The UK government has outlined a plan to significantly reduce energy costs for thousands of businesses, aiming to level the playing field with foreign competitors. Under the new British Industrial Competitiveness Scheme, over 7,000 manufacturing firms will benefit from reduced electricity costs, with savings of up to £40 per megawatt hour starting in 2027. This scheme will exempt businesses from green levies, such as the renewables obligation and feed-in tariffs.
The initiative focuses on addressing the high electricity costs that UK manufacturers face compared to their international counterparts. The steel, chemicals, and glass industries, known for their energy-intensive operations, will receive additional support, with network charges set to drop by 90% by 2026.
Alongside energy cost reductions, the strategy includes measures to expedite connections to the energy grid for new factories, offering businesses greater stability and growth potential. The plan is part of Sir Keir Starmer’s ten-year strategy aimed at reviving the UK’s economic growth and ensuring long-term investment security for key industries.
Other aspects of the strategy include a £25.6 billion increase in financial support through the British Business Bank, additional funding for research and development, and efforts to address the skills gap by investing £1.2 billion annually in training. There are also plans to reduce regulatory red tape, expedite planning approvals, and increase the availability of strategic sites nationwide.
However, concerns remain over the potential costs of the Employment Rights Bill, which could add financial burdens on businesses, and the challenge of maintaining the UK’s competitiveness in a global market. Industry leaders have welcomed the energy cost reductions but emphasised the importance of continued focus on competitiveness.
