BUSINESS groups have given a cautious welcome to the Government's new Industrial Strategy.

The Government yesterday unveiled plans aimed at making the UK the world's most innovative nation by 2030 by investing £725 million to "transform" industries.

The money includes £170 million towards building houses that are more affordable and use less energy, and £210 million to improve early diagnosis of illnesses and development of "precision medicine" for patients.

The measures are part of the Industrial Strategy, which sets out the Government's long-term vision on how to tackle the UK's poor productivity, embrace technological change and boost wages.

The £725 million will go into a fund over the next three years, on top of previously announced £1 billion towards projects - although ministers said around £80 billion could be invested in advanced technology in the next decade.

To mark the launch of a White Paper on industrial strategy, leading life sciences company MSD said it will open a state-of-the-art hub in the UK to drive research into future treatments for patients.

Around 150 research roles will be created, and it is envisaged that the new site will accommodate hundreds of staff for the UK domestic market and other European clinical functions currently based in MSD's Hoddesdon offices in Hertfordshire.

The move aims to build on an announcement by the Prime Minister last week that the Government's ambition is to deliver a step change in the level of investment in research and development (R&D), rising from 1.7% to 2.4% of GDP by 2027.

Business Secretary Greg Clark said: "Any serious strategy should address the weaknesses that stop us achieving our potential, as well as our strengths, and this Industrial Strategy does that.

"Britain's productivity performance has not been good enough, and is holding back our earning power as a country.

"So this Industrial Strategy deliberately strengthens the five foundations of productivity: ideas, people, infrastructure, business environment and places."

Rob Perks, chief executive of Inspire, formerly Wessex Chamber of Commerce, said: “The paper is an interesting insight into the minds of ministers but is long on policy direction and short on detail.

"The aims are all very worthy – improving our productivity, supporting innovation and exporting, providing better access to suitable finance for these activities and support for growing businesses in particular. The intention to improve infrastructure including transport and roads as well as broadband connectivity are also welcome.

"There is an intention to pump more money through the British Business Bank to provide more flexible finance as well as a substantial sum to go into Innovation support and growing our skills base.

"Inspire will be working closely with Local and National Government to help to shape the roll out of these plans and will be involving our clients in that process as well as supporting them to access these new opportunities to grow their businesses.”

Ian Larrard, director of Swindon and Wiltshire initiative Business West, said: “Following the Chancellor’s budget last week it should come as no surprise that Government support for high-tech growth and the exploitation of digital technologies is at the heart of its industrial strategy white paper.

“Beyond these so-called ‘grand challenges’, Government is right to identify the ‘five foundations of productivity’ as ideas, people, infrastructure, the business environment and place.

“Out of all of these, it is a renewed focus on place that resonates most strongly with the Initiative’s objective of making this region the best place to live, work and do business. Despite this, however, on the basis of the ‘key policies’ put forward by Government to signal this renewed focus on place, one cannot help but be a little disappointed.

“While the pledge to develop ‘Local Industrial Strategies’ sounds promising it is unclear how they will work in practice in if they will turn out to be complementary to the work of the council and LEP in this area.

“Finally, a £42m budget to help pilot the Teacher Development Premium in schools seems highly ambitious given the skills gaps the region faces.

“Early days, of course, but much more detail and much more input from the business community is desperately needed.”

Ministers were urged to appoint trade union representatives to a new council dealing with the new policies.

TUC general secretary Frances O'Grady said: "Ministers have failed to explain how workers will be given a say in the new industrial strategy. They are missing a trick if they don't listen to the factory floor."

Stephen Martin, director general of the Institute of Directors, said: "Business leaders will welcome the Government's grand ambition to turn around the UK's woeful performance productivity.

"The measures in could be the beginning of a bold, new approach to the economy - but only if what has been announced is followed through, not just in this parliament, but over many parliaments to come."