The Chancellor has delivered the Spring Statement 2025, setting out a series of measures aimed at strengthening the UK’s economic resilience, boosting industrial competitiveness, and driving long-term investment. Several announcements are particularly relevant to the aluminium industry, with implications across energy, trade, manufacturing, and sustainability.
Below is ALFED’s summary of the most significant measures for the aluminium and wider UK manufacturing sector.
Climate Change Levy Exemption for Hydrogen Electrolysis
The government has confirmed that it will remove the Climate Change Levy (CCL) from electricity used in electrolytic hydrogen production. This is intended to support the growth of low-carbon hydrogen, which plays a critical role in decarbonising heavy industry and energy systems.
Although this measure is not directed at aluminium specifically, it signals a broader commitment to reducing energy cost burdens for energy-intensive industries. ALFED continues to advocate for similar relief for UK aluminium producers and downstream operations, particularly those investing in remelt and low-carbon production.
Expansion of the National Wealth Fund
The National Wealth Fund will have its economic capital limit increased from £4.5 billion to £7 billion, with the ambition of leveraging more than £70 billion in private sector investment. The fund will prioritise investment in clean energy, advanced manufacturing, and infrastructure projects aligned with net zero objectives.
This expansion opens new doors for the aluminium sector, particularly where companies are looking to scale domestic recycling, circular economy infrastructure, or invest in more sustainable manufacturing capabilities. The fund builds on previous commitments to back green steel and hydrogen, and ALFED is working to ensure aluminium is considered alongside these as a strategic material.
Launch of the Advanced Manufacturing Plan
The Chancellor unveiled a new Advanced Manufacturing Plan backed by £4.5 billion in public investment through to 2030. Key priorities include:
- £2 billion for the automotive sector, focused on electrification and low-emission vehicle technologies
- £975 million for the aerospace sector, including funding to support innovation and green aviation
- Increased investment in digitalisation, automation, and advanced materials
- Opening access to new global markets and simplifying supply chain regulation
This represents a major commitment to restoring UK manufacturing strength and resilience. The aluminium industry stands to benefit as a material supplier into both the automotive and aerospace supply chains, and ALFED will be working to identify opportunities for member engagement and funding alignment.
Industrial Strategy Advisory Council
The government has established a new Industrial Strategy Advisory Council, bringing together senior business leaders, economists, and academics to guide long-term policy. Its remit is to support the delivery of sustained growth, higher productivity, and better-quality jobs.
This is a welcome development for the manufacturing sector, and ALFED will be advocating for aluminium to be embedded in any national industrial strategy that emerges. We see this council as an important opportunity to influence national priorities on trade, skills, innovation, and material resilience.
Defence Innovation and Industrial Growth
The Budget includes new funding for defence innovation and the establishment of a national defence innovation body. The government is aiming to fast-track the development of cutting-edge military technology and strengthen UK defence manufacturing capacity.
With aluminium’s established role in defence applications, from lightweight structures to high-performance alloys, this initiative may create long-term growth opportunities for manufacturers and processors serving defence-related supply chains.
Economic Outlook and Business Environment
The Office for Budget Responsibility (OBR) forecasts GDP growth of 0.8 percent in 2024, rising to 1.9 percent in 2025 and 2.0 percent in 2026. Inflation is expected to return to the 2 percent target in the second half of 2025.
These projections suggest a stabilising business environment for UK manufacturers, underpinned by declining energy costs and improving export confidence. However, global risks remain – including recent developments around US tariffs and the implementation of CBAM, which ALFED continues to monitor closely.
ALFED’s Position and Next Steps
ALFED welcomes the direction of the Spring Statement in strengthening UK manufacturing and backing low-carbon industrial transformation. However, we will continue to push for:
- Aluminium to be formally recognised as a strategic material in UK industrial and trade policy
- Greater access for aluminium processors to national funding schemes and industrial decarbonisation programmes
- Alignment of CBAM implementation with EU frameworks and reinvestment of revenues back into UK manufacturing
- Fair and competitive energy pricing for energy-intensive businesses, including remelters and extruders
- Continued investment in domestic recycling and circular economy infrastructure to support scrap retention and supply chain resilience
The full Spring Statement can be read here (PDF), and the government’s official press release is available here.
If you have any questions about how these announcements affect your business or would like to contribute insights to ALFED’s policy activity, please get in touch via alfed@alfed.org.uk.
