British Industrial Competitiveness Scheme

With permission, I would like to make a statement on industrial energy costs.

When I became Business Secretary, I said that we needed to be bolder, to go further and to move faster to support British enterprise. Today, I want to set out what that means for reduced electricity costs for British industry. The events of recent days and weeks serve to demonstrate the strategic weaknesses and the economic threats inherent in Britain’s over-dependence on the geopolitics of the global oil market. It is high time that Britain gained energy independence by ending that dangerous over-reliance and instead transitioned to become a clean energy superpower.

My right hon. Friend the Secretary of State for Energy Security and Net Zero is overseeing that transition; however, British manufacturing continues to have some of the highest electricity costs in Europe. That undermines our manufacturing base, impacts our manufacturing jobs, and damages the lives and livelihoods of cherished communities across the country. The Government were elected to halt and reverse Britain’s industrial decline. That is why our modern industrial strategy addresses high electricity costs for British businesses.

As part of our British industry supercharger package, I have already increased support for over 550 of the UK’s most energy-intensive businesses—those in our heavy industries. We have increased the network charging compensation scheme discount from 60% to 90%, saving companies up to £420 million a year on their electricity bills, and we have started building the UK’s first small modular reactor in north Wales, laying the groundwork for manufacturers to benefit from reliable, low-carbon electricity.

Last year, I launched the consultation on the British industrial competitiveness scheme, or BICS—our plan to bring industrial electricity costs more closely in line with those in other European economies. I am grateful for the support of the Chancellor in establishing BICS. The response to our consultation, which we are publishing today, shows overwhelming business support for BICS. The scheme has been endorsed by the Confederation of British Industry and the Society of Motor Manufacturers and Traders. Our partners have done more than just support the policy; they have been co-creators, helping us to shape the scope and scale of the scheme. BICS is bigger, bolder and better as a result of their hard work and partnership.

I am announcing today that BICS will benefit 10,000 electricity-intensive manufacturing businesses—those best equipped to drive growth in our economy. Those 10,000 businesses will save up to £40 per megawatt-hour from next year. They will be exempt from paying the indirect costs of three other schemes: the renewables obligation, feed-in tariffs and the capacity market. BICS is designed to support eligible businesses across all regions of Great Britain. The eligible sectors collectively employ 900,000 people, of whom 700,000 live outside London and the south-east. That is a real advantage for working families and communities around the country, and it gives British businesses a real competitive advantage in the global economy. That is the difference that a Labour Government with an activist industrial strategy makes. This is not just about high hopes or warm words; it is real action to reduce energy costs and increase industrial competitiveness.

I pledged not just to be bolder and to go further, but to act faster in the interests of British businesses. Business is keen, as I am sure the whole House is, for the benefits of BICS to take into account the challenging economic reality that we face. I can announce a one-off payment for businesses eligible for BICS, covering the 2026-27 period, and reflecting the support that businesses would have received had the scheme been in place this year. It will be delivered next year, and my Department will set out more details shortly.

Our focus now is on making sure that BICS is as strong and significant as possible, and that it delivers for our car industry, aerospace and defence—the best of British manufacturing. My Department is inviting businesses to help us finalise the operational details of BICS. I invite all companies that can benefit from it to go to the Department for Business and Trade’s website, submit their views, and help us prepare for this final phase together.

This is a major industrial intervention and financial commitment by this Government. I am determined to get it absolutely right from the start. We said that our industrial strategy was never about a single publication or a single moment in time. It is a marked departure from the old economic orthodoxies of Thatcherite de-industrialisation and a failed free market ideology that let whole towns, regions and communities go to the wall. Ours is an activist industrial strategy, supporting British businesses when they need it, intervening when circumstances demand it, and investing in wealth creation and opportunity for all.

We recognise the instability in the global economy. As the Prime Minister has said, the conflict in Iran is not our war, but we must do everything in our power to shield British businesses from the worst effects of it. Businesses are rightly concerned about the impact of the conflict in the middle east. The Chancellor will set out the principles guiding the Government’s thinking as we consider our response.

