The UK’s New Industrial Strategy

What is the Modern Industrial Strategy?

On the 22nd of June 2025, The United Kingdom government unveiled the Modern Industrial Strategy, a potentially transformational 10-year plan designed to address long-standing economic challenges and reposition the nation as a leading destination for business investment and growth. At the heart of this ambitious agenda is the British Industrial Competitiveness Scheme (BICS), a flagship policy intervention aimed squarely at tackling one of the most significant barriers to UK industrial competitiveness: crippling high electricity costs.

The BICS operates in tandem with an enhanced British Industry Supercharger scheme, which offers deeper support on network charges for approximately 7000 of the most energy-intensive firms, primarily in the steel, glass, and ceramics sectors. Together, these measures represent the most direct and substantial intervention within the broader Industrial Strategy.

However, the scheme is not without significant complexities and uncertainties. Its 2027 start date creates a multi-year gap that may delay investment decisions. The precise eligibility criteria remain undefined and will be determined by a forthcoming consultation, turning this process into a critical strategic focus for industry.

The launch of the 2025 Modern Industrial Strategy and its centrepiece, the British Industrial Competitiveness Scheme, is not a routine policy update. It is a direct response to economic pressures and a long-term decline in UK industrial competitiveness.

Understanding this context is essential for appreciating the scheme's significance, and the tensions in its design. The strategy represents a fundamental shift in the UK's economic philosophy, moving towards a more interventionist, long-term approach to spark industrial growth.

The overall sentiment toward UK industrial output is decidedly negative. Most sectors trend steadily below their 2019 baseline, and by the provisional 2024 data very few have regained to pre-pandemic levels.

Automotive shows a brief rebound in 2023-24, but widespread declines across Chemicals, Steel, Glass & Ceramics, Paper, and Packaging point to persistent headwinds rather than a short-lived dip, leaving observers with a clear sense of concern about the sector’s near-term prospects.

Something has to change. This new policy could be it.

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Competing in a High-Cost World

The UK's industrial strategy faces an uphill struggle. At home, manufacturers are grappling with persistently high electricity prices, positioning the UK among the most expensive locations for energy-intensive industries, as shown in the chart on the left. Abroad, competitors like the US and EU are launching substantial subsidy programmes. The chart on the right highlights how the UK's smaller, targeted approach compares against these larger global initiatives. Taken together, the charts illustrate the central challenge: enabling UK industry to remain competitive despite high domestic costs and fierce international competition.

A Competitiveness Crisis

For years, UK industry has faced some of the highest industrial electricity prices among developed nations.

A Global View

The UK's approach differs from the large-scale subsidies of the US and the regulatory focus of the EU.

A Tale of Two Schemes

The government's response involves two distinct but related schemes. Use the toggle below to understand the specifics of the British Industrial Competitiveness Scheme (BICS) and the British Industry Supercharger.

British Industry Supercharger

A highly targeted scheme providing deeper, more immediate cost relief to the UK's *most* energy-intensive foundational industries.

✓Target Audience: A narrow group of ~500 businesses in foundational sectors like Steel, Ceramics, and Glass, where energy is a primary operational cost.
✓Core Mechanism: A direct and enhanced discount on electricity network charges, which are the costs of transporting power over the grid.
✓Financial Impact: The existing discount on network charges will be significantly increased from 60% to a full 90% exemption.
→Key Timeline: This enhanced discount will take effect from 2026, providing earlier relief than BICS.

Strategic Takeaway: The Supercharger provides faster, deeper support for a select group of foundational industries. If your firm is in this category, the benefits are more immediate.

Are You Eligible?

Final eligibility for these schemes will be determined by a future government consultation. However, based on initial announcements, you can get a preliminary idea of which scheme your business might fall under. Select your primary sector below.

Select your industrial sector:

The Consultation Conundrum: Final eligibility depends on a future consultation that will define the 'energy intensity threshold'. Proactive engagement via trade bodies is critical.

Key Implementation Timeline

2025

Modern Industrial Strategy Announced

2026

Enhanced Supercharger Support Begins

2027

BICS Commences, Creating an "Implementation Gap"

2030

Formal Review of BICS Policy

The IS-8: Backing Britain's Strengths

The strategy focuses investment and policy on eight high-growth sectors with the potential to power the UK economy. Select a sector to explore its 2035 ambition and key government support.

Frontier Industries:

Headline Interventions:

Strategic Recommendations for Leaders

Navigating this new policy requires a proactive response. Here are five key strategic actions for your business.

1

Engage the Consultation Proactively
Don't wait. Compile energy usage data now and engage with your trade associations to influence the final eligibility rules.
2

Conduct Rigorous Scenario Planning
Model your financials under different scenarios: full eligibility, partial eligibility, or no eligibility for support.
3

Align Corporate Strategy with the "IS-8"
Frame R&D, M&A, and skills programmes to align with one of the eight priority sectors to maximise chances of further government support.
4

Explore All Available Transitional Support
Investigate existing schemes like the Supercharger (from 2026), R&D tax credits, and Innovate UK grants to bridge the gap until 2027.
5

Monitor Governance and Policy Signals
Watch the new Industrial Strategy Council's reports and investor sentiment in the renewables sector for early warning signs of policy shifts.

Industries on the Outside

The strategy's tight focus on electricity-intensive manufacturing means many other sectors facing high energy costs are not eligible for direct support, creating a "two-tier" industrial imbalance.

A Contentious Exclusion

The BICS and Supercharger schemes are designed specifically to support businesses that are both electricity-intensive and trade-exposed. The rationale is to help sectors that compete directly with international firms who often benefit from lower state-supported energy prices. This has led to the explicit exclusion of many domestic-facing sectors, even those that are large employers and significant energy users.

Key Excluded Sectors Include:

✗ Hospitality: Pubs, restaurants, and hotels have faced crippling energy bills but are not included in the direct relief schemes.
✗ Retail: Most retail businesses, despite high energy use for lighting and refrigeration, are not considered "trade-exposed" in the same way as manufacturing.
✗ Agriculture: While some food processing may fall under manufacturing, the broader agricultural sector is not a primary target.
✗ Construction: Not typically classified as an electricity-intensive industry in the same vein as foundational manufacturing.

UK Energy Policy Is Changing

The UK Government's 10-year plan aims to reduce the high cost of electricity to boost industrial competitiveness and investment.

Will your business benefit?

What is the Modern Industrial Strategy?