Energy costs for manufacturers in the UK will need to be subsidised until structural change takes place, Peter Kyle, secretary of state for business and trade, said at the Make UK National Manufacturing Conference in London on Tuesday, attended by Kallanish.
“We inherited the highest energy costs in Europe, four times that the wholesale price of the United States,” he told delegates. “Until we change the structural nature of our energy markets, which I don’t think anybody in this room thinks we can do in 18 months of government, then we only solve the challenge by subsidising.”
He highlighted the British Industry Supercharger policy and the British Industrial Competitiveness Scheme as two fundamental initiatives to support highly energy-intensive industries.
“I am deeply frustrated that I can’t move faster,” he added, noting the requirements for legalisation and consultations.
“We are looking at ways where we can use subsidies wisely until we can get to the point we can fundamentally lower the energy costs,” he noted.
He also pushed back against suggestions that increasing North Sea production could sustain the entirety of domestic energy demand, following a large rise in energy prices after the escalation of conflict in the Middle East in recent days.
“We would always be dependent on parts of the world which are fundamentally unstable, so therefore, doubling down on the renewables … is essential,” Kyle asserted. This is especially given instability in certain regions “is creeping into our energy prices, for which the British government has no agency.”
He said other political parties seeking to return to North Sea production and overturn environmental energy targets “will exacerbate the exposure we have at times like this”.
Therefore, the UK Government is “doubling down as quickly as possible so the transition is about national resilience … [and] sovereignty.”
Kyle added the government wants to increase resilience in the manufacturing sector, which supports the country’s economic and national security.
