UK Government Pledges Major Energy Cost Cuts for 7,000+ Businesses

The UK Government has rolled out a new Industrial Strategy that promises sweeping reforms across energy, skills, infrastructure, and innovation. At its core is a bold plan to cut electricity costs for more than 7,000 manufacturing businesses by as much as 25 per cent starting in 2027. The move is part of a broader ten-year vision to make the UK a more competitive industrial powerhouse and create one million skilled jobs.

This marks the first comprehensive update to the country’s industrial policy since 2017 and comes after years of criticism that the UK lacked a coordinated approach in the face of shifting global trends.

One of the biggest challenges businesses have faced—long delays in connecting to the electricity grid- is finally being addressed. A new service, called the Connections Accelerator, is set to launch by the end of 2025. Its goal? To fast-track access to the grid for investment-heavy projects that bring economic value and new jobs. Additionally, pending legislation may soon enable the government to reserve grid capacity for developments deemed strategically significant.

On the energy front, the flagship measure is the British Industrial Competitiveness Scheme. This initiative will exempt eligible manufacturers from costly levies like the renewables obligation, feed-in tariffs, and the capacity market. The exemptions could reduce energy bills by up to £40 per megawatt-hour for high-energy sectors such as automotive, chemicals, and aerospace. More than 7,000 firms—employing over 300,000 people- stand to benefit, though final criteria are still under consultation.

Also in the spotlight is the expanded British Industry Supercharger Scheme. Starting in 2026, discounts on electricity network charges for energy-intensive industries, such as steel, glass, and ceramics, will increase from 60 per cent to 90 per cent. Around 500 businesses are expected to qualify. According to Steel UK, electricity costs in 2023 resulted in UK steelmakers paying up to £50 million more than their competitors in Germany and France.

Both schemes will be funded by savings from the energy system and increased revenue from a stronger UK carbon pricing system, including future alignment with the EU Emissions Trading System.

The strategy doesn’t stop at cheaper electricity. It’s packed with proposals to strengthen the UK’s economic foundation.

Skills development is a top priority. Annual funding for skills will rise by £1.2 billion by the 2028–29 fiscal year. Over £100 million will be explicitly allocated toward clean energy training across England, with a comprehensive Clean Energy Workforce Strategy promised this summer.

Access to finance is also getting a boost. The British Business Bank’s capacity will rise to £25.6 billion, with £4 billion earmarked for eight high-growth sectors, including advanced manufacturing, digital, clean energy, and life sciences.

Meanwhile, public investment in R&D is set to increase to £22.6 billion annually by 2029–30. Over the next ten years, £2 billion will support artificial intelligence, and £2.8 billion will be invested in advanced manufacturing to anchor high-tech innovation within the UK.

Small and medium-sized enterprises (SMEs) will see more support, too. The Made Smarter programme is expanding to help another 5,500 SMEs adopt new tech, and a new Business Growth Service will consolidate all support into a single platform. Regulatory red tape is also in the crosshairs, with administrative costs set to drop by 25 per cent and fewer regulators overseeing compliance.

The government has also reiterated its ambition to accelerate planning approvals and reform public procurement. More planners will be hired, pre-application requirements will be simplified, and environmental assessments may be merged to reduce duplication. However, some environmental groups have raised red flags, warning that these changes could put sensitive habitats at risk.

Eight sectors are being prioritised under the strategy, each getting its tailored ten-year roadmap. Five of those sector plans were unveiled immediately:

• Advanced Manufacturing: Up to £4.3 billion in support, including £2.8 billion in R&D. The aim is to scale up domestic vehicle production to 1.35 million units annually and develop next-gen technologies like zero-emission aviation.

• Clean Energy: The goal is to double investment by 2035. An additional £700 million will be added to the Great British Energy Supply Chain fund, bringing the total to £1 billion.

• Digital and Technology: Over £2 billion in funding for AI, including a new Sovereign AI Programme. £187 million will support tech training for one million young people. Meanwhile, new features like ethical AI guidance are being explored.

• Professional and Business Services: This includes initiatives such as the international recognition of UK qualifications and the global promotion of UK-developed AI tools.

• Creative Industries: A £380 million package will improve access to finance for sectors including film, television, gaming, advertising, music, and the performing arts.

Sector strategies for defence, life sciences, and financial services are set to follow. These are expected to include R&D support, export funding, and additional policy tools to enhance the UK’s global competitiveness.

Business groups have broadly welcomed the strategy, calling it a long-overdue and ambitious response to challenges facing British industry.

In a joint statement, Shevaun Haviland (British Chambers of Commerce), Rain Newton-Smith (CBI), and Tina McKenzie (Federation of Small Businesses) praised the strategy for reflecting the industry's voice.

The statement said: “While there’s more to do, we are ready to support the next steps.

“We encourage businesses nationwide to get behind this strategy and champion the UK as the best place to live, work, invest and do business.”