Today’s announcement of our bigger, bolder scheme is proof positive of our commitment to backing British businesses for the long term. It sits alongside our continued focus on short-term impacts, on which we will not hesitate to act where needed. We will continue using our activist industrial strategy to create the right conditions for British firms to succeed and grow. We do so because we know that when the Government and enterprise work in partnership, we can make Britain stronger, wealthier and more resilient. I commend this statement to the House.

I call the shadow Minister.

I thank the Secretary of State for advance sight of his statement, and for coming to the House proactively this morning. I refer the House to my entry in the Register of Members’ Financial Interests and my former career in asset management.

I very much welcome the Government’s recognition that industrial energy bills remain incredibly high. This is an issue that businesses across the country have been raising for many months. I have heard what the Secretary of State has to say, and there are a number of areas where I would appreciate further clarity. First, according to the Government’s figures, at least 99% of companies will not benefit from the scheme, even after the announced expansion. Pubs, restaurants, farmers and retailers also face energy cost challenges, and innovative companies such as OpenAI have halted planned multibillion-pound investments in our country. What action will the Government take to address those businesses’ concerns?

Secondly, although businesses are being told today that they will be supported and that their energy bills will be reduced, no relief will actually come their way until next year, so what plan is there to provide a more timely relief for businesses who have to pay their energy bills right now? Finally, I am not clear on how this one-off additional payment next year will be funded. Just this week, the International Monetary Fund has expressed concern about the UK economy, saying that we are the most exposed of all major advanced economies, so can the Secretary of State provide clarity to the markets this morning about how this will be paid for?

High energy costs for British businesses did not start with the conflict in Iran. We all know that energy prices have been far too high for far too long, and we now have the highest industrial energy prices in the whole G7. We should look at the root of the issue at hand: the structural energy challenges that we face as a country. I am pleased that in the regulatory consultation launched today the Government have committed to the removal of carbon price support from April 2028. That is adopting one of the key provisions of the Conservatives’ cheap power plan, so I very much welcome that, but why wait until 2028, and why stop there? The Secretary of State could go further and adopt the plan in full, ending the carbon tax and green levies right now, as well as scrapping the 78% tax on North sea oil and gas companies. Those pragmatic and sensible steps are actionable right now, today. If he does those things, he will have our full support.

I thank the hon. Gentleman for his support for the scheme. I know it is qualified support, but where that qualified support exists, I am grateful for it. Let us be very clear about the scheme, which I have been designing for quite some time: it is a competitiveness scheme, and it is targeted; it is not a general scheme for the entire economy. It is to increase the competitiveness of businesses, so that they can compete globally and be more profitable domestically. The scheme will be highly impactful for those businesses. Many of them are already profitable and doing great work. Through the scheme, we can turbocharge their ability to be competitive, both domestically and internationally. I have announced a range of other schemes, including the supercharger for energy-intensive sectors, and I have made other interventions, just in the six months that I have been Secretary of State.

The hon. Gentleman was gracious in praising parts of the scheme. He could have also mentioned that the growth figures that came out today show that we approached the challenges in the middle east by busting the forecasts and exceeding expectations for growth. That is good for every single business in the entire country. Growth is the No. 1 mission of the Government, and that is what we have been getting on with. That, of course, means that, going into this challenging period, we have more resilience and success in the British economy.

The hon. Gentleman asked about funding. As I said in my statement, the scheme is being funded through reliefs on three schemes, and through support from the Exchequer. It is fully funded and within the fiscal rules, and that is fully set out. More details will flow as we work with business to ensure that we get the implementation absolutely right.

The hon. Gentleman went on to call for a whole set of measures that he would like to see. I would like him to hold himself to the standard to which he holds me, and to set out how he will fund all the commitments he is making.

Let us start with the positives. I am glad that there is now some form of recognition that there is an industrial energy crisis, and that the Secretary of State has brought forward something that helps some sectors.

The bad news for the sector that I and many colleagues in the Chamber represent is that the ceramics sector is not included. There is nothing for tableware or giftware, nothing for ceramic tiles, clay pipes or clay tiles, and nothing for bricks. We have a Government with an objective of building 1.5 million homes, but there is no support for bricks in the scheme, which means that we will have to import bricks from Pakistan, on diesel-chugging super-tankers—bricks made by indentured labour in coal-fired kilns. We will not make them in Walsall, north Staffordshire or your constituency, Madam Deputy Speaker.

