Manufacturers across Britain have warned that sharp increases in energy charges could force firms to close, threatening supply chains in key sectors such as defence, automotive, aerospace, and construction.
From October 1, government-approved rises to standing charges and levies on industrial electricity bills will begin to take effect, with the full impact expected by April. Energy brokers say the changes mean non-commodity costs—fees for using the national grid and funding subsidies—could account for as much as 65% of a company’s bill, regardless of electricity consumption.
For a manufacturer currently paying £300,000 annually for power, standing charges alone will jump from £32,000 to £64,000. In addition, a new levy due in November will contribute to the construction of the Sizewell C nuclear power station, further inflating costs.
The Confederation of British Metalforming (CBM), which represents firms supplying components across multiple industries, warned the increases would hit already fragile businesses. “We will end up getting to net zero by having no industry,” said Stephen Morley, CBM president. “We will lose companies over this, without a doubt. They cannot afford this increase.”
While some heavy industries, such as steel and ceramics, qualify for the Energy Intensive Industries subsidy, thousands of smaller manufacturers in heat treatments, forgings, and sheet metal production are excluded. Industry leaders argue that these businesses are essential links in national supply chains but are being left to shoulder costs that effectively subsidise their larger competitors.
Among those feeling the pressure is Sheffield-based Footprint Tools, the UK’s last specialist drop forge for hand tools. Managing director Tim Jewitt said his firm’s energy bills had nearly doubled even before the latest hikes. “Sixty per cent of our energy costs are not paying for electricity itself. That is wrong. This is driving manufacturing offshore and making us uncompetitive globally,” he said.
The government maintains the charges are necessary to fund grid upgrades and ensure long-term energy security. A spokesperson said: “We are protecting energy-intensive businesses from volatile fossil fuel markets. The only answer is clean, homegrown power to bring down bills for good.”
However, energy brokers warn the scale of the increase has caught many firms off guard. “This has been dropped as a bombshell,” said Liam Conway of Greenfields Energy Group. “Businesses are left asking what costs they’ll have to bear before they see any benefit.”
Ministers have acknowledged the risks, with a consultation planned on the so-called British Industrial Competitiveness scheme. Yet with details still scarce, industry leaders fear closures will come before relief is in place.
