Energy costs support – John Reid & Sons Ltd (REIDsteel) comment

Simon Boyd, managing director of John Reid & Sons (Strucsteel) Ltd (REIDsteel), said: “Enhanced assistance for energy intensive sectors is welcome yet there remain some critical flaws in the Chancellor’s new deal which could leave more businesses in danger of going under.
“The structure of the reformed support scheme as a discount rather than a fixed price per unit is a reckless gamble and clear misreading of the situation which leaves business crossing their fingers for stability in the energy market whilst placing them at the mercy of continued volatility and rising prices.
“It provides a discount for energy intensive firms for electricity prices above £185/MWh which, as the trade body UK Steel has pointed out, places the UK steel industry at a serious competitive disadvantage compared to some other nations such as Germany where the government has guaranteed an electricity price of €130/MWh for the whole of 2023.
“We have to export our way out of the dire economic situation our country finds itself in yet the government’s reformed energy support package seriously damages our competitiveness and runs the risk of more businesses collapsing which will cost the government more in the longer term.
“The Chancellor’s failure to grasp these basic points demonstrates just how out of touch he is, especially when we are still recovering from the impact of the Covid pandemic.
“Our company faces a 400 per cent increase in our energy costs which is completely unsustainable in an industry where profits margins can be as little as one to two per cent.
“Like many other companies, these costs seriously damage our competitiveness and growth prospects as well as our support of the supply chain and contribution to the economy.
“We will be examining the scope of the new support to see if we qualify and what exactly any discount will mean for us.
“Energy intensive sectors such as steel and manufacturing are crucial for job creation, tax take, social cohesion, wealth creation and security of national infrastructure so easing their pain must be a top priority for the Chancellor if he wants to drive UK plc’s economic recovery.
“In the longer term, a strategy is required to ensure the UK becomes self-sufficient in energy and associated key industries, such as steel, to create the stability and conditions for businesses to invest, become more productive, create jobs and grow themselves and the economy.”

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