The 1.8 Percentage Point Divide: Nick Curum Analyzes UK Industrial Competitiveness Scheme

In a recent LinkedIn post, Nick Curum scrutinizes the intricacies of the UK’s new British Industrial Competitiveness Scheme, highlighting a critical threshold that could significantly impact manufacturers. Curum points out that the scheme’s eligibility hinges on a narrow 1.8 percentage point difference in electricity intensity, creating a stark divide between ‘frontier’ and ‘foundational’ sectors.

The scheme, set to open on 1 October and close on 30 November, offers relief but imposes different requirements based on industry classification. Curum explains the disparity:

The whole scheme turns on 1.8 percentage points:

Frontier sectors qualify for relief above 0.9% electricity intensity.
Foundational sectors need 2.7%.

Same relief. Three times the bar.

Curum elaborates that ‘Frontier’ sectors are defined by the Industrial Strategy’s growth list, encompassing industries like aerospace, automotive, batteries, and life sciences. In contrast, ‘Foundational’ sectors, which supply these growth industries, include steel, chemicals, cement, glass, and ceramics. This distinction means that essential supply chain industries face a significantly higher hurdle to access the same level of support.

Analyzing the Impact of the Threshold

Curum argues that this 1.8-point difference is not merely a technicality but a deliberate policy choice that signals which industries are expected to bear their own costs. As Curum states, “The harder test went to the sectors with the thinnest margins to absorb it.” This suggests a potential disadvantage for foundational industries that often operate with tighter profit margins and are crucial for the success of the more prominent ‘frontier’ sectors.

The scheme’s timeline for implementing changes also presents a challenge. Curum notes that the scheme “lifts the Renewables Obligation and Feed-in Tariffs from April 2027, and the Capacity Market from October 2027.” For a site consuming 5GWh annually, this transition could mean a substantial financial impact, estimated by Curum to be between £175,000 and £200,000 after both dates have passed.

Site-Specific vs. Sector-Wide Measurement

A key point of contention raised by Curum is how electricity intensity is measured. He emphasizes that “Intensity is measured by sector, not by site.” This means that a company’s individual energy usage and efficiency at a specific location are secondary to the overall intensity of its industrial sector. Curum further clarifies the site-level implications:

Your own meter only enters at the second test, where 25% or less eligible electricity gets you nothing and 25 to 50% gets you half.

This nuanced measurement approach could leave many individual sites in a difficult position, potentially missing out on relief despite efforts to improve energy efficiency on-site.

A Window for Advocacy

Curum underscores the urgency of the situation, pointing out that “None of it is law yet.” With legislation expected in the autumn, there remains a critical window for industry stakeholders to voice concerns and potentially influence the parameters of the scheme. He advises businesses to “Save this before the next capital paper lands on your desk” and consider their position within the supply chain.

The core question Curum poses to his audience is a direct challenge to their strategic planning: “Which side of the 1.8 points does your supply chain sit on?” This prompts businesses to assess their reliance on foundational industries and consider the potential ripple effects of the competitiveness scheme’s structure on their operations and wider supply networks.