Government’s 10-Year Plan: Lower Energy Costs for Industry

LONDON,June 23,2025

New plan aims to reduce energy bills and boost key sectors.

UK’s strategy targets growth through reduced energy costs and strategic investments.

• Energy bill cuts of up to 25% for over 7,000 businesses.
• £1.2bn annual investment in skills by 2028-29.
• Focus on eight key sectors including manufacturing and clean energy.
• Streamlined planning processes to cut costs for developers.

The UK government is set to unveil a 10-year industrial strategy on Monday, with a central focus on lowering energy costs for businesses; the strategy aims to reduce energy bills by exempting them from some green energy levies.

Strategy to Stabilize the Economy

The new plan is intended to help “stabilise” and “mitigate” challenges to the UK from abroad, according to Prime Minister Sir keir starmer. Speaking about the industrial strategy, Starmer told the BBC that it will give businesses “the long-term certainty and direction” they need to “invest, innovate and create good jobs that put more money in people’s pockets.”

Chancellor Rachel Reeves said the industrial strategy will “see billions of pounds for investment and cutting-edge tech, ease energy costs, and upskill the nation.”

Did you know?-The UK’s industrial output has faced challenges in recent years due to factors like Brexit and global economic uncertainty. This strategy aims to revitalize key sectors and boost overall productivity.

Criticism from Opposition

Acting shadow energy secretary Andrew Bowie criticized the plans. He stated that the UK needed “a serious approach to energy policy” that “tackles the root cause of our high energy prices.”

Bowie added that it was “astonishing” Labor was “finally admitting that the costs of net zero are so high that they’re having to spend billions of pounds of taxpayers’ money subsidising businesses’ energy bills to stop them going bust.”

British Industrial Competitiveness Scheme

Manufacturers in the UK currently face some of the highest electricity prices in the developed world. To address this, a new British Industrial Competitiveness Scheme will cut costs by up to £40 per megawatt-hour from 2027 for more than 7,000 manufacturing firms.

These savings will be achieved by exempting businesses from certain extra charges that currently support green energy and back-up power supply systems. Details regarding eligibility and specific exemptions will be determined following a two-year consultation period.

Did you know? The UK economy shrank by 0.3% in April, marking its worst contraction in a year and a half.

About 500 of the most energy-intensive firms, including those in the steel, chemicals, and glassmaking industries, will also have their network charges reduced. These firms currently receive a 60% discount through the British Industry Supercharger scheme, which will increase to 90% from 2026.

Reader question:-How will the government ensure that the energy cost savings are passed on to consumers through lower prices for goods and services? Will there be monitoring mechanisms in place?

Additional Measures

Monday’s proclamation will also include measures to expedite the connection of new factories and projects to the energy grid.

Other key components of the industrial strategy include:

• Upskilling Britons and reducing reliance on foreign workers by spending an extra £1.2bn each year for skills by 2028-29.
• Attracting “elite global talent” to come and work in the UK with visa and migration reforms.
• Hiring more planners and streamlining application processes to reduce planning timelines and cut costs for developers.
• boosting research and development spending to £22.6bn per year by 2029-30 to drive innovation, including £2bn for AI.

The government will focus on eight specific sectors where the UK is already strong and shows potential for faster growth. These sectors are advanced manufacturing,clean energy industries,creative industries,defense,digital and technologies,financial services,life sciences,and professional and business services.

A tailored 10-year plan for five of these sectors will be published on Monday. Strategies for the defense, financial services, and life sciences sectors will be released later.

Writing the Financial Times, the prime minister said the strategy “backs Britain’s wealth creators” and marks a “new phase for the government – a shift away from fixing inherited problems to delivering change and renewal people can feel”.

The announcement follows figures that showed the UK economy shrank by 0.3% in April, and concerns raised by business groups in April that the government’s Employment Rights Bill could negatively impact growth.

Industry Reaction

Make UK’s chief executive Stephen Phipson said the government strategy sets out plans to address “all three” major challenges facing industry – “a skills crisis,crippling energy costs and an inability to access capital for new British innovators.”

Trades Union Congress (TUC) general secretary Paul Nowak welcomed action “to reduce sky-high energy costs for manufacturers.” He added: “For too long, UK industry has been hamstrung by energy prices far above those in France and Germany. Its made it harder to compete,invest,and grow.”

Concerns from Other Sectors

Not all businesses are satisfied with the proposed plans. The retail and leisure sectors have not been included in the strategy, despite many businesses in these sectors reporting high energy bills and rising staffing costs.

