The Autumn Budget was an important test of the Government’s commitment to reindustrialising Britain. For the UK aluminium sector, it has left one of the most significant barriers to investment and growth largely unresolved: the high cost of industrial electricity.
While ALFED welcomes confirmation of support through the British Industrial Competitiveness Scheme (BICS) and recognises the Government’s wider ambitions for manufacturing, the measures announced do not go far enough to address the fundamental cost disadvantage facing UK aluminium businesses.
The Government’s own Budget acknowledges that UK industrial energy prices are among the highest in Europe. Yet manufacturers continue to face electricity costs that undermine their ability to compete with international producers, invest in new capacity and accelerate decarbonisation.
Recognising the problem is not the same as solving it.
For aluminium businesses, this is frustrating. Global demand for aluminium continues to grow, driven by automotive, construction, packaging, infrastructure, defence and the transition to a lower-carbon economy. The UK has the expertise, recycling capability and manufacturing infrastructure to capture more of that opportunity.
However, without internationally competitive energy prices, there is a real risk that investment and production will increasingly take place elsewhere.
Industrial energy: Support is welcome, but the fundamental problem remains
The confirmation of BICS is a positive development, with its wider recognition of foundational manufacturing and supply chains.
The scheme is expected to provide eligible businesses with electricity bill reductions of approximately 20–25% through exemptions from specified policy costs.
ALFED has consistently called for support that reflects the breadth of the aluminium value chain, and we welcome progress towards that objective.
But BICS is not a complete solution.
Reducing certain policy costs does not resolve the underlying wholesale electricity price disadvantage, nor does it guarantee that all aluminium businesses will receive meaningful support.
For energy-intensive manufacturers, remelters, recyclers and processors, high electricity prices are not simply an additional operating expense. They directly affect production decisions, margins, investment confidence and the viability of future projects.
This is concerning when Government is simultaneously asking industry to invest in electrification, cleaner technologies and greater domestic processing capability.
The Budget includes longer-term energy market proposals, but much of the detail remains subject to consultation or future implementation.
ALFED’s concern is that industry is being asked to make investment decisions today against costs that Government has yet to bring under control.
If reindustrialisation is to become a commercial reality, rather than simply an industrial policy ambition, competitive energy prices must be treated as an immediate priority.
Rising employment and operating costs add to the pressure
Energy is not the only challenge.
The Budget confirms a further increase in the National Living Wage from April 2027. While the rate of increase has moderated, employers continue to manage the cumulative impact of higher wage bills, employer National Insurance contributions, pension obligations and the requirements of employment legislation.
ALFED supports fair pay, workforce development and good employment practices. However, Government must also recognise the commercial realities facing manufacturers, particularly SMEs operating on tight margins.
Across the aluminium supply chain, businesses are managing increases in energy, labour, transport, insurance, compliance and other operating costs.
Individually, some measures may appear manageable. Collectively, they can significantly weaken the business case for recruitment, expansion and investment.
The Budget offers measures intended to encourage business investment and reduce administrative burdens, but these do not remove the wider cost pressures already affecting manufacturers.
A credible growth strategy must address the cost of running and expanding a manufacturing business, not simply offer incentives to invest.
Trade and tariff policy: Greater certainty, but strategic questions remain
Alongside the Budget, there was also the confirmation that 269 existing import duty suspensions will be extended to 31 December 2028, providing continuity for businesses using affected materials and inputs.
The new duty suspension application window, opening on 11 November 2026, also offers an opportunity for businesses to raise specific tariff concerns.
However, tariff policy must be considered as part of a wider industrial strategy.
The UK needs a more proactive approach to understanding which materials and products it must import, where domestic production capability already exists, and where there are opportunities to retain or create greater value through UK processing.
Members should review the relevant commodity codes through the Government’s published duty suspension guidance.
CBAM: The principle is welcome, but implementation matters
ALFED continues to support the objective of preventing carbon leakage and ensuring that UK producers are not disadvantaged by imports manufactured under different carbon-cost regimes.
The Budget confirms further planned changes to the UK Carbon Border Adjustment Mechanism, including country-specific default emissions values from 2029 and consultation on potential expansion to refined products.
However, businesses need clarity, proportionate compliance requirements and effective UK–EU alignment.
A poorly coordinated approach risks creating additional administrative costs and uncertainty for manufacturers and their customers.
For the aluminium sector, CBAM must support competitive, lower-carbon domestic production rather than introduce further complexity into already challenging trading conditions.
ALFED’s response: Reindustrialisation requires competitive manufacturing conditions
The Government has rightly recognised the strategic importance of foundational industries and the opportunities presented by growing demand for aluminium.
However, industrial ambition cannot compensate for an uncompetitive cost base.
UK aluminium businesses are being encouraged to invest, innovate, decarbonise and expand domestic production while continuing to face energy and operating costs that can make those investments less attractive than comparable opportunities overseas.
That contradiction must be addressed.
ALFED will continue to press Government for meaningful action on industrial electricity prices, effective and accessible BICS support, proportionate employment and regulatory costs, strategic trade policy and a commercially workable approach to CBAM.
The Budget has taken steps in the right direction, but it has not delivered the decisive action on industrial energy costs that manufacturers need. If Government wants more aluminium to be produced, recycled and processed in Britain, it must make Britain a competitive place to do so.
ALFED will continue to make that case directly to Ministers, officials and policymakers, supported by evidence from our members.
Member feedback
We would welcome members’ views on the Budget and its practical implications, particularly the impact of electricity costs on investment decisions, BICS eligibility, employment costs and trade policy.
Your feedback will help ensure that ALFED’s ongoing representations reflect the real commercial pressures facing businesses across the UK aluminium supply chain.
