Support for energy intensive industries could end up costing rest of UK firms more - claim

The majority of UK industry will be paying to subsidise “energy intensive” industries if government proposals go ahead, specialists at audit, tax, advisory and consulting firm Crowe UK are warning.

Johnathan Dudley (pictured), head of Manufacturing and SME Corporates, said the impending hike in energy costs for the rest of industry had passed under the radar.

The government has confirmed plans to increase the discount on electricity network charges for energy intensive business to 90 per cent from 60 per cent next year.

The enhanced discount is intended to support around 500 businesses in the steel, glass and ceramics industries, potentially saving them up to £420 million a year.

“The government is billing ’support for energy prices for energy intensive industries’ as a positive, whereas, for most businesses who are effectively being asked to subsidise them, as well as support the expansion of PV in the grid, it’s negative.

He pointed out that the UK currently has the highest energy prices in the developed world for both industrial and domestic consumers.

“This is due to a combination of factors including high taxes, the cost of net-zero policies, and a reliance on imported energy, though specific factors vary by year and source. While specific numbers change, the UK's prices are significantly higher than in countries like the US, France, and Germany.”

He added: “While the UK is racing to meet its Net Zero targets, other countries in Europe and around the world are strolling towards them, some less than others, some might argue.”

Another cost-saving energy proposal is the British Industrial Competitiveness Scheme, which is intended to reduce the electricity bills of more than 7,000 businesses by up to 25 per cent in 2027 by removing some net zero levies from their bills.

But Dudley said: “The Department for Business and Trade has not yet started its proposed consultation yet, so there must be some doubt over whether it will proceed. We may hear more in the Budget.”

Businesses seeking advice on managing energy costs and planning for net zero can contact [email protected]