Britain’s factories are set to benefit from hundreds of millions of pounds in savings after the government announced sweeping cuts to industry energy costs to stem a wave of closures across the manufacturing sector.
Peter Kyle, the business minister, confirmed that energy-intensive industries such as steel, glass and ceramics will receive a 90 percent discount on electricity network charges from next year – up from the current 60 percent. The move is expected to save around 500 companies up to £420 million a year.
The announcement follows increasing pressure on ministers to tackle soaring industrial electricity prices in Britain, which remain among the highest in the developed world and are blamed for a series of recent factory closures.
Despite the scale of the relief, business groups expressed frustration that the measures will not be applied retroactively to April 2024. It is understood Mr Kyle had pushed for the plan to be backdated but was overruled by Energy Secretary Ed Miliband after weeks of internal wrangling.
The Department for Business and Trade (DBT) has also been criticized over delays to the UK’s Industrial Competitiveness Scheme (BICS) – a long-awaited program that aims to cut energy costs for more than 7,000 companies by up to a quarter from 2027 by removing certain net zero levies from bills. A consultation on the plan has yet to begin, leaving manufacturers uncertain about the timeline for further relief.
Mr Kyle said the new discounts would be funded by savings in departmental efficiency, rather than additional customer fees or new industry levies. He described the reforms as a crucial step in creating a level playing field for British exporters to compete 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 aid will be included in Chancellor Rachel Reeves’ November 26 budget, but suggested the government’s pro-growth agenda would include further energy and regulatory reforms.
The Business Secretary also vowed to strike “the right balance” in the upcoming Employment Rights Bill after the House of Lords approved amendments extending union powers and introducing workplace rights on day one.
Kyle said his department would launch 27 new consultations, stressing: “Consultation means I will listen. That means I will act – in a way that is growth-enhancing and appropriate for the modern times we live in.”
He hinted at a wider deregulation and planning reform push, saying: “We will continue with the same zeal and urgency in the future.”
Louise Hellem, senior economist at the Confederation of British Industry (CBI), welcomed the announcement, describing it as “an important step in bringing the UK’s industrial energy costs closer to European competition”.
But she warned that more needed to be done to ease energy cost pressures across the economy. “As businesses urgently await the BICS consultation, the upcoming autumn budget presents an important opportunity to introduce targeted measures to help more businesses reduce their energy consumption and electrify their processes,” she said.
The reforms represent a key test of Labour’s industrial strategy as it aims to balance fiscal discipline, competitiveness and the goals of the green transition – while restoring confidence in the core regions of Britain’s manufacturing sector.
