Industrial Strategy Classifications

The UK government’s Industrial Strategy identifies eight sectors — the IS-8 — as the drivers of UK economic growth over the next decade. The Data City has built precise, data-driven definitions for each, designed to be tracked and evaluated over time. This page explains how those definitions work, why they differ from traditional classification approaches, and what evidence underpins them.

---

​

The problem with SIC codes

Standard Industrial Classification (SIC) codes are the conventional way of categorising UK businesses. They have three well-documented limitations for Industrial Strategy analysis: They are backwards-looking. SIC codes were last updated in 2007. Sectors like AI, quantum computing, or clean energy cannot be reliably identified using them — companies in these sectors typically register under broad codes like “IT consultancy activities”. They only capture primary activity. A company’s SIC code reflects what it mainly does. Dual-use businesses — common in defence and fintech — are systematically miscategorised. A financial firm using AI has a different SIC code from a tech firm providing financial services, even though both are FinTech companies. Self-selection introduces noise. Businesses choose their own SIC codes, and many choose incorrectly or not at all. Around 26,000 active companies declare “activities of head offices” — a vague catch-all that obscures what they actually do. The government acknowledges these limitations explicitly. For three of the IS-8 sectors (Clean Energy, Defence, and Digital and Technologies), it states that no reliable SIC-based definition exists.

---

​

How The Data City defines the IS-8

The Data City uses two proprietary classification systems to overcome the limitations of SIC.

​

Real-Time Industrial Classifications (RTICs)

RTICs identify companies operating in sectors that SIC codes cannot capture. They are built using machine learning trained on company website text, combined with expert input from government departments, industry bodies and academics. RTICs are live — they update continuously as companies’ activities evolve — and explainable, meaning analysts can inspect why a company has been included or excluded. Frontier sectors within each IS-8 sector are mapped to dedicated RTICs. Many of these have been co-designed directly with government, including DSIT, Innovate UK, and DCMS.

​

Real-Time SIC Codes (RSICs)

RSICs address the self-selection problem. For sectors where SIC codes exist but are unreliable, RSICs use website text and machine learning to assign companies up to four more accurate SIC codes, correcting for vague declarations and outdated classifications. RSICs are used in sectors like Creative Industries, Financial Services and Professional and Business Services, where the underlying SIC framework is sound but its application by businesses is not.

---

​

Confidence ratings

The Data City infers a confidence rating for each IS-8 sector based on how well existing government definitions capture the sector’s activities.

---

​

The IS-8 sectors

​

IS01 — Advanced Manufacturing

Covers medium-high technology firms across advanced materials, aerospace, agritech, automotive manufacturing, batteries and space. SIC codes are used by government as a proxy, but analysis shows they identify only 4% of companies in the sector as innovative, compared to 12% under The Data City’s RTIC-based definition — a three-fold difference. Both approaches produce a broadly similar overall business count (~25,000 companies), indicating that the RTIC definition is capturing the right population with greater precision. Frontier RTICs were developed in partnership with DSIT and Innovate UK. Three were co-created directly with government teams.

---

​

IS02 — Clean Energy Industries

Covers carbon capture, heat pumps, hydrogen, nuclear fission, nuclear fusion, and offshore and onshore wind. The government acknowledges that SIC codes are too restrictive for this sector and currently relies on the Low Carbon and Renewable Energy Economy (LCREE) survey. Survey-based estimates carry an inherent margin of error, making it difficult to attribute changes in sector size to specific policies with confidence. The Data City’s RTIC-based definition provides a company-level view that can be consistently monitored over time without survey uncertainty. The Net Zero RTIC underpins this approach and has been adopted in published academic research, including work that informed the Skidmore Review.

---

​

IS03 — Creative Industries

Covers advertising and marketing, film and TV, music, performing and visual arts, and video games. Also includes CreaTech — the 4,879 companies at the intersection of creative industries and digital technology. The government’s Creative Industries definition dates to 1998 and is well-established. The Data City aligns with it but uses RSICs to correct misclassifications. Our business count is broadly consistent with official data. CreaTech is defined as companies operating in both the creative industries (excluding software development) and the Digital and Technologies sector. The government is committed to better capturing this subsector through future SIC revisions.

---

​

IS04 — Defence

Covers companies in land, sea, air, cyber and dual-use defence technologies. The government acknowledges SIC codes are insufficient for this sector, primarily because defence businesses commonly serve both civil and defence markets. A company’s SIC code records its primary activity, making dual-use firms invisible in SIC-based analysis. The Data City’s methodology combines RSICs and a dedicated Defence RTIC. Company website text captures dual-use activity that a single SIC code cannot. This definition is being expanded in partnership with ADS Group.

---

​

IS05 — Digital and Technologies

Covers artificial intelligence, cybersecurity, engineering biology, quantum technologies, semiconductors and advanced connectivity. DSIT has acknowledged that SIC codes cannot define this sector with the granularity modern policy requires. Around half of companies in this sector carry SIC codes that fall outside the digital economy as DSIT defines it, meaning a SIC-based approach would miss them entirely. The Data City’s definition relies entirely on RTICs. The RTIC-based approach is well-established: it underpins the government’s own revised methodology for measuring the UK digital economy, developed with DSIT, Cambridge Econometrics and The Innovation and Research Caucus and published in July 2025. The specific RTICs used here differ from that publication but share the same methodological foundation. RTICs covering AI, Cyber, Quantum and Advanced Connectivity were co-designed directly with government departments.

---

​

IS06 — Financial Services

Covers asset management, capital markets, FinTech, insurance and reinsurance, and sustainable finance. Financial Services is one of the highest-confidence IS-8 sectors. SIC codes capture most of the sector well; RSICs correct systematic misclassifications in complex group structures where companies declare head office SIC codes, ensuring the sector is accurately sized. Where SIC falls short is at the frontier. FinTech is captured through a dedicated RTIC developed with Innovate Finance, and Sustainable Finance through the Green Finance RTIC, developed with WPI Economics.

---

​

IS07 — Life Sciences

Covers biopharma and medtech, alongside broader life sciences activity in medical devices, diagnostics and research. The government advocates for the definition created by the Office for Life Sciences (OLS), which publishes an open dataset of companies in Life Sciences frontier sectors. The Data City’s definition aligns with this. RSICs correct common misclassifications, and RTICs extend coverage to frontier areas. This makes Life Sciences one of the best-evidenced IS-8 sectors, with an open, shared evidence base already in place.

---

​

IS08 — Professional and Business Services

Covers accounting and audit, legal services and management consultancy, alongside a wide range of B2B professional activity. Professional and Business Services is a high-confidence sector. RSICs correct the misclassifications that affect SIC-based analysis — particularly the ~26,000 active companies that declare “activities of head offices” but are actually in management consultancy, IT services or other professional activities — ensuring the sector is accurately represented.

---

​

Further reading

Full methodology, sector comparisons and business count data are available in The Data City’s discussion paper: [Open Sourcing the Industrial Strategy](https://thedatacity.com/reports/open-sourcing-the-industrial-strategy/)