Britain’s struggling manufacturing sector is set to receive a major boost after the government announced sweeping cuts to industrial energy costs aimed at halting a wave of factory closures.
Business Secretary Peter Kyle confirmed that from next year, energy-intensive industries such as steel, glass, and ceramics will receive a 90 per cent discount on electricity network charges — up from the current 60 per cent. The move, designed to restore competitiveness and protect jobs, is expected to save around 500 firms as much as £420 million annually.
The decision follows months of pressure from business leaders and unions urging ministers to tackle the UK’s soaring industrial electricity costs — among the highest in the developed world. High energy prices have been blamed for multiple recent factory shutdowns, particularly in the steel and ceramics industries.
Despite welcoming the relief, manufacturers expressed disappointment that the measures will not be backdated to April 2024. Sources said Mr Kyle had sought retrospective implementation but was blocked by Energy Secretary Ed Miliband after internal cabinet disagreements.
The Department for Business and Trade (DBT) has also faced criticism over delays to the British Industrial Competitiveness Scheme (BICS), a key programme expected to cut energy costs by up to 25 per cent for more than 7,000 firms from 2027. The scheme aims to remove certain net zero levies from bills, but consultations have yet to begin, leaving companies uncertain about the timeline.
Mr Kyle said the new energy discounts will be funded through departmental efficiency savings rather than new levies or customer charges. He described the reforms as “a vital step towards levelling the playing field” for British exporters facing stiff competition from European rivals.
“These measures will help businesses grow and invest with confidence,” he said, adding that further support for energy users would be announced “in the not too distant future.”
While Mr Kyle stopped short of confirming whether additional aid will feature in Chancellor Rachel Reeves’s upcoming Budget on November 26, he hinted that further reforms to boost productivity and reduce red tape were underway.
Louise Hellem, lead economist at the Confederation of British Industry (CBI), welcomed the announcement, calling it “an important step in bringing UK industrial energy costs closer to those of European competitors.” However, she urged the government to act quickly on broader reforms. “As firms urgently await the BICS consultation, the autumn Budget presents a vital opportunity to help more businesses cut energy use and electrify their processes,” she said.
The measures form part of Labour’s wider industrial strategy, as the government seeks to balance fiscal discipline, competitiveness, and green transition goals while rebuilding confidence in Britain’s manufacturing heartlands.
