Skills

The strategy contains a raft of commitments to develop the domestic skills base in England and a commitment to work with devolved governments to align the UK skills system with economic priorities. This includes a commitment to provide £1.2 billion of additional skills investment per year by 2028/29.

The strategy commits to “harness all parts of the system to create a talent pipeline for crucial occupations, from our work experience schemes and apprenticeships, to our Higher Education and Further Education sectors, to our network of Jobcentres”. In our report The Skills Opportunity, CaSE called for the UK Government and devolved administrations to coordinate and support an integrated skills system to deliver a more innovative and research-intensive UK. It is therefore positive to see a focus on coordinating different parts of the skills system. To deliver the skills needed for R&D, a range of dimensions of skills provision needs to be considered, including science teaching in schools and careers advice, through to higher and further education, lifelong learning, and immigration.

Efforts to align England’s skills provision with the Industrial Strategy include commitments around apprenticeships, short courses as well as the previously announced Lifelong Learning Entitlement, launching in January 2027, which aims to upskill the public across their working lives. Initial courses will focus on training into the IS-8. It is important that in their delivery the Government considers the supply and demand landscape of skills both across the R&D landscape and the regions of England.

In the Industrial Strategy there is an emphasis on encouraging engagement and investment from employers to address skills gaps, including by working with Skills England to identify needs and co-develop solutions. It is positive to see a focus on greater employer engagement in developing the provision of skills as they can help to identify, anticipate and address local and national skills gaps, as well as develop new types of provision to support lifelong and flexible learning.

The strategy also states that Skills England will work with devolved governments to create a coherent and accessible skills system for the IS-8 to access across the UK. It is welcome to see a focus on growing regional skills bases as the skills needs of businesses are not always communicated effectively to education institutions and more can be done to engage residents with R&D career paths. In our Place 2025 briefing we recommended that local authorities and devolved Governments should align education and skills development with regional employer needs. The public already associate R&D with job creation. CaSE public opinion research shows that most people who support more R&D activity in their region or local area do so because of the potential this will bring in jobs.

Place

It is good to see a strong focus on place in the strategy, including a full section on supporting the UK’s city regions and clusters, and recognition that all IS-8 Sector Plans will include interventions for their most important city regions and clusters. We are particularly pleased to see the strategy recognises individual R&D strengths in each region of the UK and hope the Government builds on these to drive nation-wide growth. CaSE research found that a majority think it is important that their region carries out a lot of R&D, peaking at 80% in Scotland and 79% in the North East. Across the UK, respondents who felt this way were motivated by local jobs and inwards investment.

Many of the commitments in England will be delivered through the Mayors and larger Strategic Authorities outlined in the English Devolution White Paper. As CaSE has previously emphasised, it is important that all regions of England benefit from these changes, including those without a Mayor. CaSE has identified place as a vital way to strengthen the connection between the public and R&D community. It is vital that conversations about devolution of R&D funding include an assessment of how to include the public’s views and voices, early and often. This is discussed in more detail in our People and Places report.

The headline commitment for place-based R&D is to the Local Innovation Partnerships previously announced alongside the Spending Review. These will provide up to £500 million to grow high potential innovation clusters across the UK. At least £30 million each will be reserved for seven Mayoral Strategic Authorities in England, and one location in each of Scotland, Wales and Northern Ireland. We’re pleased to see this support for place-based innovation but are disappointed that other regions of the UK will only have access to funding through a competitive process. CaSE has previously recommended against this approach as it can come at the expense of inter-regional collaboration and alignment to national priorities.

What next?

As the Government moves from developing to implementing its Industrial Strategy it is important that they give the R&D sector certainty and support to drive growth in the UK economy. CaSE will actively monitor how the implementation of these policies affects the sector, and we will continue to work with our members, government and the wider R&D community to advocate for the changes needed to ensure UK R&D drives growth across the country and improves lives and livelihoods.