Spiralling energy prices are threatening the future of many manufacturing companies which are being forced to make redundancies and cut back on investment plans, it was claimed today.

And one Warwickshire manufacturer could have to reduce its workforce to overcome a fuel bill which has doubled this year.

Steven Mills, chief executive of Plastic Engineering (Leamington), said more than 7,000 jobs in the plastics sector could be lost as a result of hikes in the price of gas and electricity.

Mr Mills has written to Energy Minister Malcolm Wicks asking for a meeting to discuss the problems.

He said: "Plastic Engineering has energy costs of some pounds 250,000 at present, but it is understood from the energy brokers retained by the company that this sum is likely to increase to pounds 500,000 in the current year.

"Absorption of yet another extra cost at a time when raw material prices are also rising as a result of increased oil prices means the only possible way of maintaining margins is to institute a programme of redundancies.

"We would need to reduce our workforce of 150 employees by ten per cent - 15 people - just to stand still."

Mr Mills said Midland businesses in particular, with the region's large manufacturing base, were being particularly badly hit by the fuel price rises.

He said: "We are a medium-sized concern with sales of pounds 12 million, of which 30 per cent is exported.

"But we cannot compete with other countries where energy costs are significantly lower and in part subsidised through various local schemes. Urgent action is required to address the UK cost base and the indicated energy uplift is entirely unwelcome."

Mr Mills has joined the British Plastics Federation to bring the matter to the Government's attention.

Its director general, Peter Davis, has already written to Mr Wicks protesting.

Mr Davis said: "Energy cost increases alone could lead to the loss of 7,000 jobs and over half our companies are reducing their UK investment plans.

"This is a serious situation and our companies have asked us to make the Government aware of all the facts."

Mr Davis said he realised there was limits to what the Government could do, but called for an immediate suspension of the Climate Change Levy until the present difficulties cleared.

The Government should keep the UK energy market under scrutiny, fully investigate price rises, and fight for the liberalisation of European energy markets.

A spokesman for the Department of Trade and Industry said: "We understand the tough conditions that high-energy users are operating in and are leaving no stone unturned.

"Discussions with the Energy Intensive Users Group have helped us focus our efforts on improving supplies and fair access to markets across Europe, both of which should bring a downward pressure on prices."

But the spokesman pointed out that UK energy prices had been historically less than in continental Europe.

He said: "Between 1990-2004, the relative costs of energy to UK industry were pounds 7.9 billion less than their German counterparts.

"Competition Commissioner Neelie Kroes has made clear that the EU is looking at unbundling supply and distribution which is at the root of market restrictions in Europe.

"Once we crack that and liberalise the markets, that will help push prices down."

john_ revill@mrn.co.uk