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Ir Kiel has been warned by British businesses that his proud industrial strategy will be announced this month, “fatally flawed” unless it comprehensively deals with the country’s extremely high energy costs.
According to government officials, the minister has embraced the high energy costs that manufacturers claim to be 46% higher than the global average, which they argue, must be addressed in industrial strategies.
However, business groups fear that the government will target help only in the most energy-intensive sectors, such as steel and ceramics, rather than the broader companies struggling with the electricity bill.
According to those who were described about the plan, the minister is trying to increase the generosity of the “British Industrial Supercharger” scheme, established by Rishi Snack’s conservative government in April 2024.
Rain Newton Smith, director of the CBI Federation of Employers, told the Financial Times:
Instead of focusing on the biggest energy users, Newton Smith said they need to find a “more inclusive” solution, adding that the chemicals, aerospace and automotive industries are one of the people suffering most from the high power bill.
Meanwhile, UK Make UK, a manufacturing lobby group, said that the UK’s industrial energy costs are four times higher than the US industrial energy costs, 46% higher than the global average.
“The future industrial strategy is fatally flawed unless the cost of air energy is addressed,” he said.
The industrial strategy of priorities is prioritizing eight “growth” sectors: advanced manufacturing, clean energy, creative industry, defense, digital and technology, financial services, life sciences, professional and business services.
An official close to Jonathan Reynolds’ executive director said, “Johnny says energy is always something that appears. He lives on the fact that industrial strategy needs to have some good answers about energy.”
Industry officials who have explained to the government’s ideas hope that the minister will take a more generous approach to British industrial superchargers. SUNAK’s government said it will save energy-intensive users such as steel makers of roughly £410 million in 2025.
They said the minister is considering increasing the reduction in network fees from 60% to 60% to the 90% compensation that France and Germany provide to industrial users for these network fees.
However, business groups hope to distribute the energy bill’s cuts more widely, including removing taxes such as “renewable energy obligations” and “climate collections” from the bill.
“If we don’t address the high industrial energy costs as a priority, we will put our country’s safety at risk,” said Stephen Phipson, UK CEO.
“The Nissan Sunderland manufacturing plant has the highest energy cost of all Nissan plants in the world,” said Alan Johnson, senior vice president of Nissan, Japanese automaker.
The Industrial Strategy is expected to be published around the same time as the Ministry of Finance’s comprehensive spending review on June 11th.
The Bureau of Business and Trade declined to comment on “speculation” regarding the content of the strategy.
