Business Secretary criticises Hull bioethanol plant's consultation on closure as 'premature'

But the firm, which is owned by Associated British Foods (ABF), said today.yesterday that it is simultaneously beginning consultation with staff to wind down the plant, which employs more than 160 people, due to the uncertain situation.

Business Secretary Jonathan Reynolds described this decision as “premature”, while a Government spokesperson said it was “disappointing”.

Mr Reynolds said: “We have secured a mandate across government to negotiate with them.

“That means we’re willing to engage with them and potentially put government money into a restructure to make sure they’ve got a strong future.

“We have met them many times. We’ve engaged the consultants overwhelmed in the process.

“So I, frankly, I really do regret those decisions to start consultations as to, you know, let the workforce go and close the plant. I think that’s premature, because we were in good faith in those negotiations with them.”

Following the announcement of a US-UK trade deal last month, Vivergo said that it would be forced to shut unless the Government intervened.

The agreement included a UK concession to cut British tariffs on US ethanol, which is used to produce beer and as a fuel additive, from 19 per cent to 0 per cent.

Vivergo said the plant would be unviable as it would be undercut by US producers, giving the Government a deadline of Wednesday to step in.

ABF said in a statement yesterday: “Unless the Government is able to provide both short-term funding of Vivergo’s losses and a longer-term solution, we intend to close the plant once the consultation process has completed and the business has fulfilled its contractual obligations.

“We would cease all manufacturing before the end of our financial year on September 13 2025.”

It added: “In our interim results announcement … we stated that the commercial viability of Vivergo, our bioethanol business, was being undermined by the way in which the UK Government was applying regulations to imported ethanol.

“Since then, the situation has been made significantly worse by the UK’s trade deal with the US, which will allow tariff-free US ethanol into the UK.

“ABF has engaged in extensive discussions with the Government to find a financial and regulatory solution that would enable Vivergo to operate on a profitable and sustainable basis.

“Yesterday, our extended deadline for the Government to deliver that solution passed.”

There will be a wider impact on the agricultural sector from the collapse of the industry, as bioethanol is a petrol substitute that is made from farmers’ wheat that is not good enough to be used to make bread.

Vivergo said the Hull plant can produce up to 420 million litres of bioethanol from wheat sourced from thousands of UK farms.

It described bioethanol production as “a key national strategic asset” which helps reduce emissions from petrol and is expected to be a key component in sustainable aircraft fuel in the future.

The plant is also the UK’s largest single production site for animal feed, covering around 20 per cent of the country’s dairy farms, and the company says it indirectly supports about 4,000 jobs in the Humber and Lincolnshire region.