Draft Renewables Obligation and Electricity Capacity (Amendment) (British Industrial Competitiveness Scheme Excluded Electricity) Regulations 2026

Blair McDougall Excerpts

Tuesday 27th October 2026 General Committees

[The Parliamentary Under-Secretary of State for Business, Innovation, Science and Trade (Blair McDougall)]

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.

It is a pleasure to serve under your chairmanship, Mr Dowd. The draft regulations were laid before the House on 7 September 2026. I acknowledge the Joint Committee on Statutory Instruments, which provided helpful scrutiny of the regulations and did not draw them to the special attention of the House. I also acknowledge that the Secondary Legislation Scrutiny Committee reported on the regulations and did not draw them to the special attention of the House.

These regulations deliver the British industrial competitiveness scheme, which is a flagship commitment of the modern industrial strategy. BICS 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.

BICS will address the persistent competitiveness challenges facing British manufacturers by reducing electricity costs for eligible businesses. It will drive investment and economic growth in strategically important sectors across Great Britain. BICS will support frontier manufacturing industries within the IS-8 sectors and the foundational manufacturing industries that provide key inputs to their supply chains. This includes eligible businesses in automotive, aerospace, clean energy, life sciences, chemicals and steel, and many more.

The Government are committed to maintaining a competitive and resilient industrial base, but persistently high energy prices, especially 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 that are facing the British manufacturing industry and stifling growth, which is precisely why BICS has been introduced.

BICS 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, which pass them on to domestic and non-domestic consumers through their electricity bills. BICS is expected to cut electricity costs by up to 25%, or £40 per megawatt-hour, and over 10,000 manufacturing businesses will be eligible.

The scheme is designed to support manufacturing businesses in high-growth and strategic sectors to be more internationally competitive, and to 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.

The regulations are an important part of delivering that objective. They implement the renewables obligation and capacity market exemptions, and they enable the renewables obligation level for the 2027-28 obligation period to be revised in the light of BICS. They also provide for the BICS 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 that 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.

BICS will support British manufacturing businesses to thrive and become more competitive on the international market. It will allow them the freedom to invest further in their business and help drive economic growth across Great Britain. I commend these regulations to the Committee.

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[Blair McDougall]

I thank Members for taking part in this debate. I am grateful for the constructive tone, particularly from the Opposition. As the hon. Member for Hinckley and Bosworth said, we sat around the table with some superb advanced manufacturers from the automotive sector in his constituency. They deserve not just our praise but our action, which is exactly what we are attempting to achieve with these regulations.

[Peter Fortune (Bromley and Biggin Hill) (Con)]

It has just occurred to me that the cut-off date is 1 December. If firms miss that, will they have to wait a whole year to reapply, or is there some sort of mechanism to support them?

[Blair McDougall]

The hon. Gentleman is getting slightly ahead of what I was about to say, which is that we are racing to make sure that as many companies as possible make that deadline. Of course, we will keep things under review as we want the maximum number of companies to be eligible.

The scheme has been described as complex, and certainly its design is complex. Although it is complex for my civil service team, we are hopeful that, through the work we have done with the online eligibility checker, it will not be complex for businesses as they apply. I urge Members across the House to reach out to their local manufacturers to make sure they apply for this support.

There is an understandable consensus urging us to go further, which is completely fair. Energy prices are one of the country’s key competitive disadvantages. When BICS was first announced, we envisaged that around 6,000 businesses would be eligible, and that has now been extended to 10,000 businesses. With its design, we have already tried to go further. Both the Secretary of State for Business, Innovation, Science and Trade and the Secretary of State for Energy Security and Net Zero have made it clear that they have wider ambitions.

It is perhaps a little late—I do not know whether the Budget has been sent to the printers—but I can assure my hon. Friend the Member for Tamworth that both my Departments will continue to make that case to the Treasury, but I would say that drawing a greater amount on the Exchequer obviously has an opportunity cost for other industrial support we can give. We have to be careful to strike a balance.

Obviously, this is not the only intervention to assist with energy costs. We have the supercharger for energy-intensive industries, and the ceramics fund is specifically aimed at helping that sector, which is under stress with energy prices, to decarbonise, to electrify and to innovate. Ultimately, the long-term future for competitive energy prices in this country, after the experience of two fossil fuel shocks in five years, is to move towards cleaner, cheaper, more reliable power that we control.

I am grateful to Members for their contributions to this debate and for their support for these regulations. BICS is intended to challenge the long-term competitiveness disadvantages, and it will benefit over 10,000 manufacturing businesses in 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. I commend the regulations to the Committee.

Question put and agreed to.