Modern Industrial Strategy 2025

On 23 June 2025, the Government set out its long awaited Modern Industrial Strategy.

We look forward to working closely with the Government to make its vision of a new strategic partnership with industry to drive growth a reality. The time is long overdue for a more muscular approach to securing the UK’s advantage and we welcome this moment.

Kevin Craven, ADS CEO said:

“Today is an important moment in ensuring the UK is a leading destination for global investment. We commend the Government on the publication of its Modern Industrial Strategy, which crucially provides a comprehensive, and long-term strategy for supporting growth-driving sectors such as aerospace, defence, security and space.

The Government has made some vitally important interventions, including the much-needed commitment to a 10-year package for the Aerospace Technology Institute, a new scheme to help businesses in our sectors with high energy prices, the creation of new Defence Technical Excellence Colleges, and several measures to help innovative SMEs access new forms of finance.

Our sectors are future-leaning industries, rich in engineering excellence, innovation in advanced manufacturing and world-leading digital services. Found in every corner of the country, they directly employ more than 440,000 people each year. Productivity in our sectors – which already outpaces the UK average – will continue to thrive with the appropriate government backing. We look forward to working closely with the Government to make its vision of a new strategic partnership with industry to drive growth a reality.

The time is long overdue for a more muscular approach to securing the UK’s advantage and we welcome this moment.”

Sector Reactions

Balaji Srimoolanathan, ADS Director – Aerospace & Space said:

“The government’s Industrial Strategy marks a pivotal moment for the UK’s £34 billion aerospace sector – providing the strategic long-term policy certainty and investment needed to secure our place at the centre of the global aerospace industry for decades to come. The extension of the Aerospace Technology Institute Programme with up to £2.3 billion by 2035, the expansion of the Made Smarter programme to reach more SMEs, a sectoral upskilling and reskilling programme, and the clear mandate to the National Wealth Fund and the British Business Bank, demonstrates a clear commitment to supporting innovation and productivity across the full breadth of our industry.

As global demand for aircraft accelerates, the UK must continue to lead on decarbonisation, supply chain resilience, investing in future capabilities, and the development of a skilled, future-ready workforce. This Strategy provides the foundations needed to meet these ambitions and secure sustainable and competitive growth.

ADS welcomes the government’s ambition and looks forward to working in partnership with industry and policymakers through the Aerospace Growth Partnership to ensure the aerospace sector continues to deliver high-value jobs, exports, and productivity across the UK.”

Samira Braund, ADS Director – Defence said:

“The defence sector warmly welcomes the government’s Modern Industrial Strategy and its clear focus on national security, industrial resilience, and dual-use technology. Building on recent defence spending commitments and the launch of UK Defence Innovation, we are encouraged to see Sector Plans prioritising frontier technologies with both civil and military applications.

With 95% of our membership made up of innovative SMEs, we are particularly pleased by the commitment to increase MoD spending with SMEs by £2.5 billion by May 2028 – a 50% uplift on 2023/24 levels – ensuring at least £7.5 billion of the MoD’s total budget reaches this vital part of the UK’s defence supply chain. SMEs remain the backbone of our defence ecosystem, and we welcome efforts to boost access for non-traditional suppliers.

In an increasingly volatile global environment, we welcome the government’s ambition to strengthen its export framework, placing industry’s concerns and priorities at its core. This approach is essential to realising the UK’s goal of becoming the leading European nation for defence exports. While we await the forthcoming Defence Industrial Strategy, industry is now better equipped with the tools and commitments needed to drive both national security and economic growth across the UK.”

Jon Gray, ADS Director – Security and Resilience said:

“We warmly welcome the recognition of cybersecurity as a frontier industry within the Digital and Technologies Sector Plan and the wider recognition by government that our prosperity and security are intertwined. As part of this, the upcoming Cyber Growth Action Plan is a timely and important step in leveraging the contribution of the UK security and resilience sector. We are also encouraged by the Industrial Strategy’s broader emphasis on dual-use technologies – particularly where defence and national security intersect – and its expansion of the National Security and Investment Fund.

These developments will play a vital role in protecting both businesses and citizens from emerging physical and digital threats. The continued alignment of national security with industrial and economic policy is a positive move, and we look forward to working closely with government to ensure industry remains at the heart of delivering these ambitions.”

Alun Williams, ADS Deputy Director – Space said:

“Confirmation that space has been included as a priority sector within the Advanced Manufacturing Sector Plan is a powerful signal of long-term commitment by the government. There should be genuine recognition of the efforts across various departments in advocating for the criticality of the UK space sector in driving growth and enhancing our national security.

There are welcome references to a further iteration of the Space Clusters Infrastructure Fund, and a renewed – and urgent – focus on the national capability goals. As a global partner of choice for international trade activities, ADS looks forward to supporting the government’s ambition of becoming a leading industrialised European exporter by 2030.”

Alistair Leuchars, ADS Deputy Director – Cyber & Digital said:

“We welcome the Industrial Strategy’s ambition to make the UK the leading European hub for scaling digital and technology businesses. With a strong focus on AI, autonomous systems, cyber and quantum technologies, it rightly recognises the sector’s potential to drive growth and innovation across every part of the UK’s industrial ecosystem. Commitments like dedicating 10% of the defence equipment budget to emerging tech and supporting regional clusters are particularly noteworthy in ensuring our cyber and digital sectors provide the security and digital resilience needed to underpin our national security. Like many across the sector, we look forward to working with government to ensure industry and government work in tandem to deliver the UK’s growth ambitions.”

Paul Oxley, ADS Director – External Affairs said:

“I welcome the Industrial Strategy’s commitment to addressing skills shortages in our growth sectors, with a strong focus on regional development and employer partnerships. These are vital steps toward building a future-ready workforce. The outlined flexibility in the Growth and Skills Levy is also a positive step forward, and I look forward to working with government on how greater flexibility can be applied to suit individual business needs and ease the current administrative issues in accessing funding.”

Members Briefing

The ADS Policy team has analysed the announcement, and members can log in to read the briefing here. The highlights are summarised below…