The Daily Telegraph

Capping energy bills ‘risks propping up bad businesses’

- By Eir Nolsøe

THE Government’s plan to cap energy costs for businesses will prop up inefficien­t companies and distort the market, the chief executive of one of Britain’s biggest lavatory paper manufactur­ers has warned.

Gareth Jenkins, chief executive of Accrol, said the Government should be doing more to encourage investment in energy efficiency rather than propping up all businesses.

“What I would like to see is the British Government actually encouragin­g people to invest in their businesses to reduce their usage and incentivis­e them with capital tax benefits,” he said.

Accrol has reduced its energy usage by a fifth over the past year in response to soaring power costs. It has also spent around £40m on automation to become more efficient, “taking a huge amount of cost” out of its businesses.

The company, which sells lavatory paper to most large UK supermarke­ts, cut 150 jobs over the past two years as a result of the automation drive.

“I almost don’t want someone to come along and say to the ones [companies] that haven’t done all that effort: we’re going to now subsidise you with a huge energy cap,” Mr Jenkins said.

He warned that having different subsidy levels across Europe will cause “all sorts of disruption of manufactur­ing competitiv­eness”. It also fails to address the underlying issue of energy security, he said.

The Government has said it will initially cap energy costs for companies for six months to prevent bankruptci­es over bills, which could rise as much as 500pc. Sectors deemed vulnerable will

likely receive support for longer, although the Government is yet to set out the details.

Items like lavatory paper and kitchen roll are some of the most energy-intensive daily consumer goods to produce.

Supermarke­t prices for lavatory paper and paper towels have risen faster than any other non-food product in the past year, data show. Accrol is increasing the price of its products as costs continue to rise.

With profit margins of 5pc-10pc, Mr Jenkins said the industry would “just disappear” if it did not pass on rising costs to customers.

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