Out of control energy bills are now business threatening for 60% of manufacturers – up from 8% just four months ago

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
 42% of manufacturers surveyed said that their electricity bills have
increased by 100% in the past 12 months and 32% said that gas prices
have increased by over 100% in the past year
 Over half (52%) of companies expect their electricity costs to further
increase by over 100% in the next 12 months and 42% expect to see
their gas prices increase by over 100%
 Almost six in ten say that increased energy costs are now business
threatening
 13% are now reducing their hours of operation or avoiding production
during peak periods and 7% are stopping production for longer
periods.
 A worrying 12% have already made job cuts as a direct result of
increased energy bills
 Manufacturers say that if bills continue to increase and prices rise by
over 50% (which they expect in the next 12 months) more drastic
action such as shutdowns and redundancies will become inevitable
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. The current crisis is leaving businesses facing a
stark choice – cut production or shut up shop altogether if help does not come soon. 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. And over half have already priced in the increases

into their final product. Some 13% are now reducing production for short periods or avoiding
production altogether during peak energy price periods, with 7% reducing production already for
longer periods in the day. 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.
Securing their own energy supply has become a priority for many manufacturers, with over a quarter
(27%) of firms surveyed saying they have managed to find the funds and have already moved to
onsite generation. One in 10 have redistributed capital from other parts of the business to cover
energy costs while 7% have taken on new or further finance to cover rising energy bills. Over seven
in ten have seen reduced margins or profits as they struggle to pay the bills, with almost every
manufacturer we surveyed saying Government is not doing enough to support industry.
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
1. Remove Carbon Price Support to reduce electricity costs. For medium electricity users this
would save companies almost £90,000 a year
2. Explore Industry Price Cap to freeze prices at an agreed rate – funded either directly by
Government or explore way of working with banks to fund an arrangement to finance a cap
Medium term
3. 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.
4. Extend business rate relief on commercial building improvements (eg insulation) from 12
months to at least 3 years
Long term
5. 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, putting in place as much as they can afford in terms of building improvements and
installing renewable sources of energy. 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.
“With an increasing number of manufacturers now in survival mode and taking drastic action such as
cutting jobs, emergency action is needed by the new Government as soon as they are inside Number
10. This must see the immediate removal of Carbon Price Support which would at once bring down
electricity prices for businesses and the introduction of an Industry Price Cap which could be funded
in a variety of ways. We are already lagging behind our global competitors, and the prolonged lack of

action by the UK Government making this worse. UK Manufacturing needs help now if it is to thrive
and maintain the millions of well-paid jobs around the whole of the UK and to keep its place as one
of the world’s great manufacturing nations.