Electricity bills for thousands of º£½ÇÊÓƵ businesses are set to be cut with the removal of green levies to help them compete with overseas rivals.
The plan is central to Sir Keir Starmer's ambitious 10-year industrial strategy aimed at energising sluggish economic growth and revolutionising the commercial sector -- and it could see bills cut by as much as 25%.
The Prime Minister has heralded this strategy as a "turning point for Britain's economy".
º£½ÇÊÓƵ manufacturers have sounded alarms over "crippling" energy rates that dwarf those faced by foreign firms.
Starting from 2027, the new British Industrial Competitiveness Scheme will aim to to slash overheads by up to £40 per megawatt hour for upward of 7,000 manufacturing entities by relieving them of levies such as those for the renewables obligation, feed-in tariffs, and the capacity market.
Approximately top 500 heavy energy-consuming industries, including stalwarts like steel, chemicals, and glass production, will see a reduction in network fees – receiving a boost from a 60% concession via the British Industry Supercharger scheme, rising to a 90% rebate come 2026.
Additionally, the strategy includes commitments to speed up the time it takes to connect new factories and developments to the power grid.
Sir Keir 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."
He emphasised that the ten-year blueprint would provide "the long-term certainty and direction British businesses need to invest" amidst an "era of global uncertainty".
Energy Secretary Ed Miliband pointed to "our reliance on gas sold on volatile international markets" as the culprit for soaring electricity costs.
Miliband advocated for a strategy of "doubling down" on wind and nuclear energy, asserting it would permanently "bring down bills for households and businesses for good".
The industrial strategy is tailored around eight key sectors where the º£½ÇÊÓƵ boasts strength and sees potential for expansion: advanced manufacturing, clean energy, creative industries, defence, digital, financial services, life sciences, and professional and business services.
While strategies for five sectors are set to be unveiled on Monday, those pertaining to defence, financial services, and life sciences will follow at a later date.
Additional initiatives include:.
– Bolstering the British Business Bank's financial capacity to £25.6 billion, with £4 billion dedicated to sectors identified in the industrial strategy.
– Raising research and development spending to £22.6 billion annually by 2029/30.
– Allocating an additional £1.2 billion per annum by 2028-29 towards skills training, aiming to equip Britons for roles in burgeoning industries and lessen dependence on foreign labour.
– Drawing in "elite" international talent through overhauls in visa and migration policies.
– Slashing the administrative expenses associated with bureaucracy by 25% and diminishing the number of regulatory bodies.
– Streamlining the planning process by recruiting additional planners, simplifying pre-application procedures, and consolidating environmental obligations.
– Boosting the availability of investment sites across the country through a £600 million strategic sites accelerator.
The strategy has been unveiled amid concerns over the economy, which recently suffered a 0.3% contraction in April – the largest monthly decline in gross domestic product in a year and a half. This downturn is attributed to the impact of Donald Trump's tariffs and domestic pressures resulting from increased national insurance contributions for businesses.
Industry leaders are also apprehensive about the potential effects of the Government's Employment Rights Bill, which could lead to increased business costs.
Rain Newton-Smith, chief executive of the Confederation of British Industry, said: "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 º£½ÇÊÓƵ's overall competitiveness."
Stephen Phipson, chief executive of manufacturers' organisation Make º£½ÇÊÓƵ, identified the three primary challenges facing the industry as "a skills crisis, crippling energy costs and an inability to access capital for new British innovators". He welcomed the strategy, stating that it "sets out plans to address all three".
TUC general secretary Paul Nowak said: "We welcome ministers taking action to reduce sky-high energy costs for manufacturers – something unions have been calling for as a matter of urgency.
"For too long, º£½ÇÊÓƵ industry has been hamstrung by energy prices far above those in France and Germany. It's made it harder to compete, invest, and grow."
Acting shadow energy secretary Andrew Bowie said: "It is astonishing that Labour are finally admitting that the costs of net zero are so high that they're having to spend billions of pounds of taxpayers' money subsidising businesses' energy bills to stop them going bust."
Shadow business secretary Andrew Griffith penned an open letter to companies, cautioning them against the potential pitfalls of the Employment Rights Bill. He said: "When it comes to business, it's actions, not words, which count, but this Government is stepping on the accelerator and the brake at the same time."
