Second Delegated Legislation Committee
Tuesday 27th October 2026
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16:30
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Speaker 3
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Speaker 3
Thank you, chair. It's a pleasure to serve with you. The Chair Mr. Dowd, I beg to move that the committee has considered the draft renewables Obligation and Electricity Capacity amendment. British Industrial Competitiveness Scheme excluded Electricity Regulations 2026. The draft regulations were laid before the House on 7th September 2026. I would like to acknowledge the Joint Committee on Statutory Instruments who have provided helpful scrutiny of those regulations and did not draw this instrument to the special attention of the House. I would also like to acknowledge that the Secondary Legislation Scrutiny Committee have reported on this instrument and did not draw it to the special attention of the House.
This instrument delivers a flagship commitment of the modern industrial strategy. The British Industrial Competitiveness Scheme, also referred to as Bix. Bix is a central part of our drive to engineer the reindustrialisation of the UK. Reindustrialisation means building on the strengths of every part of our country, creating good jobs and connecting communities to the industries and opportunities of the future. Bix will address persistent competitiveness challenges facing British manufacturers by reducing electricity costs for eligible businesses. It will drive down. It will drive investment and economic growth in strategically important sectors across Great Britain. Bix will support frontier manufacturing industries within industrial strategy sectors known as the IS8 and foundational manufacturing industries, which provide key inputs to their supply chains.
This includes eligible businesses in the automotive, aerospace, clean energy industries, life sciences, chemicals, steel and many more. The government is committed to maintaining a competitive and resilient industrial base, but persistently high energy prices, particularly electricity prices, have increasingly undermined investment, productivity and employment, particularly in manufacturing. For too long, British industries have faced some of the highest industrial electricity prices in Europe due to a combination of structural factors and policy costs. There is a need to address the immediate cost pressures facing the British manufacturing industry and stifling growth. This is precisely why Bix has been introduced.
Bix will exempt eligible manufacturing businesses from paying the indirect costs of the renewables obligation and feed in tariffs from April 2027, and capacity market costs from October 2027. These costs are levied on electricity suppliers who pass them on to domestic and non-domestic consumers through their electricity bills. Bix is expected to cut electricity costs by up to 25%, or £40 per megawatt hour, and will be eligible for over 10,000 manufacturing businesses. The scheme is designed to support manufacturing businesses and high growth and strategic sectors to be more internationally competitive, and drive investment and economic growth across all regions of Great Britain.
It will spread the benefits of growth across the country, supporting businesses rooted in communities across our regions, with the vast majority being small and medium sized businesses. This instrument is an important part of delivering this objective. It implements the renewables Obligation and capacity market exemptions, and enables the Renewables Obligation level for the 2027 2028 obligation period to be revised in light of Bix. It also provides for the Bix eligibility criteria and how the level of discount will be calculated. An instrument to exempt eligible businesses from the indirect costs of the feed in tariff will also be made.
We recognise the tremendous challenges British manufacturers are facing and we have heard the call to go further. That is why eligible businesses will also receive an additional payment in 2027 related to the amount they would have received had the scheme gone live this year. In conclusion, Chair Bix will support British manufacturing businesses to thrive and become more competitive on the international market. It will allow the freedom to invest further in their business and help drive economic growth across Great Britain.
I commend these regulations to the House.
This instrument delivers a flagship commitment of the modern industrial strategy. The British Industrial Competitiveness Scheme, also referred to as Bix. Bix is a central part of our drive to engineer the reindustrialisation of the UK. Reindustrialisation means building on the strengths of every part of our country, creating good jobs and connecting communities to the industries and opportunities of the future. Bix will address persistent competitiveness challenges facing British manufacturers by reducing electricity costs for eligible businesses. It will drive down. It will drive investment and economic growth in strategically important sectors across Great Britain. Bix will support frontier manufacturing industries within industrial strategy sectors known as the IS8 and foundational manufacturing industries, which provide key inputs to their supply chains.
