LONDON (From news reports) -- Soaring power costs and a lack of clarity around net zero are threatening the future of British industry, one of the country's biggest manufacturers has warned.

Miles Roberts, chief executive of paper and packaging giant DS Smith, said the UK's high cost of electricity compared to the US and Europe was hurting the competitiveness of its businesses.

He also criticised a lack of clarity on the Government's plan to overhaul the power grid for the net zero era, warning that the situation threatened future investment in his company's paper mill in Kemsley, Kent.

His comments come as the Government battles concerns that the switch to green energy risks sparking "deindustrialisation", with unions highlighting job losses in the steel and oil industries.

Mr Roberts said: "For us, infrastructure, distribution and energy are big costs.

"And in the UK, energy costs for heavy users are significantly ahead of those costs in Europe and very, very substantially ahead of our competitors in the US.

"So when we're all having this debate about the future of Britain's energy and the transition to green electricity, I think we need to be very clear about what that energy is, where it going to be and how it is going to be paid for.

"At the moment, [in the UK], we don't have that. But in other countries, we do.

"If you don't have the clarity, then that just delays the decisions and delays the investment that this country needs."

He added that UK paper production had declined in recent years despite rising demand, with imports filling the gap.

"For the UK paper industry to continue to be competitive, the cost of energy needs to be addressed," Mr Roberts said.
Manufacturers in the UK have repeatedly complained about the cost of power, which is higher than many other European countries.

The average British business paid 27.7 pence per kilowatt hour (KWh) for electricity in 2023, according to government figures, compared to 16.4 pence in France and 17.5 pence in Germany. Taxes made up around one fifth of the UK figure.

Since 2008 the bill of a medium-sized British business has increased by 230pc compared to a 150pc increase to the median cost across EU countries and the UK.

Energy-intensive industries are spared most taxes and network costs through the Government's "supercharger" policy, but many other manufacturers remain exposed.

A large disparity between UK and European wholesale prices has been blamed by industry group Make UK on Britain's greater reliance on gas for generating electricity.

But Mr Roberts also warned that the UK's lack of a detailed plan for a future net zero power grid was also hurting business confidence.

For example, he said recent investments by DS Smith in factories in Poland and France followed detailed discussions with each country's respective government about how the sites would be powered, what price they would pay and how the factory would be connected up.

In the UK, where it employs 5,000 staff, DS Smith is currently evaluating options to replace a gas-fired plant that currently powers its Kent factory.

But Mr Roberts said the company has yet to receive clear answers on how it will be able to source enough power or whether it can receive a high-voltage grid connection to meet its needs.

The plant was installed three years ago and has a lifetime of roughly 10 years, meaning decisions about its replacement must be made imminently.

He added: "We're now looking at what the new investment is, and how we are going to replace those gas turbines. But we're unclear as to what is going to be the source of the energy, what is going to be the cost and how it is going to be transmitted.

"And we're just one company - there are many others out there that are also heavy energy users."

Mr Roberts stressed there was no immediate threat to the factory's future but added: "Long-term, this clearly has an effect on the attractiveness of investment into that site."

His comments come as the Government is drawing up a new industrial strategy.

Sarah Jones, the industry minister, said earlier this week that "deindustrialisation must not be the result of decarbonisation".

She said: "We know these energy intensive industries use a huge amount of electricity and we need to make sure those bills are coming down.

"We will look at anything that will kind of make it fairer and easier for people to manufacture and produce in this country."