Earlier this week, the government unveiled its new industrial strategy, describing it as a framework to support key sectors, boost employment, and foster sustained economic growth.
This strategy builds on what the government announced earlier this month in the Spending Review, a briefing on which is available on our website.
Outlined below is what the Industrial Strategy means for the rail sector and for skills policy.
Rail and Skills: Relevant Announcements
Skills Investment
The strategy outlines a £275 million package aimed at training new workers. This funding is directed toward the government’s high-growth industries, which are the central focus of the strategy. Since the rail sector is not among these eight designated industries, it is excluded from the direct benefits of this funding. However, there may be some indirect gains through investment in rail related sectors such as construction and green technology.
Growth and Skills Levy
From April 2026, businesses in high-growth sectors will gain greater flexibility over their Apprenticeship Levy, now renamed the Growth and Skills Levy, to fund a broader range of training, including short, modular courses. However, this change does not yet apply to sectors like rail, which fall outside the eight designated industries. This marks a potential shift from previous government policy to extend this flexibility across all sectors.
Energy Cost Relief
From 2027, energy-intensive manufacturers, including some foundational industries such as rail, could see electricity costs reduced by up to 25 percent. This reduction will be delivered through exemptions from net zero levies. Although it is not yet clear which, if any, rail firms will qualify, there is certainly potential for train manufacturers and certain supply chain businesses to benefit. The government is expected to launch a consultation shortly to determine which businesses should be included in the scheme. NSAR encourages its members to respond directly or through NSAR. We will continue to monitor developments and provide further updates as more information becomes available.
Strategic Policy Shift
It is also worth noting that the energy cost relief policy signals a broader shift in government strategy, indicating a willingness to prioritise industrial growth and competitiveness over environmental objectives. It reflects a more flexible policy stance that may reshape the balance between green commitments and economic expansion.
Procurement Reform
The strategy also commits to using procurement to support skills delivery, job creation, and regional growth by embedding social value, skills, and employment requirements into major contracts. NSAR has consistently identified this as a vital lever to drive skills development across the rail industry, so this move is very welcome. The government is to consult on exactly how to do this in due course.
Institutional and Structural Changes
• Industrial Strategy Advisory Council (ISAC): This new body will oversee the delivery and impact of the strategy. This body will be given a statutory footing with the aim of ensuring continuity of policy direction.
• National Wealth Fund: A government-backed fund focused on supporting strategic sectors, including infrastructure. The government has instructed the body to prioritise a small number of clean energy sub-sectors, including transport. While this is unlikely to have an immediate impact given that most of the funding will come from private investment, it does signal that some support may follow in the future.
• Company Law Reform: The reporting requirements for around 132,000 companies may be relaxed, easing regulatory burdens for smaller businesses.
• Labour Market Evidence Group (LMEG): A new analytical unit will draw on existing advisory bodies to improve understanding of where sectors are overly reliant on overseas labour and how to reverse underinvestment in domestic skills.
Analysis
The limited attention given to foundational sectors such as rail in the industrial strategy feels like a significant missed opportunity. Rail is far more than a mode of transport. It strengthens regional connectivity, enables growth across other industries, and is vital to the UK’s decarbonisation goals. It also holds substantial untapped potential as a growth driver in its own right. Given how closely these outcomes align with the government’s stated ambitions, the lack of focus on rail and transport infrastructure more broadly is both surprising and disappointing.
It is also a missed opportunity when judged against the strategy’s own goals. Stronger transport infrastructure is consistently cited by high-growth industries as essential for expansion. Similarly, the need to drive productivity is mentioned fifty-three times in the strategy document. Yet skills outside of the key sectors, which represent 70 percent of the UK economy, are overlooked. Given that skills shortages are a major factor behind the UK’s sluggish productivity, this is a notable omission. The strategy also rightly places great emphasis on place-based growth, but meaningful regional growth is likely to depend on agglomeration. This requires infrastructure, which the strategy fails to connect explicitly to its broader ambitions.
The absence of a coherent skills plan is particularly troubling. It prevents alignment between the industrial strategy and the welcome rail investments announced in the recent Spending Review, reducing the effectiveness of both. Rail is already facing serious workforce pressures. Without a clear plan to attract talent and retrain the existing workforce, the new investment risks being undermined by resource shortages, threatening delivery of the government’s infrastructure objectives.
