UK Modern Industrial Strategy

Baroness Kramer Excerpts

Monday 30th June 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I genuinely admire the intent of the industrial strategy. The sectors that it highlights are sensible. I like the aspiration to focus on all regions and to nurture clusters. All that is very good, but it is a list of aspirations; it is not a strategy. A strategy is a plan of action designed to achieve a long-term or overall aim, and this is not that. All the aspirations in it are good and no one could reasonably argue with them, but the economy and the growth we need will not be delivered by this, or by fine words and noble sentiments.

Growth is not a slogan, it is a result. Indeed, the introduction to the industrial strategy says that

“the Government’s priority mission is to deliver strong, secure, and sustainable economic growth”,

but the Government continue to mistake the former for the latter.

Despite the Chancellor’s triumphant declarations that growth is the number one priority, the harsh reality confronting British businesses tells a starkly different story. The Governor of the Bank of England has delivered a sobering assessment that should give this House pause. He has categorically dismissed the Chancellor’s claims that Britain’s economy has turned a corner, warning instead that growth is slowing precisely because high taxes are biting deep into our economic foundations.

The Governor’s analysis is both precise and damning. What the Chancellor has hailed as evidence of economic recovery is nothing more than a temporary blip driven by fleeting factors that will not be repeated. British businesses, rather than preparing for prosperity, must now brace themselves for an economic slowdown of this Government’s making.

The employment figures alone should shame any Administration who claim to champion working people. Unemployment has risen every single month—all nine months—since the Government took office. This is not coincidence; it is consequence.

Perhaps most telling is the collapse in Britain’s international standing as an investment destination. The number of foreign direct investment projects has plummeted to the lowest level since records began 18 years ago. According to EY, the Government have made the UK a less attractive place to do business than Oman, the Czech Republic and Saudi Arabia. Before the Chancellor’s Budget last year, a PwC survey ranked the United Kingdom as the second most attractive place for investment in the world. That is our record: their record is destroying that competitive advantage in less than a year.

The human cost of these policy failures is becoming increasingly apparent. The British Chambers of Commerce has revealed that almost one-third of small and medium-sized employers have made redundancies or are actively contemplating job cuts as a direct consequence of the Government’s decision to hike employers’ national insurance contributions. Its survey of over 570 member firms found that 13% had already wielded the axe, while 19% were sharpening it for future use.

In times of global uncertainty, businesses look to their own Governments for stability and support. Instead, this Government have chosen to pile domestic chaos upon international volatility. They have created a perfect storm of their own making. They speak eloquently of cutting energy costs while systematically pursuing policies that guarantee the opposite outcome. Their obsession with net zero has created an energy regime that punishes British businesses with costs five times higher than those faced by their American counterparts.

The introduction to the strategy says on page 33:

“There can be no plan for economic stability or sustainable growth that does not include a credible plan for net zero”.


That is obvious nonsense: of course there can. This is a choice, and publishing elegant explanations about how they are going to alleviate the worst effects of their own policies is simply baffling, but it is not strategy.

While pouring billions of pounds into subsidies for renewables, they steadfastly refuse to end the windfall tax on oil and gas companies or to issue new licences for drilling in the North Sea. They have turned their backs on our own North Sea resources, preferring instead to import energy from abroad rather than harness the secure—that word deserves repeating—and reliable supplies beneath our own waters. The result is an energy policy that reads like a masterclass in economic self-harm, and also puts us at a strategic disadvantage in a dangerous world.

It would be remiss of me if I did not acknowledge credit where it is due. The commitment to free trade principles offers a glimmer of hope, and recent trade agreements suggest that the Government have not entirely abandoned the opportunities that Brexit provides. However, if we are truly to harness these benefits, we need comprehensive free trade deals, not the minor economic agreements that currently pass for trade policy.

Their promise to reduce regulatory burdens by 25% reveals another layer of the Government’s duplicity. This sounds precisely like telling businesses what they want to hear, while doing the exact opposite in practice. The Employment Rights Bill alone, which they proudly champion, will impose £5 billion—the Government’s own impact assessment number—in administrative costs on British businesses and introduce a new agency, which is a regulator by any other name. How is that part of a strategy to reduce regulatory burdens?

I suspect that this £5 billionfigure will represent only the tip of the iceberg. What the Government have failed to factor into their calculations is the true cost of empowering trade unions to constantly disrupt business operations, of making it infinitely riskier and more expensive to hire workers, and of creating a labyrinth of legal obligations that will tie employers in knots for years to come. Small businesses, already struggling with the highest tax burden in a generation, will find themselves drowning in compliance costs that will inevitably dwarf the Government’s modest £5 billion estimate.

The impact on young people seeking employment is particularly troubling. At a time when youth unemployment demands urgent attention, the Government are making it more expensive and riskier for employers to take a chance on inexperienced workers. The Employment Rights Bill, whatever its intentions, will price young people out of the job market at the very moment they need opportunity most.

