The UK Modern Industrial Strategy is a 10-year government plan designed to increase business investment, strengthen industrial competitiveness and support economic growth. In 2026, the strategy is moving into its delivery phase, with measures covering manufacturing, energy costs, technology, research, skills, infrastructure and business investment.

Manufacturers are a major focus because electricity costs, investment requirements, international competition and access to skilled workers can affect their ability to expand. One of the central measures is the British Industrial Competitiveness Scheme, which is designed to reduce electricity policy costs for eligible manufacturing businesses from 2027.

The strategy also supports wider investment across eight growth-driving sectors, including advanced manufacturing, clean energy industries, life sciences, digital and technologies, defence, creative industries, financial services, and professional and business services. Businesses may benefit from different measures depending on their sector, activities, location and eligibility.

Official overview: The UK Modern Industrial Strategy.

1. What is the UK Modern Industrial Strategy?

The Modern Industrial Strategy is a long-term economic plan intended to provide businesses with greater certainty when making investment decisions. It identifies sectors with growth potential and sets out measures intended to improve the conditions for companies to invest, innovate, recruit and expand.

The strategy addresses barriers that can make investment more expensive or difficult, including electricity prices, access to finance, planning delays, infrastructure constraints, skills shortages, regulation and the adoption of new technologies.

Rather than focusing on a single industry, the plan combines sector-specific measures with wider reforms that can affect companies across the economy. Manufacturing is a central part of this approach because industrial production depends on reliable energy, transport links, supply chains, skilled workers and access to investment.

The strategy also seeks to support regional economic growth by strengthening industrial clusters, research partnerships and local supply chains. This approach is intended to help businesses expand beyond established economic centres and create employment in different parts of the UK.

Read the official strategy: Industrial Strategy policy paper and sector plans.

2. Which eight sectors are covered by the strategy?

The government has identified eight growth-driving sectors for targeted policy support. Each sector has different challenges and opportunities, so individual measures can vary.

Manufacturing companies may also operate within supply chains that serve several of these sectors. Eligibility for a particular scheme depends on the published definitions and conditions rather than the general sector list alone.

Official source: Industrial Strategy and sector plans.

3. British Industrial Competitiveness Scheme: What manufacturers should know

The British Industrial Competitiveness Scheme, commonly known as BICS, is a key measure designed to reduce electricity costs for eligible manufacturing businesses in Great Britain. It is intended to improve competitiveness and encourage investment in strategically important industrial activities.

Under the published strategy, the scheme is expected to reduce electricity costs by approximately £35 to £40 per megawatt-hour from 2027 through exemptions from selected electricity policy costs. The measure is intended to support thousands of businesses, including qualifying manufacturing industries and foundational manufacturers that supply important inputs to other growth sectors.

The government published applicant guidance in October 2026. Businesses should use this guidance to understand the proposed scheme, the relevant industry definitions and the information needed to establish eligibility.

BICS is not a general cash grant. It is an electricity cost support measure. A company should not assume that it will receive a direct payment equal to the estimated reduction or that its total electricity bill will fall by the same percentage.

4. Which manufacturing businesses could qualify for BICS?

BICS is designed to support eligible manufacturing businesses within the growth-driving sectors and the foundational manufacturing industries that provide essential inputs to those sectors.

The strategy identifies industrial activities such as automotive and aerospace manufacturing as examples of frontier industries. Foundational manufacturing industries, including qualifying chemical production, can also be important because their materials and components are used by other manufacturers.

A business operating in manufacturing is not automatically eligible. The relevant industry definitions, business activities and scheme conditions determine whether a company qualifies.

Businesses should review the official applicant guidance and assess the activity carried out at the relevant site. Where an organisation operates several business activities, it should not assume that every part of its operations will receive the same treatment.

Practical checks for manufacturers

• Identify the main manufacturing activities carried out by the business.
• Check whether the relevant industrial activity is included in the published eligibility definitions.
• Confirm that the business operates within the geographic scope of the scheme.
• Review the electricity supply and billing arrangements relevant to the application.
• Prepare business and site information requested in the official guidance.
• Check any application or verification deadlines published by the responsible department.

These checks are a starting point, not a substitute for the formal eligibility rules. Businesses should obtain confirmation from the scheme administrator where their activities or classification are unclear.

Official source: British Industrial Competitiveness Scheme guidance for applicants.

5. How the scheme could reduce industrial electricity costs

Industrial electricity bills contain several elements, including wholesale electricity costs, network charges, policy-related costs, supplier charges and taxes. BICS is designed to address selected policy costs rather than remove every component of an electricity bill.

The strategy estimates a reduction of approximately £35 to £40 per megawatt-hour for eligible businesses. The actual financial effect on an individual company depends on its eligible electricity consumption, scheme treatment and applicable rules.

The following illustration shows how the estimated reduction could translate into annual savings if the full reduction applies to the stated eligible electricity consumption.

These figures are illustrative calculations, not guaranteed savings or individual funding awards. They assume the estimated reduction applies to the entire stated electricity volume. The actual eligible volume and financial benefit must be confirmed under the scheme rules.

Businesses should use their actual electricity consumption and billing information when assessing the potential effect on operating costs.

6. Existing support for energy-intensive industries in 2026

BICS is not the only energy cost measure associated with the Industrial Strategy. The government is also increasing support under the Network Charging Compensation arrangements for eligible energy-intensive industries.

The Network Charging Compensation scheme provides eligible businesses with compensation for part of specified electricity network charges. Under the announced changes, the compensation level increases from 60% to 90% for qualifying firms covered by the relevant arrangements.

The government has described this uplift as support for around 500 highly energy-intensive businesses. It is separate from BICS and has its own eligibility rules.

