Government Expands Energy Support for 10,000 Manufacturers Starting April 2027

The British government announced it will expand its industrial energy support scheme to cover 10,000 energy-intensive manufacturers, up from an original target of 7,000 firms. Beginning April 2027, eligible companies in sectors including steel, pharmaceuticals, and aerospace will receive exemptions from electricity charges that finance net zero transition, worth approximately £35-£40 per megawatt-hour.

The expansion of the British Industrial Competitiveness Scheme (BICS) adds 3,000 additional businesses to the program, which was first outlined in 2025. Qualifying firms will receive exemptions from specific electricity levies starting in April 2027, and will also receive a one-time payment in 2027 covering retroactive support from April 2026. The scheme will cost £600 million and will be funded through changes to the energy system and government expenditure, with no direct impact on domestic household bills.

Business Secretary Peter Kyle said the expansion would "strengthen Britain's economic security and boost competitiveness" in response to recent volatility in global oil and gas prices. The Confederation for British Industry's chief executive Rain Newton-Smith called the move "a significant step" and indicated the government had responded to industry concerns about high energy costs.

However, the scheme excludes pubs, restaurants, farmers, and retailers. The Conservative Party criticized the decision, arguing these sectors were "already on their knees." Shadow energy secretary Claire Coutinho stated the plan would only benefit 0.2% of all firms and proposed instead reducing green levies to lower electricity costs across the board.

The scheme targets firms in automotive, aerospace, steel production, metal fabrication, pharmaceuticals, medical supplies, recycling, plastic production, nuclear fuel processing, and cooling and ventilation equipment manufacturing. Businesses can determine eligibility using their Standard Industrial Classification code on the government business department website.

Context

UK businesses currently pay up to 50% more for electricity than competitors in the European Union and more than double the rates paid by US businesses, according to industry spokespeople cited in government statements. The British Chambers of Commerce reported in recent assessments that four in 10 businesses across all sectors are struggling with energy bills. The scheme's expansion follows the start of the war in Iran in early 2026, which pushed oil and gas prices sharply higher, though prices subsequently fell from initial peaks as hopes for conflict resolution grew.

The original BICS framework was developed in 2025 as part of broader efforts to support industrial competitiveness. This expansion represents the first major revision to the program's scope since its initial announcement.

What's Next

Eligible firms will not receive support until April 2027, creating a 12-month gap between the announcement and implementation. The government will issue retroactive payments in 2027 to cover the period from April 2026 onward, meaning businesses will receive compensation for energy costs incurred during 2026 and early 2027 before the scheme takes effect. Industry groups have indicated that broader action addressing energy costs for non-qualifying sectors remains a priority in ongoing discussions with government officials.