According to the government announcement published on GOV.UK on 16 April 2026, the final design of the British Industrial Competitiveness Scheme will cut electricity bills by up to 25% for more than 10,000 manufacturers from April 2027. The measure, first set out in the 2025 Modern Industrial Strategy, widens the scheme by 40% from the previously expected 7,000 firms and adds a one-off payment in 2027 for businesses that would have qualified from April 2026. The announcement was made while Chancellor Rachel Reeves was attending the IMF spring meetings in Washington. The political framing from HM Treasury is economic security and industrial competitiveness; the policy substance is more specific, setting out who can qualify, which levies will be removed from bills, and when legislation is expected to follow.
On the government’s design, BICS will exempt eligible sites from the indirect costs of three electricity schemes: the Renewables Obligation, Feed-in Tariffs and the Capacity Market. The published estimate is that this will reduce costs by around £35 to £40 per MWh, with annual support worth up to £600 million once the scheme is fully in force from April 2027. This is not a general reduction in wholesale electricity prices. It is a targeted levy exemption for manufacturers producing eligible goods, which means the gain for any individual business will depend on its electricity use, the products made at each site, and whether it falls within the published eligibility codes.
The government says the widened scheme will reach sectors including automotive, aerospace, steel, pharmaceuticals and medical supplies, metal fabrication, plastics, recycling, nuclear fuel processing and the manufacture of cooling and ventilation equipment. Ministers have also said that both large companies and SMEs will be able to qualify, with support not prioritised by business size. For firms, that matters because BICS is designed around production activity rather than corporate scale. A smaller specialist manufacturer with a heavily electrified plant could qualify, while a larger group may find that only some of its sites meet the test.
Eligibility will be assessed site by site, based on the share of electricity used to manufacture eligible products at that location. The government has set three bands: sites using less than 25% eligible electricity will receive no exemption, sites using 25% to less than 50% will receive a 50% exemption, and sites using 50% or more will receive a full exemption. That structure will matter operationally. Businesses will need to evidence both the relevant SIC and HS codes and show how electricity consumption maps onto eligible manufacturing at plant level. For groups with mixed-use sites, shared utilities or contract manufacturing arrangements, the administrative burden may become almost as important as the headline value of support.
The 2027 one-off payment is intended to cover the support eligible firms would have received if BICS had started in April 2026. In practice, that backdated element is especially significant for the extra 3,000 businesses brought into scope by the final design, because it closes a policy gap between the original announcement and the operational start date. For finance teams, this creates two separate planning points. The first is the prospective reduction in electricity costs from April 2027. The second is the treatment, timing and accounting of the additional 2027 payment, which the government says will be explained in separate detail rather than through the headline announcement itself.
The timetable is now clear in outline but not yet complete in law. The second consultation on the regulatory changes closes on 14 May 2026, with legislation expected by autumn 2026. Under the published framework, exemptions from the Renewables Obligation and Feed-in Tariff levies would begin in April 2027, while Capacity Market exemptions would follow from October 2027. A formal scheme review is scheduled for 2030. That leaves several matters still to be settled through consultation and legislation, including enforcement, evidential standards, appeals, administrative costs and the precise drafting of the eligibility rules. The government has said a full impact assessment will be published alongside the legislation in autumn 2026.
Funding is one of the main unresolved points. Ministers say households and businesses outside the scheme will see no increase in their energy bills, and that BICS will be financed through a combination of energy-system changes and Exchequer funding. The full settlement is not due until Budget 2026, so the commitment on bill neutrality remains a stated policy position until the Treasury publishes the underlying figures. The announcement also sits alongside the separate Supercharger package, which the government says delivered a £420 million boost for around 500 of the most energy-intensive businesses from 1 April 2026 by raising the discount on electricity network charges from 60% to 90% for sectors such as steel, cement, glass and chemicals. Together, the two schemes show a move towards more selective industrial electricity relief. Business groups including the CBI, the Society of Motor Manufacturers and Traders and the British Chambers of Commerce have welcomed the broader BICS design, but the next substantive test will be whether the consultation and Budget 2026 documents preserve the promised savings without shifting costs elsewhere in the system.