The Government's Unveiled Industrial Strategy: The REC Position

On Monday, the government introduced Invest 2035, a 10-year industrial strategy aimed at boosting growth, improving productivity, and securing Britain’s economic future. The strategy focuses on eight priority sectors: professional and business services (PBS), advanced manufacturing, clean energy, creative industries, defence, digital technologies, financial services, and life sciences. The inclusion of PBS highlights its vital role in driving long-term prosperity, which is important for the recruitment sector. 

The strategy outlines key interventions in areas that have hindered growth, such as transport, infrastructure, skills, and taxation. Addressing these barriers is essential for unlocking the potential of the PBS sector and ensuring the success of the strategy. 

People and Skills: The Foundation of Economic Growth 

The strategy emphasises skills development as a driver of growth, with commitments to workforce training and upskilling. Sectors like clean energy, where specialist skills are crucial, stand to benefit from this focus. Sumitomo Electric’s subsea cable plant in Scotland (announced in May 2024), a £350 million investment, is a prime example of business investment in a crucial sector. The government now needs to engage with businesses like this to deliver a workforce strategy that can maximise returns. With up to 725,000 jobs expected in low-carbon sectors, as reported by the Climate Change Committee, ensuring the workforce is prepared will be key to success.   

This need for talent extends across all the identified priority sectors. In the digital and tech sectors, for instance, the government’s goal of supporting start-ups and SMEs relies on a strong talent pool and an innovation-friendly culture. To drive growth, companies will also need access to global talent. The strategy’s alignment with the Migration Advisory Committee (MAC) and Skills England is crucial for fostering competitive, dynamic labour markets. As outlined in our Dynamic Labour Markets for Growth manifesto, a coherent immigration policy will be vital for accessing the skills necessary to thrive. 

Business Taxes: A Need for Certainty 

Business tax rates stability is another area of concern for the PBS sector. The strategy rightly acknowledges the importance of creating a stable environment, but fluctuating business taxes continue to create uncertainty. Long-term stability is essential for businesses to plan investments, especially in high-cost sectors like professional services. The government has committed to a Corporate Tax Roadmap, which will set out its approach to this over the coming years. 

Place-Based Growth and the Role of Mayoral Combined Authorities 

A central feature of the strategy is its focus on regional growth, with Mayoral Combined Authorities (MCAs) playing a key role in delivering Local Growth Plans. This approach is particularly beneficial for sectors like Advanced Manufacturing, where 84% of jobs are based outside of London and the South-East. Cities in England such as Manchester, Leeds and Birmingham, and Edinburgh and Glasgow in Scotland are well-positioned to benefit, as they already host thriving PBS and financial services hubs. Edinburgh and Glasgow, for example, rank among the top 40 globally significant financial centres. The government’s focus on partnering with the financial services sector can play a key role in positioning the UK as a prime hub for green businesses financing the Net Zero transition. 

The strategy’s emphasis on harnessing regional expertise aims to help attract investment and create high-quality jobs, particularly in sectors like life sciences, which generated over £100 billion in turnover in 2021/22. The government’s goal of renewing the UK’s leadership in life sciences by strengthening partnerships with business, academia, and healthcare will help drive economic growth and modernise the NHS through research and development. 

Transport and Infrastructure: The Key to Unlocking Potential 

Transport and connectivity are critical to regional development. The strategy recognises the need for improved infrastructure to connect city regions and make them attractive to businesses and skilled workers. As a mobile sector, PBS depends on efficient transport networks to facilitate seamless operations across regions and internationally. 

The government’s upcoming 10-year infrastructure strategy, aligned with the Industrial Strategy, looks to modernise transport networks. The REC will be advocating for transport and infrastructure investments that are closely aligned with local growth priorities, ensuring that businesses can operate more efficiently and that the UK remains a competitive destination for investment. 

What the REC will do? 

The Industrial Strategy is still in its early stages, with the green paper setting out the government’s intentions ahead of a more detailed final plan to be published in 2025. Much of what has been announced in the Industrial Strategy green paper has drawn from previous announcements. Crucially, the government has committed to further consultations across various aspects of the strategy, including skills, local growth, and regulatory frameworks.  

The consultation closes on 24 November. This presents a key opportunity for businesses to engage in shaping the approach to this strategy that will affect them in the years to come. As the voice of the recruitment sector, the REC will be actively feeding into these consultations, representing the interests of our members and ensuring that the government’s final strategy addresses the most pressing challenges facing the labour market. If you are interested in feeding into the REC’s response, please contact Usman at usman.ali@rec.uk.com