GAS CRISIS COULD SHUT FACTORIES
Industry bosses issue stark warning to minister over nightmare scenario that could be reality ‘in weeks’
SOME factories could shut ‘within weeks’, putting tens of thousands of jobs at risk, as the energy crisis pushes up bills and ‘strangles’ British industry, ministers were warned last night.
The UK heavy industry sector – including steel, chemicals, ceramics, cement and brick makers – faces scaling back production and even closing some plants.
Industry bosses held emergency talks with the Business Secretary Kwasi Kwarteng yesterday, which were described as ‘positive and constructive’.
Participants said he promised to put together a package of measures to help mitigate soaring energy costs, for discussion with the Treasury.
However, some fear the Government still does not understand the urgency and scale of the threat to industry, jobs and the economy.
Any shutdowns could worsen the supply crisis already hitting the UK economy. Almost 9million people – about one in six adults in Britain – have not been able to buy essential food items in the past two weeks because they were not available, official research suggests.
According to an Office for National Statistics (ONS) survey, 17 per cent of
‘Forced off the network’
adults could not buy some of the grocery products they needed between September 22 and October 3, reflecting the widespread impact of supply chain disruption and labour shortages. Nearly a quarter of respondents (23 per cent) told the ONS they had not been able to purchase other essential non-food items.
Meanwhile, angry heavy industry leaders warned last night that some plants could shut down ‘within weeks’ without urgent action to protect against sky-high energy costs. One source in the talks told the Daily Mail: ‘There were realistic warnings given that, without a resolution to these issues, it could not be guaranteed that some businesses and supply chains would be able to continue.’
Industry leaders and unions yesterday suggested the impact on UK industry and manufacturing from the gas crisis should be treated in the same way as the collapse of the banks during the financial crash of 2007-2008.
They warned of closures and tens of thousands of job losses, many in deprived communities, including the north of England. That would present a challenge to Boris Johnson and his ‘Levelling Up’ agenda designed to help towns and cities won from Labour at the last election. The official energy regulator, Ofgem, has already predicted big prices rises for consumers, with analysts suggesting they could add anything from £500 to £800 to annual household energy bills.
But industrial companies do not have any sort of cap to protect them from the power price shock seen in recent days.
Chief executive of UK Steel, Gareth Stace, said: ‘These unprecedented price rises are hurting us now, and they could – if the Government does nothing to help us – start to strangle steel production here in the UK.’
Mr Stace said the Prime Minister’s ambition of moving towards a high skill, high wage economy is at risk, saying: ‘We are actually walking blindly, towards a low wage economy. At the moment there is an energy crisis. If the Government does nothing, tomorrow there will be a steel crisis.
‘In terms of what impact that could have on jobs, that would not be good, not only for the steel sector, but for those regions where steel is made and for the UK economy as a whole.’
Mr Stace said steel producers in the UK have to pay 50-80 per cent more for electricity than their direct competitors in Germany.
At the same time, the authorities in other countries, such as Italy and Portugal, have pledged billions of euros to protect heavy industry against spiralling costs. He told BBC Radio 4’s World at One: ‘We talk to the Government about this all the time, but they do nothing.’ Major energy users in the UK say rising prices are made worse because their bills carry huge levies required to fund the move to renewable energy, such as wind and nuclear.
There are also concerns about the security of electricity supplies over the winter. In these circumstances, major industries can be ordered to stop production at short notice in order to release power for homes. The GMB union confirmed the threat saying: ‘The
Government must move fast or tens of thousands of jobs could be at risk.’ National General Secretary, Jude Brimble, said: ‘The security of energy supply is a basic requirement for the UK to keep its lights on and the production lines moving.
‘Any national shortfall in energy will mean that intensive energy users will be forced off the gas network to protect households.
‘The impact on industry can be fast and dramatic – and could have a major impact on supply chains. Ceramics – including brick making – in particular could face total collapse.’ He added: ‘Gas prices must
be contained across the winter, to ensure high energy users in manufacturing can continue to operate, compete on the international stage and produce essential goods.
‘The Government must take action – reducing network costs and replicate network tariff discounts offered in Europe – to protect manufacturing jobs and production now and into the winter months. Businesses and workers cannot bear the brunt of ministers’ continued failure to regulate energy markets.’
Some industry leaders who took part in the meeting said they were baffled about the lack of Government action. Separately, a Whitehall source said: ‘The energy intensive industry has been quite clear about what they want – they want subsidies over the winter and an industrial price cap. We’ll continue to work with [the] industry over the coming days to find possible solutions.’
Andrew Large, from the Confederation of Paper Industries, has warned of threats to everything from the production of toilet paper to food packaging.
He described the meeting with Mr Kwarteng as ‘positive and constructive’. He added: ‘The Secretary of State shares our concerns about the impact of prolonged high energy prices... He understands the need to avoid disruption and will be working quickly with us to put together a package of measures.’