Advanced Manufacturing Sector Plan
Advanced Manufacturing Sector Plan
Along with the release of the Government’s Modern Industrial Strategy, there was the release of five individual Sector Plans. In this briefing, CEDOS are focussing on the Advanced Manufacturing Sector Plan, with a review of the other sector plans to follow. The ambition of the Advanced Manufacturing Sector Plan aims to make the UK:
“the best place in the world to start, grow, and invest in Advanced Manufacturing.”
As with the other key growth sectors, the background context is all broadly positive with the sector already contributing £82bn GVA to the economy and directly supporting a quarter of a million jobs. It is also noted that 84% of manufacturing jobs are outside London/South East (although the definition is manufacturing not advanced manufacturing). The key aims of the plan are:
- To build resilience, reducing supply-side barriers, measured in terms of the UK’s energy costs for the manufacturing industry, the number of firms facing supply chain disruptions, and an increase in major new investments.
- To be a global leader in scaling up innovation and automation, measured in terms of improved productivity, an increase in R&D expenditure, and the number of businesses classed as “innovation active”.
- To develop a digitally literate, skilled, and inclusive workforce, measured in terms of increased business investment into the domestic skills pipeline, an increase in the number of relevant apprenticeships started and completed, and an increase in the participation of women in the sector
- To increase business investment from £21bn to £39bn by 2035
Advanced manufacturing is a very broad sector, with Government focussing efforts on six broad sub-sectors
- Automotive,
- Batteries,
- Aerospace,
- Space,
- Advanced Materials,
- Agri-tech
Some of the key headlines of the Modern Industrial Strategy will be highly applicable across the sector, notably the Industry Supercharger to reduce energy costs, along with the Steel Strategy and the Critical Minerals Strategies. Chemicals, construction and composites have all been identified as key foundational sectors that will be important to underpin future and resilient growth. Advanced Manufacturing is also seen as critical to the UK’s efforts to both decarbonise and digitise.
In terms of demonstrating success, there are six proposed core metrics for the Advanced Manufacturing that will cover:
- Exports
- Business Investment
- GVA
- Productivity Growth
- Labour Market Earnings
- The number of new, large, “home-grown” businesses
Advanced Manufacturing will also be closely aligned to the UK’s trade policies and future trade deals and will feature heavily in the UK Trade Strategy. Advanced manufacturing businesses are likely be key beneficiaries of an enhanced UK Finance Support offer.
The National Wealth Fund and British Business Bank have both been steered towards filling the patient capital gap for the sector, especially related to innovation. The Made Smarter Innovation programme is being further extended and the Made Smarter Adoption programme has also been enhanced by £99m (and will include digital internships). There will also be a new £40m Robotics and Autonomous Systems Programme, along with a national network of Robotics Adoption Hubs. There will also be further support available through the High Value Manufacturing Catapult and initiatives for better Data Sharing infrastructure from April 2026 onwards.
One key aspect of the Advanced Manufacturing Sector Plan is the cross over with innovation and defence technology, with Government placing an emphasis on developing dual use technologies. On one level, this may be an accounting tool to increase defence spending, but also may be an opportunity to open up high tech industries to defence procurement and exports.
The Modern Industrial Strategy allocated £160m for Investment Zones and there is also a link between Advanced Manufacturing and the proposed AI Growth Zones, which are currently open to expressions of interest. AI Global Fellowships will also aim to bring more international talent to the UK. Only 7% of UK manufacturers were well versed in AI and uptake in the sector was deemed to be slow – although as covered in our last Lunch and Learn session with the Tony Blair Global Institute, AI investment in the manufacturing sector may be more skewed towards utilising bespoke AI software and training – which comes with more barriers to adoption. This aspect is covered in more detail in the Technology Adoption Review.
June 2025 also saw the production of the Sector Skills Needs Assessment by Skills England for Advanced Manufacturing. The report highlighted 49,000 current vacancies in manufacturing and the sector has the third-highest skill-shortage vacancy density. Filling this skills gap could generate £6bn to the UK economy each year.
Some of the areas of skills shortage roles cross over with construction, including electrical and electrical engineering and joinery skills. How ambitious housebuilding targets and an £625m investment in construction training impact on training, pay and careers between the two sectors will be interesting to follow. It will also be interesting to see how Government investment in construction skills may create labour supply for manufacturing and advanced manufacturing.
