One of Labour's most significant donors has called on Andy Burnham, who is expected to become Prime Minister, to reduce high energy prices that are impacting the manufacturing sector and could cost the economy £85 billion.
Dale Vince, a renewable power entrepreneur and founder of Ecotricity, urged an end to the current energy market structure, which he described as an "absurdity" for linking electricity prices to gas. He stated that this policy has led to "life-threatening" energy bills for industries, affecting jobs, investment, and the broader economy.
Vince, who has donated £5 million to Labour, noted that gas prices have risen sharply since the start of the Iran war. "British companies continue to face some of the highest energy costs in Europe," he said. "Our next Prime Minister must seize the opportunity to lift this burden from our whole economy and finally break the link."
A report jointly produced by Ecotricity and the industry group Make UK indicated that 13 percent of manufacturers believe further increases in energy prices could be financially fatal for their businesses. The report estimated that a 13 percent contraction in manufacturing output would result in an £85 billion annual loss to the economy. It cautioned that high energy costs could compel UK factories to close if the government does not act swiftly to lower prices.
The report also highlighted that elevated energy costs are having a ripple effect throughout the economy, with seven out of ten manufacturers passing increased bills onto consumers. Simultaneously, rising operational costs are diminishing profits and postponing investment plans.
Stephen Phipson, chief executive of Make UK, commented, "Companies want to invest, innovate and decarbonise, but they cannot do so while electricity prices remain internationally uncompetitive." He added, "The incoming government must act quickly, ensuring support reaches the whole manufacturing base while investment decisions are being made now. Without urgent action, we risk losing industrial capacity that will be extremely difficult to rebuild."