Last month, Sir Jim said he had lost confidence in the UK, describing the country as “on the slide”, as his company explains the impact of the budget on business
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LBC
Billionaire Sir Jim Ratcliffe’s chemicals giant Ineos has warned its UK operations could ‘disappear’ due to rising taxes and energy prices.
Last month, Sir Jim said he had lost confidence in the UK, describing the country as “on the slide”, which he blamed on the level of taxation and high immigration.
The latest warning, from one of Britain’s biggest companies, comes ahead of this week’s Budget – one that Chancellor John Healey has promised to be ‘business-friendly’.
The chemical giant employs around 4,000 people in the UK. It has sites in 26 countries, employing more than 23,000 people worldwide.
During a visit to the firm’s Runcorn site, Ineos’ Director of Corporate Affairs Tom Crotty told LBC that the current economic environment is the ‘toughest ever seen for the chemical industry’.
“If you look at where we’re making our big investments, they’re not in the UK at the moment,” Mr Crotty said.
Read more: Amazon UK boss gives ‘vote of confidence’ in British economy ahead of Budget
“We’ve got our biggest investment at the moment going on in Belgium, in Antwerp, where we’ve had a lot of support from the Belgian government. We make big investments in the US because it’s a very business-friendly environment in the US.
“If you look at our footprint in the UK, that has come down…I worry that our footprint has been contracting and contracting and contracting, and eventually it just disappears. And that’s not a good thing for the UK economy.”
Last month, INEOS announced it was pausing production at its three plants in Hull.
The company said the move will affect up to 1,000 of its staff, of whom 245 work directly at the site.
INEOS’ warning poses strategic questions for the UK, with the company providing the chlorine that cleans much of Britain’s drinking water.
The company has blamed spiralling UK energy prices for its decision to move investment abroad, with the company’s energy bill at its Runcorn site rising by £90 million since the start of the war in Ukraine.
“We are increasingly uncompetitive globally. At the moment, the electricity price here (UK) is 6 times that of the US. Their prices in France are 30% lower than they are here, because over many years they’ve invested sensibly in nuclear power”, Tom Crotty said.
Adding to these pressures is the £4m extra the firm has paid out annually as a result of the increase to National Insurance in 2024.
The government is helping businesses with their energy bills through the British Industrial Competitiveness Scheme (Bics).
UK manufacturers can now apply for the new scheme intended to reduce their electricity costs by up to 25 per cent from April 2027.
“We (INEOS) actually won’t qualify for Bics because we qualify for some other protections, which we’re hoping will kick in,” Crotty added. “But we’ve been waiting. I think we were promised protection back in March and it’s now October and we’re still waiting.
“You promise one thing and then you fail to deliver. That doesn’t give industry the confidence to invest. And that’s the key issue here. That’s what John Healey is trying to encourage in the budget, growth. And growth comes through investment. Would we make a choice to invest in the UK right now versus investing in the US or somewhere else? Probably not.”
Earlier this month, INEOS said Labour’s British Industrial Competitiveness scheme (Bics) fails to address UK industries relying “far more heavily on gas than electricity”.
The chemicals giant also reiterated its calls for the government to approve drilling at the Rosebank oilfield.
However, Crotty questioned whether the incentives are really there for companies to invest in the North Sea, with oil and gas companies paying a marginal tax rate of 78% on their profits.
“We just had the announcement from the government about Jackdaw, ticking the box. Thank goodness they finally made a good decision on that. But it’s too little in many ways…because the North Sea is a huge asset that we’re underexploiting.
“We’re North Sea operators. While we’re paying 78% tax rates, is anyone going to invest in the North Sea? Of course they’re not.
Adding: “So let’s get on with North Sea development. Let’s give a tick to Rosebank as well as Jackdaw and Let’s encourage investment in the North Sea by getting the tax rate down from 78% to something normal, like a business tax rate of 40%.”
In response, a government spokesperson said: “We’ve taken bold action to support our chemicals industry, and we continue to meet with INEOS and the industry to see what we can do to support them through their current challenges.”
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