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  • Growth steady, but manufacturing still struggles

    A CBI growth indicator study has shown that while growth remains steady, momentum has slowed up. 748 companies from the manufacturing, retail and service sectors responded to the survey; it shows that as with other sectors the manufacturing industry is still affected by slow growth.

    The survey also revealed that expectations for the next quarter remain weak, but on a more positive note they are still above average.

    CBI Director of Economics Rain Newton-Smith stated:

    “Growth in the economy is steady this month, but momentum is slower than in the first half of the year.

    “Business and consumer services are stoking the economic fire, but while manufacturing has seen a modest improvement, firms in the sector are still expecting to see a fall in output.

    Newton-Smith added that the major risks to our economy came from beyond the UK; this is due to vulnerabilities in emerging markets and the possibility of volatile global markets.

    However, the PMI report from Markit showed an increase in exports for manufacturing in November, and while the sector continues to see moderate growth, it is the larger companies that are benefiting as opposed to the small and medium sized businesses.

    Rob Dobson, who is the Senior Economist at Market, said:

    “UK manufacturing is moving back into expansion mode during quarter four, as it starts to reverse the losses sustained in the prior quarter. Although the pace of growth so far is only very modest, it positions manufacturing as less of a drag on the broader economy.”

    Manufacturing Advisory Service

    The manufacturing sector was handed a blow on Friday, December 4th, when the government made the surprise announcement that it is to close the Manufacturing Advisory Service and the Growth Accelerator, which are all part of the government’s Business Growth Service.

    As part of the advisory service, manufacturers could get advice to help grow their business if they were based in the UK and had a turnover of less than £40 million; it helped to support manufacturers in a vast range of industries including the oil and gas, pharmaceuticals, food and chemical sectors.

    The decision to close the Business Growth Service was unexpected as it wasn’t announced as part of the spending review and some MPs, including Greg Mullholland, are calling for the decision to be reconsidered.

    Commenting on the decision, Baroness Lorely Burt stated:

    "The Manufacturing Advisory Service was a great asset to businesses, and an important part of the Industrial Strategy set up by Vince Cable.”

  • Gas and oil production in the UK predicted to increase

    The UK’s gas and oil production increased by 7 per cent in 2015, according to new figures released by Gas and Oil UK, however, it is warning that it will be difficult to sustain these levels during the coming year.

    In a statement, Oil & Gas UK’s chief executive Deirdre Michie, said:

    “Government data for the first 10 months of 2015 shows that the total volume of oil and gas produced on the UK Continental Shelf (UKCS) was up 8.6 per cent compared with 2014, with the production of liquids up 10.6 per cent and gas up 6.1 per cent.

    “Output in November and December tends historically to be more stable, but even so, Oil & Gas UK now expects year end production for the full year of 2015 to be seven to eight per cent higher than last year.”

    However, Michie also made it clear that gas and oil production will face many challenges in the year ahead; the most pressing challenges for the offshore gas and oil industry include the low prices for oil, and the sector is also facing job losses.

    In a recent statement, Michie also spoke of the importance of a resilient gas and oil industry, and it is imperative that the gas and oil industries adapt their strategies if they are going to compete globally and gain vital investment.

    The official announcement that production was on the increase followed predictions issued by the government in late 2015, but figures are expected to decline from 2020, according to the UKCS Oil and Gas Production Projections.

    New Initiatives

    A number of new initiatives were introduced in 2015 to help bolster the gas and oil sector in the UK. In late 2015, an Industry Behaviours Charter was signed by the Oil and Gas UK Board. The aim of the charter was to improve efficiency in order to transform the offshore gas and oil industry and enhance collaboration between SMEs, contractors and operators, as well as to develop new business models.

    In addition, the Rapid Efficiency Exchange was launched to allow gas and oil companies to come together to share useful advice on improving efficiencies in the industries, while also providing a forum to discuss the challenges that face the sector.

    Government support

    Oil and Gas UK added that an important factor for the future of the industries would be support from the government and HM Treasury.

  • Government announces licenses for 27 onshore blocks

    The Oil and Gas Authority has announced that 27 onshore areas of land or blocks, are to be offered to businesses as part of the 14th Onshore Oil and Gas Licensing Round. The announcement of the fresh licensing round was first made in 2014.

