Is UK Manufacturing Ready for the Modern Industrial Strategy?

Sixteen months after the modern Industrial Strategy was published, most of the manufacturers it is meant to lift have still not felt it. If you run operations at a firm of 40 or 400 people, that gap has a cost. Every month you wait for a scheme to reach you is a month your legacy kit, your skills gaps and your energy bill stay where they are.

In February we put the question to a full room at the National Manufacturing Summit, the annual summit run by MTC Events at the Manufacturing Technology Centre in Coventry. 188 delegates voted live. Only 14% were confident the Strategy would bring real benefits to their business within two years [1].

The criticism we hear most is that the Strategy is for big business. On the numbers, backing the largest firms makes sense: they are few, but each one carries a weight of output, exports and jobs far beyond its count. Yet SMEs make up 99% of UK manufacturing businesses [2], and most of them sit in the supply chains of those large firms. Family-owned SMEs alone produce about 39% of UK manufacturing output [3], so the chain is no side show. So the real test is pull-through. Here is our position. Until the Strategy shows how much of its money reaches those supply chains, SME doubt is a fair reading of the evidence. And still, the right move for an SME is not to wait.

What the modern Industrial Strategy promises, and how it keeps score

Definition. By the modern Industrial Strategy, we mean the UK Government’s ten-year plan, published in June 2025, to raise investment and growth in eight priority sectors, known as the IS-8, which together make up 32% of the UK economy [4]. Advanced manufacturing, defence and clean energy are among the eight. Progress is tracked against six core metrics: business investment, GVA, productivity growth, exports, labour market outcomes and the number of new large home-grown businesses [4].

Read that list again from a machine shop. None of the six asks how much of the work flows down to the firms that machine, mould, coat and assemble.

What 188 delegates told us in February

MTC Events gave us a session at the 2026 National Manufacturing Summit, on 26 February, to test what the Strategy means for the people in the room [1]. They were manufacturers of every size, plus the suppliers, advisers and researchers who work with them.

You can watch Nick play the results back to the room.

8 What Does Industrial Strategy Mean for Me Nick Leeder, INCIT UK

Uploaded by MTC Events on 2026-04-13.

The headline was a trust gap sitting on top of an awareness gap. 57% had only heard of the Strategy or had not heard of it at all, and 42% were doubtful or not at all confident in it [1]. Counting “neutral” as not yet convinced, 87% sat in one of two sceptic groups. Only 11% were both informed and confident [1].

Yet 47% said their investment in automation or digital was already underway [1]. A large part of the room is investing anyway, with little faith in the Strategy. That tells you the Strategy is not yet what drives the decision.

Playing the results back, Nick put the room’s verdict in one line: the Strategy’s impact “will be won or lost on the enablers it provides and not on its ambition”. He drew four asks from the votes. Get the foundations right, starting with people who have the skills and the time to make change happen. Raise productivity by doing more with what you have, not the same with less. Match the pace of the 60% who said they want to move in the short term. And help firms compete in new markets, which 37% named as their main goal [1].

The same picture shows up elsewhere. Made in Group’s survey of 248 UK manufacturing SMEs found 10% confident of real benefits in the next year, and 75% feeling barely or not at all represented in how industrial policy is made [5]. In Make UK’s September report, 91% of manufacturers said they had seen no benefit one year on [3].

Backing the big firms makes sense. The test is what pulls through

So follow the money into three places where big public programmes meet long manufacturing supply chains: defence, nuclear and clean energy. The Defence Investment Plan alone is backed by £298bn over four years [6]. That is where the pull-through question bites hardest.

Defence first. MOD spending with UK industry reached a record £34.1bn in 2025/26 [6]. But direct MOD spending with SMEs was £1.2bn in 2024/25, against £31.7bn with UK industry as a whole [7]. That is under 4p in the pound. Direct spend misses the work SMEs do through the primes, but that share is exactly the one nobody publishes. To its credit, the MOD has committed to spend £7.5bn a year with UK SMEs by 2028 [6], and opened a Defence Office for Small Business Growth in January, starting with 30 pathfinder SMEs [7]. That is a real start. It is also 30 firms.

Then the rules. Defence frameworks require Cyber Essentials or Cyber Essentials Plus [7]. Bidders for major government contracts must commit to net zero by 2050 and publish annual carbon reduction plans [7]. Each rule is reasonable on its own. Together they are a fixed cost of entry that weighs far more on a 40-person firm than on a prime. Is regulation helping the small supplier into these chains, or keeping it out?

Nuclear tells a sharper story. Serious money is going in: EDF and Centrica are putting £800m into extending Sizewell B to 2055 [6]. Meanwhile the Nuclear RAB levy, which pays for new nuclear build, has sat on industrial electricity bills since November 2025 [8]. So the machine shop helps pay for the build before it has any chance of supplying it. In our experience, the quality and paperwork needed for nuclear work is a big step for a firm that has never done it, and the cost lands before the first order. That is what we see, not what a survey says.

