Labour’s Industrial Strategy: What Cheaper Energy Means for UK Heavy Industry

Written By Leanne Li

The UK’s industrial landscape could be in for a major shake-up.

Labour has unveiled a bold Industrial Strategy aimed at transforming Britain’s energy-intensive sectors - with a promise to cut electricity costs for heavy users by up to 25% by 2027.

This long-awaited reform is big news for over 7,000 manufacturers across the UK, many of whom have long warned that the high cost of power has undermined their global competitiveness.

What’s Changing?

Under the new British Industrial Competitiveness Scheme, high-energy users in industries like:

  • Steel

  • Glass

  • Chemicals

  • Automotive

  • Aerospace

…will be exempt from major green levies including the Renewables Obligation, Feed-in Tariffs, and the Capacity Market.

In practical terms, that could cut electricity costs by £40 per megawatt hour - a huge boost for UK firms trying to keep up with European competitors.

Why it Matters

The UK has some of the highest industrial electricity prices in the developed world. Energy-intensive industries have long claimed this is pushing production offshore, threatening jobs, and stifling investment.

This policy is designed to reverse that trend - helping protect more than 300,000 jobs, while encouraging investment in low-carbon manufacturing, clean steel, and industrial electrification.

What Else is in the Strategy?

Bigger Discounts on Network Charges

From 2026, the British Industry Supercharger scheme will expand - offering a 90% discount on electricity network charges for eligible firms (up from 60% today). Around 500 companies are expected to benefit.

Faster Grid Connections

A new Connections Accelerator Service will launch in 2025 to tackle long delays connecting to the national grid. Projects that create jobs or hold strategic value will be prioritised - with possible powers to reserve grid capacity.

EU Carbon Pricing Link

Labour also plans to link the UK’s carbon pricing system with the EU’s - to avoid British firms paying punitive EU carbon taxes on exports. A deal would keep carbon revenues in the UK, allowing reinvestment in domestic industry.

A Long-Term Strategy for Growth

This is part of a broader 10-year plan covering:

  • Advanced manufacturing

  • Clean energy

  • Life sciences

  • Transport

  • And other high-growth sectors

Labour says the plan could unlock billions in investment and deliver 1.1 million high-quality jobs over the next decade - with energy reform at the heart.

What This Means for Your Business

As a business energy broker, we’re watching these changes closely. Here’s our take:

  • The cuts are real - If delivered, the 25% drop in electricity costs will level the playing field for UK industry.

  • Not immediate - Most reforms are planned from 2026–2027 and subject to consultation. Planning ahead is crucial.

  • Opportunities ahead - Firms investing in clean technologies, hydrogen, or electrification stand to benefit most.

  • Act early - Companies should start reviewing energy strategies, site demand, and tariff exposure now, to position for support.

Want to Talk Strategy?

If you operate in or advise energy-intensive industries, now’s the time to plan. We can help you:

  • Benchmark current energy costs

  • Explore contract options and exemptions

  • Get ahead of upcoming consultations

  • Identify funding or carbon-saving opportunities

Get in touch today for a no-obligation discussion with our expert team.

Leanne Li
Next

The RTS Signal is Ending – Here’s What it Means for Your Energy Supply