The Modern Industrial Strategy (IS6 as it is ‘fondly’ known as) was published in November 2025 promising £20.4 billion in R&D grant and loan investment in 2025/26, rising to £22.6 billion by 2029/30, targeted at eight priority sectors. Seven months on, the UK has a new Prime Minister. For businesses aligning funding strategy around that funding, the obvious question is whether any of it survives a change of leadership.
The encouraging answer is that most of it does.
Continuity, not another rewrite
Andy Burnham became Prime Minister in July 2026, taking over from Keir Starmer within the same Labour government. One of his clearest early moves was reappointing Jonathan Reynolds as business secretary, now leading a newly enlarged Department for Business, Innovation, Science and Trade, formed by folding the old science and technology department into the business brief. Commentators have read this reappointment as a real vote of confidence in the existing strategy, since most incoming Prime Ministers scrap what they inherit and Burnham has chosen not to.
Some simplification looks likely. The strategy currently names eight priority sectors broken into 37 separate frontier industries, and there’s a reasonable expectation the new department will tidy this list rather than start again.
We are keeping a watching brief on this through the grant funding lens and will post updates.
Innovate UK’s own reset
Innovate UK published its own prospectus in March 2026, narrowing its focus to six of the eight priority sectors:
- Advanced manufacturing
- Clean energy
- Creative industries
- Defence
- Life sciences
- Digital and technologies (which covers AI, quantum, semiconductors, engineering biology, advanced connectivity and cybersecurity.
New Growth Sector teams and an account management service called Velocity were announced alongside this. Since the prospectus predates July’s reshuffle, it now sits inside the same review pressure as the wider strategy.
From our understanding, the strategic direction remains unchanged, but work is ongoing on ‘the details’.
Two decades of reliability
Since I started out in the R&D grant funding domain, UKRI and Innovate UK have been the backbone of UK innovation funding for more than twenty years, through several changes of government and more than one industrial strategy. UKRI’s own annual budget stands at £8.8 billion, and several of today’s priority sectors, including life sciences, advanced manufacturing and creative industries, have featured as government priorities since at least 2017.
The Innovate UK Strategy and Prospectus is evolution rather than reinvention, and that consistency is good news for anyone planning a multi-year R&D project.
Priority sectors and the end of Smart Grant
The clearest sign of Innovate UK’s sharper focus is the closure of its Smart Grant, the flagship open-scope competition that funded high-impact innovation from any sector on its own merits. Innovate UK’s stated reason is straightforward: with activity now concentrated on six priority sectors, a fully open competition sits awkwardly alongside a more targeted strategy.
We suspect that isn’t the whole story. Smart Grant rounds ran on success rates under 2%, and application volumes had been climbing for some time, driven by tech companies with hard-sell remits. A scheme designed to spot original ideas becomes harder to run well when assessor capacity is abused by greed-based volume. A narrower sector list helps with that too, alongside fewer, stronger applications and gated competitions.
The replacement, Growth Catalyst, is already funded at up to £130 million for 2025/26, split across strands including grant funding paired with private investment and support for early-stage innovators. It’s a smaller, more targeted pot than Smart Grant at its peak, but it’s live, funded, and worth understanding now.
What this means in practice
For businesses in the six priority sectors, the picture is encouraging: record public investment, a £500 million Local Innovation Partnerships Fund aiming to draw in a further £1 billion of private co-investment, and a £500 million R&D Missions Accelerator Programme, all standing regardless of who is in Downing Street. For everyone else, the sensible move is understanding exactly where your project now fits, rather than assuming an older route is still open.
A change of Prime Minister rarely changes what actually gets funded. It changes who you need to talk to, and how you position what you’re asking for. That’s exactly where we can help.
In our next article on this topic, we will look at what funding is available now and in the next 12 months. This ‘live and forthcoming grant opportunities vision’ is the basis for our strategic advice to our clients.
Alex Chalkley
I have over 20 years experience in founding and scaling businesses, mainly focused on the non-dilutive funding sector. Since 2008, I have built, trained and mentored teams to successfully draw down over €100m in non-dilutive funding from the UK and EU for clients spanning multiple sectors.
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