Latest news with #UKindustry
The Guardian
23-06-2025
- Business
- The Guardian
Lower electricity prices for industry are crucial, but the government's plan lacks details
The colour palette for the front cover was the same, and whizzy light beams were again used to denote go-getting national ambition. But the big difference between Greg Clark's 2017 industrial strategy and Jonathan Reynolds's 'modern' version on Monday was supposed to be the latter's emphasis on reducing the sky-high cost of electricity for UK industry. Does it deliver? Well, it acknowledges the problem, which is a start. But then it's impossible to avoid the UK's woeful position on electricity prices. The statistics are aired alongside every de-industrialisation story from the Port Talbot steelworks to the Grangemouth oil refinery. The lobby group Make UK estimates costs for UK steelmakers of £66 per megawatt hour in 2024-25 compared with estimated German prices of £50 and French ones of £43. So a plan to 'slash industrial electricity prices' for 7,000 companies and 'move us from being an outlier to right in the middle of the pack,' as Reynolds put it, is definitely a step towards sanity. The detail, however, matters. For at least three reasons, this looks more like a sketch of a plan rather than a fully worked-up scheme. First, the new 'British industrial competitiveness scheme' won't arrive until 2027, which leaves an uncomfortably long period for more crises to occur. Shouldn't the government have made up its mind by now? The forerunner Invest 2035consultative document was issued last October, but the outcome on Monday was a further consultation on eligibility criteria for the headline measure. At least the separate and established 'British industry supercharger' scheme, aimed at the likes of the steel, chemicals and glass industries, will deliver bigger discounts next year – but that scheme covers only about 500 firms. Second, the tally of 7,000 firms in the new scheme is not enormous in the context of a broadly-defined UK manufacturing sector of 140,000 companies. The hospitality industry and others grumble about how painful electricity bills also bite on them, but most within manufacturing sector will also be outside the fold. Food and drink manufacturers, which are still a substantial part of the economy, are not a priority, for example. Third, the savings for eligible firms will be 'up to' 25%, raising the obvious question of how many will get the full whack. Net-zero levies, such as renewables obligations for wind and feed-in-tariffs for solar, will be removed from their bills, but those costs still have to be funded and the government has simultaneously promised that other bill payers will not pay more. So the money will come from 'bearing down on levies and other costs in the energy system' plus the proceeds from 'the strengthening of UK carbon pricing'. How much does that yield in practice? Most energy experts agree UK carbon prices should float upwards, yielding a gain for the Treasury as the the country aligns with the EU carbon market. But precision is impossible. As for reforms in the energy system, that's a reference to persuading windfarm developers to accept a lower headline price-guarantee for, say, a 20-year contract than they would for a standard 15-year one. The economic principle makes sense, but the length of the contract is not the only current consideration. Rising cost pressures on off-shore windfarms, as evidenced by Ørsted's decision to shelve a huge scheme of the coast of Yorkshire, cannot be wished away. None of which is to deny the basic logic of trying to remove renewable levies for key non-domestic users. We need those companies to survive the costs of energy transition and contribute to the running of the system in the future. Nor is to deny that other aspects of the wide-ranging industrial strategy generally got a cheer from business, especially on skills and startup funding. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion But electricity prices for industry were always going to be the focus. On that score, the dial is being turned, but it's simply not clear how far. The government doesn't have huge sums to throw at the problem. That is also familiar.
Reuters
08-05-2025
- Automotive
- Reuters
Starmer hails second trade win in a week after UK's tariff deal with Trump
LONDON, May 8 (Reuters) - British Prime Minister Keir Starmer on Thursday secured a second trade pact in three days through a deal with U.S. President Donald Trump, claiming a much-needed political victory that removes a threat to some of the UK's must vulnerable industrial sectors. The U.S. agreed to lower tariffs on British cars and steel in return for Britain lowering tariffs on American beef and ethanol. Starmer said the deal was worth doing so that companies in the impacted sectors could make plans without worrying about tariffs of 25% or more, even though a broader deal to cut 10% baseline tariffs remain under discussion. "We would like to go further in relation to tariffs, but I think it's really important that we've been able to get this deal over the line now, because in that way, we've been able to protect and save and enhance jobs right here, right now," Starmer told reporters in London. The deal, which follows a landmark free trade agreement with India on Tuesday, was criticised by British opposition Conservative leader Kemi Badenoch but initially welcomed by Nigel Farage, the leader of the anti-immigration Reform Party who is close to Trump. "We have an American president who's pro-Britain and we can take this much further," said Farage, the pro-Brexit campaigner. "It's a Brexit benefit that we're able to do this ... this is a big step in the right direction." It was also largely welcomed by British businesses and industries such as auto manufacturing and steel production. They said it would provide some relief to companies impacted by the tariffs without giving too much away in return. The future of steel in Britain has been in doubt, with the government stepping in to keep blast furnaces running, while car manufacturers have also spoken up about the threats of tariffs to their business plans. The Society of Motor Manufacturers and Traders said the deal was "great news for industry" and would provide "much needed relief". The National Farmers Union largely welcomed it, thanking Starmer's government for not lowering agricultural standards in a deal that provides reciprocal market access for beef. Britain also said the U.S. would give it preferential treatment in considering other sectors it is exploring further tariffs on, such as pharmaceutical sectors - a key issue for AstraZeneca (AZN.L), opens new tab and GSK (GSK.L), opens new tab. Trump has also floated taxing the film sector to ensure more movies are made in Hollywood, but as there is no formal review as to whether tariffs will be imposed, the sector was not covered in Thursday's deal, officials said. Starmer has pinned his entire political strategy on economic growth. But with the British economy struggling to grow, the U.S tariffs had added to the pressure on his government. Last week, he suffered a bruising set of local election results, which were blamed on his government's unpopular decision to cut winter fuel or welfare payments.