The same applies for sanitaryware. This sector has seen exports of half a billion pounds, employs 20,000 people directly across the supply chain, and puts £1 billion back into the UK economy. We have spoken to the Chancellor, to the Secretary of State’s predecessor, to the Energy Secretary, to Ministers across all Departments, and to the Treasury. They promised us help in the Budget, in the industrial strategy, in another Budget, and in the autumn statement. Then we were told, “Wait for BICS.” I suspect that the line from the Secretary of State will be, “The sector is gas-intensive, so wait for the supercharger scheme.” Frankly, that is not good enough. Factories will close and jobs will be lost as a result of this announcement. Bluntly and directly, may I ask the Secretary of State how many job losses and factory closures it will take, and how many brick kilns need to be mothballed, before the Government step in and do something for the ceramics sector? Is it now the Government’s policy objective to oversee the end of UK ceramics production?

I am grateful to my hon. Friend for his passionate intervention. I came into Parliament 10 years ago, and he came here just a short time afterwards. He has been raising these issues in Parliament for a very long time, about a sector that has long been under stress for various reasons, both global and domestic. I have been determined to ensure that my Department is connected, and as open as possible to listening, and to seeing how we can support the sector. There are monthly meetings with officials. There was a meeting just last week, attended by my hon. Friend, other MPs and industry figures from the sector. I have just discovered that no Secretary of State for Business has visited Stoke to meet ceramic industry figures for over five years. I am willing to do that, and in the coming days, my Department will reach out to the people running those companies to see if my going there, listening to the concerns and seeing what could be done would be of interest to them. If they would like that, I will be there.

I want to stress that my hon. Friend has listed a whole series of very different components of the ceramics industry. It is a diverse industry with diverse inputs. Some of them—I admit, a minority—could be eligible for the BIC scheme that I have announced today. That diversity means that there needs to be a very focused, comprehensive look at the sector. I am willing to go there and meet the industry figures myself.

I call the Liberal Democrat spokesperson.

I thank the Secretary of State for advance sight of his statement. Our country is in a very fragile state. We cannot defend ourselves, we cannot feed ourselves and we cannot power ourselves. Our national security, our food security and our energy security are deeply interconnected, and the Government’s response is far too sluggish. The CBI and others are very clear: their response to the announcement is that industry cannot wait until next year. A back payment in 12 months will not cut it; businesses are negotiating their energy deals now, they need support now, and the failure to provide that will mean that jobs will be lost, companies will close and our sovereign capabilities will collapse. I urge the Secretary of State to come back to the House next week, and to make then whatever announcement about the back payment he was going to make in 12 months’ time.

There is a significant gap in the Government’s industrial strategy: we Liberal Democrats believe that the food and farming sector should have been included. Will the Government confirm whether the backdated payment in 12 months’ time and the BIC scheme will apply to the food and farming industry, including agri-tech businesses? Reports in The Times today suggest that the UK may face food shortages due to the Iran conflict. That would impact farming and the hospitality sector, and increase food bills for families. For months, the Liberal Democrats have highlighted that many non-domestic energy retailers refuse to offer good energy deals to hospitality businesses. The broken business rates system also penalises firms for investing in energy-saving measures. May I urge the Government for the umpteenth time to please instruct the Competition and Markets Authority to investigate the energy retail market for hospitality businesses? Will the Government create an energy security bank, which would offer low-interest loans that enabled households and small and medium-sized enterprises to take up energy-saving measures? Will they exclude energy-saving investments from business rates—

Order.

I could have listened to the hon. Lady for much longer, because she is listing important areas across the sector. I am very aware of the challenges and opportunities in an economy that is full of great enterprise and a lot of highly profitable businesses doing great things with great entrepreneurs. Listening to her, we would think that the economy was not full of people and businesses that are thriving. She only focuses on the challenges.

Let me be clear on how BICS happened. It came about through consultation with the very businesses that the hon. Lady is asking us to listen to. They have been part of designing the system. We will release and implement a targeted scheme that will have maximum benefit. We will announce over the summer an eligibility checker, so that businesses can see their eligibility for the scheme. Of course, as we move forward, we will make payments for costs that may have been incurred this year.

