The government’s new 10-year industrial strategy will focus on reducing energy costs for thousands of businesses by eliminating green levies.
This initiative, expected to decrease energy bills by as much as 25% for over 7,000 UK businesses, is scheduled for announcement on Monday, alongside other measures designed to stimulate growth.
Prime Minister Sir Keir Starmer described the industrial strategy as “a pivotal moment for Britain’s economy,” emphasizing support for key industries with significant growth potential.
Conservative acting shadow energy secretary Andrew Bowie criticized the initiative, asserting that the UK needs “a meaningful energy policy” that addresses the fundamental causes of high energy prices.
He remarked that it is “incredible” that Labour is “finally acknowledging that the costs of net zero are so significant that they are compelled to allocate billions of taxpayer money to subsidize businesses’ energy bills to prevent bankruptcies.”
Currently, manufacturers in the UK face some of the highest electricity prices among developed nations.
A new British Industrial Competitiveness Scheme will reduce costs by up to £40 per megawatt-hour starting in 2027 for over 7,000 manufacturing firms by exempting them from levies on their bills, such as the renewables obligation, feed-in tariffs, and the capacity market.
Approximately 500 of the most energy-intensive companies, including those in steel, chemicals, and glassmaking, will also experience reduced network charges.
These firms currently benefit from a 60% discount through the British Industry Supercharger scheme, which will escalate to 90% starting in 2026.
Additionally, Monday’s announcement will introduce measures to expedite the connection of new factories and projects to the energy grid.
The prime minister stated that the industrial strategy offers businesses “the long-term stability and guidance” necessary to “invest, innovate, and create quality jobs that enhance people’s incomes.”
The strategy also aims to facilitate the creation of over one million new “well-paying jobs” within the next ten years.
Additional elements of the industrial strategy include:
- investing £1.2 billion annually in skills enhancement by 2028-29 to reduce dependence on foreign workers
- attracting “top global talent” to the UK through visa and migration reforms
- increasing the number of planners and streamlining application processes to cut planning timelines and expenses for developers
- boosting research and development funding to £22.6 billion per annum by 2029-30 to foster innovation, including £2 billion earmarked for AI
The government has stated its focus will be on eight specific sectors where the UK already excels and thus has the potential for accelerated growth.
These sectors include advanced manufacturing, clean energy, creative industries, defence, digital technology, financial services, life sciences, and professional and business services.
A tailored 10-year plan for five of these sectors will be revealed on Monday; however, the strategies for defence, financial services, and life sciences will follow at a later date.
This announcement comes after recent data indicated that the UK economy contracted by 0.3% in April – marking the worst decline in a year and a half.
In April, business groups also expressed concerns that the government’s Employment Rights Bill could impede growth during a precarious time for the UK economy.
Chancellor Rachel Reeves remarked that the industrial strategy would “allocate billions for investment in cutting-edge technology, alleviate energy costs, and enhance skills nationwide.”
Stephen Phipson, chief executive of the manufacturers’ organization Make UK, stated that the government’s strategy addresses “all three” significant challenges facing the industrial sector – “a skills crisis, soaring energy costs, and challenges accessing capital for new British innovators.”
Trades Union Congress (TUC) general secretary Paul Nowak welcomed efforts “to alleviate the exorbitantly high energy costs for manufacturers.”
He stated: “For too long, UK industry has been hindered by energy prices much higher than those in France and Germany, complicating competition, investment, and growth.”
Sarah Olney, spokesperson for the Liberal Democrats on business matters, insisted that government plans “must include genuine solutions to reduce businesses’ exorbitant energy costs and enhance worker skills across the nation,” urging that small businesses “must be central” to these initiatives.