Following recent engagement with Ministers, MPs and industry stakeholders, ALFED has submitted a Parliamentary briefing highlighting the growing impact of industrial energy costs on the competitiveness of UK manufacturing and the future resilience of the aluminium sector.
Developed in collaboration with the Cast Metals Federation (CMF), the briefing forms part of ALFED’s ongoing engagement with Government on industrial competitiveness, energy policy and manufacturing growth, including discussions surrounding the British Industrial Competitiveness Scheme (BICS).
Energy Costs Are Becoming a Strategic Threat to Manufacturing
A key message within the briefing is that industrial energy costs are no longer simply a business overhead. Increasingly, they are influencing investment decisions, production levels, recruitment plans and the long-term viability of manufacturing operations across the UK.
ALFED has highlighted growing evidence from industry that rising energy costs are contributing to workforce reductions, recruitment freezes, deferred investment and reduced production activity. In some cases, members have reported production being scaled back or investment opportunities being delayed as businesses seek to remain competitive against international counterparts facing significantly lower energy costs.
The briefing makes clear that this is not simply a competitiveness issue. It is increasingly a jobs, skills and industrial resilience issue.
As energy-intensive manufacturing activity comes under pressure, the sector risks losing valuable technical expertise, apprenticeship opportunities and specialist engineering skills that take years to develop and are difficult to replace once lost.
Supporting Growth, Reindustrialisation and Investment
ALFED’s submission also emphasises the important role that aluminium plays in supporting UK economic growth, industrial resilience and the transition to a low-carbon economy.
The UK aluminium sector contributes approximately £9.4 billion in Gross Value Added (GVA) and supports critical supply chains across automotive, aerospace, defence, construction, infrastructure, transport and clean energy technologies.
Whilst welcoming the introduction of BICS, ALFED has highlighted that support schemes alone will not resolve the UK’s wider competitiveness challenge.
With more than 250,000 manufacturing facilities operating across the UK, the briefing argues that long-term growth and reindustrialisation will ultimately depend on creating a competitive operating environment for all manufacturers, rather than relying solely on targeted support mechanisms.
A central recommendation is that industrial electricity should be recognised as a strategic economic input and treated differently from domestic energy consumption, reflecting its role in supporting employment, investment, exports and economic growth.
Protecting Strategic Manufacturing Capability
The briefing also raises concerns regarding the exclusion of aluminium casting and other non-ferrous processing activities from current BICS eligibility proposals.
ALFED and CMF have called on Government to review the evidence underpinning these classifications and ensure that industrial competitiveness policies recognise the importance of complete manufacturing supply chains rather than focusing on isolated sectors.
The aluminium value chain supports a wide range of strategically important industries, and maintaining domestic processing capability will be critical to the UK’s ambitions around resilience, growth and decarbonisation.
Key Messages to Government
Through the briefing, ALFED is calling on Government to:
- Deliver a long-term strategy to improve UK industrial electricity competitiveness.
- Recognise the relationship between energy costs, employment, skills retention and investment.
- Review the exclusion of non-ferrous casting activities from BICS.
- Support complete manufacturing supply chains rather than isolated sectors.
- Establish ongoing industry engagement throughout the implementation and review of industrial competitiveness policies.
- Create the conditions necessary for long-term manufacturing investment, growth and reindustrialisation.
Continuing to Represent Members
This briefing forms part of ALFED’s wider programme of engagement with Government, Parliament and stakeholders on behalf of the UK aluminium sector.
We will continue to ensure that members’ experiences and concerns are represented in discussions around industrial strategy, energy policy, trade, competitiveness and decarbonisation, whilst advocating for policies that support a thriving, competitive and sustainable aluminium industry.
Members wishing to discuss the briefing or share examples of how energy costs are affecting their business are encouraged to contact the ALFED team.
To view the full joint parliamentary briefing document, please click here.
