Your interactive monthly newsletter update from the North East Chamber of Commerce.
THE UK'S MODERN INDUSTRIAL STRATEGY MEMBER BRIEFING
we are the voice OF business
SUMMARY Following the announcement of the Spending Review on Wednesday 11 June 2025 and the Infrastructure Strategy on Thursday 19 June 2025 , in the UK’s Modern Industrial Strategy, the government is seeking to set out a cohesive plan to drive stable, sustainable, just and inclusive economic growth across the UK. It focuses on removing barriers to investment through better and more streamlined regulation, infrastructure, skills, research and development, energy and trade and targets eight “growth ‑ driving” sectors and high-potential sustainable growth regions.
The eight growth-driving sectors are:
- Advanced manufacturing - Clean energy industries - Defence - Digital and technologies
- Financial services - Life sciences - Professional and business services - Creative industries
The government states that the UK’s Modern Industrial Strategy will be anchored by a statutory Independent Industrial Strategy Council and built in partnership with business, unions, devolved governments and local authorities. The strategy aims to boost international and domestic investment, scale up businesses and catalyse high ‑ quality job creation nationwide. In this member briefing, we have summed up the key elements of the ten-year Modern Industrial Strategy with specific reference to policies affecting the North East.
WE ARE the voice OF business
A COMMITMENT TO PARTNERING WITH BUSINESS The UK’s Modern Industrial Strategy has outlined a firm commitment to building a partnership with business: - The government will combine public and private capital wherever possible, aiming to drive growth, jobs and resilience in priority sectors and regions. - New measures under the Procurement Act 2023 simplify rules, cut red tape and open more contracts to small and medium-sized enterprises (SMEs), including new requirements for job and skills KPIs and faster payment across supply chains. - The Office for Investment has been expanded to provide a concierge service for key investors, to increase access to new sites, skills and infrastructure faster and to co-create opportunities with public finance institutions and local leaders. - A new Business Growth Service will launch in summer 2025 with a single online hub for growth, finance and export support; plus, reforms to tackle late payments and expand the Made Smarter tech adoption programme across England. - Recruit ‘Industry Champions’ to ensure the Strategy’s Sector plan is delivered in line with business needs and is informed by sector expertise and innovation. - The government has outlined its commitment to enhancing support for SMEs and will publish a dedicated SME Strategy later this year, which we will monitor closely to assess its impact and opportunities for regional businesses. We welcome this clear commitment to a stronger partnership with business. Our experience delivering two successful Local Skills Improvement Plans (LSIPs) shows that close collaboration between government and employers is essential to building a skills system that drives growth, innovation and a stronger, fairer North East. Collaboration on this broader scale, benefiting all the Modern Industrial Strategy’s key sectors, is a positive signal that aligns with what we know works for our region and our businesses.
THE UK'S MODERN INDUSTRIAL STRATEGY
ADVANCED MANUFACTURING - The government’s Modern Industrial Strategy sets out investment in the latest technologies in the advanced manufacturing sector through £4.3bn in funding, including up to £2.8bn in research and development programmes over the next five years to spur innovation, automation, digitisation and commercialisation. - The UK’s advanced manufacturing sector is set to receive nearly double the business investment, to £39bn per year. - A pilot initiative in partnership with the North East Combined Authority for an electric vehicles manufacturing cluster, creating a blueprint for unlocking other clusters of excellence in other key growth areas across the UK. - The Modern Industrial Strategy sets out the approach to support advanced manufacturing clusters across the UK, with 84% of jobs located outside London and the South East and strong concentrations of businesses in Glasgow and Edinburgh; the North East; Belfast; Yorkshire; the North West; Wrexham and Flintshire; East Midlands; West Midlands; South West and the Oxford to Cambridge Corridor. - The Modern Industrial Strategy has given license to expand the National Wealth Fund’s £27.8bn mandate to focus more strategically on driving growth. Focusing on key Modern Industrial Strategy subsectors, including advanced manufacturing. - Boosted funding for early career further education teachers in areas such as advanced manufacturing. - The extension of the existing Metro network in the North East serves one of the UK's largest advanced manufacturing zones. - Reform of the business environment to give the advanced manufacturing sector long-term stability, enabling it to reduce electricity costs, strengthen supply chains, scale up innovation with advanced technologies and develop a digitally skilled workforce.
