UK automotive industry prioritised for industrial strategy support

Commenting from the SMMT international automotive summit in London on Tuesday, Nicole Livesey of Pinsent Masons said such a holistic approach would promote global investment in the UK automotive industry.

With its industrial strategy published on Monday (160-page / 15.6MB PDF), the government has identified eight sectors of the UK economy that it will provide priority support to, whether through direct public funding or via other measures aimed at, for example, bolstering skills, improving access to finance, limiting regulatory burdens, and catalysing private investment. One of those sectors is advanced manufacturing, with the government confirming that automotive would be one of the “frontier manufacturing industries” sitting within the sector to which it would provide priority.

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The multi-faceted strategy and separate advanced manufacturing sector plan (82-page / 19.5MB PDF) contain government plans to cut energy costs for manufacturers, deliver regulatory reform to support the adoption of AI and other technologies, and work with industry to address skills gaps. The papers further confirm measures to improve business’ access to finance – including through the British Business Bank and National Wealth Fund and from private sector investors globally – and to strengthen UK supply chains, including through a renewed focus on connectivity and clustering.

For the automotive industry specifically, the government’s plans include a new ‘DRIVE35’ initiative aimed at promoting investment in electrification of vehicles. The government said it is committing £2 billion of automotive capital and R&D funding to 2030. The government also said it will outline an automotive technology strategy in 2026 and, by 2027, fully implement the Automated Vehicles Act – framework legislation that establishes high level principles and powers for the UK government to make regulations setting out the details of regulatory requirements for self-driving cars before they can be used.

The government said it hopes its support for advanced manufacturing will drive annual investment in the sector up, from £21 billion to £39 billion by 2035.

Livesey said: “At the SMMT summit on Tuesday morning, Sam Lister, the director general for industrial strategy at the Department for Business and Trade, was at pains to stress that this industrial strategy is different to those that previous governments have published in the past 15 years. The main difference, he said, is that the aims of the strategy will be reflected in subsequent policy developed and decisions taken across government and by regulators.”

“In practice, this would mean that everything from the budgets set in the periodic spending reviews and how the British Business Bank focuses its investment, to whether and how new regulation is developed and how exemptions to stricter immigration rules are carved, should align with the industrial strategy. If this is the reality that industry experiences in the years ahead, it will go a long way to providing the stability business craves to be confident enough to choose the UK to invest in, in what is a highly competitive global marketplace,” she said.

For the UK automotive industry, Livesey said businesses will particularly welcome the government’s clear efforts to carefully balance trade tensions, so that, for example, they can grow exports to China as well as to the US and Europe. She added that longer term access to finance is vital to the automotive industry because of its long product development cycle, and highlighted the potential for regulatory reform to further drive investment.

“Opening up the remit of the British Business Bank to invest by way of equity stakes should facilitate greater access to early-stage funding of new technologies across the automotive sector and encourage further private sector funding,” Livesey said.

“In terms of regulation, original equipment manufacturers have long called for the abolition of the ‘zero emissions vehicle’ mandate and so have been encouraged to see it being refreshed. However, policymakers should also focus on long-term sustainable changes that allow companies to plan and invest for the future,” she said.