Rachel Reeves has pledged to slash electricity bills by up to a quarter for more than 10,000 British manufacturers, in a move Whitehall hopes will shore up the country’s battered industrial base and blunt criticism that ministers have been slow to tackle the highest energy costs in the developed world.
Speaking from Washington, where she is attending the spring meetings of the International Monetary Fund, the Chancellor confirmed on Thursday that the British Industrial Competitiveness Scheme (BICS) will be widened by 40 per cent, bringing an additional 3,000 firms under its umbrella. The scheme, first trailed in last year’s Modern Industrial Strategy, will exempt qualifying businesses from the indirect costs of three legacy green levies: the Renewables Obligation, Feed-in Tariffs and the Capacity Market.
Treasury officials put the value of the relief at roughly £35 to £40 per megawatt hour, or up to £600 million a year once the scheme takes effect in April 2027. Crucially, ministers insist that neither households nor businesses outside the scheme will see their bills rise as a consequence, with the cost being met through a mixture of changes within the energy system and Exchequer funding. Full details are to be set out in next year’s Budget.
In a concession to firms that have been lobbying hard for immediate relief, the Chancellor has also agreed to a one-off backdated payment in 2027, replicating the support manufacturers would have received had BICS been operational from April 2026. Exemptions on the Renewables Obligation and Feed-in Tariff levies will kick in from April 2027, with Capacity Market exemptions following that October.
Eligibility will run the length of the industrial spectrum, from sprawling steelworks and automotive plants to smaller recyclers, plastics producers, metal fabricators and pharmaceutical manufacturers. Aerospace companies, nuclear fuel processors and makers of cooling and ventilation equipment are also expected to qualify. Relief will be calculated site by site, based on the proportion of electricity used to manufacture eligible goods. Sites where less than 25 per cent of power is used for qualifying production will receive nothing; those between 25 and 50 per cent will get a half exemption, and any site above 50 per cent will benefit in full. Notably, the scheme draws no distinction between large corporates and SMEs, a point likely to be welcomed by smaller firms in the supply chain who have often found themselves shut out of previous industrial aid programmes.
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