By Jonathan Menzies, Business Development Manager
The UK’s manufacturing base is once again under threat – and this time the challenge is structural, not cyclical.
According to a recent report highlighted by The Guardian today, British industry is facing some of the highest industrial energy prices in the developed world, with electricity costs sitting 70% higher than before Russia’s invasion of Ukraine and gas 60% higher. Almost 90% of firms have seen bills rise over the past five years, and 40% have already cut investment as a direct consequence. [theguardian.com]
For UK manufacturers – particularly energy intensive sectors such as metals, chemicals, paper, ceramics, food production, plastics and automotive – the implications are stark: suppressed competitiveness, delayed capital projects, and mounting risks of job losses, production cuts and offshoring.
A Worsening Structural Crisis
The Guardian’s analysis makes clear that the UK’s high-cost base is not merely the result of temporary geopolitical shocks. Instead, business groups blame:
- Failure to cap industrial energy prices
- Underinvestment in the UK’s ageing gas and electricity networks
- Outdated regulations governing energy supply and distribution
- Slow progress on grid modernisation and renewable infrastructure
Together, these weaknesses leave the UK exposed to volatility and at risk of accelerating deindustrialisation. With the UK reporting its worst goods trade performance on record in 2025, and manufacturing competitiveness eroding further, the urgency for action could not be clearer.
What This Means For Energy-Procurement Leaders
Senior leaders in energy intensive manufacturing now face a strategic inflection point. Decisions made over the next 12 months will influence cost structures, profitability and investment viability for the rest of the decade.
Key challenges now dominating boardroom discussions include:
- Budget instability driven by unpredictable forward energy prices
- Eroded margins due to energy costs rising faster than output prices
- Delays or cancellations of capital projects as cash is redirected towards essential operations
- Increased scrutiny from investors and auditors on risk management and cost control
- Supply chain fragility, particularly for firms dependent on heat-heavy processes
Energy costs are no longer an operational line item – they are a board-level strategic risk.
Where Manufacturers Do Have Levers To Pull
Although the macro picture is grim, the Guardian report notes a critical point: the government has not yet gone far enough in supporting industry. This means many firms are still missing out on available reliefs, exemptions and schemes that directly reduce electricity costs.
In our work with UK EII (Energy Intensive Industries), we consistently find that:
- Many energy intensive firms qualify for EII Exemptions, but have not yet applied.
- Businesses engaged in electro-intensive or heat-intensive processes often qualify for indirect cost compensation, sometimes worth £millions.
- Some companies are unaware that group structures, SIC codes, metering setups or legacy organisational changes may be preventing valid applications.
- Firms who previously failed to qualify may now do so under updated criteria.
In short – there is serious money on the table, but it requires expert assessment.
The Path Forward For UK Industry
Industry leaders should treat energy exposure with the same seriousness as tax, compliance or regulatory risk. This means:
- Conducting a full energy cost risk audit
- Exploring all available government-backed cost reduction schemes
- Correcting historical eligibility errors
- Ensuring procurement and finance teams have up-to-date regulatory knowledge
- Taking a proactive stance rather than waiting for policy change
The UK may be entering its most challenging energy era since the 1970s – but organisations that act decisively will be the ones that remain competitive
How Bonham & Brook Helps UK Energy-Intensive Businesses
Bonham & Brook supports UK manufacturers in mitigating the cost shocks described in The Guardian’s report. Our specialists help clients:
- Check whether your business – or any site within your group – qualifies for EII Exemptions
- Recover unclaimed or underclaimed relief through retrospective correction
- Navigate complex eligibility rules around SIC codes, metering, and group structures
- Secure cost reductions of up to 60–85% on eligible non-commodity electricity charges
- Build a forward strategy to protect your organisation against future price volatility
If your manufacturing sites have seen energy bills surge, now is the time to assess your eligibility and protect your margins.
Next Steps
Get in touch with Bonham & Brook’s Energy Team to begin your EII assessment today. If you would like expert support in navigating these changes, contact us at jmenzies@bonhamandbrook.co.uk
Business Development Manager
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