Will the last one to leave please turn out the lights
1 min read
George Osborne may have billed his budget as heralding the march of the makers. But, unless the government delivers affordable energy manufacturers will be attempting to march in lead lined boots says WM Editor Max Gosney
Get set for the march of the makers, boomed George Osborne in his budget speech. Nice sound bite George, but you might want to consider Napoleon's observation that an army marches on its stomach. Starving UK manufacturers of affordable energy means the march is destined to take place in lead-lined boots.
Manufacturers at our Energy roundtable last month slammed government thinking on energy (see p22). Policy makers from successive administrations have ignored an impending crisis. The UK will lose at least 20% of its power producing capacity in just four years when a wave of coal-fired stations shuts down. Seven nuclear sites will follow by the end of the decade.
The government's remedy is to hedge its bets with nuclear, cleaner coal and gas, and green energy. Eight new nuclear plants are mooted, but none will be operational until 2025. Some might not make it that far with images of Japan's Fukushima plant fresh in public minds. Upgrades of coal- and gas-fired stations are on hold. Wind farms spring up in abundance but they simply can't match energy demands. This approach can't deliver the quick wins we need – it looks more like indecision than effective energy strategy.
So, in the interim, UK manufacturing's revival will be powered by French electricity and Russian gas. One diplomatic spat with Paris or Moscow and the lights go out at factories across the land. The situation gets more farcical when you consider ambitious carbon emission targets, which the government will drive through tax.
The chancellor announced a new carbon floor price of £16 per tonne from 2013 in the budget. UK firms already contending with the fifth highest electricity prices in the EU face another energy penalty. It smacks of stupidity. Drop the manufacturing rhetoric; take back your otherwise excellent budget announcements on extending capital allowances and delivering extra apprentices. Without a secure and cost-effective energy supply, the lights will go out on these good intentions and British manufacturing as a whole.
