The government has unveiled a bold new Industrial Strategy that will cut electricity costs by up to 25% for more than 7,000 energy-intensive businesses from 2027.
Ministers say it marks a new era of partnership with industry and a break from the short-term politics that has held back growth for too long.
The new British Industrial Competitiveness Scheme will see high-energy users in sectors like steel, glass, automotive, chemicals and aerospace exempt from major green levies.
These include the Renewables Obligation, Feed-in Tariffs and the Capacity Market.
Firms will save up to £40 per megawatt hour — helping level the playing field with European competitors and protecting over 300,000 jobs in the process.
It follows years of pressure from UK manufacturers who have warned that sky-high energy costs are undermining investment and driving production offshore. The UK currently has some of the highest industrial electricity prices in the developed world.
The reforms will be funded through changes to the energy system and the carbon pricing regime — not from higher taxes or household bills.
Prime Minister Keir Starmer said:
This Industrial Strategy marks a turning point for Britain’s economy and a clear break from the short-termism and sticking plasters of the past. In an era of global economic instability, it delivers the long term certainty and direction British businesses need to invest, innovate and create good jobs that put more money in people’s pockets as part of the plan for change.”
Heavy users
Support for the most energy-intensive industries — like steel, ceramics and glass — will also be ramped up through an expanded British Industry Supercharger.
From 2026, eligible firms will receive a 90% discount on electricity network charges, up from 60% today.
That boost will benefit around 500 firms and is expected to help protect strategic supply chains in sectors vital to economic growth and the clean energy transition.
The government says all changes will be subject to consultation in the coming months, but the message is clear — big energy users are back at the heart of British industrial policy.
Grid delays
Long waits to connect to the grid will also be tackled through a new Connections Accelerator Service launching in 2025.
The service will prioritise investment projects that create jobs or deliver strategic value. It could also be given powers to reserve grid capacity for key developments under new legislation.
The Strategy is part of the wider Plan for Change and follows the 10-Year Infrastructure Strategy and Spending Review.
It aims to unlock billions in investment and says Labour, deliver 1.1 million well-paid jobs over the next decade.
Energy reform sits at the centre of the plan. Slashing electricity costs for high-energy users is key to revitalising manufacturing and bringing costs in line with Europe.
That’s especially critical as sectors like hydrogen, clean steel and industrial electrification scale up.
Carbon pricing
The UK also plans to link its carbon pricing system with the EU’s. Without a deal, British firms exporting to Europe would face the EU carbon tax. Linking would keep that money in the UK and allow it to be recycled into support for British firms and jobs.
The Industrial Strategy targets eight growth sectors with bespoke 10-year plans — including advanced manufacturing, clean energy, and life sciences — with energy policy now central to making them globally competitive.
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