Investment in UK’s energy sector equivalent to 20 Olympic Stadiums, report finds
4 November 2013
- In 2012 private sector investment in the energy sector rose to £11.6bn
- £24bn direct contribution to the UK economy and in excess of 600,000 jobs supported by the sector
- Sector paid £3bn in tax with more on business rates, the climate change levy, the renewable obligation and the carbon price floor
- Challenge of delivering affordable prices for UK users whilst also investing in new generation and energy efficiency now top of the agenda
London, 4 November 2013: In the Olympic year, private sector investment in the UK energy sector rose to £11.6bn, representing the equivalent to building 20 Olympic Stadiums, according to Powering the UK 2013, a report prepared by EY for EnergyUK.
The report - which looks at the sector’s total economic, investment and employment contributions to the UK - concludes that investment in the UK’s energy sector in 2012 was higher than the private sector’s investment in transport, and the public sector’s investment in health and education.
Tony Ward, Head of Power & Utilities at EY, said: “What our research shows is that the UK energy sector has, in recent years, consistently delivered higher levels of both investment and employment across the country. In 2012 investment levels haven’t lost momentum, despite the slow progress towards a reformed energy policy. Private sector investment in the energy sector increased by £1.6bn compared to 2011 and the sector now supports 1 in 45 jobs in the UK.
“While near term affordability of energy is the dominant issue at the moment, it is being debated at a time when the fruits of recent massive capital investment, and an effective focus on energy efficiency are beginning to be seen in consumption patterns. Long term consumer choice over energy consumption is driven by an expectation of absolute future security, as much as affordability of unit price.
“More needs to be done to secure the UK’s future energy supplies and to achieve a successful transition to a low carbon economy. To continue delivering the quiet energy revolution that has already been taking place, certainty, stability and trust at a customer level are all necessary.
The sector’s contribution to the UK economy
In 2012 the energy sector provided £24bn in direct contribution to the UK economy, up from £21bn in 2011, and an additional £78bn indirectly through its supply chain activities - a total of £102bn in Gross value Added (GVA).
The energy sector contributes around 3% of UK GDP and is also one of the most productive sectors in the economy as indicated by GVA per direct employee. A key reason for the productivity observed is the high level of capital investment in the energy sector compared to other sectors of the UK economy.
Despite recent challenging economic conditions, the energy sector continues to be a major industrial contributor to public finances. In 2012 the energy sector directly contributed central Government tax revenues equal to £3bn, broken down in £1.2bn in corporation tax, which constitutes around 3% of total HMRC corporation tax receipts for 2012; £760m and £460m in income tax and employee National Insurance respectively; and £530m via employer National Insurance Contributions.
The energy sector is a major employer in the UK. In 2012 the sector employed an estimated 125,000 people directly, which has increased from 90,000 in 2008. Overall the energy sector supported an estimated additional 539,000 jobs through supply chain activities. In total the sector supported 1 in 45 jobs or 664,000 jobs in 2012. 86% of energy sector jobs growth between 2008 and 2013 has been outside London, Southern and Eastern England.
Ward concludes: “The last two years have seen growing public awareness around major issues such as energy affordability, policy costs and the role of low carbon energy, however the debate has become skewed and politicised. At the same time as needing to deliver the policy and regulatory clarity necessary to unlock long term discretionary investment, we must also have an open, balanced and honest debate on all these issues on behalf of the future generation of energy users.”