Government's Modern Industrial Strategy aims to accelerate growth in '8 key sectors' including clean energy
Thu 26 June 2025
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The Government has published a 'Modern Industrial Strategy' which includes significant elements focused on transport and energy, aiming to drive economic growth and meet net zero targets. Key elements include plans to decarbonise the energy network, cut energy costs for energy intensive industries and accelerate grid connections for clean energy.
The Strategy prioritizes strengthening infrastructure and connectivity, particularly in transport. It aims to position the UK as a leader in the future of mobility, with a focus on zero emission vehicles and efficient movement of people, goods, and services. Key elements include extending East West Rail to Cambridge, improving grid connectivity, and supporting city regions and clusters with interventions like land remediation, anticipatory grid capacity, and transport improvements.
The strategy aims to double investment in clean energy industries by 2035, spearheaded by GB Energy. An additional £700 million has been announced to support clean energy supply chains, taking the total funding for the Great British Energy Supply Chain Fund to £1 billion. A Clean Energy Industries Sector Plan is published alongside the Modern Industrial Strategy.
The Government identifies eight sectors that it judges have the highest potential for economic growth. They are: advanced manufacturing, the creative industries, life sciences, clean energy, defence, digital and technology businesses (including artificial intelligence and quantum computing), financial services such as banking and insurance, and professional services such as accounting and the legal profession.
A key element of the plan is to reduce energy costs for big electricity users as well as to speed up grid connections for those needing to install or upgrade their access to electricity. A 'connections accelerator service' will be launched by the end of this year and will work to support projects that could create jobs or speed economic growth.
SMMT's CEO Mike Hawes, said: "We welcome the Government’s Industrial Strategy, a 10-year plan which answers our call for a long-term commitment to automotive manufacturing. With action to reduce electricity costs, upskill workers and unlock finance, it lays the foundation on which we can build our future.
“We now need to see the Strategy implemented and at pace, because competitors will move fast so our window of opportunity will not remain open for long. The prize, however, in terms of jobs, innovation and economic growth – green growth at that – is worth the investment.”
The Modern Industrial Strategy builds on the UK's Spending Review which was announced earlier in the month.
The Spending Review 2025 (SR25) sets out the Government’s sets departmental budgets for day‑to‑day spending until 2028‑29, and until 2029‑30 for capital investment. Total departmental budgets are planned to grow by 2.3% across the Spending Review period. SR25 also sets devolved government block grants for the same period.
The Department for Transport gets a capital boost with £31.5 billion allocated by 2028–29, growing by about 4% in real terms annually according to Carbon Brief. Key projects include the TransPennine Route Upgrade (£3.5 bn), Oxford–Cambridge East–West Rail (£2.5 bn), and significant rail investments in Wales (£300 m). Local transport also gets strong support with £15.6 bn for city-region settlements and £2.3 bn in Local Transport Grants, earmarked for buses, cycleways, and congestion improvements.
The Government's “Clean Energy mission” for transport includes £2.6 bn to accelerate decarbonisation: £1.4 bn for EV uptake (vans/HGVs), £400 m for charging infrastructure, and £616 m for walking and cycling pathways, plus continued backing for sustainable aviation fuel
The Spending Review also confirms a major shift toward low carbon energy infrastructure, particularly nuclear, with £14.2 bn to build Sizewell C, plus £2.5 bn each for small modular reactors (SMRs) and fusion (STEP). Significant investment is also allocated to carbon capture and storage (CCUS) with £9.4 bn pledged.
DESNZ sees its administrative budget reduced by around 0.5–2.7%, but capital expenditure grows, supported by the National Wealth Fund’s £27.8 bn earmarked for clean‑energy, digital, and transport sectors.
The Government says that these transport and energy investments underscore its strategic focus on decarbonising infrastructure, boosting regional connectivity, and scaling up clean energy projects—a core part of its longer-term economic and environmental ambitions.
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