Chancellor Rachel Reeves has cut some green levies on manufacturing firms to help them meet higher energy bills arising from the Iran War.
Ms Reeves last year announced a 25% cut in electricity costs for more than 7,000 UK businesses and has now expanded this to cover a further 3,000 firms.
The British Industrial Competitiveness Scheme (BICS) exempts these businesses from certain extra charges that currently support green energy. It is expected to be worth up to £600 million per year from next April
Companies operating in the automotive, aerospace, steel, and pharmaceuticals sectors are among the those that will benefit, though there have been calls for the support to be applied immediately.
Stephen Phipson, chief executive of the manufacturers’ lobby group Make UK, said in response: “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.
“Failure to provide help now risks substantial job losses and further deindustrialisation of a sector vital for our national security and resilience.”
Ms Reeves, who is in Washington for the International Monetary Fund (IMF) spring meetings, 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.”
Business Secretary Peter Kyle, whose department is overseeing the scheme, said: “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%, we’re acting decisively to tackle the number one issue that businesses face head-on.”
He responded to calls for an earlier start date by saying many high energy users are locked in to contracts that will not expire until later this year or early next year.
He said details of who is eligible will be announced in the summer.
Economy grew in February
The UK economy was on a growth path in the month before war in Iran began, according to official figures.
GDP grew by a faster-than-expected 0.5%, while the Office for National Statistics revised its estimate for January up to 0.1% after previously saying the start of the year had seen no growth.
However, the Iran war is expected to hit the UK economy more than others.
Britain’s economic prospects have been downgraded more than any other major economy in the International Monetary Fund’s latest update on the state of the world.
