The Confederation of British Metalforming (CBM) believes ministers are “missing a massive trick” by apparently focusing on just 300 large manufacturers classed as ‘energy intensive’ with the new Energy Bill Discount Scheme (EBDS).
The EBDS starts on 1 April, providing eligible businesses and other non-domestic energy users a discount on high energy bills until 31 March next year. The government said businesses of all sizes are eligible for ‘baseline support’ if contracts are above the threshold price.
The CBM said it has nonetheless been “inundated” with examples of gas and electricity bills rising to nearly 20% of turnover amongst its over 200 members, including sheet metal formers, forgers, fasteners and cold formers. This is financially unsustainable and makes firms “uncompetitive against international rivals”, the organisation warned.
It described the removal of the EBRS on 31 March as a “hammer blow”, and president Steve Morley urged the government to act before it is too late. Speaking at an Energy Summit meeting attended by West Midlands mayor Andy Street, he unveiled a four-point blueprint that he believes will help hundreds of SME manufacturers “without breaking the bank”.
The four steps are:
1. Asking business and trade secretary Kemi Badenoch to “listen to industry on the shopfloor” and ‘realign’ the EBDS to cover all energy intensive industries.
“Whilst there will be a cost to the treasury, the price will not be as big as if it fails to act, with the interdependency of the supply chain meaning a lot of UK industry could collapse, including British steelmakers,” the CBM said.
2. Regulating energy suppliers and brokers that have inflated prices on all other elements of energy costs above the 35% element of the wholesale price.
“The government is sleepwalking into an industrial disaster, it’s that simple,” said Morley.
“I don’t think the sector has ever seen anything like these price hikes. You have well-run firms who have seen energy bills rise from £600,000 per year to £4.2m, and from £4.3m to nearly £6.8… how can you expect them to absorb those and still survive or remain competitive?”
He added: “The EBRS provided sufficient support for many companies to just survive, but certainly not to invest or thrive. Removing it without nothing in place will result in the death knell of many manufacturing companies and a serious collapse in our already stretched supply chains.”
3. Asking the government to tackle perceived ‘mis-selling’ of fixed contracts during the peak of the wholesale energy market between July and December 2022.
“Our members also faced new supply contracts being declined based on wrong credit ratings, threat of non-supply or massive security deposits, which were unaffordable,” said Morley.
“We believe there is a clear case of mis-selling and the government needs to step in, investigate and bring in regulation that allows firms to renegotiate these contracts. Several organisations are making massive profits at the expense of UK competitiveness.”
4. For the government to bring in policies that allow companies with Coronavirus Business Interruption Loans (CBILS) to extend their payment terms or convert them into green energy initiatives, such as solar panels.
“During the pandemic, the government delivered effective and critical interventions, through furlough and guaranteed loan schemes. It will be deeply shameful and have long-lasting negative effects on Britain if these initiatives go to waste through failing to address the difficulties our members currently face with energy,” Morley said.
“We have been encouraged by the support of West Midlands mayor Andy Street, who attended our Energy Summit. Whilst talking with our members, he committed to taking our concerns directly to the prime minister, seeking an extension of the EBRS and renegotiation of contracts signed around the peak of energy costs at the end of last year.”
Professional Engineering contacted the Department for Business and Trade for comment. A spokesperson said: “Companies large and small will benefit from the EBDS, and a higher level of support will be provided to the most energy and trade intensive businesses of all sizes.
“While no national government can control the global factors pushing up the price of energy and other business costs, we continue to stand by business. That’s why we provided them and other non-domestic energy users with an unprecedented package of support, enabling some businesses to pay around half of predicted wholesale energy costs this winter.”
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