Opinion Former Article

CIA: Chancellor must act now on spiralling business costs

Britain’s £60 billion chemical industry has warned the Chancellor, ahead of the Thursday’s Autumn Statement, to get a grip on rising energy costs for industry so that chemical businesses can continue to support growth across the UK economy.

In a letter to George Osborne, the Chemical Industries Association Chief Executive Steve Elliott said “the impact of climate policies on Energy Intensive Industries electricity costs is projected to rise to 70% by 2020 and the measures so far only partially address competitiveness concerns."  

"We therefore call on the Government to broaden and deepen planned rebate measures to ensure that UK chemical businesses can compete with production locations in Germany, where the level of rebates for climate policy costs is higher, and further close the gap with operators in the US who, due to shale gas, enjoy gas prices which are a third of those in the UK”. By exploiting opportunities for shale gas the UK can credibly move to a longer-term energy policy that supports manufacturing and leaves energy-intensive industries less at the mercy of complex rebate and compensation schemes."

"The Association has also demanded that attempts to reduce the structural deficit are not met with a spread of further tax rises, government budgets for innovation are protected and previous promises to sort regulation are turned into action. In his letter Elliott points out that last year the Chancellor made a commitment to improve the transparency of regulators’ fees and charges but nothing of significance has happened. However the new cost burden seems to be coming through European environmental regulation, especially the Industrial Emissions Directive (IED). Elliott warned “UK chemical businesses alone could potentially need to make investments of approaching £1 billion to satisfy a “best techniques” criteria which will have no meaningful benefit on the environment”.



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Notes to Editors:

·         Chemical and pharmaceutical businesses in the UK - represented by the Association - contribute £80 million of Added Value every single working day - £20 billion a year - to the UK’s Gross Domestic Product.


·         The Industry’s trade balance is a positive £25 million every day, whilst the rest of manufacturing has a daily deficit of around £300 million.


·         The Industry is the nation’s number one manufacturing exporter.


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