Energy crisis: Factory production could come to halt as gas prices soar

9 October 2021, 01:40 | Updated: 9 October 2021, 02:38

Factories could be forced to close due to the energy crisis.
Factories could be forced to close due to the energy crisis. Picture: Alamy

By Emma Soteriou

Factories across the country could stop production due to rising energy costs, industry leaders have warned.

Representatives of energy intensive industries met with Business Secretary Kwasi Kwarteng on Friday to discuss the ongoing crisis.

It came amid reports that energy bills could go up even further for UK customers, with an additional charge being introduced.

The new strategy could commit the Government to cutting the price of electricity and imposing a levy on gas bills to fund low-carbon heating, according to The Times.

A series of consultations are expected to be released before going ahead with the plan, which is likely to start in 2023 and could add £170 a year to gas bills, the paper said.

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During talks, leaders warned the Government of "production curtailments" that could be on the way as the winter crisis looms.

Dr Richard Leese, chair of the Energy Intensive Users Group (EIUG), said: "Our message to the Secretary of State was for prompt and preventative measures to help avoid recent production curtailments in the fertiliser and steel sectors being replicated in other areas this winter.

"EIUG will work with Government to avoid threats both to the production of essential domestic and industrial products, as well an enormous range of supply chains critical to our economy and levelling up the country."

The EIUG's membership comprises trade associations and customer groups representing industrial sectors with the heaviest energy consumption in the UK. They include UK Steel, the Chemical Industries Association, the Confederation of Paper Industries, the Mineral Products Association, the British Glass Manufacturers Federation, the British Ceramic Confederation, BOC, Air Products and the Major Energy Users Council.

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However, the Government has said it remains "confident" in the security of gas supply in coming months.

In a statement, the Department for Business, Energy and Industrial Strategy said about the meeting: "The Business Secretary stressed that the Government remained confident in the security of gas supply this winter.

"He also highlighted the £2 billion package of support that has been made available to industry since 2013 to help reduce electricity costs.

"The Business Secretary noted he was determined to secure a competitive future for our energy-intensive industries and promised to continue to work closely with companies over the coming days to further understand and help mitigate the impacts of any cost increases faced by businesses."

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Shadow Business Secretary Ed Miliband argued that "this is a crisis made in Downing Street".

He said: "Kwasi Kwarteng is scrambling to meet industry bosses but he is all talk. This chaotic Tory government got us into this mess in the first place and has no plan to address it."

'It certainly looks like we'll see increases in the energy price cap'

It comes as there have already been warnings that bills could rise by 30 per cent in 2022.

Research agency Cornwall Insight predicted that the potential collapse of even more suppliers could push the energy price cap to about £1,660 in summer - approximately a third higher than the record £1,277 price cap set for winter 2021-22, which commenced at the start of October.

Energy regulator Ofgem reviews the price cap once every six months, with it changing based on the cost that suppliers have to pay for their energy, cost of policies and operating costs, among other things.

Mr Kwarteng said consumers will be better insulated from erratic gas prices as wind and solar power start providing more energy to the UK's households.