Energy policy should support the economy, say manufacturers

UK manufacturers have today called on the next government to ensure that energy policy supports their ambitions for a better-balanced economy.

Key points of manufacturing organisation EEF’s agenda include calling for the implementation of the Energy Intensive Industries (EII) compensation package; a fresh approach to industrial energy efficiency and decarbonisation; and reform of the costs of decarbonising the power grid to energy consumers.

EEF head of climate and environment policy Gareth Stace said: “This is a wake-up call that the tension between the pursuit of low carbon policies and Britain’s ambitions for a better-balanced economy must be resolved. Failure to do so could hit investment, margins and competitiveness, putting the brakes on growth and leaving our economy stuck in the slow lane.”

He added, “High energy costs are crippling for manufacturers of all sizes, but rapid implementation of this scheme would at least reduce the burden on those who are most exposed.”

EEF claims that the projected 50 per cent rise in electricity prices by 2020 could hit investment, margins and competitiveness for the manufacturing sector.

Research from the body shows that rising energy costs could lead to a quarter of manufacturers considering investment overseas. Almost 73 per cent of manufacturers said the projected rise would have a noticeable impact on profit margins, while 53 per cent believed it would hit their competitiveness.

Over a third 34 per cent would be forced to cut spend in other areas of their business, the report added.

There were also concerns over government’s energy efficiency schemes with less than 19 per cent of firms saying the key UK schemes provided the right incentive to improve energy efficiency. Almost four in ten believed the schemes are overly complex.