More businesses to receive help with rising energy costs

The Government has confirmed it will expand a support scheme aimed at helping energy-intensive manufacturers manage rising electricity costs.

Around 10,000 UK manufacturers could now benefit from reduced electricity bills under the expanded British Industrial Competitiveness Scheme (BICS). The original proposal, announced in 2025, covered around 7,000 businesses, meaning an additional 3,000 companies have now been brought into scope.

The scheme applies to energy-intensive sectors including:

• Steel
• Automotive
• Pharmaceuticals

Why the scheme is being expanded

The move comes after continued pressure from high energy prices.

Oil and gas costs rose sharply during recent geopolitical tensions. Although prices have eased somewhat since then, UK manufacturers are still facing significantly higher energy costs than competitors in parts of Europe and the United States.

For many businesses, energy remains one of the biggest operational pressures, particularly in sectors where electricity usage forms a large part of overall costs.

What support businesses could receive

From April 2027, eligible companies will be exempt from certain electricity charges linked to net zero policies.

The Government estimates this could reduce costs by around £35 to £40 per megawatt hour.

There will also be a one-off payment in 2027 to compensate businesses for support they would otherwise have received from April 2026.

The overall scheme is expected to cost around £600 million.

According to the Government, funding will come from wider energy system reforms and public spending, with no additional impact on household energy bills.

Businesses will be able to check whether they qualify using their Standard Industrial Classification (SIC) code.

Reaction from businesses

Business groups have generally welcomed the announcement, although some believe the support still does not go far enough.

Critics have pointed out that sectors such as:

• Hospitality
• Retail
• Agriculture

remain outside the scheme, despite continuing to face significant cost pressures of their own.

Industry bodies continue to warn that energy costs remain a major issue across the wider economy. Recent figures suggest around four in ten UK businesses are still struggling to manage energy bills.

Final thoughts

For manufacturers affected by high electricity costs, the expansion of the scheme may provide some longer-term relief and greater certainty around operating costs.

However, the wider challenge around energy pricing in the UK has not disappeared, and many businesses outside the scheme will still be dealing with significant pressure on margins and cashflow.

As always, understanding how rising costs affect profitability and planning ahead remains important, particularly in sectors where overheads can change quickly.

If you’d like to talk through rising business costs or how they are affecting your numbers, I’m always happy to have a conversation.