UK government announces measures to help energy intensive industries in March budget
19 March 2014
On March 19 Chancellor George Osborne used his annual Budget to announce a package of measures to help energy intensive industries that he claimed would be worth £7 billion. Initial reaction is that the Chancellor has taken real steps to constrain energy price growth and boost the country’s manufacturing sector.
Individual measures proposed include:
•Capping the Carbon Price Support rate at £18 per ton of CO2 from 2016-17 for the rest of the decade.
•Extending the existing compensation scheme for energy intensive industries for a further four years to 2019-20.
•Protecting energy intensive manufacturers from the rising costs of the Renewable Obligation and Feed-In Tariffs.
•Exempting electricity from Combined Heat and Power plants to industry from the carbon price floor
Further positive developments included the doubling of UK Export Finance’s direct lending programme to £3 billion and interest rates cut by a third, and companies looking to invest in new plant and machinery saw their investment allowance exempting capital expenditure from tax in the first year following purchase doubling to £500,000.
The Apprenticeship Grants for Employers (AGE) scheme will also receive an extra £85 million in both 2014-15 and 2015-16 giving over 100,000 grants to employers.
The one dark clouds were from the independent Office for Budget Responsibility which revised down North Sea oil and gas revenues by £8 billion over the next five years and also warned that “productivity and wage growth remained disappointing” in the UK.
Chemical Industries Association Chief Executive Steve Elliott, who has been a key campaigner against energy price increases for manufacturing industry, said: “There is still much to do, both here in the UK and across the European Union, if we are to truly compete with America and other leading economies in the years ahead. Today’s announcements are, though, a good start.”
His approbation was echoed by Terry Scuoler, chief executive of manufacturers federation EEF, who said: “The Chancellor said this would be a Budget for manufacturers and he has delivered on his word.
British Chambers of Commerce Director General John Longworth said: “Business wanted a Budget that was disciplined, focused, and geared toward the creation of wealth and jobs – and that’s what the Chancellor has delivered.”