Driving sustainable growth in the UK

The UK Government’s 2025 Industrial Strategy sets out a 10-year plan to drive significant business investment in eight priority growth sectors. Its overarching mission is to drive long-term, sustainable growth by increasing business investment and supporting priority growth industries. The Government also recognises that it must tackle the priority challenges facing industry today, notably inflation, high energy costs, global competition and persistent skills shortages.

 

We understand these challenges only too well. Schneider Electric helps industry, buildings, transport, and infrastructure to electrify, automate, and digitalise to drive efficiency and sustainability.  The UK Government is right to focus on the immense economic opportunities of the energy transition and electrification. Only through widespread electrification can UK industry and households access cheaper, cleaner, and more secure energy.

 

But the access and distribution of that energy is predicated on a smarter, decentralised grid network. This is where electrification converges with automation and digitalisation. Software, AI and digital tools will play a vital role in the development of the new energy landscape. But currently, not enough organisations have the skills to operate these new technologies, which is why access to education and training has become a priority for energy initiatives up and down the country. Sustainability applies just as much to skills and people as it does to climate and energy.

 

Crucially, it also applies to driving energy efficiencies now and not at the point of when a company can switchover to wind turbines or solar farms. For the industrial strategy to find its feet, UK companies need to curb energy demand at a time when costs are rising. After all, the cheapest energy is the energy you don’t use. Access to smart monitoring and data analysis tools will provide organisations with a better picture of their energy profile, helping to cut energy waste and costs.

 

 

Outlining the investment for industrial change

As a large UK employer with a historic footprint, we agree that policies need to be designed to raise living standards as well as provide greater policy certainty for business. Through long-term planning, clearer regulation and faster approvals, the 2025 Strategy is a departure from the past and previous industrial policies.

 

It aims to achieve its goals through increased funding for R&D and other innovative financing solutions, measures to tackle high energy costs, reformed planning and infrastructure policy, and access to a skilled workforce for growth sectors. It acknowledges the role that digitalisation will play in shaping the overarching vision and the practical delivery of the Strategy. Finally, it acknowledges that electrification is crucial to the Government’s plans to power the UK’s industries, drive growth and reduce harmful emissions.

 

 

Electrification and digitalisation will recharge UK industry

Crucially, the Strategy sets out to address two critical business issues - energy costs and skills. This includes increasing the discount on electricity network charges for energy-intensive industries, who will also be exempted from costs associated with renewable energy policy, such as the Renewables Obligation, Feed-In Tariffs, and the Capacity Market.

 

On skills, there is recognition that the existing apprenticeship levy scheme needs to be reformed and that investment in technical training must be increased. Addressing the UK’s high energy costs and persistent skills gaps is critical for UK businesses, regardless of sector, but especially for advanced manufacturing and the other segments targeted for the plan.

 

Another positive feature is the recognition of electricity networks as a ‘foundational sector’ – meaning sectors that provide the essential building blocks and infrastructure for overall industrial and economic growth. The UK’s electricity grid needs to be urgently upgraded for the UK to meet the Government’s target of a decarbonised power system by 2030 and to manage increased demand as more sectors electrify their operations. Carefully managed upgrades will add resilience to the grid, securing energy independence and bringing down the cost of electricity to more affordable levels.

 

This is particularly relevant for a business like ours that is heavily focused on energy management and automation with local production facilities. Schneider’s recently opened smart manufacturing plant in Scarborough will help to deliver the electrical equipment needed for the UK’s grid expansion and transport decarbonisation efforts. By retaining our existing workforce and adding new skilled jobs, we’re showing how future-focused industries can support communities across the UK.

 

 

Digitalisation leads to decarbonisation

Digital technologies have also led to a step change in how industry operates. Technologies like software-defined automation, edge computing, and industrial AI can lead to measurable gains in productivity, efficiency, safety, and sustainability. But the real differentiator lies in choosing technologies that are scalable and fit-for-context, and in working with trusted partners who can simplify integration and execution.

 

Electrification and digital technologies strengthen competitive advantage by helping firms to improve energy efficiency and reduce their emissions footprint, while using AI to better manage and reduce costs.

 

Importantly, many of these technologies already exist. We don’t need to spend millions on new pilots. But don’t take our word for it. Many UK organisations have already made significant energy and cost savings through the adoption of digital technologies that bolster onsite electrical infrastructure. But significant barriers remain, preventing organisations from digitalising – legacy systems, skills shortages, and high up-front costs.

 

 

Delivering the Modern Industrial Strategy

Overall, the Industrial Strategy is a step in the right direction. So far, the prospects for growth are promising across the key investment sectors. It should provide a platform for economic growth, through trade and investment, while also addressing key issues such as net zero, sustainability and the regional distribution of economic activity.

 

The Industrial Strategy can only succeed if it delivers on its promises of sector-specific investment, the delivery of programmes to reduce energy costs, skills development, and planning and regulatory reform. Success will also depend on consistent implementation, cross-sector collaboration, and maintaining political and economic stability to give businesses the confidence to invest for the long-term. Finally, the plan also recognises the importance of data provision to inform policy but also to help businesses adopt digital technologies that will cut energy waste, decarbonise operations and meet climate targets. 

 

---

 

David Hall is Zone President, Schneider Electric UK & Ireland

 

Main image courtesy of iStockPhoto.com and metamorworks