There is also the dual challenge in a fast moving sector of reskilling existing staff whilst also upskilling the next generation of workforce. Those working in Advanced Manufacturing will need a more in-depth understanding of digitisation, automation and carbon reduction across the board. These changing needs are within an environment where Advanced Manufacturing Apprenticeships starts have recently been falling, only half of employers invest in training, training costs are high due to capital needs and the sector is deemed to be well promoted as a career option, especially in schools.
In terms of skills, there is a target to increase employment of women in the sector to 35% by 2035. At present 74% of the manufacturing workforce are male, 88% are white and 36% are over 50. This is a very stretching target (although again applies to manufacturing as a whole) and there are no specific measures within the Sector Plan to address this.
Shorter duration apprenticeships, short courses and wider reforms through Skills England and the Growth and Skills Levy are deemed to be highly relevant to the Advanced Manufacturing sector, although the reduction in funding for higher level Apprenticeships will also have an effect. There is also a proposed Recruitment and Workforce Transition Programme to address persistent vacancies and support those not well served by traditional recruitment approaches.
There are also plans for funding uplifts to support priority courses through an Upskilling and Reskilling Programme, which could be invaluable given the high unit cost of training engineers and skilled technicians, the expansion of Technical Excellence Colleges. It is expected that there will be more detail in the Post-16 Education and Skills White Paper.
Changes to the funding regime should be implemented from April 2026.
Despite a section on cluster and city regions, the detail of how this will work in practice still remains work in progress and clearly tied up in wider the wider processes of the Devolution White Paper and the development of Local Growth Plans. There is a desire to build networks between clusters, including the Oxford to Cambridge Growth Corridor and across northern City Regions.
Advanced Manufacturing will likely be one of the hardest sectors in the Industrial Strategy to strengthen and grow from the actions of local agencies. Although there is now guidance available, the lack of detail and the growing number of forthcoming and early stage programmes at a national level may make developing Local Growth Plans to support Advanced Manufacturing skewed towards being a wish list from Government.
The new Government had a manifesto pledge to end funding on a process of competitive bidding. However, the AI Growth Hubs will be allocated competitively, there are also Robotics Hubs that may follow the same process and there are also national programmes such as the Strategic Sites Accelerator that has a ‘yet to be decided’ allocation process. It looks like there needs to be at least something competitive to test the new Green Book processes on.
The Industrial Strategy has launched a plethora of newly financed programmes to navigate, some that will operate on a local level, some that will be national and some hybrids. This all at the same time the Government is out to consultation on Fair Funding for Local Government, including Strategic Authorities.
There is a clear emphasis on working with Mayoral Strategic Authorities, so Local Authorities below this tier will have a further level of complexity to navigate – despite some small geographies being significant hubs for Advanced Manufacturing.
It looks like there will be a short term geographic patchwork of policy implementation, with some of the UK’s most prominent advanced manufacturing areas presently sat outside of Mayoral city regions, distant from key hubs of innovation and training. It is unclear how all these large numbers of interventions can be knitted together at a local and sub-regional level – or whether they will operate as purely national led programmes. There is probably an argument for introducing or extending Account Management support to help businesses navigate the changing landscape, otherwise there is a danger the role of Local Government is largely focussed on bringing sites to market.
Within the six sub-sectors, there are specific measures and aims highlighted.