This includes eligible businesses in the automotive, aerospace, clean energy industries, life sciences, chemicals, steel and many more. The government is committed to maintaining a competitive and resilient industrial base, but persistently high energy prices, particularly electricity prices, have increasingly undermined investment, productivity and employment, particularly in manufacturing. For too long, British industries have faced some of the highest industrial electricity prices in Europe due to a combination of structural factors and policy costs. There is a need to address the immediate cost pressures facing the British manufacturing industry and stifling growth. This is precisely why Bix has been introduced.
Bix will exempt eligible manufacturing businesses from paying the indirect costs of the renewables obligation and feed in tariffs from April 2027, and capacity market costs from October 2027. These costs are levied on electricity suppliers who pass them on to domestic and non-domestic consumers through their electricity bills. Bix is expected to cut electricity costs by up to 25%, or £40 per megawatt hour, and will be eligible for over 10,000 manufacturing businesses. The scheme is designed to support manufacturing businesses and high growth and strategic sectors to be more internationally competitive, and drive investment and economic growth across all regions of Great Britain.
It will spread the benefits of growth across the country, supporting businesses rooted in communities across our regions, with the vast majority being small and medium sized businesses. This instrument is an important part of delivering this objective. It implements the renewables Obligation and capacity market exemptions, and enables the Renewables Obligation level for the 2027 2028 obligation period to be revised in light of Bix. It also provides for the Bix eligibility criteria and how the level of discount will be calculated. An instrument to exempt eligible businesses from the indirect costs of the feed in tariff will also be made.
We recognise the tremendous challenges British manufacturers are facing and we have heard the call to go further. That is why eligible businesses will also receive an additional payment in 2027 related to the amount they would have received had the scheme gone live this year. In conclusion, Chair Bix will support British manufacturing businesses to thrive and become more competitive on the international market. It will allow the freedom to invest further in their business and help drive economic growth across Great Britain.
I commend these regulations to the House.
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Speaker 5
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Speaker 5
Thank you, Mr. Chairman. It's a pleasure to serve under your chairmanship. And actually it's a pleasure to be opposite the Minister. Last time we sat we were in my constituency, actually in Myra, talking about some of these very issues that affect the automotive industry. So he will be pleased to know today that we won't be dividing the House, because it is welcome news. The government is looking at ways to reduce costs on businesses. That being said, there are some fundamental questions that need to be raised when it comes to this piece of legislation. Given the government has correctly identified this energy cost, high energy costs as a major obstacle to British manufacturing, but its response seems to be to create a complicated system of exemptions, helping selected businesses while leaving the majority facing, well, uncompetitive costs.
In essence, we argue on this side that we need a cheaper electricity for British industry in its entirety. And so the question here is why are we creating effectively winners and losers, leaving the underlying problem under resolved? It bodes the question for us on this side who ultimately pays for. There's a legitimate concern that this could be placed on households or businesses who are excluded from the schemes. They may well face higher costs, but also, why are so many businesses excluded? Because the eligibility rules favour selected manufacturing sectors, while leaving other businesses to face higher energy bills.
And on that basis, why is the scheme unnecessarily complicated with several tiers within it over what percentage you can actually gain back? And fundamentally, does it address the real problem underlying the government? And the minister has again pointed out that we have high industrial costs, some of the highest in the world. Well, if Bics carves out selected manufacturing's out of existing electricity policy costs, that's welcome for them. But he said repeatedly, what about those who are eligible? What about those who aren't? We on this side of the House would get rid of the renewable obligation for every business that helps every business on that basis.
Now, that turns me to a couple of questions that I'd like to pose to the minister, because what we have to think about is the economy in the wide in the wider realm. And I'm glad he's double hatted because he will look at businesses, too. What about the pub? What about the restaurants? What about the corner shop and the other manufacturers who aren't picked up? They weren't in the selected 10,000 manufacturers who were given special treatment. What guarantees for them are there that if they're outside the box, they will see no temporary or permanent rise in their energy bills?
