Chancellor commits £4.5bn to UK manufacturing industry

Per the emailed statement, key British manufacturers will be able to take advantage of the package of loans and grants from 2025, after the next general election (which is widely expected to occur next year).

The Treasury said the package, which includes £2bn for the automotive industry, £975m for aerospace and £960m for clean energy, would provide manufacturers with “longer term certainty about their investments” and ensure the UK “remains at the forefront of the global transition to net zero”.

The statement comes after the latest S&P Global/CIPS UK Manufacturing PMI figures show that industry continued its contraction in October. The UK manufacturing sector has now been in contraction territory for 15 months.

Speaking about the £4.5bn funding package, Chancellor of the Exchequer, Jeremy Hunt, said: “Britain is now the eighth largest manufacturer in the world, recently overtaking France. To build on this success, we are targeting funding to support the sectors where the UK is or could be world-leading.”

“Our £4.5bn of funding will leverage many times that from the private sector, and in turn will grow our economy, create more skilled, higher-paid jobs in new industries that will be built to last.”

Reacting to the news, Mike Hawes, SMMT Chief Executive, said: “Today’s announcement is an unequivocal vote of confidence in the UK’s critical 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.

“This additional Government investment reflects the fact the UK automotive sector has the talent, the innovation and the determination necessary to thrive in the face of fierce global competition. 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.”

ADS Chief Executive, Kevin Craven, said: “On behalf of industry, ADS is very pleased to welcome the measures announced by the UK Government to support UK aerospace, re-affirming long-term backing for our world-leading advanced manufacturing sector. The UK’s aerospace, defence, security, and space sectors are powerhouses of growth, hubs of ground-breaking innovation, and pioneers of the UK’s advanced manufacturing capability.

“Set against a backdrop of increasing global competition, the continued commitment towards aerospace R&D is significant and will provide a boost to continued investment in innovation and advanced manufacturing in the UK. In addition, we also welcome the Government’s commitment to expand the Made Smarter programme to a pan-UK programme, which will benefit businesses across our nations and regions. This is a very timely intervention given the growing pace of aerospace recovery, huge aircraft order backlog and industries’ continued commitment to net zero.”

Brian Holliday, managing director at Siemens Digital Industries UK, and co-chair of Made Smarter, said:

“Today’s announcement clearly says that UK manufacturing matters. It represents a tremendous investment boost for our makers that will enable the confidence to invest in innovation, productivity and sustainability.

“Key sectors benefit but so does the long tail of small and medium firms which is really important to directly address our recent challenges of weak overall productivity and investment.

“The business benefits of digitalisation are now clear, while being an enabler for industrial decarbonisation too – the package of measures announced in bolstering Made Smarter, targeted regulatory reform and sector support, along with our world-class Catapults and Universities now makes the UK one of the best countries on the planet to sustainably design, make and export goods.”

Tom Bouchier, Managing Director of FANUC UK, said: “This package of loans and grants will help to provide the industry with some much-needed long-term certainty

“As the eighth largest manufacturing nation in the world – and still the only developed country without a coherent Industrial Strategy – we punch well above our weight. To keep driving forward and maintain our strong position on the international stage, UK manufacturers need clarity and certainty to enable them to invest for the future and increase their productivity further through advanced technologies such as automation and digitalisation. This funding package will go a long way towards enabling them to do that.”

John Neill, Executive Chairman of Unipart Group, also welcomed the move. He said: “We welcome the Government’s commitment to advanced manufacturing and the recognition of the strategic importance of the automotive industry to the UK. As an independent management and employee-owned company, Unipart has seen the strategic benefit from investing in developing performance improvement technologies for our global clients across a range of industries including automotive. The government’s investment strategy will enhance opportunities for companies like ours to continue that vital innovation.”

The Treasury statement comes ahead of the Chancellor’s highly-anticipated Autumn statement next Wednesday. Check back next week to see how the manufacturing industry reacts to that.

Paul Miller, Director at Drax Energy Solutions: “The announcement of the UK Government’s £960m funding package for the manufacturing sector is a great opportunity for British businesses. This targeted and measured approach to funding signifies a commitment to achieving impactful results on the journey to net zero.

“This funding presents an opportunity for manufacturers to invest in cleaner production processes and explore innovative solutions that contribute to the ambitious net-zero targets. Energy companies play a pivotal role in helping manufacturers reach their emissions targets, through solutions like energy flexibility, vehicle fleet electrification, carbon credits and electric asset optimisation. This integration will help businesses to enhance their operational efficiency while taking significant strides toward a more sustainable and resilient future.

“As a prominent player in the energy sector, we believe this offers an opportunity to invest in sustainable initiatives. Now is the time for the manufacturing sector to look at offsetting their Scope 1, 2 and 3 emissions with this new investment.”

Made Smarter Adoption Programme to be expanded

To drive growth among SME manufacturers, the government also announced the expansion of the Made Smarter Adoption programme, which will see the scheme offered to all English regions in 2025-26 before working with the Devolved Administrations to explore making the programme UK-wide from 2026-27.

The Made Smarter Adoption programme helps small and medium sized manufacturing companies to use advanced digital technologies which can reduce carbon emissions and drive-up productivity, and its expansion will also involve inclusion of digital internships.

Speaking about the expansion of the programme, Stephen Phipson, CEO of Make UK, the manufacturers’ organisation said: “Make UK has long campaigned for Made Smarter to be a fully national scheme so that all SME manufacturers can benefit from the expertise the programme delivers and we are delighted at today’s decision from government to commit to a national rollout.

“Made Smarter has already transformed thousands of companies in the North East, North West, West Midlands and Yorkshire & 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.”