Budget breakdown: energy support for digital infrastructure left out of week of announcements

9th December 2025

In all of the major fiscal announcements in budget week, most notably Wednesday's Budget, there was a notable lack of financial support for digital infrastructure, particularly around energy costs. This is despite digital infrastructure being fundamental to the operation of Britain’s economy and the functioning of our society.

The UK’s electricity prices are a structural impediment to growth and competitiveness. techUK polling with Public First in February 2025 and February 2024 of 250 UK tech leaders found that UK energy costs, which are some of the highest in Europe, were the single greatest barrier to tech sector investment in the UK. The government’s ambitions to deepen the UK’s existing technological capability, to expand it for the future, to digitalise the UK’s public sector, and achieve clean power by 2030 (a target that relies on the digital solutions made possible by digital infrastructure) are all fundamentally incompatible with the high cost of energy plaguing the most innovative and dynamic sector of the UK economy.

The Budget itself included measures to support the infrastructure sector generally with regards to planning, on speeding up grid connections, announcements on AI Growth Zones, including planning and energy support for firms within those zones, and techUK’s recommendation of abolition of the Energy Company Obligation on consumer energy bills.

However, there was a conspicuous omission of energy support for the digital infrastructure sector across the country. Furthermore, increases to Business Rates on properties above £500,000 are expected to hit digital infrastructure operators around the UK especially hard. The lack of general support for digital infrastructure in the Budget risks further increasing costs for operators and customers while reducing necessary investment.

It is not just the Budget where this support has been absent. On 24 November, the Government announced their consultation on eligibility for the British Industrial Competitiveness Scheme, which first appeared in their June 2025 Industrial Strategy. The consultation will run for eight weeks until 19 January. Members can find the full consultation page on GOV.UK

The proposed scheme will cut energy bills for businesses in ‘manufacturing frontier industries’ within the IS-8, or those in a foundational manufacturing sector that supplies essential inputs to those businesses, by £35-£40 per MwH in order to support the delivery of the Industrial Strategy. The scheme is designed to support energy intensive businesses, and it is estimated 7000 firms will receive support from April 2027 as part of the scheme. The BICS follows on from the British Industrial Supercharger, which reduces energy costs by 60-90 percent for the steel, cement and glassmaking sectors.

Both these schemes are designed to combat high UK energy prices, and yet neither makes provision for digital infrastructure. The government claim they are restricting the scheme to manufacturing because ‘there is substantial evidence linking high electricity costs with decreasing investment and growth in manufacturing industries’. However, this logic also applies to digital infrastructure. In effect, the current course means that high energy costs for digital infrastructure will linger, and, inevitably, be passed on to business and individual customers.

Furthermore, this will more greatly punish those firms that have digitalised their own systems. These firms, which have invested in Britain’s vibrant tech sector and which aim to raise their own productivity, will be unfairly punished for doing so as unmitigated energy costs force prices up for all services that use digital infrastructure. This will also punish government itself, which will not only have to pay higher prices for its own digital transformation, but will also increase the potential distortionary effects of local energy relief through schemes such as AI Growth Zones, make support for these areas more expensive.

With these realities in mind, we urge the government to rethink its current approach by developing solutions to national energy challenges for digital infrastructure. In particular, the government should include foundational digital infrastructure such as telecoms and data centres, in the BICS when it finally begins operation. techUK will be responding to the consultation on this scheme and we urge techUK members to get in contact with ed.emerson@techuk.org; archie.breare@techuk.org; katie.davies@techuk.org and luisa.cardani@techuk.org if they have any views on this topic.

We also ask that government understand how digital infrastructure investment will be negatively affected by changes to business rates and how these costs will be passed on to customers, which are directly counter to the government's stated growth ambition. Government needs to make sure the Valuation Office Agency, shortly to be merged with HMRC, works to mitigate the impact that this will have on the sector’s ability to invest. We are therefore planning to respond to the government’s call for evidence on the topic to urge a rethink on this issue. Please get in touch with ed.emerson@techuk.org; archie.breare@techuk.org; luisa.cardani@techuk.org and sophie.greaves@techuk.org if you would like to feed in.

We see the treatment of digital infrastructure as a test case for the government’s thinking around Industrial Strategy, as combatting high energy costs is an essential part of supporting the digital and technology industry as one of the IS-8 sectors. In order to fulfil the pledges made in the Industrial Strategy, and make progress on the wider pledges of this government, bringing down energy prices for digital infrastructure must be a priority for the government.