Member Article

Manufacturers give mixed views on latest Energy support package for business

Two SME manufacturers and the Confederation of British Metalforming give their views on the enery support package announced by Jacob Rees-Mogg yesterday.

The positive…

Neil Clifton, Managing Director of Cube Precision Engineering in Rowley Regis, welcomed the Government’s support package.

“Without intervention, our energy bills were due to rise from £12,000 in August 2021 to a massive £44,000 this year based on a similar level of consumption.

“On top of lots of external pressures, inflation and supply chain disruption, this would have been the last thing we needed, especially as we are trying to make the most of lots of exciting new opportunities.

In fact, our tooling expertise has been in significant demand from the automotive and aerospace sectors, providing us with the largest order book in our history.

“Our bill will now be between £23k to £25k based on it being capped at £0.21p per kWh – not ideal, but something we can manage.

“I’m also looking forward to getting full details on the support and to see if levies are to be applied on top of the introduction of the capped rate.”

The not so positive…

“This doesn’t help us at all!!” explained Nimisha Raja, founder of Nim’s Fruit Crisps, who wasn’t impressed with the level of intervention.

“The Government has done nothing to address the daily standing charge. When we entered into a new contract on April 1st, the only option available to my business was one with a £14 per day standing charge, with over and above double the unit rate we were paying previously. This saw prices go from 2.12p per kw to 4.08p per kw.

“This has meant our gas bill has increased from £2500 per month on average to £7500. Our energy bills have been increasing since last November when several suppliers ceased trading, so I have no idea on what they have based the 7.5p per kWh on?

“SMEs need a little bit more from the Government. They talk about a new Growth plan being announced shortly, well the best thing for growth is giving us a fair playing field to do what we do best.”

Nimisha went on to add: “I was also hoping for some plans on reforming how energy suppliers are regulated and, rather than borrowing billions to pay companies who are already showing record profits, let’s introduce a one-off Windfall Tax fund that help businesses and consumers in need.

“We can then borrow more, in order to invest in more offshore resources so that we don’t have to be in this situation ever again. I simply don’t buy that a Windfall Tax will slow down growth.

“What will and is already slowing down growth across all sectors – retail, manufacturing and the service industry - is the crippling energy costs forcing many small businesses to close.

“As an owner who understands the fundamentals of buying at one price and selling at another, it is hard to accept the rhetoric from energy companies that higher prices and record-breaking profits are coincidental and not a direct result of the extortionate increases we are seeing.”

The CBM perspective…

The Confederation of British Metalforming (CBM), which represents 200 UK manufacturers of fasteners, forgings and pressings, cold-rolled and sheet metal products, has initially welcomed the Government’s announcement around support for Energy bills for business.

Geraldine Bolton, CEO of CBM, commented: “At first glance, it’s positive, especially as it gives breathing space to our members and it covers all sectors, which is really important.

“However, there are some important factors that we would want clarity on before getting too carried away.”

CBM President Stephen Morley raised some of the issues: “Firstly, it is only for six months with a review in three, so we need clarity on what happens after that, and we certainly don’t want to see other sectors get preferential treatment when the review is carried out.”

He added “Another point that everyone appears to be missing is that this clearly states it is based on wholesale costs. This only equates to 35% of the cost, the rest is made up of 45% on delivery, 15% on taxes and state charges and 5% on purchasing.

“This could be open to interpretations by different suppliers and needs direction or, better still, regulation.”

This was posted in Bdaily's Members' News section by Russ Cockburn .