Why is the planning system becoming a key variable in manufacturing investment in the UK?

Planning Is No Longer Just a “Procedural Issue”

British manufacturing is redefining the planning system as a variable of industrial competitiveness, rather than a mere administrative compliance step. Make UK’s latest survey shows that surveyed firms are broadly dissatisfied with the planning system, believing it is “not fit for purpose,” overly complex, and already an obstacle to investment. More importantly, this sentiment is not confined to corporate complaints; it has already translated into direct judgments about the UK’s economic potential, pace of expansion, and regional investment capacity.

In the survey, 46% of manufacturing firms said the planning system is weakening the UK’s economic potential, while 43% said it is slowing growth or investment. For manufacturing, the significance of these figures is not simply that approvals are cumbersome, but that capital formation, plant expansion, production line upgrades, and supply chain reconfiguration are being repriced by institutional friction. In other words, the planning system has become a major factor affecting the payback period of manufacturing investment in the UK.

What Manufacturing Is Really Worried About Is Uncertainty

From a business perspective, the most costly aspect of the planning system is often not the application itself, but uncertainty. The survey shows that 48% of respondents cited the complexity of planning regulations as the biggest barrier, 44% mentioned compliance costs, and 38% believed decisions varied inconsistently across local authorities. For manufacturers that need long-term capital investment, the combination of these three factors means longer project timelines, higher internal decision thresholds, and even site-selection implications.

That is also why Make UK has proposed a “Manufacturing Growth Test.” Its core aim is not to add another layer of policy rhetoric, but to directly link planning reform with manufacturing investment outcomes, measuring whether reform truly reduces cost, complexity, and uncertainty. For industrial policy, the value of such a test lies in turning abstract “reform” into an improved investment environment that businesses can actually feel.

Regional Devolution Is Becoming a New Interface for Industrial Policy

Notably, the survey does not simply frame the issue as either “central deregulation” or “faster local approvals.” Instead, it reveals manufacturers’ preference for stronger regional coordination powers. More than two-thirds of firms support granting metro mayors greater planning powers, and the same proportion believe that more coordinated regional planning would make expansion easier.

This reflects a deeper trend: British manufacturing is increasingly reliant on regional-level industrial organizational capacity. Whether it is industrial clusters, logistics nodes, energy access, or labor markets and skills supply, manufacturing investment increasingly requires coordination across local government boundaries. If planning remains fragmented, it will amplify “postcode planning” — where the same type of project faces different rules and timelines in different areas — which is especially detrimental to advanced manufacturing, energy equipment, and infrastructure-support industries that require scaled deployment.In this sense, planning reform is not merely a technical issue of approvals, but a question of whether Britain’s regional economic governance structure is fit for a new round of industrial restructuring. If local mayors and regional bodies are given stronger coordinating powers, that would in theory help align land, infrastructure, and industrial priorities; but without unified rules, local decentralization may continue to create uncertainty. Therefore, Make UK’s call for stronger strategic and mayoral powers is, in essence, a demand that the planning system serve industrial clusters, rather than forcing industry to adapt to fragmented governance.

Tensions between the energy transition and environmental approvals are rising

The survey also shows that environmental requirements have become an important source of friction for manufacturers when dealing with planning. More than half of respondents said that rules involving the protection of species such as newts and bats at least occasionally create obstacles for planning proposals, while 14% said this interference is very frequent. By citing the HS2 case, where tunnel costs were increased to protect bats, Make UK aims to show that if environmental protection goals lack proportionality and predictable mechanisms, they may push public and industrial projects toward higher costs.

This does not mean manufacturing opposes environmental standards. On the contrary, manufacturing is taking on a larger role in the energy transition and net zero investment, and therefore needs an approvals framework that is workable, predictable, and financeable. The problem is that when environmental goals, planning processes, and industrial timelines cannot be aligned, the result is often not a faster green transition, but slower investment delivery. For firms that need to deploy electrification, low-carbon processes, energy storage, heat pumps, or supply chain restructuring, approval delays themselves can become an implicit cost in the carbon reduction process.

A gap remains between policy goals and industrial reality

Faye Skelton’s remarks highlight a key contradiction in current UK industrial policy: the government has already acknowledged problems in the planning system and is pushing reforms under the Planning and Infrastructure Bill, yet businesses’ experience remains “slow, heavy, and difficult.” This means there is still a clear gap between policy design and industrial implementation.

For Britain’s industrial strategy, this gap is especially important. Whether the policy goal is to raise productivity, drive regional growth, or support the energy transition, it must ultimately be reflected in the actual pace of factory, warehousing, logistics, laboratory, and infrastructure projects. If planning reform cannot reduce project uncertainty, industrial strategy will be held back at the land and approvals stages.

In other words, the planning system is no longer just a supporting tool for “growth”; it is the underlying institutional framework that determines whether growth can happen at all. For manufacturing, the most important question is not how complete the reform documents are, but whether approvals are stable, fast, and predictable enough for capital to enter, expansion to proceed, and supply chains to be restructured.

Broader implications for Britain’s competitivenessThis survey involved only 196 companies, so it cannot be overread as a complete picture of British manufacturing. But the signal it sends is clear: manufacturing firms are beginning to treat planning as part of the investment environment, rather than an external condition. This has three implications for Britain’s competitiveness.

First, planning efficiency will affect the geographic distribution of manufacturing capital spending. If approvals are slow and rules are inconsistent, companies are more likely to delay projects or shift them to more predictable regions.

Second, the planning system will affect the pace of regional industrial upgrading. If local governments lack coordination capacity, it will be difficult for industrial clusters, infrastructure, and energy projects to reinforce one another.

Third, planning reform will become a litmus test for the success or failure of industrial strategy. A country that emphasizes productivity, supply chain resilience, and the net zero transition cannot for long rely on a planning system that businesses see as an “obstacle.”

So what this Make UK survey really warns is that the challenge facing British manufacturing is not just slow approval processes, but whether institutional design is sufficient to support the next stage of reindustrialization. If planning cannot shift from a tool that “restricts projects” to one that “organizes investment,” then many industrial policy goals will remain on paper.

Conclusion

For British manufacturing, planning reform is no longer a peripheral issue, but a precondition for industrial strategy to be implemented. It determines whether factory expansions can happen faster, whether regional development can proceed more evenly, whether the energy transition can be carried out more smoothly, and whether the UK can maintain its attractiveness to investment in global manufacturing competition.

Precisely for this reason, future discussions of Britain’s industrial competitiveness probably cannot focus only on taxes, subsidies, or energy prices. They must also examine whether the planning system truly opens channels for manufacturing, infrastructure, and transition investment.