UK factories are set to benefit from millions of pounds in savings after the government announced sweeping cuts to industrial energy costs in a bid to prevent a wave of manufacturing closures.
The Business Secretary, Peter Kyle, confirmed that from next year energy-intensive industries such as steel, glass and ceramics will get a 90 per cent discount on electricity network charges – up from the current 60 per cent. The move is expected to save around 500 firms £420 million a year.
The announcement comes after mounting pressure on ministers to tackle Britain's skyrocketing industrial electricity prices, which are among the highest in the developed world and have been blamed for a number of recent factory closures.
Despite the scale of the relief, business groups expressed disappointment that the measures will not be implemented retroactively until April 2024. It is understood that Mr Kyle had pushed for the plan to be implemented retrospectively, but it was rejected by Energy Secretary Ed Miliband after weeks of internal wrangling.
The Department for Business and Trade (DBT) has also faced criticism for delaying the British Industrial Competitiveness Scheme (BICS) – a long-awaited program designed to cut energy costs by a quarter for more than 7,000 firms by 2027 by removing some net zero charges from bills. Consultations on the plan have not yet begun, leaving manufacturers uncertain about the timeline for further relief.
Mr Kyle said the new rebates would be funded through departmental efficiency savings rather than additional customer charges or new industry charges. He described the reforms as an important step towards providing a level playing field for British exporters competing with European rivals.
“These measures will help businesses grow and invest with confidence,” he said, promising additional support for energy users “in the not too distant future.” He declined to confirm whether further help would be included in Chancellor Rachel Reeves' budget on November 26, but indicated the government's pro-growth agenda would include more energy and regulatory reforms.
The Business Secretary also promised to “get the balance right” in the upcoming Employment Rights Bill after the House of Lords approved amendments expanding union powers and introducing workplace rights “on day one”.
Kyle said his department would launch 27 new consultations, emphasizing that “Consultation means I will listen. It means I will act – in a way that is pro-growth and appropriate for the modern era we live in.”
He hinted at pursuing comprehensive regulation and planning reform, saying: “We will continue to work with the same enthusiasm and urgency in the future.”
Lewis Helm, chief economist at the Confederation of British Industry (CBI), welcomed the announcement, calling it “an important step towards bringing the UK's industrial energy costs in line with European competitors”.
However, he warned that more needed to be done to ease energy cost pressures across the wider economy. “As companies await the urgent BICS consultation, the upcoming Autumn Budget presents an important opportunity to introduce targeted measures that help more businesses cut energy use and electrify their processes,” he said.
The reforms mark a key test for Labour's industrial strategy as it seeks to balance fiscal discipline, competitiveness and green transition goals while reviving confidence in Britain's manufacturing sectors.
Amy Ingham
Amy is a newly qualified journalist specializing in business journalism with responsibility for news content at Business Matters, the UK's largest print and online source of current business news.
