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Nearly a year after Labour’s sweeping election victory, the party has begun unveiling its long-awaited policies in response to mounting public pressure for visible change. Among these is the Industrial Strategy—positioned as a central component in reshaping the UK’s economic future. While the strategy aims to benefit the entire country, its impact on Scotland could be particularly significant, especially given its focus on strategic industries, clean energy, and defence.
I. Unpacking the Industrial Strategy
1. Strategic Sectors Targeted for Growth
The primary goal of the Industrial Strategy is to bolster industries deemed vital for national security and economic prosperity. Key sectors include defence, advanced manufacturing, clean energy, digital technologies, and life sciences—areas where Scotland already has an established or emerging presence.
Defence remains a critical pillar, with Scotland playing a major role through naval shipbuilding on the Clyde and Forth, as well as radar and missile development in the Edinburgh area. Furthermore, Glasgow’s satellite manufacturing capabilities and Edinburgh’s finance sector add to Scotland’s contributions in high-value industries.
Creative industries also receive attention, with Dundee’s video game sector and Edinburgh’s festival economy contributing to Scotland’s cultural and commercial landscape. Universities across Scotland continue to outperform in life sciences and technology spinouts, which attract international investment and foster job creation.
2. Funding and Infrastructure Commitments
Reinforcing the strategy’s ambitions, the Spending Review reiterated a commitment to restore £750 million in funding for a supercomputer in Edinburgh—a symbolic and practical investment in the UK’s digital infrastructure and research capabilities. While other infrastructure reviews have limited relevance to Scotland, this particular pledge ties in closely with the broader goals of boosting technological innovation and high-skill employment north of the border.
II. Clean Energy as a Cornerstone
1. Scotland’s Role in the UK’s Green Transition
Clean energy is arguably the most transformative aspect of the strategy, with potential to reshape not just the economy but also Scotland’s physical landscape. Northern Scotland is poised to generate a large portion of the UK’s wind power, offering new opportunities to base energy-intensive industries near the power source—thus minimizing transmission needs.
The strategy aims to streamline planning procedures in partnership with the Scottish government and accelerate grid connections for businesses with high energy demands. Projects like the Acorn carbon capture and storage initiative in Aberdeenshire exemplify this green pivot.
2. Potential for Hydrogen and Data Infrastructure
The abundant wind resources in Scotland also open the door for hydrogen production and the establishment of new data centres powered by clean electricity. The government may identify strategic sites for development, likely through competitive selection processes, with support for preemptive grid connectivity and land clearance.
III. Areas of Political Tension and Collaboration
1. The Nuclear Energy Divide
While there is alignment in some energy areas, nuclear power remains a point of contention. The SNP has historically opposed new nuclear projects, a stance that Labour hopes to challenge. Scottish Labour leader Anas Sarwar’s recent visit to Torness nuclear power station signals an effort to promote modular reactors as part of a balanced energy mix—potentially unlocking investment and job creation.
However, the SNP remains critical, citing long-term radioactive waste concerns and high nuclear costs. This policy divide is expected to surface prominently in next year’s Holyrood elections.
2. Defence Industry Divergence
Labour is also at odds with the SNP over defence manufacturing. While Labour sees rising defence spending as an economic opportunity, the SNP maintains a long-standing policy of encouraging diversification away from arms production. With the UK government pledging to build six new munitions factories, Scotland could secure one—provided there’s a shift in Holyrood’s stance.
The strategy even proposes a dedicated Scottish growth fund for defence, which may deepen political debate on whether Scotland should capitalize on defence opportunities or continue urging peaceful diversification.
IV. Skills, Training, and Economic Gaps
1. Transitioning from Oil and Gas
Scotland’s transition from fossil fuels to renewables is a central issue, particularly for workers in oil and gas. The industry’s training body, Opito, has raised concerns over the skills gap between declining roles in fossil fuels and rising demand in renewables. They argue that the transition strategy must be more cohesive and better coordinated across Westminster and Holyrood.
2. Market Reforms and Investment Uncertainty
A looming decision on whether to reform the single GB energy market into one with zonal pricing adds further complexity. While this could lower prices in Scotland, it might also deter future offshore wind investment—highlighting the delicate balance between affordability and long-term growth.
V. Criticism from Overlooked Sectors
1. Hospitality and Inflation Pressures
Not all sectors are benefiting equally from the new strategy. The hospitality industry, already burdened by inflation, higher payroll taxes, and minimum wage hikes, has expressed frustration over being left out. Its trade body criticized the strategy for failing to recognize the ongoing struggles faced by one of the UK’s largest employers.
2. Concerns from the Scottish Government
Deputy First Minister Kate Forbes noted that many of the priorities highlighted in the UK’s strategy were already part of Scotland’s own National Innovation Strategy from three years ago. She also voiced concern that promised energy cost reductions for businesses won’t be implemented until 2027, limiting short-term relief.
Conclusion
The Labour government’s Industrial Strategy marks a significant step in shaping the UK’s economic direction over the coming years. For Scotland, it offers both opportunities and challenges. With its strengths in clean energy, defence, finance, and technology, Scotland stands to benefit—but only if cooperation between Holyrood and Westminster can be maintained.
Yet, entrenched political differences—particularly over nuclear power and defence manufacturing—could complicate the rollout. Meanwhile, sectors left out of the strategy are voicing their discontent. As these dynamics unfold, the strategy’s real test will be how effectively it delivers tangible outcomes for workers, businesses, and communities across Scotland.
