Government announces lower energy costs as part of ten-year plan for industry

More than 7,000 British businesses are set to see their electricity bills slashed by up to 25% from 2027, as the Government unveils its new Industrial Strategy.

Lowering energy costs for thousands of businesses by exempting them from some green energy levies will be the central part of the refroms.

The modern Industrial Strategy sets out a ten-year plan to boost investment, create good skilled jobs and make Britain the best place to do business by tackling two of the biggest barriers facing UK industry – high electricity prices and long waits for grid connections.

British manufacturers currently pay some of the highest electricity prices in the developed world while businesses looking to expand or modernise have faced delays when it comes to connecting to the grid.

From 2027, the new British Industrial Competitiveness Scheme will reduce electricity costs by up to £40 per megawatt hour for over 7,000 electricity-intensive businesses in manufacturing sectors like automotive, aerospace and chemicals. These firms, which support over 300,000 skilled jobs, will be exempt from paying levies such as the Renewables Obligation, Feed-in Tariffs and the Capacity Market — helping level the playing field and make them more internationally competitive. Eligibility and further details on the exemptions will be determined following consultation, which will be launched shortly.

The government is also increasing support for the most energy-intensive firms — like steel, chemicals, and glass — by covering more of the electricity network charges they normally have to pay through the British Industry Supercharger. These businesses currently get a 60% discount on those charges, but from 2026, that will increase to 90%. This means their electricity bills will go down, helping them stay competitive, protect jobs, and invest in the future.

This will help around 500 eligible businesses in sectors such as steel, ceramics and glass reduce their costs and protect jobs in industries that are the backbone of our economy and will be delivered at no additional cost to the taxpayer.

These reforms complement the government’s long-term mission for clean power, which is the only way to bring down bills for good by ending the UK’s dependency on volatile fossil fuel markets.

To ensure businesses can grow and hire without delay, the government will also deliver a new Connections Accelerator Service to streamline grid access for major investment projects — including prioritising those that create high-quality jobs and deliver significant economic benefits.

We will work closely with the energy sector, local authorities, Welsh and Scottish Governments, trade unions, and industry to design this service, which we expect to 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.

“This is how we power Britain’s future – by backing the sectors where we lead, removing the barriers that hold us back, and setting out a clear path to build a stronger economy that works for working people. Our message is clear – Britain is back and open for business.”

Chancellor of the Exchequer Rachel Reeves said “The UK has some of the most innovative businesses in the world and our Plan for Change has provided them with the stability they need to grow and for more to be created.

“Today’s Industrial Strategy builds on that progress with a ten-year plan to slash barriers to investment. It’ll see billions of pounds for investment and cutting-edge tech, ease energy costs, and upskill the nation. It will ensure the industries that make Britain great can thrive. It will boost our economy and create jobs that put more money in people’s pockets.”

Business and Trade Secretary Jonathan Reynolds said “We’ve said from day one Britain is back in business under this government, and the £100 billion of investment we’ve secured in the past year shows our Plan for Change is already delivering for working people.

“Our Modern Industrial Strategy will ensure the UK is the best country to invest and do business, delivering economic growth that puts more money in people’s pockets and pays for our NHS, schools and military.

“Not only does this Strategy prioritise investment to attract billions for new business sites, cutting-edge research, and better transport links, it will also make our industrial electricity prices more competitive.

“Tackling energy costs and fixing skills has been the single biggest ask of us from businesses and the greatest challenge they’ve faced – this government has listened, and now we’re taking the bold action needed. Government and business working hand in hand to make working people better of is what this Government promised and what we will deliver.”

Energy Secretary Ed Miliband said “For too long high electricity costs have held back British businesses, as a result of our reliance on gas sold on volatile international markets.

“As part of our modern industrial strategy we’re unlocking the potential of British industry by slashing industrial electricity prices in key sectors.

“We’re also doubling down on our clean power strengths with increased investment in growth industries from offshore wind to nuclear. This will deliver on our clean power mission and Plan for Change to bring down bills for households and businesses for good.”

Dame Clare Barclay DBE, Chair of the Industrial Strategy Advisory Council and President of Enterprise & Industry EMEA at Microsoft said “I welcome today’s Industrial Strategy, which sets out a clear plan to back the UK’s growth driving sectors. It is particularly positive to see the strong focus on skills in areas such as engineering, technology and defence. Commitments such as £187 million for the TechFirst programme will ensure the UK has the skills it needs to support our growth industries and seize transformative opportunities like AI.”

Rain Newton-Smith, Chief Executive, CBI said “Today’s Industrial Strategy announcement is a significant leap forward in the partnership between government and business that sets us on the path to our shared goal of raising living standards across the country.

“It sends an unambiguous, positive signal about the nation’s global calling card as well as the direction of travel for the wider economy for the next decade and beyond. The CBI has long been advocating for a comprehensive industrial strategy, based on the UK’s USP – the sectors and markets where we can compete to win on the global stage.

“More competitive energy prices, fast-tracked planning decisions and backing innovation will provide a bedrock for growth. But the global race to attract investment will require a laser-like and unwavering focus on the UK’s overall competitiveness. Today marks the beginning of delivering this strategy in close partnership, at pace, and with a shared purpose.”

Stephen Phipson CBE, CEO at Make UK said “British industry has been in desperate need for a government who understands our sector and had the strategic vision for a plan for growth. Today’s Industrial Strategy is a giant and much needed step forward taken by the Secretary of State who has seen the potential and provided the keys to help unlock it.

“Make UK has led the campaign for a new industrial strategy for many years, highlighting the three major challenges that were diminishing our competitiveness, hampering growth and frustrating productivity gains: a skills crisis, crippling energy costs and, an inability to access capital for new British innovators.

“The strategy announced today sets out plans to address all three of these structural failings. Clearly there is much to do as we move towards implementation but, this will send a message across the Country and around the world that Britain is back in business.”

Tufan Erginbilgic, Rolls-Royce CEO, said “The UK Government’s Industrial Strategy commitment to support our world-leading aerospace and nuclear industries shows long-term strategic foresight. Rolls-Royce’s highly differentiated technologies in gas turbines and nuclear capabilities- including SMRs and AMRs- are uniquely placed to deliver economic growth, skilled jobs and attract investment into the UK.”

Mike Hawes OBE, SMMT Chief Executive said “The publication of an Industrial Strategy – one with automotive at its heart – is the policy framework the sector has long-sought and Government has now addressed. Such a strategy – long-term, aligned to a trade strategy and supported by all of Government – is the basis on which the UK automotive sector can regain its global competitiveness. Making the UK the best place to invest now depends on implementation, and implementation at pace, because investment decisions are being made now against a backdrop of fierce competition and geopolitical uncertainty. The number one priority must be addressing the UK’s high cost of energy, enabling the sector to invest in the technologies, the products and the people that will give the UK its competitive edge.”