The Department for Business & Trade (DBT) published its response to the consultation on the British Industrial Competitiveness Scheme (BICS) this week. This aims to reduce energy costs for around 10,000 UK manufacturers.
Paul O’Donnell, Secretary of EAMA (of which MTA is a member) comments that the changes arising from the consultation are a mixed bag of good news and missed opportunities. The good news is that more money has been made available and more companies are now within the scope of the scheme; although it won’t be available until April 2027, mainly for logistical reasons and issues around mid-year increases in departmental spending, there is a commitment for retrospective support to be given for the current year (2026-27).
We would add that although, for reasons that are hard to understand, metalworking machine tool manufacturers are not covered by the scheme, most of our customers will be, including sub-contractors, so it will be of some benefit as one barrier to investment will be eased.
The DBT Announcement
Key changes following consultation:
- The electricity intensity test will apply at sector level only; there will be no test for individual businesses.
- Two sectoral electricity intensity thresholds have been applied:
- Frontier manufacturing: 0.9%
- Foundational manufacturing: 2.7%
Eligibility:
- Annex A contains the final list of eligible SIC codes for sectors that meet the electricity intensity thresholds.
- Applicants must provide evidence that they manufacture eligible products.
- Eligible manufactured products are defined using HS6 codes, as proposed in the consultation. Annex A also includes the final list of eligible HS6 codes.
Applications:
- To claim support for a site, businesses must provide:
- All import MPANs for the site; and
- Evidence of the proportion of electricity used for eligible production processes.
- A simplified formula will apply, allowing 25%, 50% or 100% exemptions.
The Government will make an additional payment to eligible firms when BICS launches in April 2027, reflecting the support they would have received had the scheme been in place from April 2026.
British Industrial Competitiveness Scheme: consultation on scheme eligibility and approach – GOV.UK
Government response to BICS: consultation on scheme eligibility and approach
annex-a-british-industrial-competitiveness-scheme-sic-hs-codes.ods
Comment from EAMA
In terms of what has changed, it is a bit of mixed bag. In general terms the scheme is now set to be more generous with up to £600m pa allocated to it (rather than the widely rumoured £300m, this seems to be, at least partially, ‘new money’ from the Treasury, which had previously insisted that it had to be funded from within DBT’s allocation) and up to 10,000 companies set to benefit rather than the previous 7,000. It should be easier for firms to calculate too, with broad tiering, rather than firms having to work out what proportion of specific sites energy use would be eligible.
The major objection that EAMA made was in respect of the use of SIC codes and HS numbers to determine eligibility. The good news on SIC codes is that Machining 2562 is now eligible (although companies in that code will still have to show that their products are eligible by HS number; on my reading that means that those supplying into aerospace, defence and automotive will potentially be included). The bad news is that some other SIC codes that related to machinery have dropped out because DBT applied an electricity intensity calculation at a sectoral level which suggested that energy costs did not make up a high enough proportion of their GVA for consideration – hopefully this shouldn’t provide a precedent for further Industrial Strategy interventions. The full list is linked in Annex A below in Terry’s email.
On the ask to start the scheme earlier than April 2027, Government has felt unable to shift it earlier, probably because I just don’t think they could turn it round more quickly (and also because it would mean quite a big change to DBT’s budget in-year), but there is an undertaking to provide some retrospective support for FY 26/27 in FY 27/28.
I suspect that, in the round, across EAMA’s footprint in aggregate this probably is good news (mostly due to the extension in the size of the scheme), but it is a long way from solving the competitiveness issues caused by Britain’s high industrial energy prices.