In 2025, the UK government published a new Industrial Strategy, setting out a ten-year plan to drive significant business investment in eight priority growth sectors. The refreshed strategy follows similar industry policy publications in other regions, most notably the EU and China.
The overarching mission of the strategy is to drive long-term, sustainable growth by increasing business investment and supporting priority growth industries. Yet there is a renewed recognition by the government that it must tackle the priority challenges facing industry today, notably inflation, high energy costs, global competition and persistent skills shortages.
We understand these challenges only too well. Schneider Electric helps industry, buildings, transport and infrastructure to electrify, automate and digitalise, driving efficiency and sustainability.
Meeting the new industrial energy requirements
Only through widespread electrification can UK industry and households access cheaper, cleaner and more secure energy. But the access and distribution of that energy is predicated on a smarter, decentralised grid network. This is where electrification converges with automation and digitalisation, which are all major facets of the new industrial strategy.
Software, AI and digital tools will play a vital role in the development of the new energy landscape. But currently, not enough organisations have the skills to operate these new technologies, which is why access to education and training has become a priority for energy initiatives up and down the country. Sustainability applies just as much to skills and people, as it does to climate and energy.
Crucially, it also applies to driving energy efficiencies now and not at the point when a company can switch over to wind turbines or solar farms. For the industrial strategy to find its feet, UK companies need to curb energy demand at time when costs are rising. After all, the cheapest energy is the energy you don’t use. Access to smart monitoring and data analysis tools will provide organisations with a better picture of their energy profile, helping to cut energy waste and costs.
Driving growth with strategic policies and funding
As a large UK employer with a historic footprint, we agree that policies need to be designed to raise living standards as well as providing greater policy certainty for business. Through long-term planning, clearer regulation and faster approvals, the 2025 strategy is a departure from the past and previous industrial policies.
It aims to achieve its goals through increased funding for R&D and other innovative financing solutions, measures to tackle high energy costs, reformed planning and infrastructure policy, and access to a skilled workforce for growth sectors. It acknowledges the role that digitalisation will play in shaping the overarching vision and the practical delivery of the Strategy. Finally, it acknowledges that electrification is crucial to the Government’s plans to power the UK’s industries, drive growth and reduce harmful emissions.
In addition, the strategy clarifies which sectors the government intends to back, alongside ringfenced funding through the Spending Review. There are also plans to establish the previously disbanded Industrial Strategy Council on a statutory footing. Doing so is essential to ensure it is delivered and not abandoned. Business investment will be severely impacted if there is a risk of the Strategy being disregarded.
Reenergising UK industry through decarbonisation and digitalisation
As already mentioned, the Strategy identifies two critical business issues – energy costs and skills – and sets out initial steps to address them. This includes increasing the discount on electricity network charges for energy-intensive industries, who will also be exempted from costs associated with renewable energy policy, such as the Renewables Obligation, Feed-In Tariffs, and the Capacity Market.
On skills, there is recognition that the existing apprenticeship levy scheme needs to be reformed and that investment in technical training must be increased. Addressing the UK’s high energy costs and persistent skills gaps is critical for UK businesses, regardless of sector, but especially for advanced manufacturing and the other segments targeted for the plan.
Another positive feature is the recognition of electricity networks as a ‘foundational sector’ – meaning sectors that provide the essential building blocks and infrastructure for overall industrial and economic growth. The UK’s electricity grid needs to be urgently upgraded for the UK to meet the government’s target of a decarbonised power system by 2030 and to manage increased demand as more sectors electrify their operations. Carefully managed upgrades will add resilience to the grid, securing energy independence and bringing down the cost of electricity to more affordable levels.
This is particularly relevant for a business like ours that is heavily focused on energy management and automation with local production facilities. Schneider’s recently opened smart manufacturing plant in Scarborough will help to deliver the electrical equipment needed for the UK’s grid expansion and transport decarbonisation efforts. By retaining our existing workforce, and adding new skilled jobs, we’re showing how future-focused industries can support communities across the UK.
Digital technologies have also led to a step change in how industry operates. New technologies like software-defined automation, edge computing, and industrial AI can lead to measurable gains in productivity, efficiency, safety, and sustainability. But the real differentiator lies in choosing technologies that are scalable and fit-for-context, and in working with trusted partners who can simplify integration and execution.
We know the importance of smart solutions for manufacturing because we’ve seen the results in our own operations. After implementing the industrial IoT solutions throughout our global supply chain, we’ve been able to reduce energy costs by between 10% and 30% and maintenance costs between 30% and 50%.
The role of new digital technologies
So, what can we learn from this as focus turns to delivery? Businesses in the UK need urgent support to tackle high energy costs and skills gaps, but the measures set out will take time to implement. As a result, we should look at optimising existing schemes and funding pots.
For example, the flagship Made Smarter programme is a government-backed initiative designed to help small- and medium-sized manufacturers adopt digital technologies. To date, this £147m programme has reached over 4,000 manufacturing SMEs, and in 2025, the government committed up to £99m in additional funding.
But let’s take it a step further. Tying the Made Smarter scheme to increased uptake of digital technologies has huge potential to directly support decarbonisation, energy efficiency, and energy savings.
Why? The Climate Change Committee sees digital technologies as a key enabler of economic growth. Yes, because of the electrification drive but also because digital technologies strengthen competitive advantage by helping firms improve energy efficiency and reduce their emissions footprint, while using AI to better manage and reduce costs.
Importantly, many of these technologies already exist. We don’t need to spend millions on new pilots. For example, we have witnessed firsthand how UK organisations have made significant energy and cost savings through the adoption of digital technologies that bolster onsite electrical infrastructure.
We helped the University of Nottingham improve its operational and energy efficiency as it transitioned to a digital-first estates strategy, achieving savings of over £84k in the first 12 months. Circle Health Group has integrated digital monitoring systems across 75% of its UK sites to support energy management and proactive maintenance, saving £200k in the process. The data collected by these, and other organisations throughout the UK – across transport, life sciences and manufacturing – helps to inform sustainability initiatives and meet decarbonisation targets.
Accelerating the Modern Industrial Strategy
Overall, the UK’s Industrial Strategy is a step in the right direction. The Government recently reported that it has secured over £250bn of investment into the selected eight sectors, which will support 45,000 high-quality jobs in communities across the UK. So far, the prospects for growth are promising across the key investment sectors. It should provide a platform for economic growth, through trade and investment, while also addressing key issues such as net zero, sustainability and the regional distribution of economic activity.
The Industrial Strategy can only succeed if it delivers on its promises of sector-specific investment, the delivery of programmes to reduce energy costs, skills development, and planning and regulatory reform. Success will also depend on consistent implementation (with minimal climb-downs), cross-sector collaboration, and maintaining political and economic stability to give businesses the confidence to invest for the long-term. Finally, the plan also recognises the importance of data provision to inform policy but also to help businesses adopt digital technologies that will cut energy waste, decarbonise operations and meet climate targets.
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