Soviet Tanks and the UK Industrial Strategy
Too big. Lacks agility. Outdated. Not fit for purpose.
WTF is IS-8?
IS-8 was a Soviet heavy tank of the Cold War. The IS-8 was named after communist dictator (Iosif Stalin, is the Russian form of Joseph Stalin), but after his death in 1953, it was renamed the T-10. The tank was heavy and cumbersome. It was made without stabilisers on the guns, meaning it was notoriously inaccurate when firing on the move. It was obsolete as soon as it was commissioned, overtaken by new technologies and more agile versions.
So why does “IS-8” appear 118 times in the UK Government’s new Industrial Strategy?
Are we refurbing old tanks? (well, not yet anyway!)
Is it some Islamic State prisoner support campaign? (Free the IS-8!)
No, it’s the government-speak acronym for the “eight industrial strategy sectors” that form the core of the new 10-year UK Industrial Strategy.
I just hope that the IS-8 tank is not a perfect metaphor for the strategy…
UK Industrial Strategy
On 23 June 2025, 354 days after securing a landslide electoral victory… after being in opposition for 14 years… the Labour government has finally published the central plank of its plan to reverse economic decline and turn Britain into a sectoral superpower. (‘Superpower’ is very much a phrase du jour, with “clean energy superpower”, “defence industry superpower”, “creative superpower” and “science superpower” all to be found in the new strategy!)
That it has taken so long to be published doesn’t bode well in a time when speed to market; rapid prototyping and agility are prerequisites of success. I guess taking a year to come up with your strategy is understandable given the makeup of the cabinet (7 career politicians; 7 lawyers; 4 trade unionists; 2 charity workers; 2 academics; 1 accountant and a journalist).
I feared that after waiting a year, the Industrial Strategy would be a rehash of a thousand previous strategies that ultimately fails to address the fundamental problems of the UK today. Maybe civil servants worried that if they produced a huge strategy too quickly there would be accusations of using AI, but would there be much difference?
(“Hello ChatGPT: Write me a 160-page government industrial strategy for the UK. Include all old industrial policies that have been tried before and make sure you include plenty of buzzwords like ‘superpower’, ‘innovation ecosystem’ and ‘powerhouse.’ Shoe-horn businesses into broad sectors and talk endlessly about clusters. Try to not commit any new funding and don’t mention tax cuts. Make it a 10 year programme so that we can’t be held to account until we’re out of office”.)
Setting my cynicism to one side (I’ve been immersed in government strategies for a very long time), I do applaud many of the initiatives included in the strategy, especially:
Reducing Electricity Costs
This was the line that grabbed the headlines and for very good reason. The UK has some of the highest energy costs in the world, so any relief is welcome, but it won’t be until 2027, which will be too late for many manufacturers struggling to survive. The continued obsession with net zero is making it difficult to compete internationally and is holding back growth.
Talent Attraction
Hallelujah, they’ve finally realised that watching so much talent and wealth-creators leave the country might not be great for growth! Other countries have been attracting talent for years with targeted strategies as an extension of investment attraction work. The £54m Global Talent Taskforce will have its work cut out to reverse the millionaire-drain caused by high taxes and the creeping culture of hostility toward wealth-creators (https://www.adamsmith.org/millionaire-tracker2024).
Access to Finance
Always a key issue for businesses of all sizes and one of the main reasons why so many scaleups head to the US.
Strategic Sites Accelerator
This is what I cut my teeth on way back in 1998 at English Partnerships when we created the Strategic Sites Programme that brought forward and promoted development land, an excellent policy.
If you’ve got the time, have a read through the 160 page strategy.
There’s a nagging feeling that I’ve read all this before. And that it’s just going to lead to a million hours of meetings and a host of new committees; councils; brandings and yet more three-letter acronyms (hello ISC (Industrial Strategy Council); ISZ (Industrial Strategy Zones) and, of course, the IS-8).
Free the IS-8!
The IS-8 are: Advanced Manufacturing, Clean Energy Industries, Creative Industries, Defence, Digital and Technologies, Financial Services, Life Sciences, and Professional and Business Services. Each growth sector has its own 10-year plan.
I can only imagine the year-long chin-stroking that resulted in choosing eight target sectors. (I bet that before the ink is dry we’ll be talking about IS-8+ or IS-9 or IS-10 because that’s what always happens with the sectoral approach… “What about us?”... on release day the retail and hospitality sectors were first out of the blocks feeling let down).
