The government’s £420m support package for energy-intensive industries has been welcomed as a step in the right direction — but experts and business leaders warn it will do little to stop the decline of Britain’s manufacturing base.
Business Secretary Peter Kyle announced the funding on Thursday, promising to ease energy costs for around 500 heavy users such as steel, chemical and building materials producers. The discount on electricity connection charges will rise from 60% to 90%, aimed at bringing down costs for firms hardest hit by soaring energy prices.
However, critics say the measure falls far short of what is needed to make UK industry competitive again.
Britain’s energy cost crisis
UK manufacturers face the highest industrial energy prices in the developed world. According to the Office for National Statistics, electricity for factories costs around 50% more than in France and Germany, and up to four times higher than in the US and Canada.
Energy accounts for as much as 40% of total operating costs in some industries, making it almost impossible for British firms to compete globally. “When electricity is that expensive, you can’t keep up,” said one manufacturing executive. “It doesn’t matter how efficient you are elsewhere.”
Over the past decade, the UK’s industrial energy prices have remained consistently above the international average, eroding the competitiveness of domestic production and contributing to factory closures across the country.
‘A temporary fix, not a solution’
The £420m package, while offering some relief, is largely seen as a temporary subsidy rather than a long-term fix. Analysts argue that the government is attempting to patch up a problem it helped create by allowing energy costs to rise so sharply in the first place.
Subsidies, they warn, are inherently unstable and subject to political changes. “Why would a global manufacturer invest in the UK,” one energy analyst said, “if the price of electricity depends on who’s in charge that month?”
The government has not clarified how the new support will be funded, beyond saying it will come through “reforms to the energy system” — a phrase that critics have called vague and uncertain.
Calls for long-term energy reform
Industry figures are calling for sustained, lower energy prices that would remain stable for at least a decade. They argue the UK must commit to developing its own energy resources — including North Sea oil and gas and onshore fracking — to ensure long-term affordability and energy independence.
Without such reforms, experts warn that Britain risks becoming the world’s first “zero-industry economy,” as manufacturing continues to decline under the weight of high energy costs and inconsistent policy.
While the new subsidies may buy time for some factories, many fear they are simply “too little, too late” to save British industry from further decline.
