Renewables Obligation and Electricity Capacity (Amendment) (British Industrial Competitiveness Scheme Excluded Electricity) Regulations 2026

Lord Blencathra Excerpts

Wednesday 28th October 2026 Grand Committee

[Earl Russell (LD)]

My Lords, I thank the Minister for introducing these regulations. On these Benches, we recognise the impact that high energy costs are having on businesses and we welcome government measures to provide further support. These regulations implement the British industrial competitiveness scheme which, as the Minister said, is the successor to the British industry supercharger, by exempting eligible manufacturing businesses from the indirect costs of the renewables obligation and the capacity market that suppliers pass on through energy bills. They also allow the Secretary of State once, and before the end of March, to revise the renewables obligation level for 2027-28.

The need for these is clear. The Government’s own impact assessment puts the policy cost for very large industrial users in Great Britain at around £61 per megawatt-hour against £2 in France and £10 in Germany. No manufacturer can compete on those terms. We have long called for more to be done in this space, so we welcome this scheme and its breadth. The supercharger supports around 550 of the most electricity-intensive businesses. This scheme is expected to support more than 10,000 with savings of £35 to £40 per megawatt-hour from 2027. I also welcome the commitment that it will not raise the bills for those who are not eligible.

I have a couple of questions. On timing, I note that applications opened on 1 October and close at the end of play on 30 November. This leaves about five weeks to gather evidence and submit an application that, as I understand it, cannot be amended. What happens to a firm that either misses that deadline or makes an error in its application? Do they need to wait a full year or is there the opportunity to amend, or is a later window available to businesses? What actions are the Government taking to reach the thousands of manufacturers who may not even know that this scheme exists?

Obviously, with any cut-off some businesses are included and by definition some are excluded. Firms must be registered at Companies House, so sole traders and unregistered partnerships fall outside. A site must use at least 33 megawatt-hours a year, and the relief itself is tiered. Those tiers are quite sharp as well, so any firm that falls just below that tier could receive substantially less support. Eligibility also depends on lists of industrial and commodity codes, and that, again, produces edges.

On funding, I note, as has been said, that it comes partly from moving the inflation adjustment on the renewables obligation from RPI to CPI and removing the tax on fossil fuels in generation from April 2028.

Although we welcome this support, we want to be clear that this cannot be the whole answer in terms of government support to industry with energy costs. This is only supporting a small section of our economy. For example, the hospitality sector and small and medium-sized enterprises face the same costs and they sit outside this scheme. Particularly for hospitality and small businesses, the cost of energy is having a real impact on their trade and turnover.

Policy costs are only one part of the problem. Gas still sets the wholesale price at least 60% of the time. Until we build faster, connect the grid sooner, help with energy efficiency or have energy market reform, these problems will persist. Do the Government accept that electricity cost support must reach beyond these sectors, and what work is under way to support SMEs and the hospitality sector outside of this cap?

The support mechanism is also complex to apply for and complex to administer, so I encourage the Government to do more to automate this system, as they are doing with residential electricity costs, so that the better use of data by government can help provide that support.

This is a sensible and long-overdue step. We welcome this regulation but I hope the Government are intending to do more in this space to support industry with the cost of energy.

[Lord Blencathra (Con)]

My Lords, I too thank the Minister for introducing today’s amendment. His Majesty’s loyal Opposition welcome this measure, which expands the scheme introduced by the now leader of the Conservative Party when she was Business and Trade Secretary. The British industry supercharger was set up to promote the international competitiveness of Britain’s strategically important industries, exempting industries such as steel and chemicals from certain costs linked to renewable energy policies, including the renewables obligation and the capacity market.

The scheme currently supports roughly 550 businesses and over 500,000 skilled workers. This expanded British industrial competitiveness scheme could reach up to 14,000 businesses and several times more employees. That is a welcome development, not least because it shows that the Government agree with the Conservative Party that the renewables obligation and similar net-zero policies are holding back business and will be better off scrapped. As my noble friend Lord Fuller said, we do not need lots of fancy schemes; we just need to cut the electricity costs and—Bob’s your uncle—the rest falls into place.

--- Later in debate ---

[Lord Fuller (Con)]

I declare an interest as I am in the fertiliser industry, and I agree with just about every word my noble friend has said. The consequences of the lack of ammonia production in this country are not just harming our farmers, bad though that is, but are reducing the ability for us to produce energetics, explosives and weapons, because as we face a dangerous world, we need to think about our national security as well as our food security. The energy security policies of the Government are making us more vulnerable in a dangerous world than we otherwise would have been.

[Lord Blencathra (Con)]

I thank my noble friend for his intervention. I am disappointed that he only agreed with nearly every word I said, not every word, but he is absolutely right. I merely cited farming as one example of an area which is suffering because of high energy costs and reducing our capacity to produce fertiliser. In order for the scheme to successfully remove costs and benefit these industries, it must provide help to firms large and small, wherever they fall in the supply chain.

