A new government strategy aims to reduce crippling energy costs for British manufacturers while injecting fresh investment into skills and training, offering hope to struggling sectors like steel and aluminium.
The UK’s embattled manufacturing sector is expected to receive a much-needed financial boost as the government prepares to unveil a long-awaited industrial strategy aimed at cutting energy bills and addressing workforce shortages. The strategy, likely to be published early next week, is designed to restore competitiveness and resilience in a sector under strain from high operational costs and a persistent skills gap.
According to The Guardian, the strategy is set to centre around reducing electricity costs for energy-intensive industries such as steel and aluminium, while also laying out plans to strengthen the manufacturing workforce with targeted training and recruitment efforts.
Two key measures are expected to underpin the energy component of the strategy. The first will see a major expansion of the British Industry Supercharger initiative, which currently provides discounts on “network compensation charges” (NCC)—fees companies pay to connect to the National Grid. The government plans to raise this discount from 60% to 90%, a move that could shave off around £6.50 per megawatt hour for the heaviest industrial users.
Alongside energy measures, the strategy is expected to mirror a previous £600 million skills package announced for the construction industry.
Although this adjustment is expected to save the steel industry approximately £15 million annually, energy prices in the UK will still lag behind those in Germany and France. This is largely due to the UK’s reliance on gas to generate electricity, whereas many continental peers rely more heavily on nuclear and renewables.
The modest relief could nonetheless help key players like Tata Steel and British Steel manage the costly transition from traditional blast furnaces to greener electric arc technologies—an essential step in aligning with the UK’s net-zero goals.
The second policy under consideration is a sliding scale of support for smaller manufacturers. This would involve a new “intensity threshold” scheme based on a firm’s energy consumption relative to its turnover. Although still in its consultation phase, the proposal could take effect as soon as 2027 and would provide more targeted relief to small and medium-sized enterprises (SMEs) that often bear the brunt of volatile energy markets without the negotiating power of larger firms.
Alongside energy measures, the strategy is expected to mirror a previous £600 million skills package announced for the construction industry. The plan aims to bolster vocational training and apprenticeships in industrial heartlands, where a dwindling talent pool has hindered productivity and innovation. The move may also be politically strategic, as the Reform UK party looks to gain traction in these traditionally Labour-leaning manufacturing constituencies.
Further initiatives could involve expanded authority for the state-backed British Business Bank, allowing it to invest directly in SMEs, particularly start-ups with potential for high growth in areas such as clean energy, robotics, and advanced manufacturing.
Trade body Make UK, which has long lobbied for such reforms, cautiously welcomed the anticipated measures. While industry leaders see the energy relief as a positive step, they argue it only scratches the surface of what’s needed to re-establish Britain as a global manufacturing hub.
Sector insiders have repeatedly warned that without structural reforms and long-term clarity, British industry risks further decline, especially as international competition intensifies and domestic demand remains fragile.
While the Department for Business and Trade declined to comment ahead of the formal announcement, insiders suggest that the government is finally ready to shift from short-term fixes to a more coherent, long-range industrial vision. The delay in publishing the strategy—initially expected earlier this year—was reportedly due to the government fine-tuning proposals for individual sectors.
As global manufacturers increasingly prioritise investment in low-carbon, low-cost production environments, the UK’s ability to offer both affordable energy and a skilled workforce will likely determine whether its industrial base can be revived—or continues to erode.
