45 www.drivesncontrols.com January 2026 The UK’s Autumn Budget 2025 arrived at a pivotal moment for the nation’s manufacturing sector, particularly for producers of drives, motors and switchgear, the backbone of the industrial automation and electrification sector. With global supply chains merging, energy prices biting, and the race to net-zero intensifying, the Budget’s measures are more than fiscal tweaks; they are signals of the government’s industrial intent. Perhaps the most consequential intervention for energy-intensive manufacturers is the launch of the British Industrial Competitiveness Scheme (BICS), which is set to cut electricity bills for more than 7,000 manufacturers by up to 25% (equivalent to £35-40/MWh) from April 2027. The scheme targets frontier industries in the government’s eight priority sectors, as well as foundational manufacturing industries in their supply chains, provided that they meet electricity intensity thresholds. UK industrial electricity prices have long been among the highest in the G7, eroding competitiveness and deterring investment. By exempting eligible firms from the indirect costs, BICS levels the playing field with European peers and unlocks capital for electrification and automation projects. However, relating back to the modern industrial strategy, our focus remains on ensuring that the right equipment is used for energy-intensive industries. There needs to be more focus on using the correct energy-saving equipment in the correct environment for the right application, to reduce energy wastage. If this is done correctly, energy costs become secondary. However, the scheme’s eligibility criteria and phased rollout mean that many SMEs and less energy-intensive manufacturers may not benefit immediately. The government’s consultation on BICS design and eligibility is ongoing, and manufacturers should engage with trade associations, such as Gambica, to shape the final framework. The Budget also delivered a suite of measures to address the persistent skills gap in manufacturing, with more than 45,000 vacancies costing the sector up to £4bn in lost output. Most notably, apprenticeship training for under-25s in SMEs is now fully government-funded, removing the 5% employer co-investment and lowering the financial barriers for small firms to recruit and train new talent. The Youth Guarantee, with £820m of backing, promises every 18–21-year-old a place in college, an apprenticeship, or personalised job support, with a paid work placement after 18 months on Universal Credit. This is complemented by the introduction of short courses through the Growth and Skills Levy in digital and engineering, and the establishment of Technical Excellence Colleges in advanced manufacturing, clean energy and digital technologies. For manufacturers of drives, motors, and switchgear – where technical skills in mechatronics, controls and data are in high demand – these measures are a lifeline. However the scale of funding remains modest relative to the magnitude of the skills challenge, and the benefits will take time to materialise. Mid-career retraining and technical upskilling for existing workers are still under-served, and the rising cost of employment – driven by increases in National Insurance Contributions and the National Living Wage – continues to squeeze margins and complicate workforce planning. The 2025 Autumn Budget is a watershed for UK manufacturers. It delivers a suite of targeted fiscal measures, investment incentives and regulatory reforms that, if fully implemented and expanded, can underpin a new era of industrial competitiveness, innovation, and resilience. The alignment with the Modern Industrial Strategy is clear: capital allowances reward investment in automation and electrification, R&D and digital transformation funding catalyse innovation, and skills and finance initiatives address long-standing barriers to growth. Yet, the Budget is not a cure. The benefits of many measures will accrue gradually, and the persistent challenges of high energy costs, skills shortages, and supply chain vulnerabilities require sustained, collaborative action. The government must move quickly to finalise and expand schemes like BICS, ensure that incentives reach SMEs as well as large firms, and maintain regulatory and fiscal certainty to unlock private investment. For manufacturers, the message is clear: the tools for growth, decarbonisation and digital transformation are on the table. The responsibility is now on industry leaders to engage with new funding streams, invest in skills and technology, and work in partnership with government to deliver the productivity gains, supply chain resilience, and net-zero progress that the UK economy so urgently needs. Hopefully the success of this Budget will be measured not by headline announcements, but by the tangible progress made on factory floors, in R&D labs, and across the UK’s manufacturing heartlands. The opportunity is real, but only if industry and government move in synch to seize it. n * Gambica is the trade association for the automation, control, instrumentation and laboratory technology sectors in the UK. You can get in touch with Nikesh Mistry on 020 7642 8094 or nikesh.mistry@gambica.org.uk, or via the Gambica Web site: www.gambica.org.uk Uncovering the Budget’s hidden industrial agenda Hidden behind the political headlines, Chancellor Rachel Reeves’ Autumn Budget contains measures that could have far-reaching effects for UK manufacturers. Nikesh Mistry*, Gambica’s sector head for automation, delves deeper into the statement to uncover some of the implications for British industry.
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