Now, the government has also accepted that the carbon price support is no longer fit for purpose. We agree on this side of the House. It accepts that abolishing it will reduce the electricity costs and intends to use them as savings to offset the cost created by Bics. But if removing the carbon price support reduces electricity costs and helps finance industrial relief, why wait until April 2028? Why retain these wider carbon costs and continue to feed through into electricity prices? So the question really is why is CPS being retained through 2027 to 2028, when Bics starts in 2027?
And that leads us on to the fundamental final question. And it's interesting, with the budget coming tomorrow, how much additional Exchequer funding is required for the 2027 2028, specifically because the carbon price support will not be abolished until April 2028. These are clearly fundamental differences that this side of the House has compared to the other side of the House. We favour a process and a cheap plan that would reduce costs for all businesses. Not the lucky selected few.
In essence, we argue on this side that we need a cheaper electricity for British industry in its entirety. And so the question here is why are we creating effectively winners and losers, leaving the underlying problem under resolved? It bodes the question for us on this side who ultimately pays for. There's a legitimate concern that this could be placed on households or businesses who are excluded from the schemes. They may well face higher costs, but also, why are so many businesses excluded? Because the eligibility rules favour selected manufacturing sectors, while leaving other businesses to face higher energy bills.
And on that basis, why is the scheme unnecessarily complicated with several tiers within it over what percentage you can actually gain back? And fundamentally, does it address the real problem underlying the government? And the minister has again pointed out that we have high industrial costs, some of the highest in the world. Well, if Bics carves out selected manufacturing's out of existing electricity policy costs, that's welcome for them. But he said repeatedly, what about those who are eligible? What about those who aren't? We on this side of the House would get rid of the renewable obligation for every business that helps every business on that basis.
Now, that turns me to a couple of questions that I'd like to pose to the minister, because what we have to think about is the economy in the wide in the wider realm. And I'm glad he's double hatted because he will look at businesses, too. What about the pub? What about the restaurants? What about the corner shop and the other manufacturers who aren't picked up? They weren't in the selected 10,000 manufacturers who were given special treatment. What guarantees for them are there that if they're outside the box, they will see no temporary or permanent rise in their energy bills?
Now, the government has also accepted that the carbon price support is no longer fit for purpose. We agree on this side of the House. It accepts that abolishing it will reduce the electricity costs and intends to use them as savings to offset the cost created by Bics. But if removing the carbon price support reduces electricity costs and helps finance industrial relief, why wait until April 2028? Why retain these wider carbon costs and continue to feed through into electricity prices? So the question really is why is CPS being retained through 2027 to 2028, when Bics starts in 2027?
And that leads us on to the fundamental final question. And it's interesting, with the budget coming tomorrow, how much additional Exchequer funding is required for the 2027 2028, specifically because the carbon price support will not be abolished until April 2028. These are clearly fundamental differences that this side of the House has compared to the other side of the House. We favour a process and a cheap plan that would reduce costs for all businesses. Not the lucky selected few.
16:38
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Speaker 3
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Speaker 3
The Liberal Democrats. also support this statutory instrument because it's exactly the kind of thing for energy intensive industries we have been calling for. Industries which face some of the highest industrial electricity costs in the world. We must support manufacturing businesses to be more internationally competitive and drive investment and economic growth across the UK. However, the Liberal Democrats also believe this support must not stop just with large manufacturers, small and hospitality businesses and other SMEs like those in West Dorset, face the same high electricity costs but receive no equivalent relief. Despite making up 99% of businesses in the UK.
