Overview
- Reeves is evaluating a £1bn annual subsidy that compensates manufacturers for electricity costs above a set threshold, recouping payments when prices fall below that level.
- Industry energy prices in the UK are about double those in Europe and four times US levels, prompting warnings of rapid deindustrialisation without intervention.
- The scheme, modelled on approaches in France, Denmark, Greece and Hungary, is projected to cost roughly £1.1bn a year from 2027 for five years.
- Make UK and the CBI have urged swift action, arguing the upfront subsidy could generate a £3bn annual boost to the economy in the medium term.
- The subsidy proposal will feed into the government’s forthcoming industrial strategy and Reeves’s upcoming spending review decisions.