Businesses should also distinguish the Network Charging Compensation scheme from other measures under the British Industry Supercharger and Energy-Intensive Industries Compensation Scheme. The precise relief available depends on the relevant scheme and the company circumstances.

Official source: Government announcement on electricity cost support for British businesses.

7. What other business support is available?

The Industrial Strategy includes more than energy cost support. Depending on the company and project, businesses may be able to explore research funding, innovation competitions, workforce training, export assistance, finance and other sector-specific programmes.

Research and development funding

Innovate UK and other public funding bodies run competitions for eligible research, development and innovation projects. These can support technical development, prototypes, feasibility studies or commercialisation where the relevant competition permits those activities.

Funding is normally competitive and tied to a defined project. Businesses must check applicant eligibility, collaboration requirements, match funding conditions, eligible costs and the closing date.

Search Innovate UK funding competitions.

Business finance and investment

Some businesses may be able to explore finance through the National Wealth Fund, the British Business Bank or other finance providers, depending on the project and financial circumstances. These organisations do not provide identical products, and funding should not be assumed to be available for every company.

British Business Bank and National Wealth Fund.

Skills and workforce development

The strategy also places emphasis on technical skills, apprenticeships and training for priority sectors. Employers should check relevant programmes for eligibility, the types of training supported and any contribution required from the business.

Official apprenticeship and skills information.

Export and international trade support

Companies looking to expand overseas can explore government export guidance, international market information and trade support. Availability depends on the market, sector and service required.

Business.gov.uk support and export guidance.

8. Manufacturing investment and technology adoption

The strategy aims to encourage investment in modern production, research and industrial technology. Manufacturers can examine whether automation, robotics, digital systems or more efficient production processes would help improve quality, productivity and resilience.

Potential investment areas include:

• Robotics and automated production equipment.
• Digital monitoring and predictive maintenance systems.
• Energy efficiency improvements and process optimisation.
• Research and development of new industrial products.
• Advanced materials and component manufacturing.
• Low-carbon industrial technologies and cleaner production methods.
• Workforce training to support new machinery and digital systems.

These are examples of potential business investment activities, not a list of expenses automatically covered by one government grant. The appropriate funding route depends on the project and any relevant competition or finance product.

Before committing to equipment or development costs, companies should confirm whether the funding rules permit expenditure incurred before an application or award. Some programmes do not cover costs incurred before a specified project start date.

9. How small and medium-sized businesses can prepare

Small and medium-sized enterprises can begin by identifying the main barrier to growth and determining whether the Industrial Strategy offers a relevant support route. A company facing high electricity costs may need a different programme from one seeking research funding or export assistance.

1. Identify the business objective. Decide whether the priority is lower energy costs, research and development, equipment investment, recruitment or market expansion.
2. Check the sector definition. Review the official description of the relevant Industrial Strategy sector and any scheme-specific industry classification.
3. Collect financial information. Prepare recent accounts, forecasts, project budgets and relevant electricity consumption data where required.
4. Build a clear project plan. Explain the challenge, proposed solution, costs, milestones and expected business benefits.
5. Review funding terms. Check match funding, eligible expenditure, business size rules, collaboration requirements and deadlines.
6. Use official application channels. Apply only through the responsible government department or recognised funding body.
7. Keep records. Retain applications, award letters, invoices, project evidence and communications as required by the scheme.

Companies should avoid treating a policy announcement as proof that a specific grant is open. The strategy sets the overall direction, while detailed rules and application windows determine whether a business can receive support.

10. How the strategy could affect energy-intensive industries

Energy-intensive businesses can be particularly exposed to electricity prices because energy is a substantial part of production costs. Industries such as steel, chemicals, glass, paper and cement can also compete with overseas producers operating under different energy and regulatory conditions.

The Industrial Strategy combines near-term support for qualifying firms with a longer-term emphasis on clean energy, infrastructure and industrial competitiveness. Lower selected policy costs can help eligible businesses manage operating expenses, while reliable energy supply and investment in networks remain important for long-term industrial planning.

However, no single policy removes all commercial risks. Wholesale prices, supplier contracts, production volumes, network charges, equipment efficiency and international market conditions can still affect the total cost of operating a factory.

Businesses should therefore assess energy support as one element of a broader cost and investment strategy. Actual savings should be calculated using the company electricity profile and the applicable scheme conditions.

11. Is the Industrial Strategy a grant scheme?

No. The Modern Industrial Strategy is a broad policy framework rather than one grant application. It contains measures and commitments covering multiple sectors and different types of support.

Some measures provide direct financial support through competitive funding awards or finance products. Others change the business environment through electricity cost relief, planning reform, infrastructure investment, trade support, skills development or research programmes.

Businesses should identify the specific policy or programme relevant to their needs. A company seeking a grant for a new production process should look for an appropriate funding competition, while a manufacturer seeking BICS electricity relief should follow the dedicated scheme guidance.

Official overview: The UK Modern Industrial Strategy: business overview.

12. Frequently asked questions

Conclusion

The UK Modern Industrial Strategy in 2026 focuses on increasing investment, supporting priority industries and improving the conditions for business growth. Manufacturing is a major part of this agenda, with electricity costs, technology adoption, skills and supply-chain competitiveness among the central issues.

The British Industrial Competitiveness Scheme is designed to reduce selected electricity policy costs for eligible manufacturers from 2027. Separately, the government has increased Network Charging Compensation to 90% for qualifying energy-intensive firms under the relevant arrangements.

Businesses should distinguish these energy measures from grants and finance programmes. The most practical next step is to identify the support relevant to the company, review the latest official eligibility rules and confirm whether a specific application route is available.