Tech South West is a contributor to the Government’s Industrial Strategy consultation Invest 2035, adding our voice to thousands of businesses, institutions and individuals across the UK who have shared their insights on shaping the future business landscape.
We have been provided with interim analysis that reveals insights from over 27,000 responses nationwide. Many of these findings strongly resonate with the challenges and opportunities we’ve identified in the South West tech ecosystem. From skills gaps to access to finance, infrastructure limitations and the vital collaborations between academia and industry – these are all critical components of our regional development story.
This blog outlines some of the key themes emerging from the consultation and how they align with our regional priorities.
Key themes from the consultation
Access to finance: a critical hurdle for growth
The consultation has revealed that 45% of SMEs across the UK report difficulty securing funding, with many facing prohibitively high borrowing costs. This barrier to growth is particularly acute in the creative industries, advanced manufacturing, and defence sector – all of which have significant footprints in the South West.
For our region’s tech companies, especially those in the early growth stages, this financing challenge is all too familiar. The consultation confirms what many South West entrepreneurs already know: traditional lenders often lack the risk appetite to invest in innovative enterprises, particularly those without substantial collateral. Consequently, promising technologies and business models struggle to secure the capital needed for research, development, and scaling operations.
This isn’t just a South West problem, but it has distinctive regional dimensions. Compared to London and the South East, our entrepreneurs often face additional hurdles in connecting with funding networks. We are working to address this through the Angel Investor Programme – to develop angel groups in the region – and the Funding & Finance Programme – to maximise touchpoints between South West founders and investors.
The geographic distribution of investment tends to favour companies closer to financial hubs, creating a structural disadvantage that must be addressed for sustainable growth across the whole of the UK.
Innovation and technology adoption: bridging critical gaps
The consultation has highlighted how innovation plays a pivotal role in addressing the UK’s productivity challenges. Businesses have emphasised the need for better financing mechanisms, enhanced collaboration frameworks, and regulatory stability to drive innovation forward.
For the South West tech ecosystem, the findings around academia-industry collaboration are particularly relevant. Our region hosts world-class universities and research institutions, yet the “gap between research outcomes and commercial applications” identified in the consultation remains a persistent challenge locally. The consultation reinforces the need for better knowledge exchange mechanisms that can transform academic excellence into market-ready innovations.
Moreover, as recent analysis by Tech South West has highlighted, ongoing economic challenges to Higher Education institutions in the UK threaten to derail investment into early stage ventures through university spinouts and university-based incubators.
The barriers to innovation cited in the consultation lean towards sectors with strong South West representation, including digital technologies and life sciences. A comprehensive approach to address these challenges will be crucial in supporting the continued success of South West-based innovation.
Skills shortages: the talent imperative
Perhaps unsurprisingly, skills shortages featured prominently in the consultation responses, with 14% of all barriers to investment linked to skills issues. In the professional and business services sector, this figure rose to 23%, highlighting the severity of the talent gap in knowledge-intensive industries.
The consultation points to a critical mismatch between education outputs and industry needs – a challenge that Tech South West has been actively addressing through skilling initiatives and partnerships with organisations such as Microsoft. Our region faces particular challenges in retaining technical talent and attracting specialists in emerging technologies, from AI to clean energy innovations.
For the South West tech sector, the consultation’s emphasis on skills aligns with our advocacy for more targeted, place-based talent development strategies and the strengthening of non-traditional pathways such as skilling programmes, apprenticeships and lifelong learning opportunities.
The findings reinforce our view that a one-size-fits-all approach to skills cannot address the distinct needs of regional economies, particularly in sectors experiencing rapid technological change.
Place-based growth: recognising regional potential
One of the most encouraging aspects of the consultation findings is the strong support for realising economic potential across all UK regions by targeting place-specific strengths and barriers. Respondents have emphasised the need for infrastructure improvements, targeted skills interventions, and long-term R&D programmes tailored to regional contexts.
The findings specifically note that “no route to national growth could be achieved without addressing the underperformance and realisation of untapped potential of the UK’s largest cities” and regions. This recognition aligns with our advocacy for the South West as a vital contributor to national economic prosperity and an engine for future-proof industrial output, not just a recipient of policies designed elsewhere.
The consultation findings reinforce the importance of understanding the unique characteristics of our regional ecosystem – from spacetech in Cornwall to marine science in Plymouth, quantum in Bristol and environment research in Exeter – and developing policies that respond to these distinct contexts.
