UK automotive jobs could be at risk as energy bills soar 50%

It’s not just households who are facing escalating gas and electricity bills. 

Britain’s automotive sector has today spoken out about facing a 50 per cent increase in energy costs this year, which is putting British businesses at a ‘competitive disadvantage’ against rivals in the EU.

The sector’s annual energy bill – which is already £50million more than its European Union rivals – will rise by £90million in 2022, analysis by the trade body Society of Motor Manufacturers and Traders says.

It says the Government must act now to do all it can to protect the future of the motor sector, which is one of the nation’s biggest employers.

The UK automotive industry has 156,400 workers directly employed in manufacturing roles and a broader 797,300 workers employed in total across the wider sector, including retail and finance, according to the latest figures.

However, the sector is at threat with energy bills soaring. 

UK electricity prices are the most expensive of any European automotive manufacturing country and 59 per cent above the EU average, according to the SMMT.

The industry body said this means UK firms could have saved nearly £50million annually if they were buying energy in the EU even before this year’s spike in prices.

The additional cost of producing vehicles and components in the UK is now risking the future of some businesses as operation costs in Europe are less expensive, the SMMT warned.

Speaking at the organisation’s annual summit in central London, SMMT chief executive Mike Hawes said challenges such as the coronavirus pandemic, parts shortages and trade uncertainty are ‘immense’, but addressing the UK’s high energy costs is ‘the industry’s number one ask’ as they are hitting manufacturers ‘extraordinarily hard’.

The Government must do ‘all it can to create stability and help keep us globally competitive’, Hawes added.

He welcomed the news electric vehicle battery manufacturers are benefitting from support as energy intensive businesses.

But he said manufacturers are not benefitting from a cap on prices, and ‘we need energy costs to be competitive for all the automotive industry’.

The SMMT boss says inflation, energy shortages, rising fuel prices and the cost-of-living crisis give the impression the UK faces ‘the return of the 1970s’.

He acknowledged the automotive industry is being ‘hit hard just like it was hit then’, but he insisted there is a ‘big difference’.

He said: ‘Go back to the ’70s, typified by poor management, poor labour relations, hence poor quality. That’s not the situation now.

‘We have a global reputation for engineering excellence, innovation, admired and desirable brands from across the country.

‘We have a strong foundation. We’re still a powerhouse of international trade, with great wealth, contributing billions to the economy and supporting thousands of livelihoods in every corner of the country.’

But circumstances in recent years ‘have not been easy’, with Brexit a ‘trauma’ that is ‘not yet done’, he added.

In a pre-recorded video message, Chancellor Rishi Sunak told the audience of automotive leaders that the sector is ‘incredibly important to the UK economy’ and ‘that’s why the Government is doing more to support you’.

He said this includes a commitment for £2.5billion of investment since 2020 to support the transition to zero emission vehicles.