Energy bill relief for big firms only leaves small businesses out in the cold

The government’s latest promise to cut energy bills for heavy industry may sound substantial, but for the vast majority of UK businesses it offers little comfort. While around 10,000 energy-intensive firms could see reductions from 2027 under the expanded British Industrial Competitiveness Scheme, millions of small and micro businesses — from farms and workshops to cafés and local retailers — are left waiting, excluded, or both. At a time when energy costs are already biting hard and margins are thin, support that is limited in scope and delayed in delivery risks missing the point entirely.

More businesses have been promised help with their energy bills but not until April next year.

Photo by Diego PH on Unsplash

Around 10,000 energy-intensive manufacturers in sectors such as steel and pharmaceuticals could see their bills cut by up to 25%. The scheme was originally announced in 2025 and aimed to support 7,000 firms.

The help for an additional 3,000 firms is a response to the recent surge in oil and gas prices, but it won’t touch the sides.

What about the millions of small businesses that are high energy users? To ignore them is gross neglect of the economy. Farmers, small manufacturers, retailers, hospitality and others that are already at risk due to the soaring cost of doing business won’t be eligible for support. Even if they were, having to wait a year is like asking water not to flow downhill.

The government said expanding the British Industrial Competitiveness Scheme (BICS) which it drew up last year, would strengthen Britain’s economic security and boost competitiveness. But it promises jam tomorrow when what’s desperately needed is reduced energy costs across the board today.

10,000 business is roughly 0.18% of the UK’s 5.6 million businesses. The real problem to be addressed is that UK businesses of all sizes, in just about every sector, are paying up to 50% more for electricity than counterparts and competitors in the EU. We pay twice as much as businesses in the US. The British Chambers of Commerce says four in 10 businesses are struggling with energy bills.

This scheme only scrapes the surface and is taking too long to deliver. We need to reduce the cost of doing business and boost economic growth so that energy costs don’t account for such a large proportion of income and everyone can enjoy lower prices and invest in their businesses. Energy costs are now the greatest brake on economic and business growth. It’s time for urgent action for all.

When the war in the Middle East started oil and gas prices rose sharply. They haven’t reached the same levels as during Russia’s invasion of Ukraine and have fallen back from initial peaks, with optimism about an end to the conflict.

The scheme is designed to support firms that are high energy users, which includes sectors such as automotive and aerospace, steel production, metal fabrication, and pharmaceutical and medical supplies companies.

Details of the Scheme

From April 2027 eligible firms will be exempt from some electricity charges that finance the net zero transition, worth around £35–£40 per MWh.

Qualifying businesses will also receive a one-off payment in 2027 that will cover the support they would have received if BICS had been in place from April 2026.

The scheme will cost £600m. Businesses can find out whether they’re eligible using their Standard Industrial classification code on the business department’s website.

The scheme will be funded through changes to the energy system and government expenditure, with no impact on domestic bills. The government says it is “working with businesses to get the eligibility criteria right.