The government is facing fresh calls to take urgent action on Britain’s soaring industrial energy costs, as leading industry bodies warn that more manufacturers could face collapse unless electricity prices are brought in line with European competitors.
In a joint letter to Chancellor Rachel Reeves, the Trades Union Congress (TUC) and Make UK, the manufacturers’ organisation, said that unless action is taken soon, ministers may be forced to repeat emergency interventions such as the recent British Steel rescue.
They warned that steelmakers, chemical producers and other energy-intensive sectors are being pushed to the brink by “exorbitant electricity prices”, placing them at a “competitive disadvantage” compared with rivals in countries like Germany and France.
According to figures from UK Steel, British producers will pay an average of £65.97 per megawatt-hour (MWh) for electricity this year — compared with £49.50 in Germany and £43.49 in France.
“The government has committed to ensuring Britain is open for business and pulling down barriers to investment,” the letter said. “If it is serious about this, it must publish a plan to deliver industrial electricity prices that are competitive with our European peers.”
The warning comes just weeks after ministers stepped in to support British Steel, whose plans to transition from coal-fired blast furnaces to greener electric arc furnace (EAF) technology had been hampered by the UK’s high electricity costs.
Critics of the UK’s green policy framework argue that environmental levies and grid charges are inflating costs for domestic manufacturers. In the UK, grid connection fees are significantly higher than in many EU countries.
Sir Jim Ratcliffe, the billionaire founder of Ineos, has repeatedly blamed UK energy policy for “enormously high energy prices and crippling carbon tax bills”. Earlier this year, Ineos shut down its synthetic ethanol plant at Grangemouth, citing “uncompetitive” energy costs.
Speaking to Times Radio on Sunday, Business Secretary Jonathan Reynolds said Britain’s electricity prices remain higher than in many European countries because they are still heavily influenced by volatile gas prices.
“What is crippling us is our exposure to the volatility of fossil fuels and gas prices,” Reynolds said. “If the price of wind set electricity prices most days, it would be a far better situation.”
He added that the government is working on this issue as part of its industrial strategy review.
While the UK’s manufacturing sector has shrunk as a share of the economy in recent decades, it still contributes £217 billion a year to GDP and supports 2.6 million jobs, according to Make UK.
“Without urgent reforms to reduce energy prices, a thriving, internationally competitive manufacturing base in the UK will simply not be possible,” the TUC and Make UK warned.
They are calling for the chancellor to implement immediate relief measures for large “electro-intensive” manufacturers and to outline a clear long-term plan to lower energy costs for all UK industrial sectors.
With inflation easing and a new government signalling a fresh approach to industrial strategy, business leaders are now pressing for decisive action — before more firms are pushed to the edge.
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