Automotive
- At present 80% of UK vehicles are exported and the plan is to build on this export driven success
- The sector is under considerable pressure from Chinese exports, adapting to Zero Emission Vehicles and high energy costs
- Emphasis is on focussing on new technology in areas such as propulsion technology, power electronics and energy systems and connected and automated mobility
- DRIVE35, a new £2bn investment programme to ensure the UK remains at the forefront of Zero Emissions Vehicles manufacture
- Government aims to secure £6.6bn private investment into Zero Emissions Vehicles
- Continue the roll out of EV charging infrastructure, including support for Local Government
- Support R&D in the automotive sector to accelerate the scale up of technology, including £500 million to extend the R&D support under DRIVE35
- Explore more dual use technology with defence/civilian applications
- Be amongst the first European market to adopt self-driving vehicles and services, including legislation for adopting Low Speed Zero Emissions Vehicles (such as delivery robots, e-scooters and last mile delivery vehicles)
- Support for students to develop the technical skills to develop automated driving systems
- Produce an Automotive Technology Strategy in 2026
Batteries
- There are currently 10,500 employees in the sector, with key hubs in the North East and West Midlands
- Plan is to make the UK a science superpower for battery technology
- Batteries are critical to building resilience in the domestic energy supply – more grid scale batteries will need to be deployed
- There is a need to diversify supplies of critical minerals into supply chains
- Provide the High Value Manufacturing Catapult with £12m to identify and scale up novel active materials and electrolytes
- Introduce a British Passport from February 2027 to allow batteries over 2kWh sold into EU market and to meet EU recycled content targets
- Reducing electricity costs for industry will help battery manufacture
- Focus on supporting start up and scale up in the supply chain. At present there are only 72 businesses
- The plan will be supported by a £452m Battery Innovation Programme, which will invest in innovation, safety, technology transfer and skills
- Increase the reuse and recycling of batteries, including through measures in the forthcoming Circular Economy Strategy and additional regulation
Aerospace
- There are 100k direct and 150k indirect jobs in the sector. Salaries are 36% above average pay and 88% of employment is outside of London and the South East. The aerospace sector (including drones) could contribute £45bn to the UK economy by 2030.
- The aim is to increase UK global market share from 10% to 15%, supported by securing £35bn of private investment
- Emphasis should be on ultra efficient narrow body aircraft and zero carbon aircraft technology
- There is significant global competition, with other nations providing direct subsidies
- There is likely to be demand for an extra 40,000 large commercial aircraft in the next 20 years
- There is significant synergy with the defence sector
- A total of 15,000 jobs could be supported by Sustainable Aviation Fuel by 2050. Extend £63m investment into the Advanced Fuels Fund to 2029/30, develop a revenue certainty mechanism for Sustainable Aviation Fuel.
- Extend the Aerospace Technology Institute programme extended with £ a further 2.3bn to 2035.
- Create an appropriate regulatory landscape support the development of vertical take-off and landing vehicles through the £20m Future of Flight programme
Space
- In 2021/22 the space sector provided £7.2bn Gross Value Added and employed 52,000 people across the UK
- The space sector is critical to the defence sector and to a range of remote monitoring activities
- The breadth of interests in the UK makes industrial scaling hard. There is a need to focus more on key capabilities, which will also help in raising finance. The focus will be on Satellite Communications, In-orbit servicing, Assembly and Manufacture (including the development and mass manufacture of satellites), Space Domain Awareness and Space Data Architecture
- From research to long term commercialisation plans, the sector needs to be economically impactful. The emphasis is to create industrialised companies with over £10m revenue, supply chain development for security and resilience and to increase exports.
- The UK Space Agency will continue to have a key role in supporting start up to scale up businesses through grants, procurement and co-investment. This includes a £135m investment across National Space Innovation Programme, Space Clusters Infrastructure Fund and Unlocking Space programme will be delivered.
Advanced Materials
- Next Generation metallics, composites and bio-materials are vital for the future of advanced manufacturing for resilience, weight reduction, efficiency
- There are 2,700 businesses active within materials innovation, hosting 630,000 employees. Demand for materials related jobs expected to at least double by 2035 and makes the sector attractive to overseas investment
- Government will invest in the capabilities and verification processes to bring new materials to market
- The Government wishes to maintain the UK’s world class environment for R&D. This includes £50m to support National Materials Innovation Plan, including co-ordination across government, industry and academia
- There will be investment forthcoming to develop key skills, including through international partnerships
Agri-Tech
- The Agri-food chain is worth £147bn in Gross Value Added and the number of Agri-Tech start-ups has increased 40 fold in last decade.
- The aim is increase turnover in Agri-Tech to £20bn by 2035, including crowding in £50m of private investment by 2029
- Agriculture is responsible for 11% of all emissions, therefore Government is seeking to promote Net Zero solutions, promote food security and increase autonomy in farming (such as in horticulture where high seasonal labour is needed)
- Tech adoption in the sector can be slow – the Sector Plan will target precision technologies in areas such as controlled environments, robotics and automation, advanced sensors and AI and data. There will be support to help industry adopt technology including support for SMEs to work with farmers to trial new technologies and provide evidence of operational feasibility and return on investment
- A total of £200m has been committed to the Farming Innovation Programme to 2030 to increase productivity, reduce emissions and reduce the need for seasonal labour.