Green levies cut will lower energy bills for industry
Electricity costs for thousands of businesses in energy-intensive industries will be cut by up to a quarter by exempting them from green levies.
From 2027, a British industrial competitiveness scheme will cut costs by up to £40 per megawatt hour in sectors such as automotive, aerospace, chemicals, steel and glassmaking.
Businesses have warned that they are being held back by 'crippling' energy costs compared with European states.
The announcement, which has confirmed the details of plans revealed by The Times last week, comes as part of Sir Keir Starmer's ten-year industrial strategy, which he hopes will address stuttering economic growth.
The prime minister said the plan, to be published on Monday, marks a 'turning point for Britain's economy' by supporting key industries to grow.
Rachel Reeves, the chancellor, will also announce £4 billion for start-ups in the eight highest growth-driving industries, including advanced manufacturing, clean energy, creative industries and life sciences.
However, the announcement of an exemption to green levies is a further blow to Ed Miliband, the energy secretary, who is pushing hard for the government's net-zero agenda.
• Rising energy costs undermine British companies' growth plans
The cuts will come by exempting businesses from paying levies on bills, including the renewables obligation and feed-in tariffs, which both fund renewable energy projects, and the capacity market, a scheme that pays subsidies to gas-fired power stations and other plants to ensure the UK has enough electricity to keep the lights on.
About 500 of the most energyintensive firms in the steel, chemicals and glassmaking industries will also have their network charges cut. They get a 60 per cent discount but this will increase to 90 per cent from 2026.
The changes are designed to help manufacturers become more competitive. British firms pay some of the highest electricity prices in the world, while businesses looking to expand or modernise have faced delays in connecting with the grid.
The Department for Business and Trade said the changes marked a 'decisive shift' in government support for industry. It added that the relief would not be funded through an increase in household bills or taxes, but did not say where it would come from.
It pledged unspecified 'reforms to the energy system' which it said would reduce costs. A source said this could include changes to the Contracts for Difference scheme, which are the subsidies given to new renewable energy projects funded through household and business energy bills.
A spokesman for the government said it had 'identified several options to fund these savings, and will consult on the details'.
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