The Chemical Industries Association (CIA) is calling on the Chancellor to use the Autumn Budget to launch a £1 billion Chemical Industry Investment and Competitiveness Programme, designed to unlock at least £3 billion in private-sector investment and help rebuild the UK’s chemical manufacturing base.
In its submission to the Chancellor, the CIA warns that persistently high energy costs, international competition, regulatory burdens and weak investment confidence are putting strategically important UK manufacturing capacity at risk.
The association says the Budget must deliver a decisive shift from managing industrial decline to creating the conditions for investment, growth and reindustrialisation.
Chemical manufacturing generates £82 billion in annual turnover, contributes £38 billion in gross value added and directly employs 140,000 people across the UK. It supports a further 350,000 jobs throughout the wider economy and exports £66.3 billion of goods annually, making it the UK’s second-largest manufacturing exporter by value.
Chemicals are also essential to the wider economy, supplying the materials and ingredients needed by industries ranging from pharmaceuticals and food to construction, defence, advanced manufacturing and clean energy.
Yet the sector faces mounting pressures. The CIA’s Business Survey found that nearly three-quarters of respondents believe their UK operations are less competitive than overseas sites, while more than four in ten report investment delays, reductions or cancellations.
Chemical output fell by more than 30% between 2021 and 2025, according to the CIA’s submission, with the decline exceeding 60% among the most energy-intensive chemical businesses.
The association warns that continued contraction would increase import dependence, weaken domestic supply chains and undermine the Government’s ambitions for economic growth, energy security and net zero.
Eight priorities for the Chancellor
Alongside the proposed £1 billion investment programme, the CIA is calling for a package of eight Budget priorities:
1. Make industrial energy more competitive. Go further in reducing electricity costs, provide greater long-term certainty for industrial energy prices and recognise the continuing importance of natural gas and industrial heat to chemical production.
2. Deliver the Critical Chemicals Resilience Fund. Implement the £350 million fund swiftly and build towards a longer-term programme to protect strategically important domestic production and supply chains.
3. Reform carbon pricing. Ensure the UK Emissions Trading Scheme and Carbon Border Adjustment Mechanism support decarbonisation without driving investment and production to countries with weaker climate standards.
4. Encourage investment through the tax system. Strengthen capital allowances, introduce targeted investment tax credits and improve incentives for research, development and industrial innovation.
5. Protect UK manufacturers from unfair competition. Strengthen action against dumping, subsidisation and global chemical overcapacity, while reducing unnecessary barriers to trade with the European Union.
6. Reduce unnecessary regulatory costs. Reform UK REACH chemical registration requirements to avoid unnecessary duplication, align with the EU regime where appropriate, and adopt proportionate, risk-based approaches to environmental permitting.
7. Invest in skills. Establish a dedicated Chemical Skills Investment Fund and give businesses greater flexibility to use apprenticeship funding for high-value technical training and retraining.
8. Accelerate critical infrastructure. Speed up investment in electricity grid connections, hydrogen, carbon capture, transport and industrial clusters to enable manufacturing growth and decarbonisation.
The proposed investment programme would support plant modernisation, automation, new manufacturing capacity, research and development, electrification, low-carbon heat, carbon capture, advanced recycling and stronger domestic supply chains.
CIA: Britain must choose industrial renewal
Steve Elliott, Chief Executive at the Chemical Industries Association, said:
“Chemical manufacturing is fundamental to Britain’s economic future. It supplies the materials, technologies and expertise on which other industries depend, supports high-value jobs and has a vital role to play in the energy transition.
“But strategic importance alone will not secure the future of UK chemical manufacturing. Businesses need competitive energy, confidence to invest, effective infrastructure and a regulatory and tax environment that allows them to compete internationally.
“The Government has recognised the importance of chemicals through its Industrial Strategy and the £350 million Critical Chemicals Resilience Fund. These are welcome steps, but they must now be matched by a broader and more ambitious programme of action.
“We are asking the Chancellor to establish a £1 billion Chemical Industry Investment and Competitiveness Programme capable of mobilising at least £3 billion in private investment, alongside practical measures to tackle energy costs, encourage innovation, strengthen resilience and support skills.
“This is about much more than one industry. When chemical manufacturing is lost, the consequences are felt throughout the UK economy, from downstream manufacturers and local supply chains to national resilience and our ability to develop new technologies.
“The choice is between allowing further contraction and import dependence, or creating the conditions for industrial renewal. The Autumn Budget is an opportunity to choose growth, investment and a stronger manufacturing future for Britain.”
The CIA says that a competitive chemical industry would help the Government deliver its ambitions for economic growth, advanced manufacturing, regional prosperity, clean energy and national resilience.
It is urging the Chancellor to make next week’s Budget a turning point for UK chemical manufacturing, backed by a clear, long-term commitment to investment and competitiveness.
ENDS