    Other blocks of land that were applied for are to undergo further assessments to establish the environmental impact of the applications, and when this has been completed licenses will then be offered to the companies. The announcement regarding the remaining companies that have been awarded licenses is due to be made later in 2015.

    Commenting on the new licences, Lord Bourne, the Energy Minister for the UK, stated:

    “Keeping the lights on and powering the economy is not negotiable, and these industries will play a key part in providing secure and reliable energy to UK homes and businesses for decades to come.

    “It’s important we press on and get shale moving, while maintaining strong environmental controls

    The Government said that close to one hundred companies had applied for the initial licenses for shale gas exploration, and chemical company INEOS has revealed that it is one of the successful applicants.

    With three licenses granted for shale gas exploration in the East Midlands, this opens up brand new opportunities for INEOS Shale, who pledged a £640 million investment into shale gas exploration last year.

    Gary Heywood, CEO for INEOS Shale said:

    "We are keen to move quickly to evaluate the potential of this resource, and determine if we can economically produce gas from our licenses.  This will depend on the pace of planning approval. If we can, it will provide a local source of competitive energy and raw materials to support manufacturing jobs in the UK.”

    Ministers say that the new rounds of blocks are essential to secure UK energy supplies into the future, and that they will also be a vital part of the continued UK economic recovery by creating new jobs.

    Controversy

    Shale gas has its opponents and there has been controversy caused by plans to allow shale gas exploration in the UK. However, others argue that it is important for finding fresh sources of energy and it is vital for job creation, and for ensuring energy production into the future. The Government predicts that investment in shale gas could be worth as much as £33 billion, and it could assist in the creation of more than 60,000 jobs.

  • Hinkley Point C could face further delays

    There is speculation that plans for Hinkley Point C could face further delays. The EDF Worker’s Committee are due to make a decision this weekon the future of the proposed nuclear power station and it is thought likely that they are to ask for it to be postponed.

    Legal action is also being taken by unions in France in a bid to delay the project. However, while plans for the Hinkley Point C plant don’t have the support of some French unions, it has the backing of four major unions in the United Kingdom.

    Unionsupport for Hinkley Point C

    Len McCluskey of Unite and Mike Clancy of Prospect are among the supporters of the new plant who have signed a letter to Vincent de Rivaz, chief executive of EDF UK urging him to make the final investment decision in “a timely fashion”.

    The letter also stated:

    “From an energy perspective, the UK needs the electricity. We are rapidly losing capacity and this process will continue as the UK coal stations and nuclear stations reach the end of their operating lives.

    “At the same time, we are committed to making a transition to a carbon-neutral balanced energy policy in the UK, including nuclear and renewables.

    “Much is at stake in both France and the UK in terms of jobs, skills, social dialogue, industrial capability and prosperity into the future.”

    Consultation Process

    The consultation process was due to come to an end on July 4 and union bosses are calling for a decision on the final financing to be made as soon as possible. Previously, the announcement on funding was due to be made in May, but this was deferred until September 2016.

     “Project is ready”

    Despite there reportedly being some concerns over funding, at a meetingwith the Energy and Climate Change Committee in May, Vincent de Rivaz announced that the “money is there”. He also noted that the French Trade Unions wished to delay the project further.

    However, de Rivaz went on to say that a delay wasn’t necessary as the “project is ready”. He also added that the project mustn’t be postponed “because the UK needs the electricity from Hinkley Point C at the time it’s due to come on line”.

    It is estimated that the building of the new nuclear plant will cost £18 billion, and it would generate 7% of electricity in Britain once it comes into use. It also has the potential to create thousands of jobs.

  • Manufacturing orders on Increase, but food prices expected to rise

    The latest Industrial Trends Survey, which interviewed 450 UK businesses, shows manufacturing orders are on the increase, but there was less demand for export orders, although they do remain above average.

    Manufacturers were also positive about the prospects for output, with 38 per cent expecting it to grow over the course of the next quarter, however, average selling prices are in for a sharp increase during the next quarter to +19, according to the CBI.

    Order book balance and output volumes

    The order book balance is now at minus 3, which is a notable improvement on October’s figures of minus 17. However, output volumes also slowed in the last quarter.

    Rain Newton Smith, chief economist for the CBI, said:

    “It’s good to see manufacturers’ overall order books at healthy levels, and the outlook for output growth remaining robust as we head into Christmas.

