BICS and beyond: inside the government’s plan to rebuild UK manufacturing with Minister for Reindustrialisation, Blair McDougall

The government has recently launched the British Industrial Competitiveness Scheme (BICS) – which could cut electricity costs for eligible manufacturers by up to 25%. Coinciding with the scheme’s release, The Manufacturer Editor Joe Bush sat down with Minister for Reindustrialisation, Blair McDougall MP to find out more.

High electricity costs remain a major competitiveness challenge for UK manufacturers, with government analysis finding that UK industrial electricity prices were the highest among its European neighbours.

BICS is intended to provide short-term relief by reducing electricity policy costs for eligible manufacturers, thus bringing UK electricity costs closer to those faced by European competitors and giving businesses greater scope to invest, expand and strengthen their supply chains.

The scheme is aimed at manufacturing businesses operating in eligible frontier and foundational industries identified through the government’s Modern Industrial Strategy. The minister picks up the story.

What will reindustrialisation look like in practice?

BM: I could talk about reindustrialisation in terms of good quality jobs, value added exports and value of investment. Important though these are, the goal of this scheme is as much about a sense of pride and hope.

It’s a recognition of the fact that what people make is part of their identity, and that has a really deep impact. I have recently visited several of the country’s steel manufacturers and there is a really strong feeling that workers are proud to have helped put their town on the map.

I visited Scunthorpe Steelworks and they highlighted how our intervention there has changed the way people were talking about the future of work at that site.

Workers had seen their fathers or uncles go through redundancies etc, so the UK’s reindustrialisation is not just about jobs that have a sense of purpose attached, but is also about creating careers which people can commit to with a feeling of hope.

Around the country – in colleges, universities and schools – we have young people learning trades that will be vital to industry, and it’s an area where the government and the private sector are investing in together.

So, while this is primarily an economic and productivity-based strategy, it also has an emotional and personal core.

What is BICS and how can it benefit manufacturers?

This is the biggest energy support scheme we’ve ever introduced. Around 10,000 manufacturers will be eligible, and it has the potential to cut energy costs by approximately 25%, or £40 pounds per megawatt hour. This is evidence that when we talk, as a government, about reindustrialisation and standing with industry, we really mean it, and this is a bold action to support manufacturing.

It’s also recognition of the concerns manufacturers are harbouring around energy prices, which are currently making a huge difference to the UK’s level of competitiveness against other nations.

In addition, an overlooked feature of BICS is the fact that we are effectively backdating the scheme, as if it had already come in. So, from the point of view of the manufacturers I’ve spoken to who are applying for BICS, that’s a huge bonus, as it’s extra support that’s already factored into their finances.

The UK has an extraordinary advanced manufacturing base and BICS will be hugely significant and important in supporting that. This is evidenced when comparing the scale of BICS with the British Industry Supercharger, for example, which impacts only around 600 businesses. So, it’s implications will be wide-reaching across manufacturing supply chains and we hope it will be a signal of confidence.

We recognise the concerns businesses have around energy prices and we’re working at speed to try to deal with the structural reasons behind that and to bring down wholesale prices. However, we also know that businesses can’t wait for that to happen, and that we need to give help to people now.

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The scheme has gone through a recent update. Why have these changes been made?

The amendments have been mostly focussed on making sure that we get the applications open and get them processed as quickly as possible. When we initially spoke about BICS, it was for a much smaller cohort, so we’ve expanded the number of businesses that are eligible.

Plus, the value we see in the scheme means that we are targeting it towards those businesses who we believe to be within particular frontier industries mentioned in the Industrial Strategy, and the foundational industries that underpin them. However, BICS is also aimed at those most exposed to the energy shocks which have been so painful for manufacturers.

So, first and foremost I would encourage businesses to get on the scheme as the deadline for applications is 30 November. Any company looking to apply can find out more at business.gov.uk where there is a fairly simple eligibility checker which manufacturers can use to assess if any application would be successful. And, the fact that we’ve essentially included a backdating element underlines the message we’re trying to get across of not missing out on this important opportunity, particularly in the first year.

Understandably, much of the discussion around BICS has focused on reducing industrial electricity costs, however, the scheme has added significance in terms of creating the confidence manufacturers need to invest.

The UK has such huge competitive advantages in terms of our skills, deep heritage of manufacturing, R&D and the quality of our supply chains.

However, energy prices are a real problem for investors, and so anything that puts the thumb on the scale just a little more and improves that competitiveness is welcome.

And we’re certainly not stopping at energy prices; we are also investing heavily in supporting the resilience of supply chains and R&D funding within manufacturing, making BICS a real central intervention to support manufacturing in the UK.

We’ve spoken to some manufacturers who feel that the scheme does not go far enough – how would you respond?

Both my secretaries of state have said that they want to go as far as possible to support the lowering of industrial energy costs. And the fact that we have expanded the scope of the scheme since it was first announced is evidence of that.

For individual sectors that are particularly struggling, we have announced £350m towards a Critical Chemicals Resilience Fund (CCRF), which was announced earlier in the year, as well as a £120m investment package for the ceramics industry.

