Manufacturing and steel industry leaders have criticised UK Chancellor John Healey’s Budget, arguing that it missed a crucial opportunity to address high industrial electricity costs and support the Government’s ambitions to reindustrialise Britain.
Responding to the Budget announcement,
Make UK and
UK Steel both expressed disappointment that no significant measures were introduced to reduce energy costs for manufacturers, despite repeated calls from industry to tackle what they describe as one of the biggest barriers to investment and growth.
Stephen Phipson, chief executive of Make UK, said the Budget represented the first major test of the Government’s commitment to rebuilding Britain’s industrial base.
“We said this Budget was the first real test of the Government’s pledge to reindustrialise Britain. Today they failed to address the one issue that would enable this – high industrial energy costs,” he said.
“Our industrial electricity costs are the highest in the world. As I told the Chancellor last week, this is having a ruinous effect on investment and requires urgent action.”
Mr Phipson said manufacturers had hoped for measures that would improve competitiveness and encourage investment but argued that businesses instead face rising employment costs.
“Likewise, while we welcome the slowing down of increases in the minimum wage, in general employing people remains more expensive and riskier thanks to the Employment Rights Act and higher employer National Insurance Contributions,” he said.
“This Budget has failed to address any of the fundamental costs holding back investment and growth in manufacturing.”
UK Steel echoed the concerns, warning that high electricity prices continue to place British steelmakers at a significant competitive disadvantage compared with European rivals.
According to the trade association, its latest analysis shows UK steel producers face electricity costs that are 49% higher than those paid by competitors in France, adding an estimated £66 million to industry costs this year alone.
The organisation had urged the Government to adopt a wholesale electricity price rebalancing mechanism, independently modelled by consultancy Baringa, which it says could significantly narrow the gap between UK and European industrial power prices at an estimated cost of around £50 million annually between 2026 and 2030.
Peter Brennan, director general of UK Steel, described the Budget as a missed opportunity.
“Today’s Budget is a missed opportunity for British steelmaking,” he said. “We have presented the Government with a clear, independently costed solution to one of the biggest barriers facing our industry. For around £50 million a year, Ministers could take a major step towards closing the electricity price gap with our European competitors. Yet once again, British steelmakers have been left waiting.”
Mr Brennan warned that failing to act on industrial electricity costs could undermine efforts to attract investment and decarbonise steel production.
“The consequences of inaction are substantial. Our industry is already paying tens of millions of pounds more for electricity than competitors in France, money that could otherwise be invested in new equipment, skilled jobs and cleaner steel production,” he said.
“With wholesale energy prices rising again, the need for action is becoming more urgent, not less. British steelmakers cannot continue competing with one hand tied behind their backs.”
Both organisations argued that affordable industrial energy remains essential if the Government is to deliver on its growth and reindustrialisation objectives.
Mr Phipson said Make UK would continue to press ministers to support manufacturers through measures that improve competitiveness and stimulate investment, while UK Steel called for urgent consideration of its proposed electricity price reforms.
“The Government cannot deliver reindustrialisation on uncompetitive electricity prices,” Mr Brennan said. “If Ministers are serious about growing British manufacturing, attracting investment and decarbonising steel production, they must address this fundamental disadvantage.”
The Confederation of British Metalforming (CBM) also added their criticism. President Stephen Morley said the Government’s promise to reindustrialise Britain had “fallen at the first hurdle”, arguing that the Budget failed to address the biggest challenges facing manufacturers.
“Most disappointingly, there is no meaningful support to tackle the crippling energy costs that we have been campaigning on since 2021,” he said. Mr Morley warned that rising employment costs and continued pressure on SMEs would further erode competitiveness. “Companies are making difficult decisions now. Investment is being delayed, competitiveness is being eroded and businesses could be lost before the Government gets another opportunity to act.”