Cut in energy support threatens hundreds of smaller manufacturers, CBM warns

The CBM, which has over 200 members made up of sheet metal formers, forgers, fasteners and cold formers, has received examples of gas and electricity bills rising to nearly 20 per cent of turnover, which CBM said is financially unsustainable and one that makes firms uncompetitive against international rivals.

Removal of the EBRS on March 31 will be another blow and CBM president Steve Morley believes the government must act now before it is too late.

Speaking at an Energy Summit Meeting, he unveiled a four-point blueprint that he believes will help hundreds of SME manufacturers.

First, Kemi Badenoch and her team at the Department for Business and Trade should listen to industry and realign the Energy Bill Discount Scheme so it includes all energy intensive industries.

CBM concede there will be a cost to the Treasury, but the price will not be as big as if it fails to act, with the interdependency of the supply chain meaning a lot of UK industry could collapse, including British steelmakers.

Secondly, the CBM would like to regulate energy suppliers and brokers, who are inflating prices on all other elements of energy costs above the 35 per cent element of the wholesale price.

MORE FROM MANUFACTURING

“The government is sleepwalking into an industrial disaster, it’s that simple,” Morley said in a statement.

“I don’t think the sector has ever seen anything like these price hikes. You have well-run firms who have seen energy bills rise from £600,000 per year to £4.2m and from £4.3m to nearly £6.8…how can you expect them to absorb those and still survive or remain competitive?”

He continued: “The EBRS provided sufficient support for many companies to just survive, but certainly not to invest or thrive. Removing it without nothing in place will result in the death knell of many manufacturing companies and a serious collapse in our already stretched supply chains.”

The CBM is also asking the government to rectify the perceived mis-selling of fixed contracts at the peak of the wholesale market between July and December 2022. During this period suppliers and brokers pushed prices to their highest, advising that future energy costs would increase further.

“We believe there is a clear case of mis-selling and the government needs to step in, investigate and bring in regulation that allows firms to renegotiate these contracts. Several organisations are making massive profits at the expense of UK competitiveness.”

The final element of the CBM blueprint is to bring in policies that allow companies with Coronavirus Business Interruption Loans (CBILS) to extend their payment terms and/or alternatively convert them into green energy initiatives, such as solar panels.

This will be at no cost to the government and can offer SME manufacturers the opportunity to invest in their energy security.

“During the pandemic, the government delivered effective and critical interventions, through furlough and guaranteed loan schemes,” said Morley. “It will be deeply shameful and have long-lasting negative effects on Britain, if these initiatives go to waste through failing to address the difficulties our members currently face with energy.”