Supply chains and international trade: building resilience
The consultation has highlighted widespread concerns about supply chain vulnerabilities, particularly in clean energy industries, defence, and digital technologies. With 11% of businesses citing increased trade barriers as their biggest concern for supply chain disruption, it’s clear that international opportunities remain vital for business confidence.
For South West tech companies, many of whom operate in global markets, these findings underscore the importance of trade policies that support rather than hinder international collaboration. The region’s growing specialisations in areas like marine technology, aerospace, and digital innovation all depend on resilient, efficient supply chains from beyond the UK’s shores.
The consultation’s emphasis on “better international collaboration on standards, research and development partnerships” has particular relevance for South West tech firms developing exportable innovations. As the Government develops its trade strategy, ensuring these international dimensions reflect the needs of regionally based innovators will be crucial.
Additional themes with regional significance
Regulatory environment: navigating complexity
The consultation identified regulatory complexity and uncertainty as significant barriers to growth, especially in sectors like the creative industries, financial services, and clean energy industries. For South West tech companies navigating emerging technologies and markets, regulatory clarity is not just a bureaucratic concern but a fundamental business need.
The findings around “safeguarding intellectual property” in the creative industries and the tension with the digital sector’s “appetite for a regulatory environment that spurs innovation” reflect debates happening at a global scale with real on-the-ground resonance for tech innovators in the South West and beyond..
Energy costs: a competitive disadvantage
High industrial electricity prices and grid connection delays have been highlighted as major barriers across almost all sectors, particularly advanced manufacturing, digital technology, defence, and clean energy industries. The consultation findings note that “the unpredictability of UK energy prices, particularly compared to competitor countries, made decisions regarding long-term investments challenging.”
As a powerhouse for clean energy solutions, including offshore wind, lithium extraction and tidal energy innovation, the South West has a key role to play in spearheading the UK’s net zero ambitions and supporting enhanced energy independence.
We are also monitoring the UK’s potential emissions scheme merger with the EU, and have previously published insight into how such a move might benefit the South West tech sector.
Planning and infrastructure: removing physical barriers
Infrastructure challenges have emerged as the most frequently cited barrier to investment (21% of all mentions), particularly for clean energy industries, advanced manufacturing, and professional business services. The consultation has highlighted “lengthy planning and permit processes, inadequate infrastructure and high costs” as significant barriers to investment.
For a region with the South West’s geographic spread and historic infrastructure challenges, these findings reinforce the need for strategic investments in connectivity – both digital and physical. The consultation’s emphasis on “regional disparities in infrastructure and connectivity” speaks directly to challenges that Tech South West has long worked to overcome via cross-regional collaboration, digital community building and network building within the sector.
Government-business partnership: streamlining engagement
The consultation has revealed widespread frustration with the complexity of government interactions and policy uncertainty. Respondents have called for “a more streamlined, transparent and collaborative relationship, with specialised contact points that coordinate across government to share insights.”
For South West tech companies, often located at a physical distance from decision-making centres, these challenges of engagement can be particularly acute. The consultation’s emphasis on clear communication channels and simplified digital services for business support aligns with our own vision for more accessible government-business interfaces.
Looking forward: Tech South West’s continuing role
As the Government enters the detailed policy design phase of the Industrial Strategy’s development, Tech South West remains committed to ensuring our region’s voice is heard. The interim findings demonstrate that many of our concerns and priorities are shared nationwide, giving us a strong foundation for continued advocacy.
We’re particularly encouraged by the consultation’s recognition of place-based approaches and the need to align national priorities with local growth plans. This creates an opportunity to ensure that Government strategy delivers tangible benefits for businesses and communities across the South West.
Our priorities moving forward include:
- Continuing active engagement through all available channels, including the SW Leadership Forum and regional networks
- Advocating for our region’s distinct tech specialisations via projects such as the Look South West Prospectus
- Building cross-sector partnerships to strengthen our collective voice
- Ensuring the final strategy delivers concrete actions, not just aspirations, for regional tech development
As the Government develops its 10-year strategy, we’ll continue advocating for our region’s distinctive needs. The independent SW Tech Advisory Board will bring in voices from across the region’s innovation ecosystem to shape and influence Government policy.
The South West has untapped potential that must be recognised in any truly national growth plan. Let’s ensure our voice remains central to the conversation.
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