    “But the weak pound is beginning to make its mark, and prices are expected to rise, especially in the food and drink sector. On the flip side though, export orders remain above average.

    Autumn Statement

    The announcement of the new Productivity Fund was welcomed by the CBI, the EEF and the Food and Drink Federation; it is hoped some of the measures outlined in the Autumn Statement will give businesses the confidence to invest.

    The £23 billion Productivity Fund will mean additional support for innovation and science, which the EEF say is “vital if we are to be at the forefront of the fourth industrial revolution”. The increased support for exports also received approval.

    Rising food prices

    The weak pound and the rising cost of ingredients has caused problems in the food and drink sector. It is predicted that prices of well-known food brands will rise in the coming months, however, some manufacturers  say they will cover these additional costs where they can.

    After Philip Hammond’s statement Autumn Statement, the Food and Drink Federation (FDF) issued a statement detailing just how important food and drink manufacturing is to the economy in the UK, with a worth of more than £21 billion.

    Strong export growth for food and drink sector

    The food and drink sector also showed strong export growth in recent months. The FDF say exports increased by 13.7 per cent, and crucially, non-EU exports grew at twice their usual rate in the last quarter.

    The FDF also said branded food and drink exports are at record levels.

  • National Grid discuss plans for Borehamwood site

    The National Grid are consulting with residents in Borehamwood over the future of a site that used to house the local gasworks.

    Work is currently underway to clear the site, and efforts to break up the gas holders that are located at the Borehamwood site are expected to get underway shortly; it is thought that the work will be completed towards the end of 2015. With the site cleared, plans for redevelopment can go ahead and there are proposals for the site to be used for housing.

    In addition to plans to remove gas holders from the site, gas equipment that is currently being used is to be transferred to another site in the local area.

    Residents and local councillors were at the meeting to hear about plans for the redevelopment of the site. At the meeting, residents had an opportunity to ask questions about the future of the former gasworks and to find out further details of the proposed redevelopment.

    Among those attending was Councillor Clive Butchins, who acts as a representative for the Borehamwood Hillside Ward.

    Commenting on the meeting, Councillor Butchins said:

    “Although it is a shame to lose such a local landmark, I am happy to see the gasholders removed from site to prepare it for a more useful future.”

    Following the meeting, Nadia Dew, Land Regeneration Manager at National Grid said: “It is always great to meet with the site’s neighbours. We hope that people found the session and opportunity to ask questions helpful.”

    She went on to say:  “We’ll continue to keep all our neighbours updated on how our work’s progressing” and she assured residents that the local pedestrian walkway would remain open during the redevelopment phase.

    The National Grid site has a long history in the area and it had once been essential for delivering gas to locals in Borehamwood. In addition, the site had been used for storing gas, but due to modern developments, there is no need for the gasholders so the decision was made to decommission them.

    According to 4-traders.com, the National Grid first told residents about the proposals to redevelop the site back in February 2015.

    As the plans for redevelopment are underway, local residents are invited to continue to give their feedback on plans for the regeneration of the site. Residents are invited to call the community relations team should they have any questions over the plans for the restoration of the Borehamwood site.

  • Questions being asked over Hinkley C

    The proposed Hinkley C power plant has always been the subject of controversy, but further questions are now being raised over its costs and who will foot the bill for the radioactive waste that will be produced.

    As detailed in the Guardian, the Department of Energy and Climate Change has declined a Freedom of Information request, which would have disclosed its state aid arrangements with the French energy firm EDF.

    The government has previously stated that when a company builds a nuclear plant in the United Kingdom, it would be responsible for the management and cost of the waste disposal, but there are worries that these expenses could be passed on to the bill payer. In addition, environmental group Greenpeace has expressed concerns over the possible bad value that the proposed plant might offer to thetax payer.

    David Lowry, who filed the Freedom of Information request, is to appeal the decision and he argues that British citizens are entitled to make up their own minds on whether the government has made the right decision over the plant.

    Hinkley C - the costs

    In an article on its website, Greenpeace has raised concerns over the potential costs of Hinkley C. A recent spreadsheet issued by the Treasury seemed to suggest that the new power plant could end up costing £26 billion, but the government has since issued a statement saying this was a mistake and the final cost will be £16 billion.

