Labour's industrial energy strategy lacks ambition, say carmakers

Times

4 days ago

The automotive industry has told the government that its plan to cut high energy costs for Britain's manufacturers does not go far or deep enough.
In its long-awaited industrial strategy announced this week, the government said it planned to cut bills by up to 25 per cent for higher energy-intensive manufacturers in an attempt to help them become more competitive with international rivals. It said its proposals would help energy costs for as many as 7,000 companies.
• Keir Starmer unveils 'targeted, long-term' industrial strategy
At the annual summit of the Society of Motor Manufacturers and Traders (SMMT) in London on Tuesday, officials and delegates questioned whether the plan would do enough for manufacturers to become competitive on the global stage at a time when their costs are rising as they attempt to hit net-zero targets.
Mike Hawes, chief executive of the SMMT, told the summit that the level of reduction and planned help could only be the start as British manufacturers have the highest energy costs of anywhere in the world and more than double that of some European Union competitors. This is against a backdrop of also having some of the world's highest business rates and regulatory costs.
'It's a good first step but we need to go further,' he said of the government's strategy.
The co-architect of the government proposals, Sam Lister, director-general of industrial strategy at the Department for Business and Trade, conceded: 'We are bottom of the global league tables for competitiveness with energy costs [in average for high-intensity users] of £160 per MWhr. The interventions announced … gets us down to about £120/MWhr.'
He added: 'That is a significant reduction that gets us back into the middle of the pack in terms of Europe.'
One delegate, however, immediately reacted: 'Is that ambitious enough?'
Of the plans to help 7,000 manufacturing companies, Katherine Bennett, chief executive of the High Value Manufacturing Catapult, a government co-funded agency, said: 'What happens to the 7,001st and others that are not eligible?'
The carworkers' leader Steve Turner, assistant general secretary at Unite the trade union, said the aid proposals would not go deeply enough into the manufacturing supply chain. The price of energy is the single largest issue for employers, he said, and its reform is crucial 'if we want to be competitive'.
Britain has large manufacturing plants at Sunderland with Nissan, in the West Midlands with Jaguar Land Rover and Oxford with BMW Mini. At lower volumes Toyota makes hybrids in Derbyshire and Stellantis builds electric vans in Cheshire. Rolls-Royce in Sussex, Bentley in Cheshire and Aston Martin in Warwickshire are among the world's top luxury carmakers. In recent times Honda has quit Britain and Jaguar closed its old plant to assembly.
• Energy prices mean UK industrial strategy is built on weakness
Of the government's commitment that the industrial strategy's primary aims are exports and attracting foreign inward investment, Turner said: 'Who's going to come here the way the energy costs are?'
He warned of a 'policy disconnect' in the cabinet over policy objectives of departments, for example, between the business department's industrial strategy and the energy department's net zero agenda.
'We cannot decarbonise by deindustrialisation,' Turner said. 'We have got to get a co-ordinated strategy across government.'
Regarding the mechanisms to deliver cheaper industrial energy, Lister admitted: 'We have more to do on how we do it.'
As for the government's industrial energy plans, Liam Byrne, the chairman of the Commons business select committee, has both cheered and warned the government. 'Ministers have heeded the call for bold action to slash the industrial energy costs that hang like an albatross around the neck of British business,' he said.
'This is not a minor shift. It is, perhaps, the most substantial remaking of the way government and business work together that we've seen in a generation, but now we need to see the small print of how the plan for energy will be delivered.'