Britain set to run out of fuel warns CBI boss

Published on 27/09/2005 01:20

Key points

• CBI boss says fuel shortages could force staff lay-offs and business closures

• Energy Minister admits Britain has only 11 days-worth of gas reserves

• Met Office issues 'amber alert' to government contingency planners

Key quote

"If we have a cold winter, we are going to throw the switch, businesses will shut down, people will lose their jobs" - Sir Digby Jones, director-general of the Confederation of British Industry

Story in full BUSINESSES could be forced to close down and lay off workers this winter because the country's energy reserves are so low, the director-general of the CBI warned yesterday.

"If we have a cold winter, we are going to throw the switch, businesses will shut down, people will lose their jobs," Sir Digby Jones said.

"If we don't sort out our decrepit supply system, we are, this winter, going to run out of fuel."

According to the CBI, Britain has only 11 days' gas held in reserve to power industrial users during a hard winter. In comparison, other European countries keep an average of 55 days in reserve.

His warning came as the Met Office yesterday issued an "amber alert" to contingency planners in the government - including the NHS and Highways Agency - and in the energy industry to prepare for a "colder than average winter".

The UK energy minister Malcolm Wickes admitted the truth in Sir Digby's words at a fringe meeting of the Labour conference in Brighton attended by both men. Mr Wickes conceded that industry could be badly hit by an unusually cold winter.

Sir Digby last night told The Scotsman that Britain's historical position as a net exporter of energy, coupled with government red tape, had left the country poorly prepared for a cold season.

Until recently, Britain was a net exporter of gas from the North Sea, and because that gas was nearby and on tap, less effort went into constructing gas reserve stations, experts say.

Now, Britain is becoming a net importer of natural gas, much of it from Russia, yet, as ministers admitted yesterday, the UK still lacks proper reserve capacity.

Many of the UK's current generation of electricity generators are gas-fired, and their output would be curtailed by any shortfall in gas supplies. Because domestic electricity users are always given priority over commercial customers, there is no realistic chance of even the worst winter affecting households.

But, as Mr Wickes admitted, most businesses have "interruptible" contracts with their energy suppliers, meaning that they would be the first to be hit by any energy shortage.

"We could have a tight winter," said Mr Wickes. "This is not about shutting off domestic customers, but there could be problems for industry."

Mr Wickes said that responsibility for any energy reserve problems lay with industry. Companies, he said, had been "a little slow" in investing in reserve capacity.

But Sir Digby insisted that government planning officials were ultimately to blame for obstructing companies' attempts to prepare for the long-anticipated decline in North Sea reserves.

"Since 2003, many local authorities have denied planning permission to build new storage capacity, and when industry has appealed those decisions and taken them to central government in Whitehall, [Deputy Prime Minister] John Prescott's office has refused as well," Sir Digby said.

Warnings of potential power interruptions are not confined to industry. Earlier this month, Prospect, a trade union whose members include engineers, scientists and other energy specialists, warned that predicted low temperatures mean "there is a very real threat this could be the winter our luck runs out".

Alan Johnson, the Industry Secretary and Mr Wickes' boss, tried to downplay the warnings last night, insisting there was only a one-in-50 chance of a winter cold enough to exhaust reserves. "And even if it happens, there is no risk to domestic supplies," he said.

But even Mr Johnson admitted that there was a "problem" with reserve capacity, though he promised: "That is going to change."

Sir Digby also called on the government urgently to launch a debate about nuclear power.

"The government never seems to take the energy debate to the consumer - they take it to business all the time. We have to have a proper debate about whether we need nuclear power."

• "Clean" carbon technologies provide better value for money than new nuclear power stations, Eliot Morley, the environment minister has said.

Ministers must decide during this parliament whether to replace Britain's nuclear plants, which supply about 20 per cent of UK electricity.

"Nuclear plants are expensive and if you're looking at the energy mix, then at the moment I think you'll probably get more value from investment in clean coal," Mr Morley said.

• Government statistics on oil and gas reserves