WE ARE the voice OF business
ADVANCED MANUFACTURING - Prioritising high-growth frontier manufacturing industries where the UK has a competitive edge, including automotive (zero emission vehicles and computer- aided design), batteries, aerospace, space, advanced materials and agri-tech. These sectors offer strong potential due to innovation, research strengths and global demand. - The Modern Industrial Strategy sets out how the government will strengthen supply chains through supporting foundational industries vital to the competitiveness of advanced manufacturing businesses, including through a Steel Strategy in summer 2025 and an enhancement of the Critical Minerals Intelligence Centre to improve its horizon scanning capabilities. - The government’s Modern Industrial Strategy signals the North East as a potential hub for advanced manufacturing, supported by a pilot electric vehicle cluster, Metro expansion and targeted investment. With £4.3bn in sector funding, including £2.8bn for research and development, the strategy aims to lower industrial costs, develop a skilled workforce and encourage innovation. The government’s Modern Industrial Strategy rightly highlights the North East as a key hub for advanced manufacturing. We welcome this focus, given our region’s strong manufacturing base and its potential to drive innovation, skills development and sustainable growth.
THE UK'S MODERN INDUSTRIAL STRATEGY
CLEAN ENERGY INDUSTRIES - In this Modern Industrial Strategy, the government says it will back its network of Investment Zones with £160m in funding over ten years to stimulate growth in key Clean Energy clusters, including in North East Scotland, North East England, South Yorkshire and the East Midlands and the West Midlands. - The government also argues in this strategy the net zero transition is also creating new demand for a wide range of climate, clean energy and environment services, which the UK is well-placed to capitalise on. - Accelerate grid connection timelines for major investment projects, using our regulatory levers and convening powers to reduce waiting times. Helping speed up the just transition to the electrification of key capital-intensive industries and the transport sector. The Modern Industrial Strategy backs Investment Zones with long-term funding to boost clean energy clusters, including in the North East and sets out plans to unlock net zero opportunities and speed up grid connections, supporting the green innovation ambitions at the heart of our stronger, fairer North East strategy.
WE ARE the voice OF business
defence In this Modern Industrial Strategy, the government says it intends to accelerate the adoption of novel and dual-use technologies by: - Spending at least 10% of the Ministry of Defence (MOD)’s equipment budget on acquiring novel technologies, such as drones and Artificial Intelligence (AI) enabled technology, pulling cutting-edge technology over the ‘valley of death’ from prototype to production and aligning this with the government’s ambitions for innovation and technology in other sectors. - Launching UK Defence Innovation to identify, develop and procure cutting- edge technologies, backed by a £400m budget, to fast-track innovative technology to the frontline while supporting the UK tech sector. - Launching an alliance with the High Value Manufacturing Catapult to leverage its world-leading research and development capabilities. - Increasing MOD’s spending with SMEs by £2.5bn by May 2028, a 50% increase against a financial year 2023/24 baseline, ensuring that they receive at least £7.5bn of MOD’s total budget in financial year 2027/2028. - Deploying the SME Support Centre to boost opportunities for non-traditional suppliers. - Defence operational developments are eligible for fast-track planning where they are considered nationally important Crown Developments, when being delivered by or on behalf of a Crown Body.
- Engaging the industry early in procurement processes on desired outcomes.
- Ensuring suppliers are rewarded for productivity, meeting deadlines and for taking risks.
- Reducing the burden on potential suppliers from startups to primes.
- Implementing a new, segmented approach to procurement: contracting major modular platforms within two years; pace-setting spiral and modular upgrades within a year and rapid commercial exploitation within three months.