Each chosen ‘sector’ has validity as a growth opportunity, but the inescapable truth is that sectors are an outdated way of looking at growth. Three of the IS-8 are ‘Advanced Manufacturing’, ‘Defence’ and ‘Digital Technology’... so maybe drone manufacturers will have to read all three sector plans. This is the inherent problem with sectors; most companies don’t fit easily into one or the other and the real opportunity and excitement is at the convergence of sectors rather than in deep silos.
Don’t get me wrong, there’s a lot of good intentions and significant buy-in from industry bodies and major businesses, I just worry about the creeping tendency to look to ‘the government’ for leadership and innovation.
The Unclustered Masses
The other worrying buzzword is ‘cluster.’ We seem to have come a long way since Michael Porter’s cluster theory (1998), definitions have blurred and clusters misunderstood. Governments have long wanted to put locations into neat boxes… technology over here; manufacturing goes up there; automotive?, that’ll go in the middle… And the Industrial Strategy is the latest iteration of this silo mentality.
Experience shows that inward investors are just as likely to choose a cluster as choosing somewhere with no similar industry at all! If cluster theory was paramount, then the Agratas gigafactory would’ve landed in the EV-cluster of the West Midlands and not in leafy Somerset with no EV, battery or automotive credentials whatsoever. Clusters emerge naturally, and new clusters emerge where nobody planned them, so it’s a fool’s errand to try and dictate where businesses should locate.
Even with stretched definitions, huge parts of the UK are omitted from the sector and cluster approach - which inevitably means they will be at the back of the queue when it comes to resources and support from OfI and DBT. However, the Government acknowledges the difficulty in identifying or prioritising city regions and clusters, so this will likely see more areas added following some inevitably robust representations.
Going through each of the IS-8 plans, there are going to be some extremely miffed people.
Here’s a few glaring omissions:
No Professional Business Services in North East; East Mids (Nottingham?!); South West (Bristol?!); Wales (Cardiff?!).
No Digital & Tech clusters in Yorkshire; North East; South Coast (Brighton!?); East Coast.
No Advanced Manufacturing clusters in Essex; or anywhere on the South Coast.
No Defence cluster in Staffordshire (don’t tell the MOD and all the Defence HQs there!).
No Creative Industries cluster in East Midlands (really? Nottingham?).
No Financial Services cluster in North East (what?!); South West; South Coast (don’t tell Amex).
The Government says that this is a strategy for the whole UK.. but it just doesn’t feel like it. Counties like Hampshire, Lincolnshire, Essex, Surrey, Staffordshire, Norfolk, Kent and many more have significant inward investment potential and most have long-standing, active investment promotion teams, but they are largely ignored in the cluster fetish.
People who work in the ‘big cities’ might not realise just how ‘big’ some of these counties are. Hampshire has twice the population of Birmingham; Staffordshire has three times more people than Manchester; and Essex four times more than Leeds.
The full implementation of the Harrington Review into UK FDI is another welcome aspect contained within the strategy, although (read my thoughts on the missed opportunities in the Harrington Review here), I’m concerned that this will see even greater concentration of resources in the big cities and won’t enhance the wider offering that relies on the marginalised ‘unclusters’.
So here’s an idea that avoids this cluster nonsense: make the whole of the UK a freeport; an enterprise zone; an investment zone. Make it the most business-friendly; bureaucracy-busting; light-regulation; low-tax place to locate in Europe. Stop the complexities of government fiddling and go back to what works best.
Elephants
Bottom line, we’re not addressing the real elephants in the room:
We have the highest tax burden since 1948
We’re losing talent and wealth-creators for fiscal and cultural reasons
We’ve failed to harness innovation to drive productivity compared to US
We have a bloated public sector that is 45% of GDP
These are the core reasons behind the UK’s decline as an attractive place to do business.
No amount of glossy strategising will cover up this reality.
My pleas to anyone working in inward investment, whether at the revamped Office for Investment, those with Department for Business & Trade and the too-often overlooked local teams:
don’t get sidetracked by strategy;
don’t lose focus on the reason you do inward investment;
don’t prioritise partnership working at the expense of proactivity;
don’t wait for the next thing, seize opportunities today;
don’t mistake ‘sector development’ for ‘investment attraction’;
there will always be lots of other people working on sectors, skills, sites and strategy… but you’re the only ones working on inward investment.
Get out there and engage with investors!
PS - apologies to the hard-working people who have worked on the strategy to date and those who have provided input from business, please don’t take my rants personally, I’m attacking the system not you!
PPS - if you want a more measured and authoritative perspective on the Industrial Strategy, there is some great analysis out there already from some smart friends of mine:
Simon Hooton, GC Insight:
https://www.linkedin.com/pulse/key-takeaways-from-uks-modern-industrial-strategy-gc-insight-ek2me/
Glenn Athey, MyLocalEconomy: