BAR is hoping that next week's mini-budget will provide details of government plans to support industry and soften the impact of soaring energy prices. In particular, the association calls upon the government to address the pricing disparities which sees steel companies in Europe pay far less that than they do in the UK. Energy costs for UK steel companies are 60% more than in Germany and 80% more than in France.
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Such a difference has a severe negative impact on the UK steel industry which employs 32,000 people. It increases production costs, reduces capital and deters investment. This, in turn, reduces the ability to invest in decarbonisation and transition to net-zero steel production.
Steve Elliott, BAR Chairman, said: "Electricity costs account for up to 20% of the price of converting raw materials to steel and wholesale electricity prices have quadrupled to over £1,000/MWh. The punishing price of electricity is making it uneconomical for the steel industry to operate."
Elliott is calling upon the government to action to address the structural weaknesses that have resulted in UK energy costs being so much higher than those in Europe. In addition, the mini-budget should announce reduced VAT on business energy bills from 20% to 5%, an extension of business rates reliefs and a capital allowance scheme that forwards investment in energy efficiency measures. Elliott also suggests that businesses are provided with energy discounts with a fixed reduction to the rate that they pay per kilowatt hour.
