Draft Energy-Intensive Industry Electricity Support Payments and Levy (Amendment) Regulations 2026

Chris McDonald Excerpts

Wednesday 4th February 2026 General Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Chris McDonald)]

I beg to move,

That the Committee has considered the draft Energy-Intensive Industry Electricity Support Payments and Levy (Amendment) Regulations 2026.

The draft regulations were laid before the House on 12 January 2026. I acknowledge the Joint Committee on Statutory Instruments, which provided a helpful review of the regulations but did not draw them to the special attention of this House or the other place, and the Secondary Legislation Scrutiny Committee, which has reported the regulations as an instrument of interest to Members.

The draft regulations aim to deliver one of the Government’s commitments in the modern industrial strategy: to increase electricity price support to energy-intensive industries through the British industry supercharger. Energy-intensive industries include foundational manufacturing sectors that are critical to the UK’s economic security and the delivery of the modern industrial strategy. They include steel, chemicals, cement, electrical components and gigafactories.

The British industry supercharger was introduced in 2024 to reduce the electricity price gap between Great Britain and comparable industrial countries in western Europe, such as France, Germany and the Netherlands. The supercharger is made up of three measures: the energy-intensive industries exemption scheme, which offers 100% exemption from contracts for difference, the feed-in tariff and the renewables obligation electricity policy levies; the capacity market exemption, which offers 100% exemption from the costs of funding the electricity capacity market; and the network charging compensation scheme, which provides 60% compensation on an energy-intensive industry’s electricity network costs.

While the supercharger package of measures has been successful, the Government recognise that there remains an electricity price gap between Great Britain and comparable industrial economies in Europe, which places British energy-intensive industries at a competitive disadvantage while increasing the risk of carbon leakage and the offshoring of vital manufacturing jobs and investment. That is why the Government’s modern industrial strategy included the commitment to increase from 60% to 90% the level of relief offered by the network charging compensation scheme. That will reduce electricity bills for currently supported energy-intensive industries by a further £7 to £10 per megawatt-hour, bringing the total reduction to £65 to £87 per megawatt-hour, and will deliver up to £420 million of electricity price support per annum.

The draft regulations aim to further close the electricity price gap, ensuring that British foundational manufacturing can thrive and grow. They will help to ensure that the 550 companies that currently benefit from the scheme will continue to attract new investment and preserve well-paid jobs and crucial supply chains across Britain’s manufacturing heartlands. The draft regulations will amend the Energy-Intensive Industry Electricity Support Payments and Levy Regulations 2024 to make provision for increasing the level of relief offered through the network charging compensation scheme.

In conclusion, the draft regulations will help to reduce electricity costs for the most energy and trade-intensive industries such as steel, chemicals, cement and battery manufacture. They will help to reduce the risk of carbon leakage by retaining critical manufacturing investment and jobs in Britain. I commend them to the Committee.

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[Chris McDonald]

It is very pleasing to see a reasonable level of support across the Committee, not only for the draft regulations but for our energy-intensive industries. Perhaps I can answer the question from the right hon. Member for Melton and Syston while talking at length about ceramics, which my hon. Friend the Member for Stoke-on-Trent Central and I both enjoy.

A general review of eligibility for the supercharger is planned for this coming year, which would certainly be an opportunity to look at eligibility of other sectors. I have already said, and am happy to repeat to my hon. Friend, that I have tasked my officials with looking carefully at the case for the inclusion of the ceramics industry. Qualification for the supercharger system currently relates both to energy intensity and to the risk of export leakage. As my hon. Friend said, the ceramics industry is gas-intensive, which is possibly why it has previously fallen below the threshold, but of course we want the ceramics industry to electrify. The difference between gas and electricity costs is a concern for the industry.

My hon. Friend also asked about the funding of the scheme. To be clear, we do not expect any increase in non-domestic or domestic bills as a consequence of the change. This is partially a result of the change in the renewables obligation and feed-in tariff schemes, from the retail prices index to the consumer prices index. Essentially, we propose to pay for the change by bearing down on costs in the system.

The hon. Member for South Cambridgeshire talked very well about the challenges for small businesses. Over the past few months, as she will understand, I have laid out improvements in energy costs for energy-intensive industries, through the supercharger, and for manufacturing more generally, through the British industrial competitiveness scheme. Some of those manufacturing businesses will be small businesses, but I appreciate that she was talking about the small business sector more widely. I, too, am concerned about that, but I am leaving no stone unturned in looking at how we can help all businesses across the country with their energy costs. That takes me back to the general point that the shadow Minister made about the level of uncompetitive energy in the UK. Fundamentally, this policy is designed to provide a measure of support as a consequence.

I am grateful that the shadow Minister welcomes the draft regulations. He described energy-intensive industries as the backbone of our economy. I could not agree more. Having worked in the steel industry for a long time, it is so nice to hear such warm words, even though the Opposition are perhaps late converts. The former Prime Minister scrapped industrial strategy; he was not keen on it, although a previous Conservative Prime Minister was, which is nice. Maybe we have consensus on industrial policy now; that would be very pleasing to see.

The shadow Minister described the environment around energy as hostile. I thank him for laying out so clearly the failure of his Government’s energy policy. Ultimately, this is a result of our reliance on gas in the system. The Opposition might not be keen to acknowledge it, but not only are solar, onshore wind and offshore wind the cheapest forms of energy available to us, but they create demand for foundational industries and offer great jobs. We have outlined an increase of 400,000 jobs in clean energy industries—good jobs for people across the whole of the country. Of course, that home-grown energy offers energy security too.

Many Members across the House—not only those on the Government side, but Liberal Democrats—are content to bask in the warm glow of solar power, onshore wind and offshore wind. I appreciate that the Opposition are feeling a chill breeze up their right flank and are tacking across to the climate-denying policies of Reform, but that cannot be the basis on which the country’s energy policy is determined. We must focus instead on low-cost energy for consumers and industry, on energy security and on good jobs, and that is what renewable energy delivers. Through this mechanism, we will ensure that our energy-intensive industries continue to be competitive in Europe.

Question put and agreed to.