    However, Greenpeace says this isn’t consistent with the costs announced by EDF, who say that the development will cost £18 billion, however, this price could still rise should be development be subject to delays.

    A new nuclear generation

    A move toward nuclear energy is considered necessary due to the closure of the majority of the United Kingdom’s older generation power stations and the need for cleaner fuels.

    The Hinkley Point C power plant is being hailed as the first step towards a new revolution for the nuclear power industry, and it will be the first nuclear plant in the UK for a quarter of a century.

    Licensing for the station was confirmed in 2012, and Hinkley C will be the first nuclear power plant to be backed by a Funding Decommissioning Programme. Under this arrangement, the company responsible for building the plant must cover all of the costs of decommissioning, and their share of the total cost for waste disposal.

  • Small business owners warned of Gas safety risks

    A new survey has highlighted concerns that some small and medium sized businesses aren’t doing enough to protect their employers and premises from gas safety risks.

    A survey by British Gas shows that 17% of businesses don’t service their appliances on a regular basis, and one in five small businesses state there have been problems with gas safety issues at their premises in the past.

    Even more concerning is the fact that 40% of small businesses say they would turn off the electric supply if they thought they could smell gas at their work premises. While others said they would try and find out the source of the gas leak, and a small minority would close up the building to try and contain a suspected gas leak.

    More than 500 senior managers were interviewed as part of the survey and 20 per cent of them admitted that gas safety issues had caused varying problems including gas leaks, lost income and a reduction in trading hours.

    Commenting on the survey, Vincent Thomas, Field Service Manager at British Gas Business, said:

    “It’s crucial that businesses take gas safety seriously. I’ve seen some alarming stuff over the years in all different types of businesses – from factories to nursing homes. When something goes wrong it can stop a business in its tracks and have a serious effect on finances, staff and customers. 

    “Our engineers visit over 1,000 businesses every week, and find that many customers don’t think about the risks of carbon monoxide and gas leaks at work the same way as they might at home.  It’s absolutely essential to get any commercial gas appliance regularly serviced and maintained.”

    The survey was conducted as part of Gas Safety Week, which is held annually to help raise awareness of the potential problems that can be can be caused due to poor safety practices.

    Employer Responsibilities

    Employers also need to be aware of their legal obligations to provide a safe working environment for their employees. According to the guidelines set out by the Health and Safety Executive, work carried out in commercial premises such as factories needs to be completed by a registered engineer, and annual checks also need to be undertaken.

    As well as carrying out regularly maintenance, records should be kept, and inspections should be conducted to look for early signs of damage to both the appliances and pipe lines.

  • SMEs confirm fall in domestic and export orders

    Figures released by the CBI show a fall in output for small and medium-sized manufacturing businesses in the UK. The CBI SME trends survey also indicated a fall in export and domestic orders for the last quarter.

    More than 400 small and medium-size companies were interviewed for the survey; the results showed there was a poor performance for output growth, but it is predicted that both domestic orders and output will perform better in the next quarter, and the decline in exports is expected to slow.

    The latest figures also demonstrated that less people were employed in the last three months, and this trend is expected to continue into the new year.

    According to the survey, businesses felt less optimistic about the future and they were less positive over the future for exports in the coming year. In addition, companies will be spending less on both product and process innovation in 2016.

    The figures from the CBI revealed that 26% of SMEs manufacturers had a rise in orders, but 48% reported a fall; these figures are expected to improve slightly in next three months.

    In addition, 25% of companies reported an increase in domestic orders while 36% reported a fall. And the 10% of companies said they had experienced an increase in export orders in the last quarter, while 46% stated export orders had fallen. This is the poorest performance since 2009.

    Other key figures from the survey show 23% of manufacturers say output has increased, while 31% reported a fall, and 22% of companies remain optimistic about their business prospects in the future; 29% say they are less positive

    Moreover, 23% of companies had increased their amount of employees, while 15% of SEMs had employed fewer people in the last quarter.

    Commenting on the new figures Rain Newton-Smith, CBI Director of Economics, said:

    “As demand has fallen, especially in the face of a strengthening Pound, our smaller manufacturers have had a tough quarter, with orders and output volumes dropping.

    “Manufacturers expect conditions to stabilise somewhat over the quarter ahead, but remain concerned about the outlook for demand.

