UK Industrial Strategy 2025: Key takeaways

On 23 June 2025, the UK Government published its long-awaited Modern Industrial Strategy, setting out a ten-year framework to foster innovation-led growth across eight priority sectors, including Digital and Technology (see technology sector plan) and Life Sciences (sector plan to be published later this year). This article looks into the government's proposed strategy on funding, research and development (R&D) investment, talent and skills, and regulation in these two particular sectors. 

1. Funding: Significant Capital Commitments Across Key Growth Sectors

The strategy confirms substantial new funding channels for innovation-intensive industries. The British Business Bank (BBB) will receive a further £6.6 billion in capital to support UK venture capital funds and direct startup investment by 2030, which it expects will attract an additional £12 billion in private capital. Additional resources are earmarked for angel syndicates and private debt funds, widening access to early-stage finance.

For companies in the digital and technology sector, the BBB will make over £4 billion available in growth capital for companies scaling up in the UK. This will be complemented by a £500 million investment in a new Sovereign AI Unit and £750 million for a next-generation supercomputer in Edinburgh, reflecting a focus on artificial intelligence (AI) capability and sovereignty.

In the life sciences sector, a further £520 million will support advanced manufacturing via the Life Sciences Innovative Manufacturing Fund, including bespoke mechanisms to support investments exceeding £250 million. A separate £600 million package will fund the creation of the Health Data Research Service: the world’s most advanced, secure and AI-ready health data platform which will unite genomic, diagnostic and clinical data at population scale, turning NHS and wider healthcare data into a magnet for global trials and AI investment.

The strategy also includes a £500 million commitment to quantum computing and £2 billion to reduce industrial electricity costs for more than 7,000 businesses. Both measures stand to benefit energy-intensive tech and biotech firms. Reforms to private capital markets (such as the new trading platform for private company shares, PISCES) and a £50 billion investment commitment from Britian's biggest pension funds will seek to deepen the pool of capital available to UK companies. 

2. R&D Investment: Strengthening the UK’s Innovation Base

Public R&D spending is set to increase to £22.6 billion per annum by 2029–30, with startup participation encouraged through funding and support from the UK's innovation agency, Innovate UK. Startups and scaleups will benefit from streamlined access to grants and loans, with enhanced flexibility for equipment procurement and increased co-investment with the private sector.

In the technology sector, the government is seeking to incentivise collaboration between industry and academia, for example by investing £500 million of funding in the R&D Missions Accelerator Programme and expanding the UK’s AI Research Resource (a cluster of supercomputers) by a factor of 20 by 2030. The government is also seeking to prioritise frontier technologies with greatest growth potential, i.e. advance connectivity technologies, AI, cyber security, engineering biology, quantum technologies and semiconductors.

There is also significant support for life sciences R&D, including£600 million alongside the Wellcome Trust in the Health Data Research Service, more than £650 million over 5 years in Genomics England; up to £354 million in Our Future Health and at least £30 million into preclinical infrastructure linked to translational research networks. The National Institute for Health and Care Research will also adopt a new dual mandate to drive improved health outcomes and economic growth through research and development.

3. Talent and Skills: Enhancing the UK’s Innovation Workforce

The Government will deploy £54 million to attract world-leading AI researchers and technical talent, whilst also providing £25 million for a new Turing AI 'Global Fellowship' specifically for overseas researchers. Parallel reforms aim to modernise the domestic skills pipeline, using targeted mechanisms such as £1.2 billion of additional investment in skills per year by 2028-29, the Lifelong Learning Entitlement which seeks to teach, upskill and retrain individuals across their working lives and the Strategic Priorities Grant which will target higher education grants.

For international talent, immigration routes are under review. Proposed changes include expanded eligibility under the High Potential Individual visa, streamlined access to the Global Talent visa, and adjustments to the Innovator Founder visa, with the overarching aim of ensuring that UK companies remain globally competitive in talent attraction.

The strategy also calls for long-term partnerships with industry to increase growth and innovate, for example by providing a dedicated support service to help 10-20 high-potential UK-based businesses scale, attract investment and remain headquartered in the UK. This is intended to retain cutting-edge R&D and IP within the UK and foster leadership in key industries like biopharma, MedTech and digital health innovation.

4. Regulation: Enabling Pro-Innovation Governance

Regulatory reform is a central component of the strategy, designed to align the UK’s legal and compliance frameworks with its innovation goals. A suite of new initiatives is expected to reduce regulatory burdens and speed innovation by cutting the administrative costs of regulation for business by 25%, reducing the number of regulators and using the Regulatory Innovative Office to clear the path to market for the latest innovative challenger products.

In digital and AI industries, the Regulatory Horizons Council will oversee the development of a proportionate risk framework for emerging technologies. A new Digital Standards Strategy will improve coherence across standards bodies and promote interoperability and trust. The Government also committed to launching an AI Adoption Fund, supporting responsible and rapid uptake of AI technologies.

The government will also launch a long-awaited 12-week consultation on updating the definitions of the 17 sensitive sectors subject to mandatory notification under the National Security and Investment Act (NSIA), with proposed changes aimed at keeping regulatory requirements targeted and proportionate. The government hopes to increase investor certainty through these amendments, in addition to other measures to bring greater transparency to the NSIA process. 

In the life sciences sector, trial approval times will be cut to under 150 days via implementation of the O’Shaughnessy Review, while regulatory and market alignment between the MHRA and NICE will give industry a clearer route to market. A “low-friction” procurement model will support faster NHS adoption of innovative MedTech products via a new NHS Innovator Passport and Rules-Based Pathway for MedTech.

5. What Comes Next?

The publication of the full Life Sciences Sector Plan, expected later in 2025, will provide further clarity on policy implementation. Meanwhile, companies should proactively engage in relevant consultations and prepare for participation in pilot schemes and early-stage funding windows.

6. Final Thoughts

The UK’s 2025 Industrial Strategy marks a material shift in the country’s approach to sectoral policy, signalling a more active state role in pushing innovation, financing growth and shaping the regulatory landscape. Bristows will continue to monitor legal and policy developments and advise clients on strategic positioning in light of this new industrial framework.