Energy watchdog warns on price rises

Rising energy prices are posing a “serious threat” to British businesses, the energy watchdog has announced.

Energywatch is to hold a meeting with business leaders and Energy Minister Malcolm Wicks during the Labour party conference in Brighton on Tuesday in order to discuss the effect that rising energy bills are having on the UK economy.

Energy bills have increased this year, due to the rising global price of oil. British Gas is among the energy providers who have announced price increases recently, announcing earlier this month that gas and electricity prices would increase by 14%.

Energywatch said that there were “dozens” of examples of the “damage” rising energy prices were having on businesses. The watchdog said that gas price increases meant that the UK paper industry was paying at least 35% more for its energy than its European competitors, costing an extra £90 million per year. Building material manufacturers in Britain were also paying almost 50% more for their gas than competitors in France and Germany and double that of those in Spain.

Jeremy Nicholson, Director of the Energy Intensive Users Group, said that energy prices were now the “greatest threat to the competitiveness of British industry”. He said: “If prices stay at these levels, companies in the energy intensive sectors will be pushed to the brink, driving another nail in the coffin of British manufacturing.”

Kevin Hawkins, Director General of the British Retail Consortium, also warned of the impact of rising energy costs on retailers. He said: “Every retailer in the UK is currently facing significant increases in their gas and electricity bills – in many cases this is as high as 50%. Combined with other cost increases and the fact that consumers are being more cautious than ever with spending patterns it means that retailers’ margins are being squeezed from both sides.”

Energywatch also warned that the public sector was also suffering because of rising energy costs. The watchdog said that the NHS gas bill had risen by at least £41 million or 57% and local authorities across Britain were having to find an additional £120 million per year for their gas and electricity.

Allan Asher, Chief Executive of Energywatch said: “Every business – from the smallest corner shop to the largest factory – is suffering. Our public services are also being seriously undermined by rising energy costs and that means we are all suffering, as more of our taxes go to pay those bills.

“Something is seriously wrong when British businesses and taxpayers are having to pay so much more for their energy while the big offshore producers are awash with revenue. The problem is that the market is broken, and unless it’s fixed it will only get worse.”

(KMcA/SP)