Gas Price Rises will Leave a Chill in the Air for Business, warns IoD

6 February 2006

Escalating energy costs are now a serious concern for UK businesses, the Institute of Directors (IoD), warned today. With manufacturers and smaller enterprises often having little ability to pass on energy price rises, any hikes in the cost of gas could put many businesses at risk, the IoD predicted.

Miles Templeman. Director General of the IoD, said:

"Gas prices are now so high that without urgent Government action tens of thousands of jobs in UK manufacturing could be at risk; this year we have witnessed a number of business failures within industry as a result of the high cost of energy and businesses are already reducing investment in UK manufacturing."

The IoD said it was also concerned that the energy markets of some other countries - even fellow European Union members - have had a detrimental effect on the UK. In a recent survey, almost 60% of businesses said that the structure of the energy supply industry in the rest of the EU should be more liberalised.

Miles Templeman, added:

"Energy is one of the big infrastructure issues of the day and we recognise that there are no quick and easy answers to problems of pricing, markets and supply. But it is because of this recognition that we call on the UK Government and indeed the European Union to address these issues urgently.

"It also shows the importance of focusing on a diverse energy supply mix so as not to disadvantage business, public services and consumers through over-reliance on one source, such as gas. That calls for tough decisions and we shall be pressing both the Government and the EU as both develop and refine their energy policies over coming weeks and months."

Following a major consultation exercise with its members on the affects of rising energy costs, the IoD said it now had a comprehensive dossier of business case studies which the Government should not ignore.