Industry electricity costs for 7,000 businesses to be slashed by up to a quarter

Electricity prices for 7,000 businesses in the UK are to be slashed by up to 25 per cent from 2027 as part of the government’s much-awaited Industrial Strategy.

British manufacturers are facing the highest industrial electricity prices in the G7, with costs currently four times higher than those of the US and significantly higher than Canada and France.

Ministers on Monday unveiled Labour’s Industrial Strategy, which it claims will unlock billions in investment and support 1.1m new jobs over the next decade.

Central to final discussions over the weekend had been industrial energy prices, which have damaged the competitiveness of industries such as steel, aerospace and chemicals.

Prime Minister Sir Keir Starmer said the strategy marked 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.”

The British Industrial Competitiveness scheme will reduce electricty costs by up to £40 per megawatt hour for 7,000 electricity-intensive businesses in the UK.

Those included will be exempt from paying some additional levies, to be decided as part of an upcoming consultation, the government said.

Energy-intensive firms such as glass and steel will also benefit from an increased discount on electricity network charges from 60 per cent to 90 per cent.

The government also plans to launch a new “Connections Accelerator Service” which aims to improve access to grid connections for major investment projects.

“Today’s Industrial Strategy builds on that progress with a ten-year plan to slash barriers to investment,” Chancellor Rachel Reeves said.

“It’ll see billions of pounds for investment and cutting-edge tech, ease energy costs, and upskill the nation. It will ensure the industries that make Britain great can thrive. It will boost our economy and create jobs that put more money in people’s pockets.”

The Industrial Strategy’s other pledges include increasing British Business bank financial capacity to £25.6bn; an additional £1.2bn each year for skills by 2028 to 2029; cutting the administrative costs of regulation for business by 25 per cent; and boosting R&D spending to £22.6bn by 2029-2030, including more than £2bn for AI.

Industrial Strategy a ‘leap forward,’ says CBI

“Tackling energy costs and fixing skills has been the single biggest ask of us from businesses and the greatest challenge they’ve faced – this government has listened, and now we’re taking the bold action needed,” Business and Trade Secretary Jonathan Reynolds said.

“Government and business working hand in hand to make working people better of is what this government promised and what we will deliver.”

Rain Newton-Smith, Chief Executive of the CBI, said: “Today’s Industrial Strategy announcement is a significant leap forward in the partnership between government and business that sets us on the path to our shared goal of raising living standards across the country.  

“It sends an unambiguous, positive signal about the nation’s global calling card as well as the direction of travel for the wider economy for the next decade and beyond.

She added: “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 UK’s overall competitiveness.”