Comment

Advanced Manufacturing Plan: What sectors and where?

The recently published Advanced Manufacturing Plan[1] re-confirms this Government’s ambition for the UK to be the best place in the world to start and grow a manufacturing business. The very presence of a plan reflects the importance that advanced manufacturing will play in the UK’s future prosperity. The Government has set out a bold commitment to reach £1 trillion of exports annually. This represents a significant shift compared to the £834 billion total in 2022.

Read the Advanced Manufacturing Plan policy paper.

The plan will be underpinned by a core thread – pivoting the UK’s advanced manufacturing sector towards addressing the substantial opportunities presented by the twin transitions of net zero and digitalisation, whilst at the same time scaling up and commercialising innovation from our world class network of universities and research institutions. 

The investment required to deliver on these ambitions and targets will be met by the private sector – the Government is very clear on this and estimates “additional capital investment averaging £50-60 million per year is needed through the late 2020 and 2030s across the economy.” This isn’t pocket change and the Government is distancing itself from “distortive subsidy battles” – a subtle reference to the macroeconomic interventions of the US and EU to attract global investment. 

So, what are these opportunities and where do they lie?

This Government is prioritising long-term investment in four “strategic manufacturing sectors” comprising: automotive (including zero emission vehicles and automated mobility), aerospace (including ultra-low emission aircraft and net zero jet fuel), life sciences (including medicine manufacturing, innovation centres and greener supply chains) and green industries (carbon capture; advanced/small nuclear reactors and hydrogen power). The Autumn Statement earmarked £4.5 billion of public funds for these sectors from 2025 for five years. 

This investment is tied to spreading opportunities across the country in the face of the Government's ambition to level up the whole of UK and is aligned with the existing spatial portrait of 84% of manufacturing jobs lying outside of London and the South East. This spatial pattern partly reflects the selection of Freeports and Investment Zones across the country which are deemed as “regional support” in the Advanced Manufacturing Plan. 

The refocused Investment Zone programme and Freeports are delivering spatial opportunities in England (Midlands and North), Scotland, Wales and Northern Ireland. This includes the Birmingham Knowledge Quarter, University of Sheffield’s Advanced Manufacturing Research Centre and Port Talbot. The investment in these locations is knitting together “the production process that integrate advanced science and technology, including digital and automation, to manufacturing” in life sciences and green industries especially. 

However, ‘supercharging’ these strategic advanced manufacturing sectors will not be exclusive to Freeports and/or Investment Zones, as requirements for land and space will need to remain agile to local, national and international investment. Additionally, the supply chain will require sites accessible to strategic road and rail links whilst ensuring proximity (in time) to raw materials, labour and critically clean power. This is exemplified by the recent news that Octopus Energy will occupy space at Hinckley Park to store and distribute heat pumps and solar panels as well as train installation engineers.  

The planning system has and will be integral to facilitating productivity growth in each strategic manufacturing sector. In this context, the Government’s announcement to “deliver a better [planning] service for businesses” is welcome, although further information is required on how this service will operate. It also seems apparent that this Government is keen for local authorities to utilise Local Development Orders in England via its additional investment of £5 million to incentivise its greater use. 

In a nod to social value, there is recognition that there are challenges with labour skills. For example, “in the automotive sector alone, over 60% of current manufacturing roles relating to electric vehicle power technologies will need upskill or reskill”. This represents a huge challenge for the success of the Advanced Manufacturing Plan in which the planning process can support by delivering the right value in education and training opportunities for local communities neighbouring economic ports, zones or sites. 

The Advanced Manufacturing Plan provides welcome clarity on Government policy and fiscal commitments in part of our economy where there is significant transition and opportunity. However, with a General Election to be held before January 2025, and with that, a potential change in governing party, it remains to be seen whether the plan will be fully followed through. We should take comfort, however, that Labour’s Industrial Strategy supports many of the priorities set out in the Advanced Manufacturing Plan, albeit will likely seek to deliver investment and support in a different way. The opportunity to radically modernise our economy through these strategic manufacturing sectors, underpinned by the twin threads of net zero and digitalisation, will therefore remain. 

Read more about our insights into the industrial and logistics sector, or for tailored advice into how these developments could inform your industry, please reach out to Sam Lake or David Diggle.

4 December 2023

[1] https://www.gov.uk/government/publications/advanced-manufacturing-plan