Chancellor Rachel Reeves has announced “bold action” to help food companies tackle the threat of soaring costs due to the war in Iran. A raft of food production sectors would quality for emergency support for the first time, she said.
The Chancellor announced at the IMF meetings in Washington yesterday that the government was stepping in to slash electricity bills for companies by up to 25% from April 2027.
The British Industrial Competitiveness Scheme (BICS) will be widened to include 3,000 extra companies including hundreds of food producers, with sectors including those manufacturing oils and fats, manufacturers of starches and starch products, and the manufacture of sugar.
The expansion of the scheme will also rope in manufacturers of industrial glass, fertiliser production and plastic packaging manufacturers.
From April 2027, BICS will exempt eligible businesses from the indirect costs of three electricity schemes: the Renewables Obligation, Feed-in Tariffs, and the Capacity Market, with Reeves promising up to £600m per year in support.
The Chancellor’s intervention follow a clamour from food industry bosses for the food industry to be included in the government’s Modern Industrial Strategy scheme, with the entire industry previously excluded despite claiming it has been “swamped” with new costs, from government regulation.
Read more: Cold Chain sector slams government ‘deafness’ of Iran war threat to supply chain resilience
Earlier this month, the FDF released a revised forecast predicting food inflation could rise at more than triple the rate it was predicting in September because of the crisis in the Middle East.
Reeves said: “Today’s announcement will cut energy bills for over 10,000 manufacturers, helping businesses to compete, win and create good jobs across the country, and to deliver our Modern Industrial Strategy.”
Business secretary Peter Kyle added: “By extending the reach of BICS by 40%, we’re acting decisively to tackle the number one issue that businesses face head-on.
“This is what our Modern Industrial Strategy is all about: giving businesses certainty and stability in an unstable time, and backing Britain’s fastest-growing sectors with the support they need to prosper and deliver good jobs right across our communities.”
FDF chief executive Karen Betts said: “It’s good to see the government starting to act to forestall the huge rise in energy costs that is about to hit the UK. Food producers’ costs are already rising, and this will escalate if the Strait of Hormuz doesn’t rapidly reopen.
”Food and drink businesses operate on slim margins and have had to cope with huge disruption over the past few years, from Covid to the war in Ukraine. If government is willing to act fast in extending energy support to more of the food sector, together we can help shield households from the full impact of the energy crisis on food and drink prices. If not, the UK risks another, unwelcome spike in food inflation.”
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