UK-based trade association UK Steel has urged the government to act swiftly in the 2025 Budget, laying out six key measures to restore competitiveness, cut energy costs and accelerate decarbonization in its latest Budget Submission. The association calls for rapid delivery of committed funding and structural policy reform to support one of Britain’s most strategic manufacturing sectors.
UK Steel has set out six key priorities for the government’s 2025 Budget:
1. Rebalance electricity prices to match EU competitors
The association calls for a wholesale price rebalancing mechanism to bring UK industrial electricity prices in line with the lowest-cost EU producers. British mills currently pay 14–25 percent more than those in France or Germany - a gap adding £26 million a year in costs and undermining investment competitiveness.
2. Implement the increase in Network Charging Compensation and backdate it to April 2025
UK Steel demands that the Network Charging Compensation (NCC) to be lifted to 90 percent from the current 60 percent and be backdated to April 2025. Without backdating, the sector faces an additional £14.5 million penalty, eroding margins in an already high-cost environment.
3. Abolish the Carbon Price Support (CPS) Mechanism
The association urges the government to scrap the CPS, a top-up carbon tax imposed on power generators. With coal power already phased out, the measure now inflates energy bills and duplicates carbon costs already covered under the UK Emissions Trading Scheme (ETS). Eliminating the CPS would lower electricity prices and support decarbonization.
4. Release the £2.5 billion decarbonization funding
UK Steel stresses that the government’s £2.5 billion funding commitment for the steel sector must be released immediately. The money is intended to modernize production, cut emissions, and safeguard jobs - but delays risk derailing the transition.
5. Negotiate fair trade quotas and import safeguards
With 80 percent of UK steel exports going to the EU, the sector warns that proposed EU quota reductions could hit British exporters hard. UK Steel calls for country-specific EU quota access and parallel import controls to prevent market distortions and protect domestic supply chains.
6. Reform the UK Emissions Trading Scheme (ETS)
Finally, UK Steel calls for a comprehensive ETS reform to align carbon prices with those in the EU and avoid carbon leakage under the upcoming Carbon Border Adjustment Mechanism. The association warns that failure to align could put UK exporters at a competitive disadvantage and discourage low-carbon investment.