Manufacturers demand immediate energy bill help as BICS scheme expansion delayed until 2027

Manufacturers are demanding immediate help with energy bills after the government revealed an expansion of a key support scheme, but said it would not begin until next April as planned. As companies grapple with surging energy prices caused by the Middle East conflict, ministers said a further 3,000 businesses were to benefit from the British Industrial Competitiveness Scheme (BICS). It is now expected that 10,000 manufacturers will get a 15%-25% bill reduction through being spared contributions to three existing policy cost elements, including the renewables obligation and feed-in tariffs.

The Department for Business and Trade (DBT) said qualifying companies - all intensive users of power - would also secure a one-off payment next year to make up for the BICS scheme not being in place during 2026. As its name suggests, BICS is aimed at bolstering UK factory competitiveness as the country has long suffered the highest industrial energy prices in the developed world. That burden has been the major force behind the gradual decline in UK manufacturing across sectors such as steel and chemicals, leaving the country more exposed to imports to meet its needs.

BICS was the first major plank of the government's industrial strategy outlined last June when bills for businesses and households alike continued to reflect growing policy costs, alongside a stubbornly high wholesale element left by Russia's invasion of Ukraine. The Iran war means hard-pressed companies are already experiencing higher bills in many cases, as there is no price cap to protect them from the surge in oil and natural gas prices. Chancellor Rachel Reeves, who is in Washington DC for the International Monetary Fund spring meetings, agreed the additional but still-delayed support after warning over the impact of the war on inflation and economic growth.

"This government has the right plan for the economy: backing British industry, cutting electricity costs and building a stronger, more resilient future", she said. "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."

But 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."