September 2019

IGEM responds to committee’s report on clean growth policies The Institution of Gas Engineers & Managers (IGEM) has echoed a Science and Technology Committee report stating the UK will be unable to meet its goal of net zero carbon emissions by 2050 without “urgent action”. The report, which criticises the government for “unacceptable” cutbacks and slow progress, sets out 10 steps needed to ensure the carbon target is met, with recommendations across transport, heating, energy efficiency and how to tackle greenhouse gas emissions. IGEM’s CEO Neil Atkinson said: “We can only agree with the committee that the UK urgently needs a clear strategy for decarbonising the energy system and heat in particular. Unfortunately, progress in this area has been stymied by indecision and hampered by cutbacks. “However, the UK has an opportunity now to take decisive action on the decarbonisation of heat. We note this report contains several positive recommendations on the measures needed to do this successfully and the important role hydrogen can play in that transition. “Key to this change will be the hydrogen safety demonstration projects currently taking place around the country and we support the committee’s call to support these schemes and address this issue with the utmost urgency. “The report goes on to urge the government to amend regulations to raise the proportion of hydrogen permitted in the gas grid, once the safety evidence has been obtained. IGEM is currently working hard on developing hydrogen technical standards and reviewing the gas quality standards that would underpin any change in gas quality legislation. “The government must now accelerate its thinking in terms of policies and regulation to support these measures.” News 10 | Plant & Works Engineering www.pwemag.co.uk September 2019 Since the new government took office there has been a clear ratcheting up of no deal rhetoric. While the Government’s preparations to date are welcome, the unprecedented nature of Brexit means some consequences cannot be mitigated in advance. The previous postponements gave some companies, particularly SMEs, more time to work on plans they were unable to complete by March 29th, such as making regulatory applications to EU agencies. However, more firms have experienced a drop in export orders this quarter as Brexit fears lead foreign customers to source goods from elsewhere that they previously bought from UK producers. As our latest Manufacturing Outlook demonstrates, there has consequently been a clear weakening in the performance of firms, particularly in terms of output, investment, and employment intentions. If manufacturers stockpiling hadn’t artificially boosted output in Q1 the economy would already have entered negative growth for the year. As it is, the Bank of England has warned that crippling uncertainty and slowing international trade suggest we have a one-in-three chance of plunging into recession by the start of 2020 anyway, regardless of what now happens with Brexit. Sterling fell 10% following the 2016 referendum but then stabilised. Recently the pound has begun sliding again, down a further 7% since May. Lower Sterling makes some UK exports more competitive, but British manufacturers import lots of their inputs so if the depreciations of 2008 and 2016 are any guide, the main effect will be increased inflation – something we’re now beginning to see. Indeed, as our survey shows, export prices have been cut but so have export orders, signalling that foreign customers are choosing not to buy as many UK goods as before even though they’re now cheaper – down 6% since last quarter. The number of vacancies has been dropping since the start of the year. There are now 126,000 fewer people (net) employed in manufacturing jobs today than there were at the time of the Brexit referendum in June 2016. These statistics are proof our sector is undeniably on a downward trajectory. In every region, companies are cutting back on investment in transport equipment, factory machinery, and IT, just at the point in the economic cycle when spending would normally increase. This reflects declining confidence ahead of a potential a crash out Brexit coinciding with worrying global trade conditions. The clock has now almost run down and as we leave the EU, Brexit really could not have come at a worse time for manufacturers. By MAKE UK chief executive, Stephen Phipson MAKE uk - the manufacturers’ organisation monthly news comment