THE UK'S MODERN INDUSTRIAL STRATEGY
defence - Creating a new Office for Defence Exports, reporting to the National Armaments Director, which will revitalise the government’s support to help UK exporters compete and win in a growing global market, including by developing a government-to-government framework with industry. - Actively build exportability into our procurement processes, including by requiring major procurements to include an assessment of export potential. - Working with industry to deliver a defence skills package, including new Defence Technical Colleges and funding for courses for defence-related skills. The government’s focus on enhancing collaboration with industry and increasing support for SMEs in defence highlights a strategic approach to driving innovation, skills development and export growth within the sector. This approach aligns well with our region’s strengths and offers significant opportunities to boost skills, technology adoption and export potential across the sector.
WE ARE the voice OF business
DIGITAL AND TECHNOLOGIES - In this Strategy, the government says it will partner with industry to implement this Plan, including through the Quantum Strategic Advisory Board, AI Energy Council and Cyber Growth Partnership. - Digital and technology sectors are among the fastest-growing parts of the UK economy, with these technologies expected to contribute to around 50% of future GDP growth. - The Industrial Strategy highlights key focus areas and industries within this sector: AI, engineering biology, advanced connectivity technologies (ACTs), quantum technologies, semiconductors and cyber security. - Progress in these fields is transforming industries, influencing how people live and work and contributing to global competition in economic and security fields. - £670m is allocated to support the development of quantum computing in the UK, creating high-value jobs and skills. - Up to £500m will establish a new Sovereign AI Unit to enhance the UK’s capabilities in AI, supporting innovation that can help local businesses grow and compete internationally. We know through our engagement with businesses that the need for comprehensive understanding and skills in navigating AI is crucial to business growth and development. We thus welcome news that the government is committed to further enhancing AI capabilities. - New AI Growth Zones have been announced, which aim to encourage regional research and innovation. While no detail has been provided on where these zones would be, we will closely monitor what this will mean for our North East businesses.
- Research and development funding is planned to increase to £22.6bn by 2029/30, helping local businesses access resources to scale and innovate.
THE UK'S MODERN INDUSTRIAL STRATEGY
DIGITAL AND TECHNOLOGIES Planned measures include:
- Supporting the growth of start-ups and scale-ups. This is welcome news as we are committed to supporting our SME members, as well as new businesses, to grow sustainably, create high-quality jobs and contribute to the region’s economic resilience and innovation. - Growing the skills pipeline to attract diverse talent. Through our dedicated work on skills and our two regional Local Skills Improvement Plans (LSIPs), we know that skills are at the heart of economic growth. We also know that digital skills are valuable and the need for these skills is growing at a pace. - Introducing a Regulatory Innovation Office to modernise regulation, making it easier for businesses to innovate and bring new ideas to market. - Strengthening international collaboration across science, innovation and business to expand the knowledge base. A collaborative and joined-up approach underlines our commitments to a Strong, Fairer North East and we are thus pleased to see the government committing to strong collaboration across industries. - A Global Talent Fund to attract 10 leading researchers and their teams to the UK, creating opportunities for knowledge transfer and partnerships with regional universities and businesses. - Turing AI Global Fellowships to bring five internationally recognised AI experts to the UK, contributing to cutting-edge research supporting local innovation hubs.
WE ARE the voice OF business
DIGITAL AND TECHNOLOGIES - Expansion of the government’s AI Research Resource (AIRR) by a factor of 20 by 2030, providing more computing capacity that businesses and researchers in the North East can access. - Investment in AI for Science to support scientific advances using AI - helping local research institutions drive breakthroughs with commercial potential. These measures signal key opportunities for North East businesses to intersect with the sectors of the economy with the strongest potential growth. As a Chamber, we urge the government to ensure our region benefits fully from these commitments, with targeted support, clear details on AI Growth Zones and investment turning laudable ambitions into tangible outcomes for local firms and communities.
