UK ministers are weighing new proposals to reduce electricity costs for British manufacturers in an effort to keep them competitive with European rivals. The move comes amid growing concerns from industry leaders that high energy prices are driving businesses away and putting jobs at risk.
The government is exploring plans that would offer energy bill discounts when a company’s energy expenses exceed a certain share of its turnover. The idea is part of a broader attempt to modernize the UK’s industrial strategy, with a focus on strengthening sectors such as automotive, aerospace, advanced manufacturing, and clean energy.
Business Secretary Jonathan Reynolds has been pushing for a more inclusive approach to energy relief. At present, only around 370 companies qualify under the “British Industry Supercharger” scheme, which helps energy-intensive industries like steel, cement, and chemicals. Under current rules, these companies receive up to 60% off their network charges. Plans are now in motion to raise that support to 90%, offering a significant reduction in energy bills.
However, many argue that the current scheme is too narrow. The UK has nearly a quarter of a million manufacturing businesses, the vast majority of which are excluded from any kind of energy support. Industry groups, including Make UK, are urging the government to cast a wider net. They argue that without urgent changes, UK businesses will continue to lose ground to international competitors with more favorable energy rates.
Data shows that British industrial electricity prices are among the highest in the developed world. In 2023, UK steel producers were paying around £66 per megawatt-hour, compared to £43 in Germany. The price gap not only limits growth but also deters long-term investment in the UK’s manufacturing base.
Some firms have already downsized or shut down production altogether, blaming unaffordable energy costs. As the situation worsens, pressure is mounting on the Treasury to commit funding to a broader relief package. But officials are also wary of passing the costs onto consumers, especially as household budgets remain stretched.
To address this challenge, the government has launched a consultation to implement new measures by 2027. Ministers hope that by combining targeted energy relief with long-term investments in skills and innovation, the UK can revitalize its industrial base and protect thousands of jobs in the years ahead.
