Could the UK Industrial Strategy Reduce Energy Supply Costs?
The UK government is launching a new ten-year Industrial Strategy with a pledge to overhaul high energy costs, unlock investment in key sectors and support more than 7,000 manufacturers.
Described by Prime Minister Keir Starmer as “a turning point for Britain’s economy,” the strategy centres on reducing electricity prices and modernising infrastructure to improve the country’s industrial competitiveness.
Cutting costs to strengthen supply chains
Energy-intensive sectors like automotive, chemicals, aerospace and glassmaking are set to benefit from steep reductions in electricity bills under the British Industrial Competitiveness Scheme.
From 2027, eligible manufacturers could see up to £40 taken off per megawatt hour, potentially lowering electricity bills by up to 25%. These businesses will no longer pay levies such as the Renewables Obligation, Feed-in Tariffs and the Capacity Market.
About 500 of the most energy-reliant firms will receive even deeper support through the British Industry Supercharger scheme. From 2026, their discount on electricity network charges will rise from 60% to 90%. This support will apply to sectors including steel, ceramics and glass, which are often the foundation of wider supply chains across British manufacturing.
Business and Trade Secretary Jonathan Reynolds says the plan directly responds to what industry has been calling for. “Tackling energy costs and fixing skills has been the single biggest ask of us from businesses,” he states.
“This government has listened and now we’re taking the bold action needed.”
The measures will not be paid for by taxpayers or household energy bill increases. Instead, the funding will come through energy system reforms, keeping government spending in check while supporting industrial growth.
Alongside cheaper power, the government is introducing a new Connections Accelerator Service by the end of 2025. This programme aims to streamline access to the energy grid for new factories and large projects.
Faster grid connections will allow companies to expand or modernise without facing long delays, helping to ease supply chain pressures and maintain production momentum.
Investing in high-growth sectors
As part of the strategy, £1bn of new investment will target eight sectors where the UK already holds a competitive edge. These include advanced manufacturing, clean energy, digital technologies, creative industries and life sciences.
Five sector-specific strategies are already published. For advanced manufacturing, there is a commitment of £4.3bn, including £2.8bn for research and development (R&D) over five years. This includes plans to raise vehicle production to 1.35 million and lead development in zero-emission flight. Clean energy gets a £1bn package for its supply chains via the Great British Energy fund.
Digital and technology sectors will benefit from more than £2bn to implement the AI Action Plan, plus £187m to train one million people in tech skills. Support is also being directed at cybersecurity development in Northern Ireland, quantum research in Scotland and semiconductor innovation in Wales.
The government will also publish detailed strategies for defence, financial services and life sciences in due course. Chancellor Rachel Reeves calls the strategy “a plan that will boost our economy and create jobs that put more money in people’s pockets.”
The strategy builds on last year’s green paper, Invest 2035, which laid the groundwork for shaping a more sustainable and secure economy through targeted support across regions and sectors.
Skills, innovation and infrastructure
To prepare the workforce for the demands of modern industry, the government pledges to spend £1.2bn annually on skills by 2028-29. There are targets to create 1.1 million well-paid jobs over the next decade, reduce the UK’s dependence on foreign labour, and attract “elite global talent” via changes to visas and migration.
The R&D budget will rise to £22.6bn annually by 2030, with £2bn alone committed to artificial intelligence development. An additional £670m will go into quantum computing and £380m into engineering biology to support medical and sustainable food research.
The infrastructure pipeline will benefit too, with the government hiring more planners and cutting planning delays to speed up construction timelines for factories and related facilities.
These reforms are designed to address what Make UK Chief Executive Stephen Phipson identifies as the three structural failings holding British industry back: “a skills crisis, crippling energy costs and an inability to access capital for new British innovators.”
Claire Hu Weber, Vice President of International Markets at Fluke Corporation, adds that the energy strategy must be matched with infrastructure readiness.
“Without a dramatic acceleration in grid connection times, we risk bottlenecks that stall progress toward net zero,” she warns.
She points to the need for operational reliability and workforce training as essential to keep pace with clean energy deployment.
Data centre development will be a crucial aspect of this infrastructure, and it is a sector the UK has seen strong growth in over the last year, largely due to the facilities being classified by the country’s government as critical national infrastructure (CNI) in September 2024, bringing them further into the public eye.
From semiconductor plants to steelworks, the strategy is framed as a plan to rebuild the UK's industrial foundations while supporting sectors already leading global supply chains.
According to Vishavjeet Sodhi, Head of Heating & Cooling Business UK IRL at LG Business Solutions, the strategy comes at a critical time: “There is an acute need to upskill and reskill the workforce... We need a workforce that is fit for purpose – one that can deliver on the Government’s vision for the future.”
With the UK economy facing recent contractions and global competition intensifying, the government’s new Industrial Strategy represents a bold attempt to drive national renewal.
By combining targeted investment, energy cost reforms and skills development, Britain is positioning itself as “open for business” and ready to lead in the industries of the future.
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