- The UK government will remove green levies and raise grid connection discounts to 90%, cutting energy bills for over 7,000 businesses, including steel and ceramics producers.
- Under the new 10-year industrial strategy, ministers aim to attract investment, speed up grid access for significant projects, and strengthen eight high-growth sectors.
The UK government unveiled a major energy cost-cutting reform on Monday, June 23. The reform aims to reduce the burden of green levies on more than 7,000 businesses. It is part of a sweeping 10-year industrial strategy designed to boost British manufacturing and attract investment to key growth sectors.
Under the new plan, firms will see levies such as the renewables obligation, which funds legacy renewable energy commitments, removed from their energy bills. The move targets manufacturers in Labour strongholds and comes alongside a broader push to revitalise the UK industry amid global economic uncertainty.
“This is a turning point for Britain’s economy and a clear break from the short-termism and sticking plasters of the past,” said Prime Minister Keir Starmer. “It delivers the long-term certainty and direction British businesses need to invest, innovate, and create good jobs.”
Chancellor Rachel Reeves added that the industrial strategy would be underpinned by the recent spending review, which prioritised investment in infrastructure, technology, and skills. “It will see billions of pounds for investment and cutting-edge tech, ease energy costs and upskill the nation,” she said. “This will ensure the industries that make Britain great can thrive.”
In addition to scrapping green levies, the government confirmed a parallel measure for energy-intensive sectors like steel, aluminium, ceramics, and glass. The discount on grid connection fees for these industries will rise from 60% to 90%, helping an estimated 500 companies. However, industry sources warned the immediate financial benefit for the steel sector would amount to just £15 million a year.
British manufacturers have long complained of paying some of the highest electricity prices among developed economies. They have also complained of persistent delays in grid access, which is particularly concerning for fast-growing tech firms. In response, the government plans to introduce an accelerated grid connection system for major job-creating investment projects before the end of the year.
Officials confirmed that the reforms will be funded through changes to the energy system. They will not increase household bills or directly impact taxpayers.
Despite the new measures, UK energy prices will remain higher than those in Germany or France due to the UK’s continued reliance on wholesale gas, which plays a larger role in its energy mix than in continental Europe.
The proposed linkage between the UK’s Emissions Trading Scheme and the EU carbon market is central to the strategy, first announced in May. However, formal negotiations on the UK’s entry into that scheme are ongoing.
The industrial strategy identifies eight key sectors with high growth potential: advanced manufacturing, clean energy, creative industries, defence, digital, financial services, life sciences, and professional services.
Industry leaders welcomed the announcement. Rain Newton-Smith, Chief Executive of the Confederation of British Industry (CBI), said the reforms provide a “bedrock for growth” but stressed that sustained competitiveness would require consistent policy focus.
Stephen Phipson, CEO of manufacturers’ group Make UK, called the announcement “a giant and much-needed step forward.”
“There’s long been frustration across the sector over high energy costs, a widening skills gap, and poor access to capital,” he said. “This strategy addresses those structural challenges and signals that Britain is back in business.”