UK’s New Industrial Strategy Slashes Energy Costs for Heavy Industry
In a decisive move to reinvigorate British industry and ease the burden of soaring energy costs, the UK government has unveiled a sweeping Industrial Strategy that will scrap green levies for heavy electricity users. The initiative is projected to reduce power bills by as much as 25% for up to 7,000 businesses—a bold step aimed at securing 300,000 skilled jobs, encouraging investment, and cementing Britain’s position as a competitive global industrial leader.
The centrepiece of the ten-year strategy, released on June 23, 2025, includes long-anticipated exemptions for industries like steel, chemicals, glass, aerospace, and automotive, which have long battled some of the highest energy prices in the developed world.
Under the British Industrial Competitiveness Scheme, these sectors will be exempt from key climate levies, including the Renewables Obligation, Feed-in Tariffs, and the Capacity Market, beginning in 2027. In parallel, under the British Industry Supercharger scheme, network charges—the fees paid to maintain the electricity grid—will be discounted by 90%, up from 60% currently, for around 500 firms starting next year.
Green Levy Reforms to Boost Growth, Jobs, and Investment Across Key Sectors
For years, UK manufacturers have argued that green surcharges placed them at a disadvantage compared to international competitors, especially in Europe and Asia, where subsidies and lower levies made operations more cost-effective.
“This strategy marks a turning point for Britain’s economy,” said Prime Minister Keir Starmer. “It’s a clean break from the short-termism and sticking plasters of the past. We are acting decisively to revive British industry.”
The government was careful to emphasise that household energy bills and taxes would not be increased to fund these exemptions. Instead, the strategy proposes to fund the reforms through energy system adjustments, such as enhanced UK carbon pricing. As part of a recent trade deal, the UK is rejoining the EU Emissions Trading Scheme (ETS), which is expected to raise an additional £2.9 billion in revenue over the next two fiscal years.
Long-Term Vision for Clean Growth and Industrial Resilience
Despite easing levies, the Industrial Strategy does not compromise on climate goals. The Labour government has reiterated its commitment to a “clean power mission”, describing the exemptions as short-term support mechanisms to protect jobs and ensure energy affordability during the transition to renewables.
Energy Secretary Ed Miliband blamed the UK’s historic reliance on volatile gas markets for driving up electricity costs, stating:
“We are doubling down on wind and nuclear power to bring down bills for households and businesses for good.”
He added that supporting heavy industry now is crucial to ensuring a just transition where clean growth and industrial strength go hand in hand.
Investing in Innovation, Skills, and Infrastructure
Beyond energy cost relief, the Industrial Strategy outlines ambitious reforms across R&D, planning, talent, and infrastructure:
- £22.6 billion in annual R&D spending by 2029/30
- An additional £1.2 billion per year for skills development by 2028-29
- 25% reduction in regulatory burdens to ease compliance
- A Connections Accelerator Service to fast-track grid access for industrial projects
- Visa reforms to attract “elite global talent”
- £25.6 billion in financial capacity via the British Business Bank for startup funding and scale-ups
These measures aim to unlock investment bottlenecks, accelerate clean energy adoption, and fuel the next generation of British innovation.
Eight Key Sectors to Receive Tailored 10-Year Plans
The strategy identifies eight sectors in which the UK already holds competitive advantages, and where tailored growth plans will be implemented:
- Advanced Manufacturing
- Clean Energy Industries
- Creative Industries
- Defence
- Digital and Emerging Technologies
- Financial Services
- Life Sciences
- Professional and Business Services
Each will have a bespoke roadmap aligned with the UK’s decarbonisation goals, growth potential, and global market trends.
Industry Leaders Applaud Bold Reforms
The response from business leaders has been overwhelmingly positive.
Rain Newton-Smith, CEO of the CBI, called the strategy:
“A significant leap forward in the partnership between government and business.”
Stephen Phipson, Chief Executive of Make UK, praised the strategy for addressing structural challenges like the skills gap, energy costs, and lack of access to capital for innovation.
“This is the scale of action we need to make the UK a manufacturing powerhouse again.”
Clean Energy, Competitive Industry: Not a Trade-Off
While the opposition Conservative Party criticised the move as a costly subsidy that acknowledges the financial strain of net-zero goals, experts argue that reform is necessary to modernise climate policy without derailing industrial resilience.
Rather than being at odds with environmental objectives, the exemptions are seen as a bridge toward a cleaner future—one that ensures businesses survive today and thrive tomorrow through cleaner technologies, energy efficiency, and smart investments.
A Strategic Reset with Global Implications
The UK’s Industrial Strategy is not just a budgetary measure—it’s a strategic reset that aims to balance economic competitiveness, climate responsibility, and social equity. In exempting heavy industries from green levies, the government is acknowledging current market pressures while laying the groundwork for clean growth leadership.
With structural reforms across finance, energy, infrastructure, and workforce development, the UK is positioning itself to lead the global race toward sustainable industrialisation.
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