Earlier this week, the Chancellor and the Business Secretary released a green paper, marking the beginning of the development process for a comprehensive industrial strategy, which is set to be published alongside the next multi-year Spending Review in spring 2025.
In the green paper, the government outlined its initial plans to drive growth, particularly the eight “key sectors” it believes are best placed to do this. These sectors are advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences and professional and business services.
While many may view the rail industry’s exclusion from this list as an oversight—considering its vast potential to generate significant economic and social value and its crucial role in the net-zero transition—the green paper nonetheless presents several positive takeaways for the sector.
General takeaways
- Growth-driving sectors: The strategy identifies eight sectors as key growth drivers: advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences and professional and business services.
- Place-based approach: The government will focus on regions with the greatest potential for growth, such as city regions and high-potential clusters.
- Pro-business environment: The strategy aims to reduce barriers to investment by addressing issues like skills, innovation, infrastructure and regulation.
- International partnerships: The government seeks to deepen economic partnerships with other countries to support growth and access new markets.
- Skills and talent: The strategy emphasises the importance of a skilled workforce and will invest in training and development programmes.
- Stability: The green paper highlights the need for a long-term, stable approach to industrial policy.
Industrial Strategy Council
Alongside the green paper, the Business Secretary announced the establishment of an Industrial Strategy Council, chaired by Microsoft UK CEO Clare Barclay, which will oversee the delivery of the strategy. Legislation has been promised to place the Council on a statutory footing, granting it more authority than previous industrial strategy councils. This industry-led body could, therefore, have real power to influence the direction of the strategy, like the role of the Office for Budget Responsibility (OBR) in budget matters.
Key takeaways for the rail sector
The green paper also outlined plans to develop subsector strategies to support economic growth. These strategies will focus on subsectors that the eight growth-driving sectors critically depend upon. Rail is likely to feature prominently as one of these subsectors and therefore could well play a key role in the overall strategy. Many of the high-growth industries identified in the green paper will rely on rail infrastructure.
The green paper also outlines several key areas vital for driving economic growth, where rail will feature prominently, most notably infrastructure investment, regional development and decarbonisation.
Analysis
As with all green papers, this announcement is primarily intended to stimulate debate and solicit input over the coming months. However, there is much for the industry to welcome. A clear industrial strategy will enhance stability across sectors, so the initiation of this process is positive news. The emphasis on skills, infrastructure, regional development and decarbonisation also signals that rail will play a meaningful role in the overall strategy and opens opportunities for future investment.
On the other hand, there are concerns. By putting so much focus on the eight key growth sectors, the strategy may be missing the mark. An industrial strategy should target areas where government intervention can drive growth and productivity, rather than merely highlighting well-performing sectors likely to thrive regardless of government action. This narrow focus risks overlooking industries where targeted intervention could yield significant economic benefits and address underlying weaknesses. Rail is a prime example of a sector where strategic government action could enhance productivity, unlock growth and drive social value. Currently, there is a risk that the government has simply identified sectors with expected growth without fully considering the broader economic potential and social value of other sectors.
Nevertheless, the strategy does strongly underscore the importance of areas where rail must play a prominent role, such as infrastructure, regional development and decarbonisation. So, there is significant potential for rail to move from the margins to a more leading role in the strategy as it develops. NSAR will continue to advocate the case for this to policymakers.
If you would like to discuss this further, please do not hesitate to reach out to edward.hughes@nsar.co.uk