The UK government is set to unveil a comprehensive 10-year industrial strategy today, with a central focus on significantly reducing energy costs for businesses across the country. This move is a key component of a broader plan aimed at boosting economic growth, driving investment, and enhancing Britain’s global competitiveness.
At the heart of the strategy are measures designed to alleviate the burden of high electricity prices, a long-standing complaint from British manufacturers who currently face some of the highest costs in the developed world.
Slashing Energy Bills for Thousands of Firms
A major initiative, the new British Industrial Competitiveness Scheme, is poised to cut energy costs for over 7,000 electricity-intensive businesses from 2027. These firms, supporting hundreds of thousands of skilled jobs, could see their electricity bills potentially slashed by up to 25%. The reduction will be achieved by exempting eligible manufacturers from certain green energy levies and charges that currently help fund renewable energy projects and back-up power systems. Specific levies expected to be removed include the Renewables Obligation, Feed-in Tariffs, and the Capacity Market. The scheme aims to deliver savings of up to £40 per megawatt-hour for these businesses.
Detailed eligibility criteria for this scheme will be determined following a two-year consultation period.
Enhanced Support for Energy-Intensive Industries
For the approximately 500 most energy-intensive firms – the backbone of sectors like steel, chemicals, glassmaking, aluminium, and ceramics – support will be further amplified. Through the existing British Industry Supercharger scheme, the discount they receive on electricity network charges will dramatically increase from 60% to 90% starting in 2026. This enhanced discount is projected to provide substantial savings, such as an estimated £15 million annually for the steel sector alone, helping these critical industries remain competitive, protect jobs, and encourage future investment.
The government asserts that these energy reforms will be funded through adjustments within the energy system itself, ensuring they do not directly increase costs for taxpayers or household bills.
Addressing Grid Connection Delays
Beyond direct cost reductions, the strategy also tackles the significant challenge of lengthy waiting times for businesses connecting new projects to the national energy grid. A new Connections Accelerator Service is planned to streamline grid access, particularly prioritizing major investment projects expected to create significant numbers of high-quality jobs. This service is anticipated to be operational before the end of the year and will involve collaboration with various stakeholders, including the energy sector, local authorities, and industry.
A Broader Strategy for Growth and Innovation
The 10-year industrial strategy extends beyond energy costs, encompassing several other key pillars aimed at fostering a more productive and innovative UK economy:
Skills Development: Investing an extra £1.2 billion annually by 2028-29 to upskill Britons and reduce reliance on foreign workers.
Attracting Talent: Implementing visa and migration reforms designed to attract “elite global talent” to the UK.
Planning Reform: Hiring more planners and simplifying application processes to shorten timelines and cut costs for developers.
Boosting R&D: Increasing research and development spending to £22.6 billion per year by 2029-30, including a dedicated £2 billion for Artificial Intelligence (AI), to drive innovation.
The strategy identifies eight specific sectors where the UK currently holds strengths and sees potential for accelerated growth: advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services. Bespoke 10-year plans for five of these sectors are expected today, with the remaining strategies to follow.
Political and Industry Reactions
Prime Minister Sir Keir Starmer has hailed the industrial strategy as “a turning point for Britain’s economy” and “a clear break from the short-termism… of the past,” promising the “long-term certainty and direction” businesses need to invest and create jobs. Chancellor Rachel Reeves added the plan will bring “billions of pounds for investment and cutting-edge tech, ease energy costs, and upskill the nation.”
Industry leaders have largely welcomed the proposals, particularly the focus on energy costs and skills. Stephen Phipson, chief executive of Make UK, described it as a “giant and much-needed step forward,” tackling “structural failings” like skills shortages and crippling energy costs, sending a message that “Britain is back in business.” TUC general secretary Paul Nowak also welcomed the action on energy costs for manufacturers, noting that high prices compared to European competitors have hindered UK industry. The CBI praised the focus on competitive energy prices and fast-tracked planning.
However, not all sectors are included, drawing criticism. UKHospitality, representing the retail and leisure sectors which employ over 7 million people, expressed disappointment at their exclusion, arguing that the plan overlooks a significant part of the economy facing high energy and staffing costs. Opposition critics argued the plans don’t address the “root cause” of high energy prices and questioned the need for subsidies linked to the costs of net zero. Liberal Democrats called for the plans to ensure small businesses are central to the measures.
The announcement follows recent figures showing a contraction in the UK economy in April, providing a backdrop for the government’s stated aim to stabilise and boost national growth through this long-term strategic approach. The strategy is also expected to bring specific regional benefits, for example, targeting key sectors like aerospace and advanced manufacturing in Wales and supporting projects like the new Tata Steel electric arc furnace at Port Talbot.
Ministers affirm that tackling energy costs and skills has been the primary request from businesses, and the strategy represents bold action to make the UK a more attractive place to invest and conduct business. While the measures aim to lower costs, it’s noted that UK electricity prices may still remain higher than in some European countries primarily due to the UK’s reliance on wholesale gas.
