Budget must tackle escalating industrial energy costs, says EEF24 February 2014

Britain's manufacturers are calling on the Chancellor to mount an all-out attack on rising industrial energy prices in next month's Budget amid continued fears that the current escalating levels are potentially diverting investment and threatening growth.

Manufacturers are most negative about spiralling energy costs and fear that vital industries will be forced to invest overseas unless costs are checked, according to a survey from manufacturers' organisation EEF.

For half the 300 companies surveyed, a government commitment to keep energy costs at or below the EU average would be the biggest single factor in encouraging more companies to expand their manufacturing activity in the UK.

The survey also revealed that rising input costs is perceived to be the biggest threat to growth.

"Furthermore," said the EEF, "the government's own estimates show that by 2020 the costs of climate policy will be around 50% higher in the UK than the next closest country, Italy."

EEF chief executive Terry Scuoler (pictured) said: "Rising energy costs represent a major threat to growth and could damage efforts to support and sustain long term recovery. The UK cannot afford to pile even more unilateral costs on the manufacturing sector which is key to developing the UK's longer term growth and stability.

"Many manufacturers now feel that they are being severely penalised by high energy costs, some of which are being unilaterally imposed and, are not shared by competitor nations."

EEF has called on the government to freeze and then reduce the cost of the carbon price floor introduced last year as a tax on greenhouse gas pollution to encourage investment in low carbon generation. The organisation has estimated that the tax will account for almost 10% of a large industrial user's electricity bill by the general election next year.

The EEF also wants the government to shield energy intensive industries like steel and chemicals from excessive UK energy policy costs by addressing the costs of the renewables obligation and small scale feed in tariffs "which add an additional hefty 15% to the bill of a steel company operating in a globally competitive market".

Ian Vallely

Related Companies
EEF (Engineering Employers Federation)

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