We have also witnessed a hat-trick of U-turns from the Prime Minister, including on welfare reform. We were told that these measures were necessary to get people back into work. I suspect that the Government are not that interested in that after all. What is the point of an industrial strategy if there is no industry left? Will the cost of this U-turn simply mean more taxes, or will the Minister unequivocally rule out further tax rises today?

The Government have shown they do not understand how wealth is created and how economies grow. You cannot tax your way to prosperity, you cannot regulate your way to competitiveness, and you certainly cannot lecture businesses about growth while systematically undermining the conditions that make growth possible. The question before us is simple: will the Government recognise that their approach is failing, or will they continue down a path that leads inevitably to economic decline? The evidence is mounting, the damage is spreading and time is running short.

[Baroness Kramer (LD)]

My Lords, we on these Benches remember how powerfully business welcomed the industrial strategy produced by Vince Cable during the coalition years, and the shock and dismay with which it greeted the Conservative decision, when that party was in government alone, first to weaken it and eventually to scrap it. Such a strategy is vital to drive business investment, good jobs and prosperity.

It was notable that the Conservatives not only scrapped the industrial strategy but sold off the Green Investment Bank. How different our energy position could have been today, had that not happened. They also readied the British Business Bank for sale; I remember direct conversations with Sajid Javid and his relief that it was to be done away with. It survived only because Covid struck and it was needed to distribute Covid loans.

Those constructive moves were pure ideology: in essence, it was private good, public bad. So I listened with interest to the Conservative Front Bench today and there is a change of tone but—my goodness—this country would have benefited had that change started a few years ago.

We find some common ground in one area. The Conservatives did not exactly name it, but we have talked about it in the past. Raising employers’ NICs, especially SME employers, was the wrong way to start the revival of business and enterprise.

We support core elements of the strategy, but we still have questions. My noble friend Lord Russell, if he has the opportunity to speak on this Statement, will talk much more about energy prices, because we welcome the help of a wider range of energy-intensive industries. But why would we wait another two years to find out who will qualify? What about the burden of electricity prices on service industries such as hospitality?

If the Government want to see a quantum growth in exports, the answer is surely to negotiate to rejoin the EU customs union. By comparison, everything else is small beer. Have the Government noticed today’s FT article charting the decline in productivity—especially in London, which is key to the economy—since Brexit? It played such a significant role, with its impact on business investment and the opportunity to participate in supply chains. This Government are keen on U-turns, so why not make a U-turn that would actually bring money into the country and the Treasury and work to find our way back into the EU customs union?

A business in rural England involved in agribusiness and farming would be asking, “Why does this strategy have so little for me?”, especially in an era of food insecurity, climate change and tariffs. Can the Minister elaborate and provide some reassurance? A business looking for skilled staff would welcome the funding boost for skills but ask, “Why not the fundamental reform of apprenticeships that we need, and where is lifelong learning?” Today’s report of a sharp drop in entry-level jobs surely underscores that need. Can they have a place in the strategy?

A creative reading the importance of data as an asset—in fact, the industrial strategy is quite good on the creative sector, but not on the importance of data as an asset—would ask why the Government have refused to strengthen copyright transparency rules to prevent the US mega-techs scraping intellectual property without recompense. Where is the logic and the justice, particularly when data is identified as critical?

An innovative small business would welcome the Government’s intention to use procurement to drive enterprise, but why do the rules still mean that the Government can then take the intellectual property of that small business and, on the grounds of transparency, give it to its competitors free of charge? This is an issue that my noble friend Lady Bowles raises often, and it still needs an answer.

One issue in particular grates with me. The Government have simply not grasped the need for access to finance for the whole breadth of small businesses, not just priority sectors such as high tech. To build our communities and make sure that good jobs and prospects are available everywhere, we cannot be in a position where small businesses grow from retained earnings only. We need a genuine community banking sector. The high street banks and most alternative finance is not interested in meeting the need. The British Business Bank has a small £150 million pot over the next two years to support community banking, but it is minimal compared, for example, to the $300 billion in community bank financing that is the backbone of small business finance and growth in the United States. Does the Minister understand that this is a missed opportunity?

In many ways, we see this industrial strategy as a positive and strong step forward, but we will not be in a full position to judge it until we see practical support and solutions. Implementation and delivery are key. I hope that, by the time we have such clarity, my noble friend Lord Fox, whose knowledge in this area is so much greater than mine, is back on these Benches. I can tell your Lordships that he will expect answers.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I am grateful to the noble Lord, Lord Sharpe, and the noble Baroness, Lady Kramer, for their contributions, but I am bitterly disappointed by the noble Lord’s remarks about the industrial strategy. He said that we should listen to business; I can safely say that we have.