    Newton-Smith went on to urge the government to include measures in its Comprehensive Spending Review to help improve skills and innovation in order to improve productivity in the coming year.

    Overall growth

    While the news for SMEs wasn’t overly positive, there was better news for growth overall as newly released figures from the CBI showed growth has increased by 4%, and GDP grew by 0.5% in the last quarter.

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  • UK-based company win multimillion pound contract with Galloper wind farm

    A UK-based company, James Fisher & Sons, has won a multimillion pound contract to work on the Galloper wind farm project. The announcement is expected to lead to the creation of 100 jobs on the east coast, including up to 50 offshore technician positions, and approximately 30 onshore and offshore staff will also be required.

    The company will be responsible for delivering a range of offshore and marine services to aid in the successful completion of the Galloper windfarm, which is planned for Lowestoft, Suffolk.

    Personnel from James Fisher will be assisting with a number of different support arrangements during the construction of the site including vessel refuelling, diving services, the operation of remotely operated vehicles, emergency responsive services, construction site set up and providing crew transfer vessels. The contract is worth £25 million to the company, which specialises in working with the marine, renewable energy and gas and oil sectors.

    Commenting on the new contract, Nick Henry, CEO of James Fisher and Sons, stated:

    “We’re delighted to be working with Galloper Wind Farm Limited on this exciting and challenging project. We are bringing together a range of services under one contract which enables us to focus on driving operational efficiencies and reducing risk on behalf of our client, through the integration of these services.”

    Planning permission and additional investment

    Permission for the building of the windfarm was first granted in 2013 and it is an extension to the already existing Greater Gabbard Wind Farm. In October 2015, RWE Innogy announced a financial close for the project and stated that Siemens Financial Services, Macquarie Capital and UK Green Investment Bank would become 25% equity owners in Galloper Wind Farm Limited.

    Construction work and project completion

    Work on the offshore construction is scheduled to begin in June 2016 and it will be completed in 2017.

    Once complete, the Galloper windfarm will have 56 wind turbines that will have the capacity to produce 336 MW of power, which is enough to fuel more than 300,000 homes. 56 subsea array cables will be built under the sea to link the turbines to the platforms, and they’ll be one offshore substation.

    It’s thought 700 jobs will be created during the construction stage, and approximately 90 operational positions will also become available once the construction is complete.

    The opening of the windfarm is set for March 2018.

  • Use of renewable energy reaches record levels

    Renewable energy is playing a key part when it comes to fuelling homes and commercial premises, according to the latest set of statistics released from the Department of Energy and Climate change.

    The figures indicate that nearly a quarter of the U.K.’s energy in 2015 was produced by renewable energy sources. Solar output is on the increase, as is bioenergy, and a small rise in hydro generation of 2.6% was recorded too.

    One of the most significant changes was in the increasing use of wind power. According to the figures, 26% of electricity in the UK is now produced by wind power, which is the equivalent of 9.8 million homes. The figures also demonstrate a surge in the use of offshore wind power generation; the escalation in wind power generation is due to the enhanced onshore and offshore capacity following the opening of several new wind farms, including Westermost Rough.

    Positive effect on Fuel Bills

    The rise in the use of renewable energy is also having a positive effect on the cost of fuel bills, with the data showing household electricity bills have fallen by an average of 8% because of the reduction in cost for energy and a reduced demand.

    Increase in energy production

    In total, energy production was more than 14% higher for 2014; this was due to the increased production in gas, oil, primary electricity and bioenergy. Moreover, the energy trends report showed that the production of natural gas was 8% higher

    The increase in primary electricity is due to a larger nuclear output and more fields being opened, while a reduced need for maintenance led to the higher production of gas and oil.

    Fall in fossil fuels

    With the drive to reduce dependence on less environmentally friendly forms of power generation and towards renewable energy, the latest Energy Trends data report showed a fall of 3.8% since late 2014 in the use of fossil fuels.

    Commenting on the figures, Maf Smith, Deputy Chief Executive for Energy UK, said:

    “These excellent figures show that renewable energy is delivering huge amounts of clean electricity right now, and that overall energy costs are coming down – including wind energy

    “Putting the consumer first means putting renewables first. As old coal turns off, renewables are quietly taking its place, delivering energy security and value for money. It makes more sense than ever to fully support and take advantage of our natural resources”.

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