Britain's industrial strategy cuts green levy to lower energy bills

By Alistair Smout

LONDON (Reuters) -Britain's industrial strategy made public on Monday will reduce green levies, lowering energy bills for thousands of companies to try to make steel companies and other manufacturers more competitive.

Under the strategy for the decade 2025-2035, the government plans to cut the bills of electricity-intensive industry by up to 25% from 2027, which it said could benefit more than 7,000 businesses.

The government has made boosting Britain's anaemic growth a priority. But lawmakers and business leaders had highlighted the high energy costs many companies face as an obstacle.

As the United States, under President Donald Trump, has taken a lead in promoting domestic industry through protectionist tariffs and by tearing up potentially expensive environmental rules and charges, Britain and also the European Union have faced pressure to support their manufacturers.

Industry body Make UK had said the government should scrap climate levies imposed on firms.

In response, the government has given an exemption to the most energy-intensive companies.

The Industrial Strategy still includes clean energy as one of eight previously identified sectors of strength for Britain. Others are advanced manufacturing, defence and the creative industries.

"Tackling energy costs and fixing skills has been the single biggest ask of us from businesses and the greatest challenge they have faced - this government has listened," Business Secretary Jonathan Reynolds said in a statement.

The government said the energy measures would be funded through reforms to the energy system, without raising household bills or taxes. The scope and eligibility for the scheme will be finalised after a consultation.

BUSINESS AND WORKERS

The industrial strategy is Britain's first in eight years, after the centre-left Labour Party said it would provide a more coherent approach to help industry with anything from skills to power to water and investment.

Prime Minister Keir Starmer and other ministers said the British state had both stood back and interfered too much. They said workers had little support during deindustrialisation but had also faced what they say is overegulation.

Engineering and business groups welcomed the strategy's focus on energy costs and skills, but pro-growth campaign group Britain Remade called for more to be done to ensure faster grid connections and to reform the planning system.

Under the strategy, the government will expand the state-owned British Business Bank's capacity to channel investment into smaller companies, provide an extra 1.2 billion pounds ($1.61 billion) a year on skills by 2028-29, and cut regulatory burdens on businesses.

Manufacturing accounts for less than 9% of the economy.

As well as including Britain's creative sector, the industrial strategy covers financial and other professional services, but business groups from sectors such as hospitality criticised it for being too narrow in its focus.

($1 = 0.7435 pounds)

(Reporting by Alistair Smout; additional reporting by Andy Bruce and Sarah Young; editing by Clelia Oziel and Barbara Lewis)