Britain’s manufacturers are today calling on the Government to commit to cutting industrial energy costs as part of its long-awaited industrial strategy for the UK, allowing manufacturing to reach its full potential and avoid a looming period of de-industrialisation.
Make UK, has made it clear that an ambitious and effective industrial strategy is not optional, but is an essential ingredient to ensuring the UK remains competitive, secure, and economically productive in the years ahead. For the industrial strategy to make the impact manufacturers across Britain desperately need, it must address the energy crisis that leaves firms at a massive competitive disadvantage. With industrial energy prices four-times higher than the USA and 46% above the global average, the Government needs to act now.
A new report,
Tackling Industrial Energy Costs, published today by Make UK sets out solutions which the organisation thinks the Government should place at the heart of the strategy, which are both deliverable and costed. In particular the organisation urges the Government to urgently reform the complex and unfair policy levies that make low-carbon energy more expensive than fossil fuels.
These costly policy levies are currently applied only to UK industrial bills and not across the rest of Europe. Making this change would cut energy costs by 15% immediately. If coupled with an agreed fixed energy price for Britian’s manufacturers, the resulting cost reduction would be significant. Both sides would take risk here. The Government would pay manufacturers the difference if the cost of energy went above the agreed ‘strike’ price, with manufacturers paying the Government if the cost of energy fell lower than the agreed fixed rate.
Make UK recommends an electricity price of £56/MWH which equates to a 10% reduction in retail prices currently paid by manufacturers. When the savings are added to those gained by removing the policy levies from bills, UK manufacturers would be on a par with European industrial energy bills.
Make UK’s CEO Stephen Phipson said: “If we do not address the issue of high industrial energy costs in the UK as a priority, we risk the security of our country. We will fail to attract investment in the manufacturing sector and will rapidly enter a phase of renewed de-industrialisation. UK manufacturers have faced energy prices far above those of European competitors for many years, undermining their ability to invest, grow, and compete globally.
“More inaction risks compounding this disadvantage and forcing the Government to make difficult choices over costly bailouts) or managed decline of the UK manufacturing sector. Today we have set out a clear package of deliverable, sensible, and popular policies to tackle this issue with the urgency it requires.”
Alan Johnson, senior vice president for Manufacturing, Supply Chain and Purchasing AMIEO, Nissan Motor Corp. said: “The Nissan Sunderland manufacturing plant has the highest energy costs of all Nissan plants across the globe. The proposals being put forward by Make UK - under the umbrella of a new industrial atrategy - would send a strong message to investors that the UK remains committed to creating a more competitive environment for electric vehicle manufacturing.”
The full report can be downloaded here
here.