Press release

Business Secretary announces Industrial Strategy Challenge Fund investments

Business Secretary Greg Clark announces the Industrial Strategy Challenge Fund, committing over £1 billion over the next 4 years.

  • Funding will focus on 6 key areas:
    • healthcare and medicine
    • robotics and artificial intelligence
    • batteries for clean and flexible energy storage
    • self-driving vehicles
    • manufacturing and materials of the future
    • satellites and space technology
  • Government has committed to increasing investment in research and development by £4.7 billion over the next 4 years. The extra £2 billion per year by 2020 to 2021 is the biggest increase in total government R&D investment since records began in 1979.

The government is investing £1 billion in cutting-edge technologies to create jobs and raise living standards, Business Secretary Greg Clark announced today (21 April 2017).

The funding from the flagship Industrial Strategy Challenge Fund (ISCF) will be spent across 6 key areas over the next 4 years, driving progress and innovation that will create opportunities for businesses and sectors across the UK.

The government has worked with businesses and academics to identify core industrial challenges, where research and innovation can help unlock markets and industries of the future in which the UK can become world-leading.

Through the ISCF, government will bring together the UK’s world leading research with the ambitions of business to meet these challenges head-on. The funding allocations announced today are designed to help deliver a step-change in the UK’s ability to turn strengths in research into commercialised products.

The first 3 areas set to receive investment through the fund – healthcare and medicine, clean and flexible energy, and robotics and artificial intelligence – were announced at the 2017 Spring Budget. The Business Secretary has today confirmed the total investment in each field (subject to business case approval):

  • clean and flexible energy or the ‘Faraday Challenge’: an investment of £246 million over 4 years to help UK businesses seize the opportunities presented by the transition to a low carbon economy, to ensure the UK leads the world in the design, development and manufacture of batteries for the electrification of vehicles
  • cutting-edge healthcare and medicine: an investment of £197 million over 4 years to develop first-of-a-kind technologies for the manufacture of medicines that will speed up patient access to new drugs and treatments, building on the exporting strengths of the UK’s biopharmaceutical sector
  • robotics and artificial intelligence (AI): an investment of £93 million over 4 years to make industry and public services more productive, by developing AI and robotics systems that can be deployed in extreme environments which occur in off-shore energy, nuclear energy, space and deep mining

Greg Clark also confirmed today that, subject to business case approval, the 3 additional areas that will be receiving ISCF grants in the next 4 years.

  • driverless cars: to ensure the UK’s reputation as a world-leader in driverless car technology, a sector predicted to be worth £63 billion by 2035, the government will be investing a further £38 million in new collaborative research and development projects, working with industry partners to develop the next generation of AI and control systems need to ensure the UK is at the forefront of the driverless cars revolution
  • manufacturing and future materials: through a new £26 million fund for research and development programmes, the government will support the UK’s civil aerospace industry, a sector which employs over 230,000 people, to develop the next generation of affordable light-weight composite materials for aerospace, automotive and other advanced manufacturing sectors
  • satellites and space technology: building on the UK’s global reputation for satellite technology, a growth industry that underpins mobile technology, the ISCF will provide funding for a £99 million satellite test facility supporting new launch technologies and the manufacturing and testing capabilities that will allow the UK to construct future satellites and deliver payloads into orbit

Further announcements on allocations, including dual support funding, will be made in due course. Business and Energy Secretary Greg Clark said:

As part of our Plan for Britain this government wants to create a modern Industrial Strategy to support the key sectors of our economy and spread jobs, prosperity and opportunity around the whole country.

Through the Industrial Strategy Challenge Fund we will provide an enormous boost to our world-class research and development sector, to help turn brilliant British innovations into new businesses and good jobs.

The UK is home to some of the world’s best innovators at the very forefront of global excellence. The funding I am announcing today, providing hundreds of millions of pounds of support to develop the next generation of technologies across a range of sectors, shows our determination and commitment to making sure the UK remains at the very forefront of research innovation for years to come.