The government must extend meaningful support to those outside of eligible sectors. We also need fast action to reduce the link between electricity and gas prices. New solar power is 11% cheaper than the cheapest fossil fuel, and onshore wind is 39% cheaper. Yet our electricity pricing system still leaves British consumers facing the fourth highest energy prices globally. The government has promised to look at decoupling electricity prices from gas. That work needs to move faster so households and businesses can benefit from cheaper renewable energy, not just energy intensive industries. The British industrial competitive scheme is a positive step, but we would ask that the government goes further.
Thank you. Thank you.
The government must extend meaningful support to those outside of eligible sectors. We also need fast action to reduce the link between electricity and gas prices. New solar power is 11% cheaper than the cheapest fossil fuel, and onshore wind is 39% cheaper. Yet our electricity pricing system still leaves British consumers facing the fourth highest energy prices globally. The government has promised to look at decoupling electricity prices from gas. That work needs to move faster so households and businesses can benefit from cheaper renewable energy, not just energy intensive industries. The British industrial competitive scheme is a positive step, but we would ask that the government goes further.
Thank you. Thank you.
16:40
Speaker 6
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Speaker 6
Thank you, chair, and I'd like to also lend my support to this piece of legislation for the British Industrial Competitiveness Scheme. And the Secretary and the Minister will know that I have been campaigning on business energy costs for a long time, and we've talked at length on that. So I'm really pleased to be able to sit here today and support this initiative. One of the businesses in my constituency, Alcon, is an automotive manufacturer, and they are. Also doing advanced manufacturing, and they're going to be applying to the scheme. So they are really pleased and welcome that.
And as a member of the Business Innovation, Science and Trade Select Committee, we also similarly welcome these initiatives and particularly the the payment that will incorporate the 2026. As the Minister stated. But what I would like to to sort of ask him to do and hopefully speak with his good friend the Chancellor, is about further, further initiatives that can be done for those other businesses that at the moment don't qualify for this, particularly because if we want that growth in every postcode, we want to make sure that as much as possible, we're dealing with those energy costs that we know are stifling all businesses, not just those in advanced manufacturing or elsewhere.
So I wanted to lend my support, but ask him if he would go and petition on my behalf as well as I will do, so that we can make sure we support all businesses right across the country, not just in Tamworth.
And as a member of the Business Innovation, Science and Trade Select Committee, we also similarly welcome these initiatives and particularly the the payment that will incorporate the 2026. As the Minister stated. But what I would like to to sort of ask him to do and hopefully speak with his good friend the Chancellor, is about further, further initiatives that can be done for those other businesses that at the moment don't qualify for this, particularly because if we want that growth in every postcode, we want to make sure that as much as possible, we're dealing with those energy costs that we know are stifling all businesses, not just those in advanced manufacturing or elsewhere.
So I wanted to lend my support, but ask him if he would go and petition on my behalf as well as I will do, so that we can make sure we support all businesses right across the country, not just in Tamworth.
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16:41
Speaker 7
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Speaker 7
It's a pleasure to serve under your chairmanship. These regulations put the British Industrial Competitiveness Scheme into effect. Eligible manufacturers will be exempt from indirect costs of the renewable obligation and the capacity market, with the government saying other consumers won't pay more. In my constituency of North Somerset, we sit on the edge of the west of England's aerospace and advanced manufacturing cluster. These firms and their supply chains compete globally against rivals with far lower energy costs.
Cutting those costs protects skilled jobs here, and I support the regulations.
Cutting those costs protects skilled jobs here, and I support the regulations.
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Speaker 3
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Speaker 3
And thank you to honourable members who have taken part in the debate. I am grateful for the constructive tone, particularly from the opposition, with regards to this. As the honourable gentleman rightly says, we sat around the table with really superb advanced manufacturers from within the automotive sector in his constituency, and they deserve not just our praise but our action. And that's exactly what we're we're attempting to achieve through this today.
