Research and the industrial strategy: priority programmes, sector innovation
There’s a steady stream of important research and innovation policy due over the coming months: final REF guidance in November, news on devolution and innovation following the Prime Minister’s summit speech last week, progress on the review of Strategic Institutional Research Funding in England, Horizon Europe developments, and much more.
One forthcoming announcement that has perhaps unjustly been flying under the radar is the launch of UKRI’s industrial strategy priority programmes, promised before the end of the year.
These will be a “genuinely new model of strategic investment,” UKRI’s strategy promised:
“Single integrated UKRI programmes, led by single senior responsible owners and delivered through cross-council teams, rather than multiple programmes across UKRI councils.”
They will focus on the eight industrial strategy sectors – advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences, professional and business services – as well as some “additional government priorities” to an extent which remains to be seen.
As we’ve been tracking on our news pages, UKRI’s board has been treated to a deep dive into each programme in turn over the last few months, demonstrating the significance of this new initiative.
They are important for a number of reasons. They are a test case in how UKRI can respond actively and effectively to a government-set agenda while retaining operational independence. Their cross-UKRI design indicates and reflects the changing role of the research councils under the new strategy. And their status as “larger and longer-term investments” – as promised by science minister Chris McDonald in his Universities UK speech, and reiterated in UKRI’s grant assessment for the age of AI initiatives – marks them out as something genuinely different, accompanied by more active and autonomous programme management.
Plus, there’s a lot of money attached to them. Across “buckets” two and three, UKRI’s December 2025 funding allocations proposed enormous investments into each industrial strategy sector (albeit with some faring better than others – digital technologies investment is so huge that it had to be separated into various strands):
It’s also the moment where we will get a better sense of how Innovate UK’s overhauled approach will work in practice, with consequences for the Catapult network – which is being reviewed to “ensure alignment” with the IS-8 sectors – and business support.
Innovation by sector
Given the growing focus on industrial strategy – heightened by the move of science and innovation policy into the Department for Business, Innovation, Science and Trade, where responsibility for the strategy sits – a useful new piece of research seeks to unpack how the meaning of innovation differs across businesses in the different sectors.
The report, from the Innovation and Research Caucus’ Ully-Yunita Nafizah and Stephen Roper, surveyed firms in six of the sectors (defence and clean energy are the two not covered). It concludes that innovation “is not a single phenomenon”:
“Different sectors innovate in different ways, invest in different capabilities, collaborate through different networks and face markedly different barriers.”
This, it is argued, has implications for policy, where there will be a need to recognise sector-specific needs in designing interventions.
For one thing, there is a marked disparity in how innovative different sectors are, and what innovation itself looks like. Life sciences is found to be the most innovation-intensive sector, with very high levels of R&D investment, whereas financial services is much less so, with firms tending to focus on service innovation, process improvement and organisational transformation. In the creative industries, businesses are less reliant on traditional R&D, and innovation is more about design, content creation, and the use of digital technologies.
This also means that the barriers to innovation vary by sector. International trade instability is a serious concern in advanced manufacturing, whereas professional and business services firms are more hindered by skills shortages. The report concludes with a summary of which barriers to innovation were most cited by respondents across the different sectors – the authors then put forward potential policy interventions for each: