Industry leaders warn that the energy crisis may stop production of factories, the energy industry

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Industry leaders have warned the government that factories across the country may halt production due to rising energy costs.

Andrew Large, Managing Director of the Paper Industries Confederation, Gareth Stace of British Steel, and other representatives of energy-intensive industries attended a meeting with Business Secretary Kwasi Quarting to discuss the wholesale gas crisis on Friday afternoon.

Speaking to BBC Radio 4’s PM program afterward, Large described the risk of spillovers across the supply chain.

“When we spoke with the Secretary of State this afternoon, it was very clear across all sectors that there are serious risks of effective plant shutdowns as a result of rising gas costs, and under those circumstances there will be a gradual gradual impact through supply chains, all the way across manufacturing, consumer retail, and other products.”

When asked what this might mean for the paper industry, Large said it would be detrimental to profitability.

He added, “Every minute that the machine is not working, and every minute that paper is not produced, harms the sector’s profitability and harms future investment potential and opportunities.”

Speaking to Channel 4 news, Stace said the government had failed to act to ease the crisis, unlike other governments in Europe.

He said, “What we are asking today from Kwasi Quarting about wholesale prices is just to intervene to relieve this pressure in the short term, just like in Portugal or Italy. Their governments are already investing billions of euros to help their industries and the UK government has done nothing so far.”

Asked what the worst-case scenario would be, Stace said steel mills could shut down permanently.

“The nightmare scenario is that we produce less steel in the UK, that we see all of this steel that we are consuming in the UK – and that is increasing – being met by imports, and once you take a steel mill you don’t,” he said, “we don’t really take them back” . “This is all for good. Once it is done, it is done.”

The Intensive Energy Users Group (EIUG) said it welcomed the opportunity to meet with the Business Secretary and is pleased that he wants to find practical solutions to the challenges that members are facing this winter.

EIUG President Dr Richard Less said: “Our message to the Secretary of State has been to take immediate and precautionary measures to help avoid recent production cuts in the fertilizer and steel sectors that are being replicated elsewhere this winter.

“EIUG will work with the government to avoid threats to both the production of essential domestic and industrial products, as well as a vast array of supply chains critical to our economy and improve the country.”

EIUG membership consists of trade associations and client groups representing the UK’s largest energy consuming industry sectors.

In a statement about the meeting, the Ministry of Business, Energy and Industrial Strategy said: “The Minister of Business stressed that the government remains confident in the security of gas supplies this winter. He also highlighted the £2 billion support package that has been provided to the industry since 2013 to help reduce electricity costs.”

Shadow Business Secretary Ed Miliband said: “This is a crisis made in Downing Street.

“Kwasi Kwarteng is scrambling to meet with industry heads but they are all talking. This messy Conservative Party government got us into this mess in the first place and has no plan to tackle it.”

Analysts have predicted that Britons could see their energy bills rise by 30% next year.

Research agency Cornwall Insight has claimed that gas prices are more volatile and a possible collapse of more suppliers could push the ceiling on energy prices to around £1,660 in the summer.

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