Out of control energy bills are now business threatening for 60% of manufacturers

Make UK say that the Government must immediately scrap the Carbon Price Support – a levy only UK businesses pay and look at introducing an Industry Price Cap to freeze energy bills at an agreed rate.

Britain’s manufacturers are warning that their energy costs have already spiralled out of control, with nearly half reporting that their electricity bills have shot up by over 100% in the past 12 months and 53% expect the same fate in the coming year. A worrying 12% of manufacturers have already made job cuts as a direct result of increased energy bills, but admit that more drastic action such as full shutdowns and wider redundancies will be needed if the expected price hikes of over 50% materialise in the next 12 months.

High energy prices are no longer an issue for energy intensive industries only, the impact is being felt across manufacturers of all sectors and sizes. Companies have attempted to mitigate against this with 58% already adjusting business practices to reduce energy consumption by insulating buildings and installing better performing heat systems. Over a third of firms are actively searching for a new energy provider and two fifths have renegotiated a fixed tariff for the next year.

The UK is currently lagging way behind other EU counterparts who are offering far more emergency help for industry – the Italian Government for example has reduced levies placed on gas and electricity bills, reduced VAT and introduced tax credits for energy intensive industries.

To bring the critical help to UK businesses, the new Government urgently needs to take short term, medium term, and long-term action.

Short term

• Remove Carbon Price Support to reduce electricity costs. For medium electricity users this would save companies almost £90,000 a year

Medium term

• Maximise incentives to enable businesses to be less reliant on the National Grid. Extend 100% rates exemption for plant and machinery use in onsite renewable energy generation and electricity storage from 12 months to at least 3 years, more reflective of the payback period of the investment.

Long term

• Rapidly reform wholesale market to decouple electricity prices from the gas price

Stephen Phipson, CEO of Make UK, the manufacturers organisation said, “As energy bills spiral out of control, manufacturers are working tirelessly to find ways to reduce consumption. Government must step in to help struggling businesses, cashflow is already stretched to the limit, to pay what are now exorbitant energy bills by supporting sustainable factories and move further away from National Grid reliance.”

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