Energy has the clearest supply chain money. The first Clean Industry Bonus round put £544m into offshore wind supply chains, and Great British Energy will run a £1bn Clean Energy Supply Chain Fund [9]. Whether a small firm can find, bid for and win from them is the question nobody is yet counting.

It is also worth noticing who is missing. Food and drink is the UK’s largest manufacturing sector, at 17.5% of manufacturing GVA [10]. Yet it is not one of the six frontier industries in the Advanced Manufacturing Sector Plan. The nearest is agri-tech, which is about the farm, not the factory [11]. The plan does promise to remove barriers to technology adoption for all manufacturers [11]. But the biggest manufacturing sector in the country has no priority of its own, and Make UK’s members already report new food and drink investment going overseas [8].

A fair measure would not be hard. Two numbers would do: the share of each anchor investment spent with UK SME suppliers, and the number of SMEs that used a scheme in the year. Primes already know who they buy from. Asking them to report it is a small price for the support they receive.

How would anyone know the benefit is flowing down, rather than hoping it does? Today, none of the six core metrics would tell you [4].

None of this is easy for the firm on the receiving end

We should be honest about where SMEs stand while they wait for that answer. Producer input prices for materials and fuels rose 8.3% in the year to September 2026 [12]. Energy-intensive UK firms paid twice the European average for electricity in 2024 [4], and Make UK estimates the flagship energy relief reaches about 1 in 10 of the UK’s 130,000 manufacturers [13]. The rise in employer National Insurance added about £1,000 per head, around £2.5bn across manufacturing [3].

Then there are people and supply. Recruiting and keeping skilled staff was the biggest operational problem in the February room, at 30% [1]. Advanced manufacturing also has the lowest training spend of the eight priority sectors, at £895 per employee [14]. And supply is never settled for long. 28% of SMEs named trade and supply chain resilience as their greatest barrier to growth [5].

We see the human side of this on site after site. Any SME leader who feels the Strategy was not written with them in mind has good reason. The plant manager knows the cell needs a robot and the team needs new skills. But the same person is chasing a late delivery, covering an absence and running the quality review. In February, 16% named competing priorities as what held back their next project, and as many again named a lack of internal expertise [1]. No scheme has a box for that.

Why waiting is still the wrong move

And yet the answer is not to wait. The goal is to stay competitive, and that takes commitments now, with or without a scheme.

That comes down to three habits. First, decide on the evidence from your own shop floor. 26% of the February room named legacy equipment as their biggest operational problem [1]. The case for replacing a worn-out press does not depend on a scheme. A scheme only shortens the payback.

Second, get supply-chain ready before the work arrives. The firms that win defence, nuclear and energy orders will be the ones already holding the certificates, the carbon plan and the quality system when the prime comes looking. Give one person time each month to watch the support and the tenders that are open.

Third, treat skills as your problem, not the system’s. Digital and automation skills topped the February list at 29% [1]. No national scheme will write the training plan for your new CNC cell or the shift handover that has to change with it.

The conversation moves on at the next National Manufacturing Summit, run by MTC Events at the MTC in Coventry on 18 March 2027. Its theme is “Engineered to Compete: Leading the UK’s Industrial Future”, which is exactly the point. We will be chairing a panel session there, and registration is free.

UK manufacturing is ready for an industrial strategy. This one still has to prove it reaches the supply chain. Until it does, the 99% should keep investing on their own judgement, because standing still costs more than anything the Strategy has yet offered them.

Frequently asked questions

First steps

Sources

1. MTC Events, National Manufacturing Summit 2026, “What Does Industrial Strategy Mean for Me?”, live poll of 188 delegates, 26 February 2026
2. Make UK, Making it Smarter: Global Lessons for Accelerating Automation and Digital Adoption in UK Manufacturing, 2025
3. Make UK, Who Inherits UK Manufacturing?, 2026
4. HM Government, The UK’s Modern Industrial Strategy, 2025
5. Made in Group, Priorities for UK Manufacturing SMEs, 2026
6. HM Government, Industrial Strategy Quarterly Update, July to September 2026
7. Make UK and Lloyds Bank, A Practical Guide to Working in Defence, 2026
8. Make UK, Essential Electrification Proposals for Industry, 2026
9. HM Government, Clean Energy Industries Sector Plan, 2025
10. Make UK and S&W, Manufacturing Outlook, 2026 Q3
11. HM Government, Advanced Manufacturing Sector Plan, 2025
12. Office for National Statistics, Producer Price Inflation, UK: September 2026
13. Make UK and Ecotricity, From Crisis to Stability: A Future Energy System for Manufacturers, 2026
14. Industrial Strategy Advisory Council, Increasing Employer Investment in Skills, July 2026

Session poll figures are reported from our own session data at the National Manufacturing Summit 2026.