British Industrial Competitiveness Scheme (BICS) –Update

The Department for Business & Trade (DBT) has held an introductory webinar on the British Industrial Competitiveness Scheme (BICS) – the new scheme to reduce electricity costs for manufacturing in key growth and “foundational” sectors, including metals.

Purpose and scale of the scheme

• BICS is designed to address the link between high UK electricity prices and reduced investment, productivity and jobs in manufacturing.
• It will target the policy and network cost elements of electricity bills (RO, FiT and Capacity Market charges), aiming to:
  • Benefit around 7,000 businesses across the UK (England, Scotland and Wales).
  • Cut electricity prices by up to £40/MWh, equivalent to an estimated 20–25% reduction in bills for eligible companies.
• The scheme is one part of a wider package on energy costs (alongside the British Industrial Supercharger and other measures).

Companies already supported under the British Industrial Supercharger will not be eligible for BICS, as they already receive similar or greater exemptions.

Timing and legislative process

• Consultation is now open and runs until 19 January 2026.
• Government aims to:
  • Finalise the design and legislate through the Finance Bill 2025–26.
  • Open BICS to applications from April 2027.
• The scheme will be reviewed around 2030 and is intended to run until at least 2035.

ALFED has already raised the concern that 2027 is late for many energy-exposed manufacturers, and will continue to press for earlier or interim relief where possible.

Who the scheme is aimed at

Eligibility will be based on three core criteria:

1. Sector
   • Businesses must operate in:
     • A manufacturing “frontier industry” within one of the Industrial Strategy growth sectors (advanced manufacturing, clean energy, defence, digital & tech, life sciences), or
     • A manufacturing “foundational industry” that provides key inputs into those frontier sectors (e.g. chemicals, critical minerals, materials including metals).
   • Eligibility will be identified using Standard Industrial Classification (SIC) codes and Harmonised System (HS) product codes.
   • The current SIC/HS lists are indicative only and will be refined after consultation, including via the new Supply Chain Centre in DBT.
2. Manufacturing activity
   • Businesses must be carrying out manufacturing, not purely trading or services.
3. Electricity intensity
   • Firms must meet a test of electricity intensity (how significant electricity costs are relative to the scale of the business).
   • Government is consulting on:
     • Whether this test should be applied at sector level, business level, or a combination.
     • How to calculate intensity (e.g. electricity costs vs GVA, or vs total expenditure).

This is a critical area for aluminium: the level and design of the intensity test will determine how many ALFED members can access support.

Mixed activities and “prorating”

Many businesses manufacture both eligible and non-eligible products. DBT is consulting on whether to:

• Prorate support so that only the eligible share of activity attracts exemptions (e.g. 60% of output = 60% of levy exemption), based on:
  • share of revenue from eligible products, or
  • share of electricity use linked to eligible products;

or

• Provide full exemption only once a minimum threshold of eligible activity is met.

Government is actively seeking feedback on which approach is more workable in practice.

Cost control and “flexibility” conditions

Because BICS is funded through savings elsewhere in the energy system, DBT wants to keep the total cost within a fixed “headroom”. The main tools will be:

• Eligibility thresholds and intensity tests; and
• Possible additional cost-control measures (still to be defined).

They are also exploring whether, at the 2030 review, future BICS eligibility might be linked to energy flexibility and efficiency measures (for example, demand-side response). This is at an early, principles-only stage.

Application and delivery

The team stressed that the application process is still being designed, but key principles are:

• Simple and accessible for businesses, avoiding heavy manual data burdens where possible.
• Robust against fraud, with verification and audit of submitted data.
• Likely evidence requests could include:
  • Company registration details;
  • Relevant SIC and HS codes;
  • Electricity meter / MPAN information;
  • Financial data needed for the electricity intensity test and any prorating.

Once approved, exemptions will be delivered via electricity suppliers, who will apply the discounts to bills. DBT is running separate workshops with suppliers to ensure this process is technically workable and to minimise billing issues.

What ALFED will do

• Submit a coordinated response to the BICS consultation by 19 January, drawing on:
  • Evidence from members on energy costs and business impact;
  • Concerns around timing (2027 start),
  • The need for aluminium and other metals to be properly captured as foundational industries and growth sectors;
  • Lessons from the British Industrial Supercharger scheme (e.g. realistic reference prices and thresholds).
• Highlight sector-specific issues, including:
  • High electricity dependency across casting, extrusion, rolling and finishing;
  • The interaction with CBAM and the UK Critical Minerals Strategy (where aluminium is recognised as a critical and growth mineral);
  • The importance of avoiding complex or impractical SIC/HS mappings that miss real-world aluminium businesses.
• Continue briefing the ALFED members as the design develops, and share the recording/slides from the webinar where permitted.

How members can engage

ALFED strongly encourages members to:

• Review the consultation and consider submitting their own response, particularly on:
  • SIC/HS coverage for aluminium and downstream products;
  • The electricity intensity test and how it should be measured;
  • Practicalities of proving eligibility and prorating.
• Share confidential energy and cost data with ALFED (where possible) to strengthen the association’s evidence base.
• Flag any concerns about being missed by current SIC/HS codes or thresholds so these can be captured in our response.

If you would like ALFED to reflect your company’s experience in the consultation, or if you need help interpreting what BICS could mean for your business, please contact: nbloxsome@alfed.org.uk