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Speaker 3
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Speaker 3
Well, he's getting slightly ahead of something I was about to come to in just a second, which was to say we are racing to make sure that as many companies as possible do get to that deadline. Of course, we'll keep things under under review. We want the maximum number of companies to to, to be eligible for this. It's also been described as a complex scheme. I think certainly the design of the of the scheme is complex, but we are hopeful that through the work we've done with the eligibility checker online, it's complex from my from my civil service team, but hopefully not for the businesses themselves as they're applying.
And I would urge members across the House to reach out to their manufacturers locally to make sure that they apply for this support, which is there. There is a consensus, understandably here, urging us to go further, which is completely fair. This is one of the key competitive disadvantages we have in this country. When Bix was first announced, we had envisaged that it would be eligible to around 6000 businesses, and that has been extended to 10,000 businesses. So already in the design of this, we've tried to go further. And both of my secretaries of state in both of my departments have been clear that they do have wider ambitions than this, and it is perhaps a little late.
I don't know if the the budget has been sent to the printers quite, quite yet, but I can assure my hon. Friend, that we, across both my departments will continue to make that case to Treasury. I would say that there is obviously an opportunity cost to. The greater the amount that we take on to the Exchequer, and then there is an opportunity cost for other industrial support that we can give. So we have to be careful to strike a balance. I would also mention that obviously this is not the only intervention to try to assist with energy costs.
We have the supercharger for particularly energy intensive industries. And we have, for example, the chemicals, the ceramics fund rather, which is specifically aimed at helping that sector, which is under stress with energy prices and to decarbonise, to electrify and to, to, to innovate there. But ultimately, the long term future for competitive energy prices in this country, after the experience of two fossil fuel shocks within five years, is to move forward towards cleaner, cheaper, more reliable power that we are in control of. So I am grateful to members across the House for their contributions to this debate and for their support for these regulations, because it is intended to challenge those long term competitiveness disadvantages.
It will benefit over 10,000 manufacturing businesses and high growth and strategic sectors across the country. We will review the scheme in 2030 to assess its continued effectiveness in supporting the competitiveness of manufacturing businesses, and I commend these regulations to the House.
And I would urge members across the House to reach out to their manufacturers locally to make sure that they apply for this support, which is there. There is a consensus, understandably here, urging us to go further, which is completely fair. This is one of the key competitive disadvantages we have in this country. When Bix was first announced, we had envisaged that it would be eligible to around 6000 businesses, and that has been extended to 10,000 businesses. So already in the design of this, we've tried to go further. And both of my secretaries of state in both of my departments have been clear that they do have wider ambitions than this, and it is perhaps a little late.
I don't know if the the budget has been sent to the printers quite, quite yet, but I can assure my hon. Friend, that we, across both my departments will continue to make that case to Treasury. I would say that there is obviously an opportunity cost to. The greater the amount that we take on to the Exchequer, and then there is an opportunity cost for other industrial support that we can give. So we have to be careful to strike a balance. I would also mention that obviously this is not the only intervention to try to assist with energy costs.
We have the supercharger for particularly energy intensive industries. And we have, for example, the chemicals, the ceramics fund rather, which is specifically aimed at helping that sector, which is under stress with energy prices and to decarbonise, to electrify and to, to, to innovate there. But ultimately, the long term future for competitive energy prices in this country, after the experience of two fossil fuel shocks within five years, is to move forward towards cleaner, cheaper, more reliable power that we are in control of. So I am grateful to members across the House for their contributions to this debate and for their support for these regulations, because it is intended to challenge those long term competitiveness disadvantages.
It will benefit over 10,000 manufacturing businesses and high growth and strategic sectors across the country. We will review the scheme in 2030 to assess its continued effectiveness in supporting the competitiveness of manufacturing businesses, and I commend these regulations to the House.
16:45
Speaker 1
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Speaker 1
A thank you question is that the Committee has considered the draft Renewable Obligation and Electricity Capacity Amendment. British Industrial Competitiveness Scheme Excluded Electricity Regulations 2026. As many as of that opinion say aye. I the contrary no. I think the ayes have it. The ayes have it. Order.