That said, it is worth noting that no major rail infrastructure projects were cancelled in the Spending Review. Commitments to rail remain in place, despite the sector being at risk during the review process. These projects continue to feature in the industrial strategy, indicating that the government still recognises rail’s strategic value, even with limited policy emphasis. This is a positive development that signals continued confidence in the sector’s long-term importance.
There is also room for some other optimism on procurement reforms and the proposed reductions to energy costs for businesses.
Despite these areas of potential optimism, a proactive approach is still needed by the industry. To bridge the current policy gaps and ensure the industrial strategy’s success, we strongly encourage the government to work closely with the rail sector to ensure it plays its full part in delivering a successful industrial strategy and is equipped with the skilled workforce required to do so. Failure to act risks undermining the very goals the strategy aims to achieve.
Ten-year Infrastructure Strategy
Summary
The 10-Year Infrastructure Strategy (10YIS), published on 19 June 2025, sets out the government’s roadmap for infrastructure modernisation. While it introduces welcome reforms on delivery, procurement, and private investment, it offers little added information, particularly in the case of rail.
Rail-Specific Announcements
The strategy reiterates previous commitments, with few new developments:
Northern Powerhouse Rail: Reaffirmed as a strategic priority, though no new delivery timelines were set. A separate announcement is expected shortly.
TransPennine Route Upgrade: Additional funding was confirmed in the Spending Review, so no major updates were included here.
HS2: Phase 1 continues, but further details on how regional value will be maximised following the cancellation of the northern leg remain to be set out.
East West Rail: The strategy restates the £2.5 billion commitment to deliver the Oxford to Cambridge section; no further details were provided.
Urban Transit: The Urban Mobility Fund will support new light rail and tram systems, though implementation timelines are still to be confirmed.
Network North: Now presented as a regional funding envelope, with an emphasis on rural line reopening and station upgrades but lacking a defined list of projects.
Institutional and Policy Developments
There are a number of positive developments relevant to the sector:
NISTA: The new National Infrastructure Strategy and Transport Authority will oversee delivery of the strategy, provide early-stage project assurance, and coordinate infrastructure activity across government. It will also manage the new digital infrastructure pipeline and spatial planning platform.
Public-Private Partnerships: The strategy also signals a shift in approach towards attracting more private investment into projects, where this offers value for money. While traditional PFI is ruled out, the door is pushed open to more flexible funding models, with Euston Station redevelopment cited as a potential example. Further clarity will be essential to unlock investment at scale.
Green Book Reform
One of the most important and genuinely exciting elements of the strategy is the proposed reform of the Treasury’s Green Book. Through these reforms, the government plans to reduce reliance on Benefit Cost Ratios to appraise infrastructure projects and provide clearer guidance on how to capture broader benefits such as social value, regional equity, and environmental impact. This could be transformative for rail. Many schemes with enormous potential previously struggled to make the case under the existing model, despite offering considerable social and economic return. These changes, therefore, could unlock a broader range of projects and make the appraisal process more responsive to the public value rail delivers.
Infrastructure Pipeline
The government will launch a digital infrastructure pipeline in July, aimed at improving transparency over future projects. It is expected to cover both publicly funded and privately led schemes, providing data on timelines, funding status, scale, location, and procurement routes. This visibility is essential to attract private capital, give the supply chain confidence, and support workforce planning. However, the rollout is likely to be phased, and it remains unclear when a full picture will emerge.
Conclusion:
The strategy introduces several constructive reforms with genuine potential, reflecting many longstanding asks NSAR has made of the government. The announcements on NISTA, procurement reform, and greater use of private investment all represent real progress. The proposed changes to the Green Book, in particular, could be transformative for the rail sector and are hugely welcome. However, the continued deferral of actual decisions and lack of proper detail is disappointing, both on rail projects themselves and the supporting reforms. Without clear timelines and firm decisions, there is a real risk that these promising ideas will fail to translate into effective delivery.
If you would like to discuss this announcement in more detail, please contact Edward.hughes@nsar.co.uk.