Photo: ShutterstockThe Chancellor Rachel Reeves today confirmed electricity bill cuts for over 10,000 manufacturers as the next phase of the Government’s plan to boost Britain’s competitiveness. The final design of the British Industrial Competitiveness Scheme (BICS), first announced in last year’s Modern Industrial Strategy, means the scheme will be expanded to cover an extra 3,000 UK businesses.
The announcement comes as the Chancellor is in Washington to set out Britain’s plan for economic security through the Middle East crisis — prioritising stability, keeping costs down for families and businesses, taking back control of our energy costs, and going further and faster on our plan for a stronger, more resilient economy.
Chancellor of the Exchequer Rachel Reeves said: “This Government has the right plan for the economy: backing British industry, cutting electricity costs, and building a stronger, more resilient future. Today’s announcement will cut energy bills for over 10,000 manufacturers, helping businesses to compete, win and create good jobs across the country, and to deliver our modern Industrial Strategy.”
Business Secretary Peter Kyle said: “We are a Government of action, and when global instability puts businesses under pressure we will always do what is needed to support them and ensure Britain’s resilience. By extending the reach of BICS by 40%, we are acting decisively to tackle the number one issue that businesses face head-on.
“This is what our Modern Industrial Strategy is all about — giving businesses certainty and stability in an unstable time, and backing Britain’s fastest-growing sectors with the support they need to prosper and deliver good jobs right across our communities.”
Energy-intensive firmsAutomotive and aerospace, steel, and pharmaceuticals are among the sectors where eligible businesses are to benefit from a one-off additional payment in 2027. This will cover the support firms would have received if BICS had been in place from April 2026. Eligibility has also been expanded by 40%, from 7,000 to over 10,000 businesses. This targets support at energy-intensive firms on the number one issue they face – high electricity costs.
From April 2027, eligible firms will see electricity bills cut by up to 25 percent. Households will see no increase in their bills as a result. BICS will exempt eligible businesses from the indirect costs of three electricity schemes: the Renewables Obligation, Feed-in Tariffs, and the Capacity Market. This is worth around £35–£40 per MW/hr.
It is expected to be worth up to £600 million per year from April 2027. Households and other businesses not benefitting will see no increase in their energy bills. The scheme will be funded through a combination of changes within the energy system and Exchequer funding, with full detail to be set out in Budget 2026.
CBI chief executive Rain Newton-Smith said: “This move marks a significant step towards addressing the high energy costs that are placing growing financial pressure on UK businesses and undermining their international competitiveness. By expanding eligibility and introducing backdated payments to the British Industrial Competitiveness Scheme, the Government has shown it is listening to firms grappling with volatility in global energy markets.
“As the UK looks to reshape and modernise its industrial base, this decision provides an opportunity to rethink how we fund our energy infrastructure. Extending this competitiveness-first approach across the wider economy could help support growth.”
Urgent support requiredStephen Phipson, Make UK’s chief executive, said: “While this announcement acknowledges the problem of high UK industrial energy costs, it doesn’t provide the immediate solution to the critical cost pressures companies are facing right now. Manufacturers are staring down the barrel of huge increases in their energy bills this month as they renegotiate their energy contracts and, when combined with other cost increases, many simply can’t wait until 2027 for relief.
“The UK has the highest industrial energy costs in the developed world which is unsustainable for a manufacturing sector which provides 2.6 million high skilled high paid jobs and must compete globally. Failure to provide help now risks substantial job losses and further deindustrialisation of a sector vital for our national security and resilience.”
Mike Hawes, the SMMT’s chief executive, said: “The final design of the British Industry Competitiveness Scheme (BICS) is a major win for Britain’s automotive manufacturers, promising to drive down industrial energy costs and boost competitiveness. This decisive first step answers our long-standing calls for energy support that reaches the whole of the automotive manufacturing supply chain and recognises the sector’s critical contribution to the UK economy. It sends a clear and immediate signal that we are open for business and a prime destination for investment.”
Stephen Morley, president of the Confederation of British Metalforming (CBM), said: “While the measures announced by the Government represent a positive step forward towards addressing high industrial electricity prices, significant concerns remain across large parts of the manufacturing sector regarding scope, timing, and overall impact.
“For CBM members, the delayed implementation until 2027 will not help with the immediate cost pressures they are facing and, importantly, this support excludes gas intensive industries. Sectors such as forging, for example, will see no direct benefit. Even with expansion, the scheme reaches only a fraction of UK manufacturers affected. Sadly, this means thousands of SMEs will again be outside the programme’s scope.”
Frank Aaskov, director of energy and climate change policy at UK Steel, said: “The BICS will bring welcome relief for parts of the steel supply chain and manufacturers not currently covered by existing schemes and materially lower their energy bills. But it will not lower electricity prices for steel producers themselves, who remain exposed to exceptionally high wholesale power costs.
That problem has intensified sharply in recent months. As a result of the Middle East war, UK steelmakers are now paying nearly 80% more for electricity than competitors in France and Germany, up from around 25% previously. This is happening despite the support already in place and reflects the UK’s continued exposure to gas‑driven electricity prices.
“To make the Steel Strategy a success and deliver the Government’s industrial and decarbonisation ambitions, additional measures are now essential. That means targeted action to bring wholesale electricity prices into line with our European competitors that gives industry the confidence to invest.”
Sectors that could benefit include automotive and aerospace, steel producers, metal fabricators, pharmaceutical and medical supplies companies, recycling businesses, plastic producers, nuclear fuel processors, and cooling and ventilation equipment manufacturers. A second consultation on the regulatory changes needed to deliver the scheme closes on 14 May 2026. Legislation is expected to be in place by the autumn of 2026.
The announcement follows a £420 million boost for around 500 of the UK’s most energy-intensive businesses through the Supercharger, which took effect on 1 April and increased the discount on electricity network charges from 60 to 90% for sectors including steel, cement, glass and chemicals.