Britain urged to lower energy costs ahead of industrial strategy

LONDON (Reuters) -Britain's first industrial strategy for eight years will be undermined unless the government also announces measures to reduce sky-high energy costs faced by companies, lawmakers and business leaders said on Friday.

Ministers have been working on the strategy, which will be presented along with a multi-year spending review due on Wednesday and highlight key sectors of priority to drive the Labour government's growth ambitions.

"High electricity prices in the UK are deterring investment and hurting the ability of UK industries to compete internationally and decarbonise," the lawmakers on parliament's business and trade committee said in a report.

"We recommend that the industrial strategy must include measures that level the playing field with our international competitors on industrial energy prices."

On Monday, industry body Make UK said Britain needed to cut industrial energy bills that are the highest among major advanced economies if its aspirations for a healthy manufacturing sector are to succeed.

It has proposed cancelling climate levies on industrial energy costs and said the committee's report was further evidence of the hard realities facing British industry.

"Government has one moon shot to give companies the certainty and stability they need with a robust Industrial Strategy," said Stephen Phipson, CEO of Make UK, adding failure to deliver on high expectations would be "wholly unacceptable".

In a speech late on Thursday, Confederation of British Industry CEO Rain Newton-Smith also called on the government to remove "policy costs" from electricity bills.

She said that while a divisive political debate between cheaper energy or pursuing net zero was a "false choice", energy-intensive businesses were finding it harder to stay in the UK and needed support to decarbonise.

"We cannot deliver economic security without action on energy," she said.

"Without it, any industrial strategy, any serious plan for economic security will fall flat on its face."

A spokesperson for the business ministry said the industrial strategy would create "the best possible conditions for the private sector to thrive" in order to boost growth, adding it had consulted extensively with hundreds of businesses.

(Reporting by Alistair Smout and David Milliken; Editing by Nia Williams)