The government has announced that electricity bills will be cut by up to 25% for over 10,000 businesses through the British Industrial Competitiveness Scheme. While this signifies good news for businesses struggling with escalating energy bills, has this announcement gone far or fast enough to make an impact?
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 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.
The Chancellor 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.”
The expansion of BICS 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
Stephen Phipson, Chief Executive, Make UK
Business Secretary Peter Kyle added: “We are a government of action, and when global instability puts businesses under pressure we’ll always do what’s needed to support them and ensure Britain’s resilience. By extending the reach of BICS by 40 percent, we’re 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.”
Automotive 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%.
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 MWh.
The announcement has been met with positivity in some quarters. Mike Hawes, SMMT Chief Executive, described the announcement as a “decisive first step answers our longstanding 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.”
While Rain Newton-Smith, Chief Executive of the Confederation of British Industry (CBI), added that the 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.”
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
Stephen Morley, President, Confederation of British Metalforming (CBM)
However, the were less glowing reports elsewhere with others claiming that not not does the expansion now go far enough, it’s also happening far too slowly to make a difference to manufacturers struggling now. Commenting on the BICS Energy Support Scheme, Stephen Phipson, Chief Executive of Make UK, 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.”
Stephen Morley, President of the Confederation of British Metalforming (CBM), added: “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.
“There is growing concern that these measures amount to a target intervention rather than a comprehensive reform. Without broader action to address underlying energy system costs, including both electricity and gas pricing, the UK will continue to face structural competitiveness challenges relative to its international rivals.”
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
Frank Aaskov, Director, Energy and Climate Change Policy, UK Steel
A statement from UK Steel, a sector that is feeling the energy price pinch more than most read: ‘BICS will be very helpful for parts of the steel supply chain and energy intensive assets not currently covered by existing programmes. This is especially beneficial for companies previously ineligible for support, as it will materially reduce their electricity bills.
‘However, it will not reduce electricity prices for steelmakers themselves, who already receive similar support through the British Industry Supercharger. As a result, the scheme does not address the core competitiveness challenge now facing UK steel production.
‘The Middle Eastern war has significantly worsened that problem, driving a sharp rise in wholesale electricity prices and dramatically widening the gap between UK producers and European competitors. UK steelmakers are now paying up to 77% more for electricity than competitors in France and Germany (up from 25%), despite existing government support, due to the Middle East war.
‘Indicative 2026 industrial prices are estimated for the UK at ~£84/MWh, vs France at ~£48/MWh and Germany at ~£65/MWh. Without action, the UK steel industry will face an additional £82m annual electricity cost compared to if we were operating in France, potentially delaying decarbonisation and investments, leading to order book loss, and putting the Steel Strategy at risk.
‘UK Steel has called for additional, targeted measures to address wholesale electricity prices, including a wholesale price rebalancing mechanism.’
Ceramics UK CEO, Robert Flello added: “The ceramics sector is critical to the UK economy, contributing over £2 billion each year and producing items and components that are used in homes and businesses across the country and the world.
“We don’t yet have the technology or necessary infrastructure to operate without gas, so it’s increasingly important that the Government consider the broader impact of all energy costs, not just electricity.
“At the moment, our industry is being ignored and, while the Secretary of State for Business and Trade, Peter Kyle, has committed to speak to the sector specifically, I cannot stress enough how urgent it is that we see swift intervention on energy bills for our members.
“Ceramics UK are calling for an immediate reconsideration of the BICS criteria, where it is particularly baffling that certain ceramic goods are excluded from eligibility while comparable products from other sectors are being included. Government’s review into the EII Supercharger Scheme also needs to be brought forward as soon as possible.”
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