Budget: £7bn energy deal for industry
19 Mar 2014
Chancellor George Osborne today used his annual Budget to announce a package of measures to help energy intensive industries that he claimed would be worth £7 billion.
Osborne apparently heeded calls by trade bodies such as the Chemical Industries Association (CIA) and the EEF for help with energy bills to ensure sectors such as the process industries remain internationally competitive.
Osborne introduced the measures saying “we need to cut our energy costs”. The measures include:
- a freezing of the carbon price floor tax on fossil fuels at £18 per tonne from 2016 to 2020
- extending the existing compensation package for Energy Intensive Industries to financial year 2019/20
- a new compensation package worth nearly £1 billion to “protect” energy intensive industries against higher energy costs resulting from the renewables obligation and small scale feed-in tariffs from 2016/17
- exempting Combined Heat and Power (CHP) plants that supply industrial users from the carbon price floor
“The Chancellor said this would be a Budget for manufacturers and he has delivered on his word,” said EEF chief executive Terry Scuoler.
”The Government clearly recognises the need to make the competitiveness of the UK a priority. We argued strongly for the need to reduce the rising cost of energy faced by many companies, and he’s acted on that.”
CIA chief executive Steve Elliott added: ”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.”
Elsewhere there was good news for exporters as UK Export Finance’s direct lending programme was doubled to £3 billion and interest rates were cut by a third.
Firms looking to invest in new plants and machinery were also given a boost, as the investment allowance that exempts capital expenditure from tax in the first year following purchase was doubled to £500,000.
The Apprenticeship Grants for Employers (AGE) scheme was handed an extra £85 million in both 2014-15 and 2015-16 for over 100,000 grants to employers.
In the food and drinks sector, whiskey and cider producers were given a boost with a freezing of duty, while duty on a pint of beer was cut by 1p for the second year in a row.
The one piece of bad news for the process industries in the budget was Osborne’s announcement that the independent Office for Budget Responsibility has revised down North Sea oil and gas revenues by £8 billion over the next five years.