The Chancellor of the Exchequer, Philip Hammond, said:

Addressing the UK’s productivity gap is key to raising living standards and ensuring we are match fit to compete in the global economy. That is why I created the £23 billion National Productivity Investment Fund.

As we leave the EU, we are determined to help Britain’s innovators compete with the best and seize the opportunities ahead, and this money will help advance our position as a global leader in developing cutting-edge technologies.

To hit the ground running, Innovate UK has confirmed that it will be supporting a £10 million first wave of projects through the ISCF in each of the 6 areas with a number of smaller projects, starting in 2017 to 2018*. Thirty-five projects have been selected for funding with innovations in projects ranging from fast chargers for electric vehicles and using 3D scanning technology to aid care for hospital patients, to the use of aerospace technology in the creation of biomedical prosthetics.

Chief Executive of Innovate UK Dr Ruth McKernan said:

The Industrial Strategy Challenge Fund will deliver the science that business needs. By supporting business-led innovation, the industrial strategy will accelerate business growth, boost productivity and create high-skilled jobs.

By announcing these first challenges we are giving businesses the green light to start finding solutions to some of our major societal and industrial challenges and at the same time helping us fully realise economic impact from our world class science base.

Chair of Research Councils UK, Professor Philip Nelson said:

For innovation and growth to be successful there needs to be a strong and coherent innovation chain that joins up fundamental research and industrial expertise across all sectors. The Industrial Strategy Challenge Fund supports the necessary environment for new discoveries to arise, innovation to flourish and novel products and services to be delivered. The first of these challenges will maintain and strengthen the UK’s leading position as the best place in the world to research, innovate and grow business.

To support delivery of the ISCF, the government announced at the Spring Budget it will invest £250 million over the next 4 years to continue to build the pipeline of high-skilled research talent.

This will include an additional 1,000 PhD places and support for new fellowships for early and mid-career researchers, both in areas aligned to the Industrial Strategy. This will be supplemented with targeted investment to attract global talent from overseas to the UK, helping to maintain the UK’s position as a world-leader in science and research.

The ISCF was created to ensure that research and innovation takes centre stage in the government’s Industrial Strategy, with investment earmarked for technologies where the UK can build on its world-leading strengths and help innovative businesses to tap into large and growing global markets, as well as the industries of the future.

The fund is being administered by Innovate UK and the Research Councils until the new body UK Research and Investment (UKRI) is formed in 2018. UKRI, under the leadership of its recently appointed Chief Executive Sir Mark Walport, will play a key role in strengthening the UK’s competitiveness through the Industrial Strategy.

The government has now concluded its 8-week consultation on its Industrial Strategy following its open call to people, businesses and local groups across the country to contribute to the vision set out in the green paper. Responses will now be considered before a white paper is published later in the year.

Notes to editors

The 35 projects Innovate UK are funding, subject to the completion of due diligence, through the £10 million investment are made up of 73 different collaboration partners, right across the country and all the projects led by SMEs.

See below for case study examples of the first wave of ISCF projects funded through Innovate UK.

Aerospace technology in creation prosthetics

Birmingham based Wallwork HT are innovators in coating technology and have teamed up with University of Leeds to develop a coating for Titanium alloys that uses technology developed for aircraft landing gear and translates it to the biomedical sector use in prosthetics.

3D scanners for wound care in hospital

Chester based Cadscan are looking to develop a novel, non-invasive diagnostic platform to assist in wound categorisation, treatment planning and monitoring of healing, designed specifically for non-specialist use in a primary care setting. By enabling more consistent diagnoses and treatment it will contribute to lower healthcare costs, faster rates of healing, less incorrect use of antibiotics and greater quality of life for patients with long term health conditions.


Bristol based OC Robotics are developing Snake-arm robots for use in the nuclear and aerospace industries. They are developing an intelligent system capable of identifying features/objects of interest, carrying out appropriate activities on the features and then presenting the data with augmented-reality, with tagged locations and all without human intervention.

Published 21 April 2017