Let me quote some of the comments from businesses. The Institute of Directors said:

“The Industrial Strategy is an important step towards the development of a positive and coherent plan to drive growth, and will enable businesses to see a sense of direction for the UK economy. For businesses to be able to plan for investment, it is crucial to have a stable policy environment. This whole-of-government approach is encouraging, not least as it draws together new and existing strands of activity into one cohesive strategy”.


Make UK, whose chairman is the noble Lord, Lord Harrington—a colleague of the noble Lord, Lord Sharpe—says:

“The Government has listened and the Secretary of State has acted decisively with a joined up strategy which reflects a wider commitment from the Prime Minister and Cabinet alike. The strategy announced today sets out comprehensive and well funded plans to address all three of these structural failings. Clearly there is much to do as we move towards implementation but, this will send a message across the Country and around the world that Britain is back in business”.


Furthermore, the leaders of the British Chambers of Commerce, the CBI and the Federation of Small Businesses said that:

“The Industrial Strategy … marks a significant step forward and a valuable opportunity for the business community to rally behind a new vision for the UK—boosting confidence, sentiment, and enthusiasm for investment. From start-ups and small businesses to large corporates, businesses need a more attractive, stable environment that enables faster, easier, and more certain investment decisions. We welcome the Government’s engagement with businesses across the UK. Much of what we’ve shared has been heard and reflected in this strategy. While there’s more to do, we are ready to support the next steps. We encourage businesses nationwide to get behind this strategy and champion the UK as the best place to live, work, invest, and do business”.


The UK is a thriving global economy, founded on stability, fairness and the rule of law, and propelled by world-leading sectors and companies. We have a record of extraordinary research and innovation. We are champions of openness and free trade, and we continue to be a magnet for international talent and capital. But, in recent decades, the pace and magnitude of global change have escalated, and the UK has been short of the dynamism it takes to stay ahead. The global trading environment has become more unpredictable, the fragility of the global supply chains more apparent, and our economic competitors have been more assertive and destructive in promoting their national industries. British workers and families have paid the price through the cost of living crisis.

Now more than ever, businesses are seeking out countries that can provide them with the confidence to invest and grow. As we set out in the plan for change, the Government’s priority mission is to deliver strong, secure and sustainable economic growth. The modern industrial strategy is a 10-year plan to kick-start an era of economic prosperity—the central mission in our plan for change—by investing in our comparative advantage and forging a new relationship between business and government.

It is a new economic approach that brings together every bit of government to drive investment. It will create a more connected, high-skilled and resilient economy where every person, place and business has the chance to flourish. Our plan will make it quicker and easier for businesses to invest, provide them certainty and stability to make long-term decisions and ensure they benefit from the UK’s openness to the world.

In order to do this, we are backing eight growth-driving sectors where the UK is already strong and has potential for faster growth: advanced manufacturing; clean energy industries; creative industries; defence; digital and technologies; financial services; life sciences; and professional and business services. With those globally competitive industries spread across the nation, there is potential to make the whole country more prosperous as they grow and become more successful. The deep partnerships developed with mayors and the devolved Administrations, support for city regions and clusters and investment in local transport networks will enable the delivery of real growth to local communities.

Our formal Invest 2035 consultation, published last year, identified a list of inputs from foundational industries—including electricity networks, ports, construction, steel, critical minerals, composites, materials and chemicals—that are important to unlocking growth in the key growth sectors. The industrial strategy will support the whole economy, including businesses outside the eight growth-driving sectors through an improved operating environment, long-term stability and greater dynamism for entrants to emerge.

Supporting growth sectors will also have spillover benefits for the rest of the economy, from innovation pull-through to technology diffusion. For example, gains from AI innovation alone could add up to some £47 billion a year for the UK in productivity gains over the next decade.

Regional growth is a core objective of the industrial strategy. Higher national growth and the success of the IS eight will come only from unleashing the potential of places across the whole of the United Kingdom. The industrial strategy and our sector plans include interventions that will grow our city regions and clusters and help them attract private investment. This includes: bringing together more investable sites with over £600 million for the strategic sites accelerator; helping places to land game-changing private investments with support from the Office for Investment, the National Wealth Fund and the Business British Bank; growing high-potential innovation clusters for the £500 million local innovation partnership fund; making a new £500 million mayoral recyclable growth fund available to invest in growth projects; and much more.

On access to finance, we are unlocking billions in finance to innovative businesses, especially for start-ups and scale-ups, by increasing the British Business Bank’s capacity to £25.6 billion. That includes an additional £4 billion for growth capital for industrial strategy sectors, crowding in billions more in private capital. By investing largely through venture funds, the BBB will back the UK’s most potential growth.

To conclude, I reiterate the words of my noble friend, the Secretary of State:

“We are creating a prosperous, proud and outward-facing but self-reliant, independent and high-skilled nation; a country where opportunity, skills and wealth are spread fairly, and where every person and every business have the chance to flourish. That is what our modern industrial strategy will deliver. Our future, in our hands, built in Britain: that is what the strategy will achieve”.