British manufacturers are set to benefit from a major government initiative aimed at reducing industrial energy costs, with plans to cut electricity standing charges by up to 90 percent for
energy-intensive sectors. The move comes as UK industries face the highest energy prices among G7 nations, having incurred an additional £29 billion in energy expenses over the past four years.
The comprehensive support package, expected to be unveiled as part of the government’s industrial strategy, will primarily target sectors such as steel, ceramics, and chemical manufacturing. The Treasury and Department for Business and Trade have been finalizing details of this taxpayer-funded initiative, which aims to enhance the competitive position of British industry against European competitors.
Recent data from the Energy and Climate Intelligence Unit (ECIU) highlights the severity of the situation, showing that UK businesses have experienced a doubling of gas costs and a 60 percent increase in electricity prices in recent years. The impact has been particularly severe on the steel industry, where average plant energy costs have surged by 80 percent since 2021, coinciding with Russia’s invasion of Ukraine.
According to International Energy Agency statistics, British industrial companies currently pay approximately £258 per
megawatt-hour for electricity, significantly higher than France’s £178 and Germany’s £177. This disparity has placed UK manufacturers at a considerable disadvantage, with energy costs reaching levels four times higher than those in the United States and notably exceeding rates in Canada and France.
Chancellor Rachel Reeves is reportedly considering expanding the support program beyond its initial scope, with plans to launch a consultation that would include additional sectors such as advanced manufacturing. While Business Secretary Jonathan Reynolds has not explicitly confirmed the details of the upcoming industrial strategy, he has acknowledged that energy pricing is an area of “considerable government activity.”
The Confederation of British Industry’s leader, Rain Newton-Smith, has pointed to various factors contributing to elevated electricity prices, including the costs associated with net zero initiatives such as national grid expansion and accelerated renewable energy
deployment.
Looking ahead, the government anticipates that the recently approved £14.2 billion Sizewell C nuclear plant in Suffolk will play a crucial role in reducing long-term energy costs. This investment, confirmed in the Spending Review, represents part of a broader strategy to address the UK’s industrial energy challenges.
The stark reality of Britain’s industrial energy pricing situation becomes clear when examining IEA data, which shows UK prices are 46 percent above the average among member countries. This
intergovernmental organization, representing three-quarters of global energy demand, provides a benchmark that underscores the competitive disadvantage faced by British manufacturers.
The government’s intervention comes at a critical time for UK industry, particularly for sectors that have been struggling with rising operational costs. The proposed reduction in standing charges represents a significant step toward addressing the competitiveness gap between British manufacturers and their international
counterparts.
This initiative reflects growing recognition of the need to support British industry in maintaining its competitive edge while managing the transition to cleaner energy sources. The success of this program could prove crucial in preserving and enhancing the UK’s industrial capabilities while supporting the nation’s broader economic
objectives.