UK Budget: tech barriers review to inform industrial strategy

During the autumn budget, chancellor Rachel Reeves announced that the government will ask the chief scientific adviser and national technology adviser to lead the review, which is set to play a pivotal role in the future of the UK’s industrial strategy.

Mark Ferguson, a specialist in public policy at Pinsent Masons, said: “The chancellor has also attributed lagging productivity to the inability of businesses to adopt new and emerging technologies. The establishment of a review on barriers to the adoption of transformative technologies is further evidence of the value the chancellor is placing on technology in helping the government tackle productivity and facilitate economic growth.”

The announcement reinforces the government’s “growth mission”, with the review’s recommendations to directly inform the development of both the industrial strategy and individual business sector plans - set to be published alongside the spring spending review.

The initiative is part of a broader strategy to ensure that the UK remains at the forefront of technological advancement and economic competitiveness.

The review will focus on the eight growth-driving sectors identified in the industrial strategy green paper (66-page/3.8MB PDF). These sectors are advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services. By targeting these areas, the government is aiming to accelerate technology adoption beyond the frontier firms, driving significant productivity gains and reinforcing the UK’s position as a global leader in innovation.

Despite the UK’s strong performance in the global innovation index, where it ranks fifth out of 133 countries, it lags behind in knowledge absorption, ranking 31^st in this area. The review aims to build on existing analyses, industry insights, and the forthcoming AI opportunities action plan to identify the barriers businesses face when adopting both established and novel technologies.

The review will provide practical recommendations to allow the government and businesses across the UK to work together to address these obstacles.

To ensure the review benefits from a wide range of perspectives, it will seek input from the industrial strategy advisory council, industry experts, technology companies, civil society, and academia. This collaborative approach aims to produce actionable recommendations that can effectively address the issues.

The budget included further good news for tech and innovation across the UK, with Reeves announcing an extension to the innovation acceleration programme in Glasgow, Greater Manchester and the West Midlands.

The chancellor’s speech also provided a significant boost to research and development. Reeves announced plans to increase research and development funding by £20.4 billion, including at least £6.1 billion core research funding for engineering, biotechnology and medical science. This investment aims to drive economic growth by fostering innovation across various sectors, setting out to enhance the UK’s competitive edge in fields such as biotechnology, artificial intelligence, and clean energy technologies.

Jonathan Kirsop, technology law expert at Pinsent Masons, said: “Announcements with respect to technology funding and commitment to technology as a growth enabler are clearly a good thing and to be welcomed. Likewise, the announcement of a comprehensive review of barriers to the adoption of transformative technologies, and the recognition that such barriers exist, is also encouraging.”

Additionally, at least £25 million will be used to launch a new multi-year research and development missions function, with funding for the ‘Made Smarter Adoption’ digital adoption programme for manufacturing set to double to £16 million.

The government will also invest up to £520 million for a new life sciences innovation manufacturing fund; and announced a further £975 million boost for the research and development of the latest aerospace technology.

It is not only large, established firms across the UK expected to benefit from the tech and innovation boosts. The government is set to launch a £4 million pilot package to encourage small and medium-sized businesses to adopt new technologies.

An artificial intelligence opportunities action plan is expected to be published shortly, with plans to bolster the UK’s position in the fast-evolving market.

Scott Wright, public policy expert at Pinsent Masons, said: “This action plan will set out a clear roadmap for the UK to cultivate and capture opportunities presented by AI. In the meantime, though, the chancellor’s budget has reiterated the importance of technology in helping the government achieve its missions, evidenced by the 6.5% increase to the department for science, innovation and technology’s budget over three years.”

The chancellor also announced commitments to funding for two small business growth schemes: Growth Hubs in England as well as Help to Grow: Management across the UK.