UK Government announces £4.5bn boost for manufacturing with net-zero focus

£2bn of the funding is for the automotive sector. Image: BMW

The funding, confirmed by the Treasury on Friday evening (17 November), will be allocated from 2025.

It is set to provide a boost to manufacturing sub-sectors which the Government believes to be crucial to the nation’s economic growth and the delivery of long-term ambitions on levelling up and the net-zero transition.

Manufacturers will need to make “fundamental changes” to reach net-zero operations and to offer the products and components needed to drive the wider low-carbon transition, the Treasury said in a statement. This is why the funding is being provided.

Some £960m has been set aside for businesses manufacturing solutions for hydrogen, nuclear, offshore wind and carbon capture, utilisation and storage (CCUS). This package will also be open to those manufacturing components for electricity networks.

A further £2bn is earmarked for automotive companies; a priority for this spending is to ease the transition to electric vehicle (EV) manufacturing ahead of the 2035 ban on new petrol and diesel car and van sales.

The Treasury notably confirmed that the Government intends to publish its battery strategy next week, in another move that will provide clarity on the EV transition for automakers.

The bulk of the remaining funding will be available to aerospace manufacturing firms (£975m) and life sciences manufacturers (£520m).

Additionally, the Government is investing to expand the ‘Made Smarter’ programme to all English regions in 2025 and is aiming to complete further expansion across the rest of the UK in 2026. This scheme supports small and medium-sized manufacturers in accessing digital technologies that can improve efficiencies.

Make UK’s senior energy and climate change specialist Brigette Amoruso said the funding “will undoubtedly help the manufacturing sector make progress towards achieving net-zero emissions”.

She added: “We are prepared to work with the Government on the practicalities of this plan, including how to incorporate manufacturing supply chains. These chains have a key role in supplying components and services for clean energy in the future low-carbon economy.”

Detailed assessment

As the UK Government announced the funding, the Energy Security and Net-Zero Committee of MPs launched an inquiry to examine how best to maximise the role of UK manufacturing in the domestic and international global energy transition.

Written submissions are currently being accepted by the Committee. Oral evidence sessions will be announced in the coming weeks and months.

“Governments often talk about market forces but Government is the biggest force in the market,” said Committee chair Angus Brendan MacNeil.

“Our inquiry will examine what needs to be done to encourage a greater role for UK firms in the supply chain – something which will be key to both decarbonising our energy sector over the next decade and ensuring the UK’s energy security.”

Related feature: How can manufacturers invest in innovation for net-zero?