Government plans to centre its industrial strategy around reductions in energy costs for businesses have received an initial welcome in the North East.
The plan, which could cut bills by up to 25% for thousands of businesses, has been hailed by Prime Minister Sir Keir Starmer as a “turning point for Britain’s economy”. It comes after the Government came under significant pressure from business groups, unions and companies to bring down energy costs for Ƶ firms, while Nissan had warned energy costs were making its Ƶ operations uncompetitive.
From 2027, a new British Industrial Competitiveness Scheme will cut costs for over 7,000 manufacturing firms by exempting them from levies on bills including the renewables obligation. Around 500 of the most energy-intensive firms, including in the steel industry, chemicals and glassmaking, will also see their network charges cut by increasing the British Industry Supercharger discount from 60% to 90%.
Other measures in the Industrial Strategy include plans to boost sectors where the North East is strong, including advanced manufacturing sector, life sciences, clean energy and the creative sector. There will also be extra funding for research and development and skills, plus a new visa scheme to allow businesses to bring in top talent.
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. 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.”
The strategy comes after the latest figures indicated the economy shrank by 0.3% in April, the biggest monthly contraction in gross domestic product for a year-and-a-half, as businesses felt the impact of Donald Trump’s tariffs and domestic pressure as a result of hikes to firms’ national insurance contributions. There are also concerns in industry about the impact of the Government’s Employment Rights Bill, which could add to business costs.
The Government said more than 200 businesses in the North East would benefit from reduced energy costs, supporting 27,000 jobs in the region. Bodies including the CBI, Make Ƶ and the Society of Motor Manufacturers and Traders have voiced support.
North East mayor Kim McGuinness said: “The North East is a manufacturing powerhouse and the Industrial Strategy backs us to grow. This Government has listened when we said energy costs for business are too high- reducing costs by at least 25% will both safeguard jobs and help us attract more businesses to create more.”
Rhiannon Bearne, deputy CEO at the North East Chamber of Commerce, said: “The North East Chamber of Commerce welcomes the new Ten Year Modern Industrial Strategy as a major step forward in delivering clear-sighted, long-term commitment to our region’s unique industrial assets. From our established strengths, in advanced manufacturing and life sciences, to our emerging leadership in clean energy and creative clusters, it is clear that the voice of North East enterprise has been heard loud and clear by the heart of Government.”
She added: “Underpinning this the Government appears to have tackled a key foundational issue for business – seeking to reduce energy costs and tackle grid infrastructure, a change we have called for consistently as part of our plan for a stronger, fairer North East.”
The North East Automotive Alliance also welcomed elements of the plan, with CEO Paul Butler saying: “The NEAA views the Industrial Strategy as a positive development that will contribute to creating a more attractive, stable, and supportive environment for businesses in the Ƶ, and we look forward to actively supporting its implementation.”
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 has written an open letter to firms warning they are being “sleepwalked into disaster” by 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.”