THE UK'S MODERN INDUSTRIAL STRATEGY
FINANCIAL SERVICES - By 2035, the government’s ambition is for the UK to be the world’s most innovative full-service financial centre. We will publish a Sector Plan alongside the Chancellor’s Mansion House speech on 15 July following an extensive co- design process with industry and working in close partnership with the regulators and the sector. - The government will also seek to unlock the economic potential of our financial services clusters, including Greater London, Greater Manchester, the West Midlands, West Yorkshire, Glasgow, Cardiff, Edinburgh and Belfast. - The government will also seek to implement its Sector Plan with industry, through a series of Industry Forums, covering the whole breadth of the sector, including banking, insurance and asset management leaders. - The Modern Industrial Strategy highlights that the financial services sector contributes approximately 9% of total UK economic output, highlighting the following key industries: FinTech, insurance and reinsurance markets, sustainable finance, capital markets, asset management and wholesale services. The government sees financial services as being a driver of growth and investment throughout the economy, outlining its approach to enable this through:
- A focus on directing pension capital into the UK to support domestic investment and economic development.
- Support will be provided to strengthen the UK’s capital markets, aligning the UK’s regulatory rulebook with international best practice and helping firms to list, raise capital quickly and grow within the UK. - A sector plan will be delivered in collaboration with industry through a series of ‘industry forums’ involving leaders from banking, insurance and asset management. Although detailed information is not yet available, we hope North East businesses can benefit from this resource, as it aligns with the collaborative approach we champion as a Chamber.
WE ARE the voice OF business
FINANCIAL SERVICES - The government intends to maintain and grow the UK’s position as the world’s leading financial services hub by rebalancing regulation to support growth, reducing red tape for FinTech firms and unlocking more private capital. - The UK aims to be the preferred location for financial services firms to invest, expand and export, with the sector expected to increase its contribution to the UK’s GVA through higher exports. - Further details will be provided when the Financial Services Sector Plan is published on Tuesday 15 July and will be supported by the Bank of England’s Financial Policy Committee, which will continue to examine how the financial sector can best support wider economic activity. - An investment of £36m will support the development of new Smart Data schemes, enabling consumers and businesses to share their data securely with authorised third parties in exchange for better product offers, tailored services and potential financial benefits.
In addition, the government will seek to:
- Ensure that the Financial Services regulatory system supports growth. This will include setting out the conclusions of the government’s review of the Financial Ombudsman Service. - Set up a bespoke Financial Services ‘concierge service’ to help international firms get to grips with UK regulations – attracting more investment and making it easier to do business in the UK. Strengthening the financial services sector will help unlock both public and private capital, drive innovation and create skilled jobs, supporting our ambition for a stronger, fairer North East with businesses that can compete globally and attract international capital.
THE UK'S MODERN INDUSTRIAL STRATEGY
life sciences - In this Modern Industrial Strategy, the government says it will unleash the economic potential of Life Sciences clusters, including London, Oxford and Cambridge, as well as other clusters in Manchester, Liverpool, Yorkshire, South Wales, the North East, West Midlands and the Glasgow Edinburgh-Dundee triangle. - The Modern Industrial Strategy sets out the government’s aim to make the UK one of the world’s top three Life Sciences economies through a package of reforms and investment, including up to £600m for a Health Data Research Service to create the world’s most advanced, secure and AI-ready health data platform. - Prioritising high-growth frontier life sciences industries, including pharmaceuticals, driven by a strong ecosystem for branded, generic and biosimilar medicines and MedTech, supported by both major firms and growing SMEs. - The Life Sciences Sector Plan will be supported over the lifetime of the Spending Review by public funding of over £2bn, alongside funding from UK Research and Innovation (UKRI) and the National Institute for Health and Care Research (NIHR). - The Office for Life Sciences is speeding up negotiations for science investments over £250m via the introduction of a Life Sciences Large Investment Portfolio, providing investors with upfront clarity over the UK’s offer and bespoke, structured engagement through negotiations.
WE ARE the voice OF business
life sciences - The government will partner with industry to increase growth and innovation. This is aimed at securing at least one major strategic partnership annually with leading life sciences companies. A dedicated support service will also be established to help 10-20 high-potential UK companies scale, attract investment and remain headquartered in the UK. - The Modern Industrial Strategy sets out support for manufacturing with up to £520m in investment via the Life Sciences Innovative Manufacturing Fund to attract global investment, strengthen the UK’s sovereign capabilities and create high-value jobs across the country. The government’s Modern Industrial Strategy supports the North East as a key Life Sciences cluster through targeted investment and reforms aimed at boosting innovation, manufacturing and global competitiveness. The region will benefit from high-value job creation and increased investment. Initiatives like the Life Sciences Large Investment Portfolio and support for scaling UK firms will support a stronger, fairer North East.