There is scepticism as to whether the policy achieves that. Specifically, the fact that the BICS will be available only to eligible businesses that use at least 33 megawatts per hour of grid-supplied electricity a year raises concerns. Small businesses—firms with under 50 employees—use up to 25 megawatt hours annually. For microbusinesses, that number is only 15 megawatt hours. The Government acknowledge that the renewable obligation certificates and capacity market costs asymmetrically damage British companies’ competitiveness, but it is the smaller firms, which do not necessarily have the same margins to deal with that cost, that are relatively the most affected by these policies. There is a chance that the scheme misses these businesses entirely. Surely the Government should be focusing on protecting them and promoting their competitiveness as a priority. Will the Minister commit to keeping these smaller firms, which are just as important to supply chains, under review as well?

I want to make a more general point. Implicit in this expanded scheme is the Government’s recognition that certain net-zero policies are economically damaging. They recognise that we are lagging behind when it comes to global competitiveness, and that much of the costs are the result of the policy they themselves support. The impact assessment calls the BICS

“part of the Government’s package for reindustrialisation.”

I have criticised that already, but it is tantamount to acknowledging that reindustrialisation is impossible, or at least markedly difficult, when policy costs are piled on industry.

[Lord Moynihan (Con)]

On that subject, I declare my interest as chairman of Amey, Acteon and Buckthorn. Does my noble friend not at least recognise the importance of the point made by the noble Earl, Lord Russell, who talked about the cost of energy? Was he not as surprised as I was on that subject that, in the OBR report today, on page 93, there is the sentence:

“The projection includes production from currently producing fields (including Jackdaw), and the NSTA’s estimate of production from development of new fields, which includes Rosebank”?


Rosebank is specifically stated. Does my noble friend have the remotest idea why something of such magnitude was not announced today by the Chancellor himself?

[Lord Blencathra (Con)]

My noble friend makes a very good point. We seem to be getting a lot of duplicitous statements and comments about Rosebank. We have one of the biggest oil and gas fields in our history, sitting out there off the Shetland Islands. We should be using it. There is no moral sense in trying to import gas from around the world and not using our own supplies. It does not add any more to global warming whatever. We should be using it and I look forward soon to hearing what the Government’s decision on Rosebank will be. If we can announce a huge oilfield in the Falkland Islands, why is it morally wrong to announce an oilfield in our own territorial waters? No doubt one day we might be importing our own oil from the Falkland Islands.

The impact assessment, as I said, claims that it is part of the Government’s package for reindustrialisation. I am concerned that it is not reindustrialisation; it continues to stop it and it continues to be deindustrialisation. If these facts were recognised by the Government, why stop at businesses that fulfil a strategic criterion? Surely, competitiveness is a general good. Would not every business benefit from lower costs or higher efficiency? Would it not be more prudent, instead of arbitrarily determining which manufacturing businesses are worthy of being competitive, for the Government to allow free and fair competition for them all?

Given that the Government acknowledge that carbon taxes and subsidies add costs and reduce competitiveness, this instrument represents an opportunity for them to begin the process of removing them. They need not stop at renewables obligation contracts. The ETS, CBAM and the carbon price support all represent additional costs and a choice.

The United Kingdom represents 0.8% of world CO₂ emissions. China produces 33%, USA 15%, India 8% and Russia 5%. So it is economic madness to sacrifice British industry and consumers on the altar of saving the world when the British contribution makes no difference whatever. The Conservative Party recognised this early on in this Parliament. It seems that the Government are now coming around. I hope they will now act speedily.

[Lord Leong (Lab)]

My Lords, first, let me say a big thank you to all noble Lords for their contributions. I am grateful for some support across the Committee on this instrument. BICS is designed to address Britain’s long-standing competitiveness challenges by reducing electricity prices for British manufacturing businesses.

Let me address some of the questions posed by noble Lords—first, that made by the noble Baroness, Lady McIntosh, about the scheme and funding. I can confirm that any residual costs not covered by the energy system savings will be funded by the Exchequer. At the same time, exchequer funding will be delivered via the Low Carbon Contracts Company, which will reduce contract for difference charges for all domestic and non-domestic electricity suppliers from April 2027 to offset the costs of BICS not already covered by the energy system savings.

Let me address the point that the noble Earl, Lord Russell, and the noble Lord, Lord Fuller, made about hospitality and SMEs. First, BICS is targeted at manufacturing in the IS-8 sectors and foundational manufacturing industries that provide key inputs to the IS-8 sectors. At this point, I remind the noble Lord, Lord Blencathra, that it was this Government who published an industrial strategy to identify the eight sectors that are important for this country. Can I also remind the noble Lord that, when they were in government, I do not remember the last Conservative Government publishing any industrial strategy on this?

The eligibility criteria for BICS are designed to maximise impact against the objectives of the industrial strategy—namely, driving economic growth and investment benefits while keeping within the agreed cost envelope to avoid increasing costs for ineligible businesses and other energy users. We will continue to engage with those sectors that are currently not eligible for the scheme on any challenges that they face with higher energy costs. If firms miss the 30 November deadline, they will still be eligible to apply for the scheme next year; we have been engaging quite extensively with business to support its implementation.

