As the manufacturing sector continues to get battered by rising energy prices, many firms are trying to anchor down by cutting operational times, increase efficiencies and, as previously discussed by Tony Wright and I, turning to green energy.

Last week the government announced intent to support energy intensive firms, which could mean lower bills for those in the manufacturing sector and a much needed boost to cashflow. An article published by the BBC cited the business secretary stating it was "essential" to explore ways of further cutting production costs. Kwasi Kwarteng went on to say "British manufacturers are the lifeblood of our economy and central to our plans to overcome this period of economic uncertainty”.

Some of the motivation behind this move is to keep manufacturing firms in the UK – energy prices are more expensive on the home shores than in others in the EU block, largely driven by our continental neighbours offering more support. The government believes this could hamper investment, competition and commercial viability for hundreds of businesses in industries including steel, paper, glass, ceramics, and cement, risking them relocating away from the UK.

So how tangible is this support and what will it actually mean for UK manufacturing in the short term? Well, for the steel industry in particular, it may not mean a lot in the context of current support already in place. The Energy Intensive Industries Exemption Scheme grants firms 85% relief on a range of environmental and policy levies that are added to electricity bills. However according to GOV.UK, The UK government is consulting on the option to increase the level of exemption for certain environmental and policy costs from 85% of costs up to 100%.

So some breathing space perhaps, but how long until the knight in shinning armour arrives? It’s uncertain, which isn’t helpful. But, the proposal would help around 300 businesses supporting 60,000 jobs in the UK’s industrial heartlands – in the immediacy however, it is hard to see what upside there is for these manufacturing firms.

The support, whilst welcome, is unlikely to give any instant relief to balance sheet and cashflow pressures. So whilst this may help with medium to long term planning, it will unlikely resolve anything right now.

Our view for any manufacturing firms who are struggling, is that directors in particular should be shoring up their advice on fiduciary duties, putting together clear strategic targets for cashflow planning to minimise loss to creditors, and ensuring all decisions that are made are properly recorded and documented to protect against their actions in the unwelcome event of failure.