Therefore, where we do recognise industries with particular stresses, we will act in support of those. At the Labour Party Conference, both my secretaries of state, the Chancellor and the Prime Minister spoke about how serious our ambitions are in terms of reindustrialisation and we will go as far as we possibly can to help businesses with current challenges around, not merely energy prices, but also speeding up connections for new investment.

Beyond BICS what else is the government doing to tackle the energy cost challenges?

There’s an intentionality which is different with this government. A lot of hard work went into the Industrial Strategy – and the Advanced Manufacturing Sector Plan beneath it – to make sure that it is a strategy that has mandated consensus across industry, business, workers and their representatives.

That long-term focus is really important for crowding in that investment. I would also say that we are alongside that strategy and putting our money where our mouth is, whether that’s the intervention of the £4bn we’re putting into the automotive sector, or the work the British Business Bank is doing to try and strengthen the resilience of supply chains in aerospace manufacturing.

And we’re seeing really serious investment from public finance institutions, which have much greater firepower, alongside that.

The proof in the pudding is of course, in the delivery as well. Often we have seen government strategies announced, and then, once the initial moment of press has passed, it gets forgotten. This Industrial Strategy will not simply sit and gather dust on a shelf.

And already, we’ve seen the reiteration of the Industrial Strategy and its development through the sector plans. And we are currently going through the jobs, skills and workforce element.

Each time we look at the strategy through a different prism, we focus with real intent on the particular challenges that exist. That’s why there has been that increase in investment, and things are starting to happen; because this is a shared undertaking between industry and government with a seriousness about getting things done.

How will the new government bring energy costs on a par with the UK’s competitors?

We have to base any strategy on what we’re good at. There are some elements of the industrial landscape such as labour costs, for example, where we’re never going to be able to compete with some other countries.

However, that’s why we are focusing so much on high-value jobs. Some of that relates to energy, while other areas relate to R&D and the modernisation of manufacturing through organisations such as Made Smarter.

Something the Prime Minister has been talking a lot about recently, is the feeling of having a more interventionist government which is willing to step in and deal with some of the factors which make us uncompetitive.

Energy costs are obviously a major talking point, but we’re also seeing more focus on using government procurement to support British supply chains and to provide long-term confidence to manufacturers.

We’re also seeing through our approach to trade – the steel measures for example – a sense that this government is not merely shrugging its shoulders when global forces impact on manufacturing and production in the UK. There is a real focus on protecting and investing in what make us uniquely competitive.

A huge element of that, of course, is skills. And manufacturers are seeing the first changes we’ve made to apprenticeships, which are really focused on some of those key manufacturing jobs, and that’s a recognition that those incredibly skilled workers are such a unique selling point of our manufacturing base.

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How will the government’s help manufacturers mitigate against the currant landscape?

It feels like we’re living in a really unstable world. However, I do think there is an opportunity hidden within that for the UK and for manufacturing. Many of the primes that I speak to are really keen to explore how to reshore some of their manufacturing, and build out their supply chains.

In many manufacturing sectors, we are having really intense conversations with those key primes about what is it we can do – whether that relates to skills, support for R&D or capital investment across supply chains – to make sure that we retain more of that value in the UK.

One of the main sources of current instability is the disruption to trade around the world, not down to military conflicts necessarily, but due to policy choices made by governments. That’s where the work we’re doing to ensure better access to markets for UK manufacturers is so important.

How confident are you that BICS will deliver for manufacturers quickly?

The key is to show that we as government, share the same impatience that industry does, and BICS is a really good example of that. This is an incredibly complex delivery challenge for us and a really huge scheme that includes around 10,000 businesses.

The fact that we will be able to move at speed and get that in place next year is a statement of intent that we are willing to move quickly. To reassure readers of The Manufacturer magazine, each of the commitments that were made within the Industrial Strategy are in the Gantt chart; they all have status updates and deadlines attached to them, and we are working with that intentionality to deliver on all of them.

We are also constantly seeking to reassure businesses that we will continue to stand behind the long-term decisions that we have made around the Industrial Strategy, and offer that long-term certainty. That will provide the environment for investment.

Turning ambition into action

For UK manufacturers, the message from government is clear: reindustrialisation is intended to be more than a policy ambition – it is a long-term commitment to creating the conditions in which industry can invest, grow and compete. BICS represents a significant short-term intervention, particularly for energy-intensive businesses, but the wider strategy goes beyond electricity costs.

From skills and R&D to supply chain resilience, procurement and trade, the government is positioning manufacturing as a central pillar of the UK economy. The challenge now is turning that ambition into tangible results for businesses operating under continued cost pressures and global uncertainty.

For manufacturers, BICS will provide welcome relief, but its success will ultimately be measured by whether it gives companies the confidence to invest in people, technology and capacity. The government’s emphasis on speed and delivery will therefore be crucial.

The minister’s message is clearly one of cautious optimism: the UK has significant strengths in advanced manufacturing, skills, innovation and supply chains, and there is an opportunity to build on these foundations. Whether this marks a genuine turning point for British industry will depend on how effectively policy translates into action – and how quickly manufacturers begin to feel the benefits on the ground.