Driving Innovation Change: Industry Wales’ Response to Invest 2035
Credit: Diwydiant Cymru/Industry Wales - Alex Feeney
The UK Government’s Invest 2035: Modern Industrial Strategy sets a bold vision for the future of British industry, offering Wales the opportunity to lead on innovation, sustainability, and economic resilience. At Industry Wales, we’ve carefully examined the strategy, compared it with our earlier recommendations, and engaged widely with stakeholders to assess its potential. While there are reasons for optimism, critical gaps remain that need addressing to realise the strategy’s full promise.
What We Called For
In a blog we wrote last month, we outlined what we wanted to see in the industrial strategy to ensure Wales’ industries were well-represented and positioned to thrive. Our key priorities included:
Investment in infrastructure: We called for greater focus on sectors such as data centres, automotive manufacturing, carbon capture and storage, and net-zero transport systems.
Support for anchoring industries: Ensuring research, design, and manufacturing activities are retained locally to strengthen supply chains and secure long-term economic stability.
Energy solutions: Highlighting the need for low-carbon, scalable energy systems to support energy-intensive sectors such as steelmaking and advanced manufacturing.
What’s Been Achieved
It’s pleasing to see these priorities reflected in the objectives of Invest 2035. The strategy highlights important infrastructure areas, such as capturing the growth opportunities from clean energy and transport systems. This could include, floating offshore wind and carbon capture initiatives in Freeport zones like Neath Port Talbot and Milford Haven. This objective aligns with our call for investment in sustainable energy solutions and provide a strong foundation for growth in Wales.
Equally encouraging are the commitments to growth in priority sectors enabling existing world leading sectors to develop further, this could include cutting-edge programmes such as Tempest and the Global Combat Air Programme (GCAP). These initiatives demonstrate a recognition of the importance of supply chain resilience and provide opportunities for Wales to showcase its aerospace expertise. Further developments in modular and micro-modular nuclear reactors could feature prominently, offering scalable low emission energy solutions to meet growing industrial demands.
Projects like Space Command further illustrate how Wales can play a central role in transformative sectors, combining government leadership with industry innovation to achieve significant advances in defence and commercial space capabilities.
What’s Missing
The objectives provided in the strategy sound positive, however there are several critical issues unaddressed. In the first instance there is very little mention of delivery, the words used are capture, identify, align, consider, to name a few which do not provide confidence that the strategy can support delivery as a primary outcome. Even the Theory of Change fails to mention delivery.
Further to the above there are other key sectors that are not addressed directly and crucial for industry in Wales and across the UK to be successful. For instance, electrical infrastructure upgrades are mentioned at the end of the energy section. The challenge of electricity transmission and distribution needs to be considerably higher up the priority list in order to deliver results for industry.. Projects like Tata’s proposed electric arc furnace at Port Talbot depend on a reliable supply of recycled steel and robust electrical systems—neither of which currently exist. Without serious targeted investment, such initiatives may stall.
Similarly, while the strategy prioritises innovation, it does not provide a strong focus on supporting smaller enterprises. Only 30% of Welsh businesses report utilising available innovation grants, compared to 45% across the UK. SMEs frequently find themselves excluded from grant funding, with larger prime contractors often dominating access. Addressing this imbalance is essential to fostering a more inclusive innovation ecosystem.
The role of anchoring industries is another area that could be significant gap. Anchoring ensures that R&D, manufacturing, and other high-value activities remain local, supporting supply chain stability and fostering long-term economic growth. Without measures to secure this, Wales risks losing its role as a hub for advanced manufacturing.
Credit: Diwydiant Cymru/Industry Wales - Alex Feeney
Opportunities and Challenges
Wales has the potential to lead the UK’s industrial transformation. With its strong manufacturing heritage, growing capabilities in net-zero technology and medical technologies alongside emerging expertise in digital and cybersecurity, the region is well-positioned to drive innovation and attract investment. However, barriers remain:
Energy costs: Wales has some of the highest industrial energy prices in Europe, limiting competitiveness. A variety of zero emission solutions exist including renewables and nuclear and could help reduce costs but require swift implementation.
Policy inconsistency: Frequent changes to tax and infrastructure priorities undermine confidence, deterring long-term investments.
Skills shortages: With only 60% of Welsh businesses engaging in structured training programmes, there’s an urgent need to expand initiatives such as apprenticeships and Year in Industry schemes to prepare the workforce for future challenges.
What Needs to Happen Next
For the Invest 2035 strategy to succeed, it must address these gaps. We recommend the following actions to ensure the strategy delivers meaningful results for Wales:
Invest in infrastructure: Immediate upgrades to electrical systems and targeted funding for low-carbon energy sources are essential to support projects like Tata’s electric arc furnace.
Support SMEs: Simplify grant processes and increase funding access for smaller enterprises to encourage innovation and growth across all levels of the economy.
Anchor industries in Wales: Introduce procurement policies tied to local content requirements, ensuring that R&D, manufacturing, and other critical activities remain within the region.
Focus on workforce development: Expand apprenticeship programmes and provide tax incentives for companies investing in upskilling their workforce.
These actions will empower Welsh industries to innovate, invest, and grow, ensuring that the benefits of Invest 2035 are felt across the country.
A Vision for Wales’ Future
Wales has always been a land of resilience and innovation. From its leadership across high value manufacturing in aerospace and automotive to its emerging role in net-zero technology, the region has consistently risen to meet new challenges and opportunities. The Invest 2035 strategy provides a chance to build on this legacy and secure a brighter future for Welsh industry.
Imagine a Wales powered by floating wind farms drive the net-zero transition supported by micro-modular reactors, and thousands of new jobs emerge in cutting-edge sectors like aerospace, creative industries, meditech and cybersecurity. With the right support from policymakers, businesses, and communities, this vision is within reach.
At Industry Wales, we remain committed to supporting the Modern Industrial Strategy and ensuring the strategy delivers on its promises. By addressing gaps, setting a clear vision and goals, and fostering collaboration, we can create an industrial future defined by innovation, sustainability, and shared prosperity.
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