UK Government Unveils Major Reforms to Cut Business Energy Costs

The UK government has announced a significant reform package aimed at slashing energy costs for thousands of businesses as part of a 10-year industrial strategy designed to strengthen the manufacturing sector and accelerate economic growth.

Key Measures to Reduce Energy Costs

As part of the new strategy, more than 7,000 companies will see reductions in their energy bills through the removal of green levies such as the renewables obligation. These levies have historically funded early renewable electricity generation projects but have also contributed to rising business energy costs—especially in manufacturing-heavy regions.

In a targeted move to support energy-intensive industries, the government is also increasing the discount on grid connection charges from 60% to 90%. This initiative will especially benefit sectors such as steel, aluminium, ceramics, and glass manufacturing, with around 500 businesses expected to gain from this change.

Enhancing Grid Access and Long-Term Competitiveness

To further support high-impact projects, the government plans to introduce fast-tracked grid access for major investments that create substantial employment. This new system is expected to be operational by the end of the year and will address one of the persistent challenges facing UK-based tech and manufacturing firms—delays in energy infrastructure access.

Additionally, the UK is advancing plans to link its emissions trading scheme with the European Union’s, a move intended to strengthen the UK’s position in international carbon markets and support the transition to clean energy.

A Sector-Wide Industrial Strategy

The broader industrial strategy will focus on eight high-potential sectors: advanced manufacturing, clean energy, creative industries, defence, digital, financial services, life sciences, and professional services. The government aims to unlock billions in infrastructure and technology investments, reduce energy costs, and build the skills base needed for a resilient, future-ready workforce.

Importantly, the reforms are designed to be cost-neutral to taxpayers and will not raise household energy bills. They will be funded through structural changes in the UK’s energy market.

Positioning the UK for Global Competitiveness

This strategy addresses long-standing industry concerns around high electricity prices, planning delays, and challenges in accessing capital. By providing long-term direction and certainty, the government is aiming to restore business confidence, attract global investment, and revitalise domestic industry.

The move marks a shift toward a more proactive and coordinated industrial policy—one that positions the UK as a competitive hub for innovation, sustainable manufacturing, and high-quality job creation.

💡 Want to understand how these reforms could benefit your business? Contact our team at hello@gleg.co.uk to explore tailored support and strategic insights.