Budget misses opportunity to tackle crippling electricity costs for British steelmakers

UK Steel has expressed disappointment that today's Budget failed to address the persistently high electricity costs facing British steelmakers, despite the industry putting forward a practical, costed solution that could transform its competitiveness for around £50 million a year. 

The omission represents a significant missed opportunity for the Government to deliver on its ambitions for reindustrialisation, economic growth and cleaner steel production. UK Steel's latest electricity price report reveals that British steelmakers face electricity costs 49% higher than competitors in France, imposing an additional £66 million on the industry this year alone. 

The industry has proposed a wholesale electricity price rebalancing mechanism, independently modelled by Baringa, which would bring UK industrial electricity prices closer to those faced by European competitors at an estimated net cost of around £50 million annually between 2026 and 2030. 

The urgency of action is growing. Wholesale energy prices have risen sharply amid continued instability in the Middle East, with prices now around three times their February levels, once again exposing British industry to the volatility of international gas markets. 

For steelmakers, electricity is already a major production cost. As the industry transitions towards electric arc furnaces and lower-carbon production, its dependence on electricity will increase substantially. 

Peter Brennan, Director General of UK Steel, said: 

"Today's Budget is a missed opportunity for British steelmaking. We have presented the Government with a clear, independently costed solution to one of the biggest barriers facing our industry. For around £50 million a year, Ministers could take a major step towards closing the electricity price gap with our European competitors. Yet once again, British steelmakers have been left waiting. 

"The consequences of inaction are substantial. Our industry is already paying tens of millions of pounds more for electricity than competitors in France, money that could otherwise be invested in new equipment, skilled jobs and cleaner steel production.  

"With wholesale energy prices rising again, the need for action is becoming more urgent, not less. British steelmakers cannot continue competing with one hand tied behind their backs. 

"The Government cannot deliver reindustrialisation on uncompetitive electricity prices. If Ministers are serious about growing British manufacturing, attracting investment and decarbonising steel production, they must address this fundamental disadvantage." 

UK Steel is calling on Ministers to urgently reconsider its proposed wholesale electricity price rebalancing mechanism and work with industry to deliver competitive electricity prices for British steelmakers.

Contact Information:

Jon Harrison, UK Steel, Director - Press & External Affairs, UK Steel, 0774 382 9613, jharrison@makeuk.org

Notes to editors

• UK Steel's October 2026 report, Competitive electricity prices: a prerequisite for reindustrialisation, estimates that British steelmakers will pay £91/MWh for electricity in 2026/27, compared with £61/MWh in France and £79/MWh in Germany. 
• The electricity price disparity with France is expected to cost UK steelmakers an additional £66 million in 2026/27. 
• Independent modelling by Baringa estimates that a wholesale electricity price rebalancing mechanism would have a net cost of £51 million annually between 2026 and 2030. 
• The proposed mechanism would operate in both directions, with industry returning funds when UK wholesale electricity prices fall below European benchmarks.

About UK Steel: UK Steel is the trade association for the UK steel industry. It represents all the country’s steelmakers and most downstream steel processors. 

The UK steel sector:   

• Produced 2.6Mt of crude steel in 2025 and supplied 32% of the UK's annual finished steel demand of 8.6Mt
• Employs 34,000 people directly in the UK and supports a further 42,000 in supply chains
• The median steel sector salary is £40,278, 22% higher than the UK national median and 34% higher than the regional median in Wales, and Yorkshire & Humberside where its jobs are concentrated
• Directly contributes £1.7 billion to UK GVA and supports a further £2.3 billion
• Directly contributes £2.9 billion to the UK’s balance of trade
• 96% of steel used in construction and infrastructure in the UK is recovered and recycled to be used again and again