Let me be really clear, however, about how those businesses are working. Most of the businesses—I include the business that was on the Radio 4 “Today” programme this morning; Sharon from Tees Components up in Teesside was on the programme—have entered into a contract with fixed prices for the coming year. Most companies in the categories that we are targeting, which have manufacturing processes in which electricity is a high-component cost, are either hedging, or are in contracts, so that they have some stability into the future. We have designed a scheme that takes that into account, will be there when they need it, and supplies support for costs that they would have had this year.

On CO₂ and the issues that are in the news, six months ago, within days of becoming Secretary of State, I mothballed Ensus up in Teesside—a fantastic company. I have had to un-mothball it, and I did so in the first couple of days of the strikes in Iran to ensure resilience in key parts of our economy. That was leaked; we do not normally comment on leaks, but that is out there now. These are the things that I am doing. I am being bold and creative, and am acting in the interests of the whole of society and the economy to make sure that we have the resilience to carry on doing business, and come out of this with growth in our economy.

We will not prosper as a nation without a lot of support for the manufacturing sector—vital for our security and our resilience—so I welcome today’s statement. I notice with some irony that the fertiliser sector is included. A producer in my constituency closed under the previous Government, and as the Secretary of State has already referred to, several hundred million pounds have already been spent correcting the failure to foresee the risks of such a move.

It is good to see that a number of sectors in my constituency are covered by the scheme, including automotive. The Secretary of State will be aware that the automotive sector faces multifaceted issues, not least on the supply side, but also to do with competition and European proposals. Will he say a little bit more about what else he can do to support the wider challenges facing automotive and manufacturing more generally?

I am grateful to my hon. Friend for his work when he was in my Department, upon which I seek to continue. He is right to point to the closure of the fertiliser plant in, I believe, 2023. Those are the sorts of things that have stripped out resilience from our economy and society and which I have sought to rebuild in turbulent times. The automotive sector will qualify for the BIC scheme and other high energy- intensive industries outside automotive will also benefit from the supercharger before it does. I regularly meet automotive industry figures, and the Department is deeply engaged with the sector. He will know some of the outcomes of those conversations and that it is a sector that has this Government and me on its side.

The buzzword this morning is “bold”. Yet the reality is that, though this plan might be bolder than what went before, it remains with all the oomph of a 40W bulb. When electricity in Dumfries in my constituency is four times the price in Dumfries in Virginia, in the United States, this country has a major problem with competitiveness— I have a problem saying it. What industry in this country needs is the decommissioning—the unplugging—of the Energy Secretary and his dogmatic carbon taxes, which really lie behind the electricity prices that we face. Today’s announcement does nothing to address that.

I have done more in six months than his Government did in 14 years. If I am not bold, what the heck was his Government?

I thank the Minister for coming to the House to give the statement. I also welcome the expansion of the scheme; I know it is desperately needed across our manufacturing sectors. However, as my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) has already highlighted, there is a missing sector, in that ceramics does not feature heavily. It is not just pottery—not that potteries are not very important in Staffordshire—but our brick-making factories need support because as a Government we are committed to building homes. We are also committed to buying British, backing British and building British. How does the Secretary of State intend to support a sector that is a linchpin for our wider economy?

I am grateful for my hon. Friend’s thoughtful words. I can assure her that the ceramics sector and the subsectors she mentions are in my mind. I said in my statement that the Chancellor will set out in the near future the approach that we will take for industries that have been put into distress as a result of the action in the middle east—a war that we did not start, but a war that we are having to respond to. I am happy to stay closely in touch with her and the industries for which she is being a magnificent voice to ensure that we get any response right.

We were promised a statement on the British industrial competitiveness scheme; we got the Secretary of State talking about foutering around with the energy bills of less than 1% of UK companies and compensating them to some undetermined extent at some period in the next year. That will come as the coldest of comfort for industries across the UK, such as the ScanStone industrial equipment manufacturers in my constituency, which is already burdened with extraordinary energy bills but is not an “intensive” energy user, so it will get no help from this. It will be similarly encumbered by the same Secretary of State’s quotas on steel imports, which stockholders and manufacturers are already saying will risk output. Will he meet me to discuss my constituents’ concerns about his plans? We support the supporting of British steel in theory, but British manufacturing cannot be put out of work in the process.