One of Britain’s oldest family-owned companies has welcomed the government’s decision to extend energy support to forging businesses, saying the move could save it up to £250,000 a year.
Somers Forge, a Black Country engineering company owned by the Folkes family since 1697, supplies components for naval vessels, including nuclear submarines. The business is part of the UK’s defence manufacturing supply chain and has now been included in the British Industrial Competitiveness Scheme (BICS).
The scheme allows eligible energy-intensive manufacturers to reduce payments towards three of the five government levies included in their electricity costs.
Tammy Inglis, finance director at Somers Forge, described the inclusion of forges as excellent news for the company. She said the firm had expected to spend an additional £1.1 million over five years on one energy-related cost.
Under the revised arrangements, Somers expects to save between £200,000 and £250,000 each year on fixed energy expenses.
The BICS scheme was announced last year and is designed to reduce electricity costs by as much as £40 per megawatt hour for more than 7,000 energy-intensive businesses. Support will begin in 2027 through reductions in payments linked to the renewables obligation, capacity market and feed-in tariff.
Forging, pressing and stamping businesses were initially excluded from the scheme. The government later changed the eligibility criteria following pressure from industry organisations, including the Confederation of British Metalforming.
The government has since published the final list of eligible activities and introduced an online checker to help companies establish whether they qualify.
Business Secretary Jonathan Reynolds said the government wanted eligible businesses to understand how they could access the available support.
The decision comes as energy costs continue to put pressure on Somers Forge. The company, which will mark 160 years of its engineering division in October, has seen the cost of energy rise sharply in recent years.
Inglis said the company was paying about 45 pence per therm in 2018, compared with as much as £1.65 today. Energy bills can now account for up to 10% of the company’s turnover.
She said the company had reached a point where it may need to introduce surcharges for customers because profit margins were becoming increasingly tight.
Somers has previously warned that high UK energy costs were making it harder to compete with European manufacturers. Inglis said the BICS support would help improve the company’s position, although other costs, including steel, remain affected by high energy prices.
Stephen Morley, president of the Confederation of British Metalforming, said the change means about 70% to 80% of his organisation’s 200 members could now qualify for the scheme.
Morley welcomed the decision but warned that UK energy prices remained significantly higher than those faced by some European competitors. He called for further government action to help manufacturers remain competitive and create jobs.
