Reeves pledges £3bn for manufacturing R&D and capital funding
12 June 2025 
The UK Chancellor of the Exchequer Rachel Reeves has announced plans to invest more than £3bn into advanced manufacturing R&D and capital funding over the next four years, with the aim of unlocking investment across the UK. She made the announcement as part of her 2025 Spending Review, and ahead of the imminent publication of the Government’s long-awaited Industrial Strategy.
The aim of the Strategy will be to accelerate growth in eight key sectors – including advanced manufacturing, clean energy, defence, digital technologies, and life sciences – and to strengthen the UK’s economic resilience. The Government believes that supporting these sectors will be crucial to delivering high-quality jobs, new opportunities and higher living standards across the country.
Reeves says that the Industrial Strategy priorities are hardwired into her Spending Review, including through R&D and access to finance spending.
Among the measures that she announced in the Review are:
- “significant” additional funding for clean energy industries;
- more than £2bn to drive an AI Action Plan including a 20-fold increase in support for computing capacity, with £160m for TechFirst to ensure people have the right skills to deliver technological change;
- up to £520m of funding for life sciences manufacturing in the period to 2029-30 to build resilience for future health emergencies;
- funding for UK Research and Innovation (UKRI), and association with Horizon Europe and its successor, thus supporting investment in universities, research institutes and businesses across the UK; and
- at least £1bn to scale up the Advanced Research and Invention Agency (ARIA), to fund breakthrough R&D designed to catalyse future growth;
- increasing funding for employment support to more than £3.5bn by 2028-29, helping people to access the skills they need, and ensuring more people are in better jobs; and
- £1.2bn of extra investment in skills per year by 2028-29, including funding to help more than 1.3 million 16-19 year olds to access high-quality training, supporting 65,000 additional learners per year by 2028-29.
Ahead of the Chancellor’s Review, the Department for Science, Innovation and Technology (DSIT) announced a package of research and innovation funding worth more than £22.5bn a year by 2029/2030. This will support developments such as AI and longer-lasting batteries, and is aimed at driving new jobs and economic growth, as well as ensuring that the UK leads the way in pioneering technologies of the future.
According to DSIT, every £1 invested in R&D generates up to £7 in benefits to the UK economy and leverages double in private investment in the long run. And businesses that receive their first R&D grant funding see jobs and turnover increase more than 20% in the following years on average. R&D supports around 3 million jobs in the UK, with the power to create many more as discoveries advance.
Reacting to the Chancellor’s Review, Dr Graham Hoare, CEO of the Manufacturing Technology Centre (MTC) said that the announcement of more than £3bn in R&D and capital funding for advanced manufacturing over the next four years “is particularly significant. This has the potential to unlock further investment across the UK and strengthen the foundations of the country’s industrial base to drive innovation, resilience, and long-term economic growth.”
Make UK CEO, Stephen Phipson, commented: “There is a welcome boost for defence, science and technology and, investment in local transport outside London and the South East, which is vital if we are to boost growth in the regions where manufacturers are such a crucial part of the economy.
“However, all eyes will now turn to the forthcoming industrial strategy where there is great need and expectation,” he added. “Industry needs a funded and joined-up long-term vision as a matter of urgency for stability and investment. Critically this must include bold measures to address the UK’s eye-watering industrial energy costs and the skills crisis. If the Government delivers on these two issues it would be genuinely game-changing for the competitiveness of, and growth prospects for, manufacturers and the economy.”
