An Industry Under Pressure
The warning arrives as UK households and businesses face rising energy costs driven by the disruption of global gas markets during the Iran conflict. In May, regulator Ofgem announced that household energy prices would rise by 13% from July, with the war pushing wholesale gas costs higher. For manufacturers, the squeeze is more acute: nine in ten companies reported energy bills increasing at least moderately since 2022, and more than half identified energy costs as their biggest challenge in coming years. bbc.com transportandenergy.com
Seven in ten manufacturers said they are passing higher bills on to consumers, while rising costs squeeze margins and delay investment. Stephen Phipson, CEO of Make UK, said the incoming government “must act quickly, ensuring support reaches the whole manufacturing base while investment decisions are being made now.” transportandenergy.com
Structural Failures and International Competition
The report argues that the UK’s electricity system is “structurally failing manufacturers” because gas still sets the wholesale price of power too often, policy levies are loaded onto electricity bills, and slow grid connections add further cost. Dale Vince, founder of Ecotricity, called for an end to the “market absurdity” that ties all electricity prices to gas. transportandenergy.com
The concerns echo broader European worries about industrial competitiveness. According to the International Energy Agency, electricity prices for energy-intensive industries in the EU averaged more than twice those in the United States and roughly 50% above those in China in 2025. In February, prominent executives urged the European Commission to take immediate action on energy prices to prevent further erosion of competitiveness against American and Chinese rivals. iea.org reuters.com cnbc.com
Government Response
The UK government announced the British Industrial Competitiveness Scheme in late 2025, promising to cut electricity bills by up to 25% for more than 7,000 manufacturers by exempting them from certain green energy levies — but implementation is not scheduled until 2027. Make UK is calling for the scheme to be delivered this year, extended to all manufacturers, and for policy costs to be moved off electricity bills into general taxation. bbc.com gov.uk transportandenergy.com
