As part of a new industrial strategy to revitalise the UK economy, Prime Minister Sir Keir Starmer has announced a £2 billion investment over four years to cut energy bills for more than 7,000 energy-intensive businesses.
The “British Industrial Competitiveness Scheme”, unveiled ahead of the Government’s full strategy release, will reduce electricity costs by up to 25% for businesses in automotive, aerospace, chemicals, steel, ceramics and glass sectors.
The support will be delivered through exemptions from green levies and expanded reductions in network charges. The scheme will come into effect in 2027, with a public consultation to determine eligibility.
In tandem, the Government is extending its existing “British Industry Supercharger” programme, which has already cut renewable levy and network charges for certain businesses.
Under the current scheme, UK steelmakers pay £66 per megawatt hour (MWh), compared with £50/MWh in Germany and £43/MWh in France. The revised scheme will increase the network charge discount from 60% to 90%, helping about 500 businesses to remain competitive with international peers.
Expanded relief for energy-intensive sectors
The energy support package will be funded by reforms to green energy mechanisms such as the Emissions Trading Scheme and Contracts for Difference, which subsidise renewable energy projects. However, there are lingering questions about how the reforms will be paid for in practice. Adam Bell, director of policy at consultancy Stonehaven, warned that “there’s a bunch of missing money”. Business secretary, Jonathan Reynolds, insisted the proposals require “no new taxes or borrowing and no increase on bills for anybody else”.
Retailers and leisure businesses, which have long complained about rising energy costs – may be frustrated at being excluded from the scheme, particularly after recent increases to National Insurance contributions raised their employment costs.
Alongside the energy measures, the Government plans to streamline access to the electricity grid through a new “Connections Accelerator Service”, using upcoming legislation to prioritise capacity for strategically critical industrial projects.
The broader industrial strategy outlines a 10-year plan to support the UK’s economic growth, particularly in regions hit by long-term stagnation. It focuses on eight key sectors: advanced manufacturing, clean energy, creative industries, defence, digital and technology, financial services, life sciences, and professional and business services.
In a bid to facilitate regional investment, ministers will also unify existing “special economic zones” – freeports, investment zones, and enterprise zones – under a new framework called “Industrial Strategy Zones.” These zones will continue to offer incentives such as business rates relief, enhanced capital allowances, and simplified customs processes, but the move is designed to reduce confusion and improve oversight. The change is expected to give more power to regional mayors, especially in planning decisions.
Wider strategy aims to boost regions and skills
A further £275 million has been earmarked for new education and apprenticeship programmes, particularly in defence and engineering, to train thousands of skilled workers by 2029. The creative industries will also benefit from a £380m package, including £150m for mayors in Liverpool, Manchester, the West Midlands and West Yorkshire to support local creative businesses.
The announcement follows growing pressure from Reform UK, which has gained ground in parts of the country facing high unemployment and child poverty. The party has been calling for stronger industrial policy, more skills, and investment in job creation.
Shadow business secretary, Andrew Griffith, criticised the Government’s approach, claiming the plan lacked originality and urgency. “It is poor that it has taken Labour a whole year to cut and paste previous sector strategies in a new cover,” he said. “Labour is not serious about an industrial strategy while they bend over backwards to trade unions and add more and more burdens on to business.”
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