THE UK'S MODERN INDUSTRIAL STRATEGY
PROFESSIONAL AND BUSINESS SERVICES - The Modern Industrial Strategy outlines the government’s intention for the professional and business services sector to double business investment to £65bn, supporting growth and innovation. - This sector includes key industries such as accountancy, audit and tax services, management consultancy and legal services. - The Modern Industrial Strategy further highlights a commitment to improve business mobility, making it easier for British professionals to move temporarily between the UK, EU and other international partners to meet short-term business needs and deliver services to clients. This builds on new dialogues on mobility and the recognition of professional qualifications announced at the May 2025 UK-EU Summit. This is welcome news in our commitment to an International North East for a stronger, fairer North East and our role as a Chamber in facilitating international trade to drive economic growth. - Targeted regulatory changes will be made, including clarifying Anti-Money Laundering and Know Your Customer requirements, to better support the financial services and professional and business services sectors. - The Made Smarter programme will be piloted for professional and business services across the North of England. Made Smarter provides guidance, skills development and match-funded grants to help businesses adopt new technologies. While details for the North East are not yet clear, this would be welcome, as many SMEs face challenges in implementing new technologies due to time and resource constraints. - There will be a focus on increasing technology adoption and innovation within the sector, especially through advancements in AI, showing a joined-up approach to supporting digital transformation. - Developing a skilled workforce remains a priority, with plans to boost staff training and reskilling in areas such as net zero, digital technologies and cybersecurity. This aligns with insights from our Local Skills Improvement Plans (LSIPs), which highlight the sector’s readiness to embrace new technologies and upskill staff.
WE ARE the voice OF business
PROFESSIONAL AND BUSINESS SERVICES - Businesses will be supported to enter new markets and grow exports, backed by a renewed focus from UK regulators on negotiating mutual recognition of professional qualifications agreements. This reflects our ongoing calls for government support to strengthen international trade. - There will be greater access to growth finance in all regions of the UK, with a focus on early-stage support for raising capital and attracting inward investment. Although details are yet to be confirmed, the indication that all regions will benefit is positive for our North East members. - Positioning the UK as an international leader in setting standards and regulations will help create global demand for professional and business services, which we welcome as part of our commitment to promoting an international North East. - A Smart Data programme will be developed for the property sector to improve data sharing across the real estate industry and drive innovation. - Access will be ensured to UK Export Finance’s recently launched Early Project Services Guarantee, which provides competitive finance terms for international buyers to procure early project services from UK-based businesses. This strategy reinforces a clear commitment to upskilling our workforce and boosting international trade, which are two priorities at the heart of our stronger, fairer North East vision. By improving skills, removing barriers to global mobility and helping businesses expand into new markets, these measures can unlock growth and opportunities for our region’s professional and business services sector.
THE UK'S MODERN INDUSTRIAL STRATEGY
CREATIVE INDUSTRIES - A share of £150m from the new Creative Place Growth Fund to support creative industries in Greater Manchester, Liverpool City Region, the North East and West Yorkshire. We will also support the One Creative North partnership. - Support the growth of creative clusters across the UK, from video games expertise in Dundee to cutting-edge Createch in the West Midlands and game- changing plans for film production in the North East. - On Friday 20 June 2025, on top of the Screen Growth Package, as part of its Creative Industries Sector Growth Plan the government unveiled “a new £150m (USD$200m) Creative Places Growth Fund” for such areas as Manchester, Bristol, Birmingham and Sunderland (Crown Works Studio) to allow local leaders “to support development of regional screen agencies and production funds to boost our film and TV clusters across the country.” - The Modern Industrial strategy sets out the ambition of increasing business investment by the creative industries from £17bn to £31bn by 2035. - Boosted funding for early career Further Education teachers in areas such as Creative Industries. The government's increased investment in the creative industries and the formation of the new Creative Place Growth Fund will help support the development of the Crown Works Studio in Sunderland. Helping position the North East as a hub for creative arts in the UK.