Kate nicholls, chief executive of UKHospitality, said: “We were desperate to see a plan for hospitality and the High Street, which together employs over 7 million people. We were disappointed. How can national renewal be properly delivered if 70% of the economy is excluded from the government’s flagship plan for growth?”

Liberal democrat business spokesperson Sarah Olney said government plans “must contain real solutions to bring down businesses’ sky-high energy costs and upskill workers around the country” and ministers must ensure small businesses “are right at the heart” of measures.

The Potential of Targeted Sectors

The government’s focus on specific sectors, as outlined in the industrial strategy, is a strategic move designed to leverage areas where the UK already has a competitive edge. Thes sectors, including advanced manufacturing, clean energy, and financial services, all have the potential to drive substantial economic growth and attract investment. The government hopes that by prioritizing these areas, the UK can foster innovation, create new jobs, and increase its global competitiveness. This targeted approach aims to create a ripple effect, boosting the entire economy.

The selection of these eight sectors wasn’t arbitrary. They were chosen based on a combination of existing strengths, emerging opportunities, and the potential for high-skilled job creation. Such as, the emphasis on clean energy aligns with global trends and the UK’s commitment to net-zero emissions. Similarly, the focus on advanced manufacturing leverages the UK’s strong research and growth capabilities and existing industrial base. The government’s approach acknowledges the importance of supporting sectors that can contribute to the long-term health of the UK economy.

Beyond these eight key sectors, the government realizes that other industries are also vital.Concerns from sectors like retail and hospitality show that a truly comprehensive strategy must address the varied challenges faced by different types of businesses.While the initial plan concentrates on specific areas, it can be expected that the government will need to carefully consider the role of other sectors to ensure inclusive economic growth.

Deep Dive: Advanced Manufacturing

Advanced manufacturing is a critical sector for the UK’s economic future. It involves the use of innovative technologies and processes to create high-value products. By investing in advanced manufacturing, the UK can increase productivity, enhance competitiveness, and create well-paying jobs. The government’s industrial strategy gives emphasis to this sector to ensure that the UK remains a global leader in manufacturing technology. This includes investment in research and development, skills training, and infrastructure.

• Investment in R&D: Funding for new technologies, such as robotics, AI, and automation, to modernize manufacturing processes.
• Skills Development: Initiatives to train workers in the latest manufacturing techniques and technologies, addressing the skills gap and boosting productivity.
• Supply Chain Resilience: Efforts to strengthen domestic supply chains, reducing reliance on imports and increasing the resilience of UK manufacturers.
• Sustainable Manufacturing: Support for eco-amiable manufacturing practices.

The growth of advanced manufacturing is essential for reducing import dependency, supporting local economies, and increasing the UK’s export potential. The government’s commitment to this sector signifies its ability to foster innovation and long-term sustainability. Make UK’s chief executive Stephen Phipson’s assessment of the government’s plans suggests alignment with the sectors’ needs, particularly pertaining to a “skills crisis, crippling energy costs, and an inability to access capital for new British innovators.”.

Impact on clean Energy and Other Sectors

The strategy’s emphasis on clean energy industries is equally crucial.The UK has seen important growth in renewable energy technologies, creating major opportunities for green jobs and investments.

• Renewable Energy Investments: The strategy will provide funding for wind, solar, and other clean energy projects.
• Green Technology Innovation: Initiatives to support the development and deployment of new clean energy technologies, such as hydrogen production and carbon capture.
• Infrastructure Improvements: Efforts to accelerate the transition to a cleaner energy system.

The development of financial services, creative industries, and life sciences is expected to further create a robust and diversified economy. The government’s strategy will include tailored 10-year plans for some of these industries.

Frequently Asked questions

How will the government measure the success of its industrial strategy?

The government will use several key metrics, including job creation, economic growth within the target sectors, levels of investment, and improvements in productivity and innovation.

What specific measures will be taken to address the skills gap?

The government will invest in vocational training programs, apprenticeships, and partnerships between businesses and educational institutions to equip workers with the skills they need for the future.The plan will inject £1.2bn annually for the skills by 2028-29.

How will the government ensure that the benefits of the industrial strategy are distributed fairly across the country?

The government will consider regional development policies, making investments in infrastructure, and promote opportunities for businesses outside of major cities. it requires the input of workers, local councils, and communities.

What role will small and medium-sized enterprises (SMEs) play in the industrial strategy?

smes are critical.The government will provide support through tax incentives, access to funding, and streamlined regulations. Making sure small businesses are central to measures is part of the framework, according to Liberal Democrat business spokesperson Sarah Olney.