The British Industrial Competitiveness Scheme (BICS) will cut electricity bills by up to 25% for over 10,000 UK energy-intensive manufacturers from April 2027. Announced by Chancellor Rachel Reeves on 16 April 2026, the scheme was expanded from 7,000 to 10,000 businesses. A one-off payment in 2027 will compensate eligible firms for support they would have received from April 2026. Household bills are not affected.
Last reviewed: May 2026
The British Industrial Competitiveness Scheme (BICS) is a government programme designed to reduce electricity costs for energy-intensive UK manufacturers. Chancellor Rachel Reeves confirmed the final design and expanded eligibility on 16 April 2026, covering over 10,000 businesses across steel, automotive, aerospace, pharmaceuticals, and their supply chains.
What Is BICS and How Does It Work?
BICS works by exempting eligible manufacturers from the indirect costs of three electricity policy schemes: the Renewables Obligation, Feed-in Tariffs, and the Capacity Market. These policy costs are currently recovered through electricity bills and represent a significant proportion of industrial electricity costs. Removing them is worth around £35 to £40 per megawatt hour for qualifying electricity use.
From April 2027, eligible firms are expected to see electricity bills cut by up to 25%. The scheme is expected to cost around £600 million a year from that point, funded through a combination of wider energy system changes and government spending. The government has confirmed that households and non-eligible businesses will see no increase in their bills as a result.
Which Businesses Are Eligible?
The scheme covers energy-intensive manufacturing businesses and, in some cases, businesses in their supply chains. The April 2026 announcement expanded eligibility from approximately 7,000 to over 10,000 businesses, an increase of around 40%. Sectors specifically named include steel, automotive, aerospace, and pharmaceuticals.
Eligibility is not automatic for every business with high electricity use. The scheme targets energy-intensive manufacturing, and mixed-use sites with production, warehousing, office space, or distribution may face more complex eligibility assessments. BICS sits alongside other existing electricity discount mechanisms including the British Industry Supercharger for Energy Intensive Industries and the Network Charging Compensation Scheme.
The Backdated One-Off Payment
One significant aspect of the April 2026 announcement is a confirmed one-off payment to eligible businesses in 2027. This payment compensates firms for the support they would have received if BICS had been operational from April 2026, effectively backdating the benefit by one year. This was a response to sector lobbying from automotive, steel, and aerospace businesses that had argued the delayed start date put them at a competitive disadvantage.
Timeline and Legislation
Legislation needed to deliver the scheme was expected to be in place by Autumn 2026, following a consultation on implementation details that closed in May 2026. The support does not begin appearing on bills until April 2027. Manufacturers that may qualify are advised to start reviewing their eligibility, meter data, and energy contracts now rather than waiting for the scheme to go live, as the one-off backdated payment will be calculated on actual consumption from April 2026.
What BICS Does Not Cover
BICS does not reduce ordinary business electricity bills for non-manufacturing firms, offices, retailers, or most SMEs outside energy-intensive supply chains. It is a targeted scheme for industrial competitiveness, not a general business energy relief measure. Policy Connect has called for the scheme to be extended to all 30,000 frontier manufacturing businesses identified in the Industrial Strategy, arguing the current scope does not go far enough.
Frequently Asked Questions
What is the British Industrial Competitiveness Scheme?
A government scheme that will exempt eligible energy-intensive UK manufacturers from certain electricity policy costs, reducing their electricity bills by up to 25% from April 2027. It covers the indirect costs of the Renewables Obligation, Feed-in Tariffs, and Capacity Market, worth around £35 to £40 per MWh.
Which businesses qualify for BICS?
Energy-intensive manufacturers and some supply chain businesses. Sectors named include steel, automotive, aerospace, and pharmaceuticals. Eligibility covers over 10,000 businesses following the April 2026 expansion. Mixed-use or non-manufacturing businesses generally do not qualify.
When does BICS start?
Electricity bill reductions begin from April 2027. A one-off payment in 2027 will compensate eligible firms for the support they would have received from April 2026 had the scheme been in place earlier.
Will BICS increase household energy bills?
The government has confirmed that households and non-eligible businesses will see no increase in their energy bills as a result of BICS. The scheme is funded through wider energy system changes and government spending.
How do businesses apply for BICS?
The full application and registration process will be confirmed once legislation is in place, expected by Autumn 2026. Businesses that may be eligible are advised to begin reviewing meter data, site boundaries, and energy contracts now, as consumption from April 2026 will be relevant to the backdated payment calculation.
