Packaging boss launches an attack on UK energy policy
The head of the UK’s largest packaging company launched a fierce attack on the policies of the British government, which have resulted in significantly higher energy costs than other European countries.
DS Smith CEO Miles Roberts said that during a period of substantial growth in online shopping, the paper industry in the UK has shrunk sharply in the past decade, while the size of the paper industry in Germany has doubled because The cost of electricity in the island country is much higher than that of the European Union.
“The fundamental problem is that the energy cost of heavy industry users is almost twice the European average,” he told the Financial Times. “Compared to other countries, this is quite unfavorable. The government is levying more and more taxes on companies.”
DS Smith announced a large investment this year to establish new production bases in Italy and Poland and expand in Germany.
Andrew Large, director-general of the trade organization Confederation of Paper Industries, said that the German paper industry has tripled the size of the UK because of Berlin’s policies to help the industry bear the additional costs associated with decarbonization. Increased to seven times.
Roberts is the latest industrialist to urge the British government to take action to control the costs of manufacturers. The previous surge in global natural gas prices has dealt a particularly severe blow to the UK due to the lack of natural gas storage and weather-dependent wind power generation.
According to data from energy-intensive user organizations, the average monthly wholesale electricity cost in the UK reached £200 per MWh in September, almost twice the average of £110 per MWh in France and Germany.
Lobbying groups called for reducing network costs, establishing a cost mechanism to curb soaring natural gas prices, and taking measures to reduce some carbon costs. The government has provided loans to help tide over the crisis.
Roberts emphasized that there are problems with the emissions trading plan launched by the UK in May, which sets a price on carbon emissions, which has risen to 75 pounds per ton, which is higher than in Europe.
The paper industry in the UK is a £12 billion industry with 62,000 employees. Roberts said that if government policies do not provide more support, it will face a further decline, and the UK will rely more on imports to produce products that have seen a substantial increase in domestic demand.
“We are committed to achieving carbon neutrality. The governments of Germany, France and Spain are very supportive of this,” he said, adding that he hopes to continue investing in the UK.
“We just need to understand what the British government’s policy will be.”
The Ministry of Commerce, Energy and Industrial Strategy did not immediately respond to a request for comment.
Not everyone in the packaging industry agrees with Roberts. Tony Smurfit, CEO of Smurfit Kappa, Europe’s largest paper packaging group, told the Financial Times last month that industrial companies should fight their own battles to deal with higher energy costs.
“The government needs to step in to protect the poor who face huge energy bills. The industry should take care of itself,” he said.
DS Smith provides 28% of the cardboard boxes in the UK and it is benefiting from the surge in e-commerce caused by the pandemic.
It is trying to control rising fiber, energy and logistics costs through price increases, hedging arrangements and internal driver teams.
The FTSE 100 Index Group increased its dividend on Thursday after reporting an 80% year-on-year increase in pre-tax profit to GBP 175 million and a 16% increase in revenue to GBP 3.4 billion in the six months to the end of October.
The group’s shares were flat in early trading on Thursday.