Let me address the point from the noble Lord, Lord Fuller, on the various schemes. We have the supercharger scheme, which currently supports approximately 550 electricity-intensive industries, whereas BICS can support more than 10,000 businesses across a wider range of sectors that operate at a lower electricity intensity. So the supercharger is for high electricity-intensive industries, while BICS is for lower electricity-intensive industries. Business may benefit from both schemes where they meet the relevant eligibility criteria, but they cannot receive relief twice for the same activity.

BICS is designed to be accessible to all businesses. We expect a large proportion of the businesses that are eligible for BICS to be SMEs. BICS sits alongside our clean energy superpower mission. The long-term plan is to boost energy security and reduce our exposure to fossil fuel price shocks by building clean, home-grown energy. BICS supports businesses with immediate electricity costs and challenges by helping to free up investment that can be used to incentivise and enable the transition to electrification and decarbonisation in the long term.

Let me address the point about Jackdaw. I am sure that the noble Lord opposite will agree with and welcome the decision that we made on 21 October, when the North Sea Transition Authority granted consent for the Jackdaw project following the Energy Secretary’s agreement. This means that gas from the pre-existing North Sea project will start to supply homes and businesses across the country from the end of October 2026. As far as Rosebank is concerned, that decision is subject to a live regulatory process, and it would be inappropriate for me to comment on any individual cases at this stage. A decision on the granting —or not—of consent for the Rosebank project will be taken in due course, and there is no fixed timeline for a decision. It is imperative that all material is properly considered so that a robust decision can be taken.

BICS will benefit more than 10,000 manufacturing businesses in high-growth and strategic sectors, make them more internationally competitive, and drive investment and economic growth across Great Britain. The scheme will be reviewed in 2030 to assess its continued effectiveness in supporting the competitiveness of the British manufacturing industry.

Israel: Trade

Lord Blencathra Excerpts

Thursday 8th January 2026 Grand Committee

[Lord Blencathra (Con)]

My Lords, I am grateful to the noble Lord, Lord Austin of Dudley, for securing this debate. I declare that I am not Jewish, but I am a member of the Conservative Friends of Israel.

In the year to the end of 2025, the UK and Israel traded roughly £6.2 billion in goods and services, with the UK reporting a trade surplus of £1 billion over that period. Services account for a large and growing share of that relationship, and thousands of British jobs depend on exports to Israel. As we have already heard, the UK-Israel economic relationship is concentrated in high-value sectors such as technology, cyber, life sciences, finance and services, which support British jobs and R&D partnerships. Then, of course, there is the other trade that is vital to our economy and security: intelligence sharing and co-operation on the military and defence. We co-operate with Israel, the only democratic country in the whole of the Middle East, on signals intelligence, counterterrorism, cyber security and aerial surveillance data.

All of that co-operation with a trusted partner helps our trade. I regret that it has been put at risk by the foolish suspension of further FTA discussions and some restrictions on the supply of defence goods. Those were, I think, token gestures to appease some Labour Back-Benchers in the Commons who are fearful of losing their seats to pro-Palestinian agitators, and they risk weakening the very economic and diplomatic ties that have worked so brilliantly up to now.

Our close working relationship with Israel has been made possible for more than three centuries because Jewish people have been integral to our national life, building businesses, schools, hospitals, cultural and scientific institutions, and charities. British Jews have served in our Armed Forces in large numbers: around 40,000 in the First World War and 60,000 in the Second World War. These figures reflect sacrifice and loyalty to this country. Jewish citizens have been prominent in science, law, medicine, the arts and public life, enriching our national life through peaceful and industrious behaviour. Just look around this Committee and the House and reflect on the dozens of Jewish Peers who have contributed across religion, politics, the media and public service. The Jewish community has not sought special privileges but has long sought to belong, to serve and to improve Britain through hard work and civic engagement.

The relevance to this debate of the huge contribution that British Jews have made to this country is that many of them still have links with and have relatives in Israel. Israeli Governments and businesses saw that the UK was a Jewish-friendly country with which they could do business. I worry that that is now under threat with the despicable rise of antisemitism against the very community of whom we should be most proud in terms of what it has done for the UK. I am appalled to see those vile people in our streets celebrating the death of 1,200 Jews in the massacre on 7 October and cheering the murders in Manchester and Bondi Beach, leading the chief constable of Greater Manchester to say:

“The intolerable has become normalised, and has almost become accepted as the way that things are”.


We must not permit the intolerable to become normal. To those demonstrators, I say this: you have no right to protest until those whom you champion do what hundreds of good Jews have done for this country over the centuries.

I am proud to support Israel and stand with Jewish people in the UK. The work of British Jews and Israel over the past 60 years has made this country better through peaceful civic contribution—not by demanding special rights or committing acts of terrorism. They all deserve our respect, our protection and our increasing trade with them.