Labour has moved to slash electricity costs for heavy industry expanding support to more than 10,000 manufacturers, as it ramps up its industrial strategy amid global market volatility.
The Government will cut power bills by up to 25% from April 2027 under an expanded British Industrial Competitiveness Scheme widening eligibility by 40% and bringing an additional 3,000 businesses into scope.
The move targets energy intensive sectors struggling with high electricity costs that have eroded competitiveness against international rivals.
The scheme will exempt firms from the indirect costs of the Renewables Obligation Feed in Tariffs and the Capacity Market delivering savings worth around £35 to £40 per MWh. In total the support is expected to be worth up to £600 million a year once fully rolled out.
Crucially the expansion also includes a one off backdated payment in 2027 covering support businesses would have received from April 2026 effectively bridging the gap before the scheme formally begins.
That payment is aimed at sectors including automotive aerospace steel pharmaceuticals and advanced manufacturing where energy costs are a core pressure.
Eligibility will be determined site by site based on how much electricity is used in manufacturing eligible products.
Sites using more than 50% qualifying electricity will receive full exemption while those between 25% and 50% will receive partial support.
The policy marks a clear shift towards prioritising large industrial users as Labour looks to anchor supply chains in the UK.
Ministers argue the package will not increase bills for households or other businesses with funding coming from a mix of system changes and Treasury support to be confirmed at Budget 2026.
Chancellor Rachel Reeves said: “This announcement will cut energy bills for over 10,000 manufacturers helping businesses to compete win and create good jobs across the country.”
She added: “We are backing British industry cutting electricity costs and building a stronger more resilient future.”
Industry groups have long argued UK electricity prices are structurally higher than competitors putting domestic manufacturing at a disadvantage.
The expansion of BICS is seen as a direct response to those concerns particularly as geopolitical tensions continue to drive volatility in global energy markets.
Rain Newton Smith chief executive of the CBI said: “This move marks a significant step towards addressing the high energy costs placing growing financial pressure on UK businesses.”
She added: “By expanding eligibility and introducing backdated payments the government has shown it is listening to firms grappling with volatility.”
A second consultation on the regulatory framework closes on 14 May 2026 with legislation expected by autumn 2026, ahead of implementation in April 2027.
Capacity Market exemptions will follow later from October 2027.
The announcement builds on earlier measures including the Supercharger scheme, which increased network charge discounts for around 500 of the most energy intensive businesses from 60% to 90% earlier this month.
Taken together the package signals a more interventionist approach from Labour, as it seeks to protect core industries reduce exposure to volatile energy costs and rebuild industrial competitiveness.
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