Energy bills for thousands of businesses will be cut by up to 25 per cent from 2027.
The cuts will be made through the British Industrial Competitiveness Scheme and reduce costs by up to £40 per megawatt hour for energy intensive sectors like aerospace, chemicals and automotive manufacturers.
The cuts will be made by exempting firms in high growth industries from levies such as the Renewables Obligation to “level the playing field” and make them more competitive in international markets.
Firms in the most energy-intensive industries — like steel, chemicals, and glass — will also benefit from a higher discount on energy network charges through the British Industry Supercharger scheme. Eligble businesses currently get a 60 per cent discount, but from 2026 this will increase to 90 per cent.
Labour estimates that this will help around 500 businesses, reducing their costs and protecting jobs in industries that form the “backbone of our economy” at “no additional cost to the taxpayer”.
New powers proposed in the Planning and Infrastructure Bill could also allow the government to reserve grid capacity for strategically important projects, reducing the chance of delays.
Prime Minister Keir Starmer 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.
“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 changes come as part of the government’s Industrial Strategy, which outlines a 10-year plan to promote growth in the economy and create “1.1 million good, well-paid jobs in thriving industries”.
Alongside reducing levies, the government has announced that additional funds will be made available by linking UK carbon pricing with the EU carbon market, meaning that British businesses will no longer be subject to the EU’s Carbon Border Adjustment Mechanism (CBAM).
Energy Secretary Ed Miliband said: “For too long high electricity costs have held back British businesses, as a result of our reliance on gas sold on volatile international markets.
“As part of our modern industrial strategy we’re unlocking the potential of British industry by slashing industrial electricity prices in key sectors.
“We’re also doubling down on our clean power strengths with increased investment in growth industries from offshore wind to nuclear.”
Criticising the plans, Andrew Bowie MP, Acting Shadow Energy Secretary, 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.
Featured image via Zara Farrar / DESNZ.