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transport - Increased use and sharing of UK health data can reduce NHS wait times and enhance diagnostics, while our geospatial data to improve public transport and urban planning. By linking data across areas such as education and housing, the government aims to identify barriers and support targeted intervention. Enhancing access to transport and logistics data can improve supply chain capabilities and resilience, ensuring UK businesses and consumers have access to the goods they need. - Reducing the average pre-application period for major infrastructure projects from two years to 12 months.
- £24bn of capital funding between 2026-27 and 2029-30 to maintain and improve motorways and local roads across the country.
- £15.6bn up to 2031/23 for some of England’s largest city regions to improve transport connectivity via the Transport for City Regions settlements and £2.3bn funding for the Local Transport Grant to improve transport connectivity in smaller cities, towns and rural areas. - £900m per year to maintain and improve bus services. Illustrative industry analysis suggests that public investment in bus infrastructure and services can generate returns of up to £4.55 for every £1 invested. - £400m to support the roll-out of charging infrastructure across the country, including to facilitate the deployment of zero-emission vans and HGVs. The proposed investment in improving connectivity is vital and plays a pivotal role in connecting our towns and cities, boosting economic growth and delivering education and job opportunities. Increased data usage to improve transport and urban planning at a local level will help create a more connected and in turn, happier, fairer and productive region (for example, creating agglomeration effects (knowledge spillovers, shared suppliers and growing value chain, etc.) region.
THE UK'S MODERN INDUSTRIAL STRATEGY
NATIONAL WEALTH FUND - The government has created this National Wealth Fund to develop investible opportunities across the North. The National Wealth Fund will deliver Strategic Partnerships with Greater Manchester and West Yorkshire to provide enhanced, hands-on support to help regions develop and secure long-term investment opportunities. - The Office for Investment will – building on its previous work with Liverpool City Region and the North East – partner with the North’s Mayoral Strategic Authorities to help identify, shape and deliver strategic projects to ensure they are best placed to leverage private capital.
WE ARE the voice OF business
ENGAGEMENT, INSIGHT AND INFLUENCE These three directives are key to how we work at the North East Chamber of Commerce. Engagement with our members through forums, exchanges and events provides critical insight into the issues affecting our region. The policy asks below, which the Chamber has used its influence to request in the consultation for this Modern Industrial Strategy, were provided by you, our members: -The government to take action on energy costs. - Expansion of devolution. - Investment and follow-through with the Crown Works Studio in Sunderland. - Support for businesses becoming net zero. - Addressing the long-term under-investment in further education. - Targeted investment in research and development. - Investment in infrastructure. - Transport infrastructure to be linked to housing and economic development, especially at a regional level. - A significantly expanded grid to enable decarbonisation, plus, crucially, accelerated grid connection timelines for new energy assets. - Relevant investment vehicles to focus elements of their investment not just in the UK but at a granular, regional level, supporting an appropriate degree of local wealth retention to drive growth. - There needs to be access to business support, infrastructure and local skills provision in place to encourage investment. - Mechanisms should be devised to ensure a strong interaction with the business representative organisations, such as the British Chambers of Commerce, as well as relevant sector representative groups. - The UK’s Modern Industrial Strategy should align with the local priorities in the local growth plans produced by the combined authorities.
THE UK'S MODERN INDUSTRIAL STRATEGY
conclusion The North East Chamber of Commerce welcomes the new Modern Industrial Strategy, published on Monday, 23 June 2025, as a major step forward in delivering a clear-sighted, long-term commitment to our region’s unique industrial assets. From our established strengths in advanced manufacturing and life sciences, to our emerging leadership in clean energy and creative clusters, the voice of North East enterprise has been actively heard by the government. The alignment with the emerging local growth plan priorities for both the North East and Tees Valley Combined Authority areas appears strong.
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