The UK government has unveiled a new 10-year industrial strategy aimed at boosting economic growth, with a significant focus on reducing energy costs for businesses. This comprehensive plan seeks to stabilise the economy, mitigate international challenges, and foster innovation across key sectors, though some industries express disappointment at their exclusion.
Government Unveils Ambitious 10-Year Industrial Strategy
Prime Minister Sir Keir Starmer announced a new 10-year industrial strategy designed to bolster the UK economy. A cornerstone of this strategy is the reduction of energy costs for businesses, a move intended to enhance competitiveness and stimulate growth. The Prime Minister stated that the strategy aims to "stabilise" the economy and "mitigate" challenges stemming from abroad, including high energy prices.
Key Measures to Slash Energy Costs
The government’s plan includes several initiatives to alleviate the burden of high energy prices on businesses:
- British Industrial Competitiveness Scheme: From 2027, over 7,000 manufacturing firms will see their energy bills cut by up to £40 per megawatt-hour. This will be achieved by exempting them from certain charges that currently support green energy and back-up power systems. Eligibility details will be finalised after a two-year consultation period.
- Increased Discounts for Energy-Intensive Firms: Approximately 500 of the most energy-intensive businesses, including those in steel, chemicals, and glassmaking, will benefit from reduced network charges. Their current 60% discount through the British Industry Supercharger scheme will increase to 90% from 2026.
- Streamlined Grid Connections: Measures will be introduced to accelerate the process of connecting new factories and projects to the energy grid.
Broader Industrial Strategy Initiatives
Beyond energy cost reductions, the industrial strategy encompasses several other key areas:
- Skills Development: An additional £1.2 billion will be invested annually by 2028-29 to improve UK workers’ skills and reduce reliance on foreign labour.
- Talent Attraction: Visa and migration reforms are planned to attract "elite global talent" to the UK.
- Planning Reform: More planners will be hired, and application processes streamlined to reduce planning timelines and costs for developers.
- Research and Development: Spending on R&D will increase to £22.6 billion per year by 2029-30, including £2 billion for AI, to drive innovation.
Targeted Sectoral Growth
The government will focus on eight specific sectors where the UK already demonstrates strength and potential for rapid growth:
- Advanced Manufacturing
- Clean Energy Industries
- Creative Industries
- Defence
- Digital and Technologies
- Financial Services
- Life Sciences
- Professional and Business Services
Industry Reactions
The announcement has drawn mixed reactions from various sectors.
- Positive Reception: Stephen Phipson, Chief Executive of Make UK, praised the strategy for addressing key challenges: skills shortages, high energy costs, and access to capital. Paul Nowak, General Secretary of the Trades Union Congress (TUC), welcomed the action to reduce energy costs for manufacturers, noting that high prices have hindered UK industry’s competitiveness.
- Disappointment from Hospitality: Kate Nicholls, Chief Executive of UKHospitality, expressed significant disappointment that the retail and leisure sectors were excluded from the strategy. She questioned how national renewal could be achieved if 70% of the economy was omitted from the government’s flagship growth plan.
Business Secretary Jonathan Reynolds defended the strategy, stating it was not about "picking winners or picking losers" but about creating a competitive business environment for internationally mobile capital sectors, which would ultimately benefit all sectors of the economy.
