British manufacturers are urging the government to slash industrial energy costs as part of its long-awaited industrial strategy. Without urgent intervention, they warn, the sector risks falling behind global competitors and facing a wave of deindustrialization.
Industry group Make UK has stressed that a bold industrial strategy is not just desirable—it is essential to keeping the UK competitive, secure, and productive. A key priority must be tackling the energy crisis, which leaves UK firms at a severe disadvantage. Industrial electricity prices in Britain are four times higher than in the US and 46% above the global average, putting pressure on businesses to stay afloat.
Proposed Solutions to Cut Costs
In a new report, “Tackling Industrial Energy Costs,” Make UK outlines practical, costed measures the government should adopt. One major recommendation is reforming policy levies that artificially inflate the price of low-carbon energy compared to fossil fuels.
Currently, these levies apply only to UK manufacturers—not their European rivals. Scrapping them could cut energy bills by 15% overnight.
Make UK also proposes a fixed energy price deal between the government and manufacturers. Under this plan:
- If energy costs rise above an agreed “strike price,” the government would compensate firms.
- If prices fall below the fixed rate, manufacturers would pay the difference back.
The group suggests setting electricity at £56 per MWh—a 10% reduction on current industrial rates. Combined with levy reforms, this would bring UK energy costs in line with Europe’s.
Warnings Over Inaction
Stephen Phipson, CEO of Make UK, warned: “If we don’t tackle high energy costs now, we threaten our economic security. Manufacturers will struggle to attract investment, and the UK could face a new wave of deindustrialization.”
He added that years of inflated energy prices have already hurt firms’ ability to invest, grow, and compete globally. Without action, the government may soon face a tough choice: bail out struggling industries or oversee managed decline.
Industry Backing
Alan Johnson, Nissan’s senior vice president for manufacturing, highlighted that the company’s Sunderland plant has the highest energy costs of any Nissan factory worldwide. He endorsed Make UK’s proposals, saying they would reassure investors that the UK is serious about boosting competitiveness, particularly in electric vehicle production.
The Bottom Line
With energy costs crippling British industry, manufacturers are demanding immediate reforms. The government now faces pressure to act—or risk watching the sector fall further behind.
