Written submission from BASF plc (PRO0146)

 

Business and Trade Committee - Call for Evidence: Priorities of the Business and Trade Committee for 2026

At BASF, we aim to be the preferred chemical company to enable our customers’ green transformation. We appreciate the opportunity of contributing to this call for evidence and have responded to the most relevant questions for our business.

BASF, one of the world’s largest chemical companies, supplies raw materials to most industries in the UK, including agriculture, automotive, chemicals, construction, energy and pharmaceuticals. We also operate six manufacturing sites across the UK from Littlehampton on the south coast of England to Callanish off the north west coast of Scotland. We produce Polyurethane systems at Alfreton, Dispersions and additives at Bradford, omega-3 Fatty acids on the Isle of Lewis, Biopesticides at Littlehampton and Rodenticides at Widnes. BASF Environmental Catalyst and Metal Solutions recycle Auto-catalysts in Cinderford. We also invest in the UK innovation ecosystem through BARI, the British Alliance for Research and Innovation, working with Imperial College on innovative chemical engineering processes and digitalization. In the UK, BASF has been part of the work of consortia such as Flue2Chem showcasing how chemicals can be made from captured CO2 as well as leading UK government funded Prosperity Partnership agreements on more sustainable chemicals manufacturing.

The recently published UK Industrial Strategy shapes the framework for innovation and competitiveness for our sector and that of our customers, most of which are in the eight identified growth sectors. The chemicals sector acts as the material backbone for advanced manufacturing, clean energy, defence and life sciences providing essential compounds, manufacturing processes, and innovation platforms. Without resilient chemical inputs and expertise, the ambitions of the Industrial Strategy cannot be achieved.

There is an urgent need to look at the state and future of the chemicals sector in the UK and ensure the policy and regulatory framework is supporting its role as a foundational industry. Across Europe, there is mounting evidence of a competitiveness crisis in the chemicals industry. In the UK, chemicals output has declined by about one-third since 2021, and there is increased reliance on imports. The Industrial Strategy correctly identified the chemicals sector as a foundational sector, its importance in supporting critical supply chains for our national resilience and the need to assess opportunities for onshoring manufacturing. However, further detail needs to be developed to provide the chemicals industry with the clarity to support future investment.

We hope that the Committee takes a closer look at the future of the chemicals sector in the UK and its competitiveness at this critical juncture.

Business Confidence 

Policy clarity, coherence and predictability are important for business investment. Today, when it comes to the chemicals sector there is little clarity from UK Government on those points. This is particularly concerning at a time when the chemicals sector is facing a significant competitiveness crisis at the European level, including in the UK.

Regular engagement with government, including Ministers, is important for business confidence and sentiment. It illustrates the government’s commitment to the sector and its future. Regular communications also allow businesses to better understand the progress being made across policy priorities and ensures transparency and opportunities for dialogue. For example, since the publication of the UK Industrial Strategy there has not been any public commitment regarding the future of the chemicals sector as a foundational sector in the Industrial Strategy despite sector plans, including the defence growth plan, identifying critical vulnerabilities. Beyond the Industrial Strategy, Defra’s “Circular Economy Strategy”, now renamed as the “Circular Economy Growth Plan”, prioritises the chemicals and plastics sector. However, very little engagement has taken place with companies operating in the sector. The new focus on growth is welcome, and we hope this will offer opportunities for constructive dialogue so that businesses such as BASF that have invested in circularity can contribute their views on how regulation can support business opportunities towards a more circular economy.

Stability, predictability, and long-term planning are fundamental to shaping business decisions. It is important to note that for BASF, stability does not mean resisting change—we welcome change that drives competitiveness and sustainability. What matters is that change is well-considered, developed in partnership with industry, and implemented in a way that provides long-term certainty. Businesses make multi-year investment decisions, so policies must be durable enough for companies to plan with confidence. Sector-specific pathways are essential for industries like chemicals, which operate across the economy and require clear signals to invest in innovation and decarbonisation.

Pro-Growth Reforms and Investment 

The Industrial Strategy was seen as a key document for providing a common vision across government for growth. It provided the main anchor for other policy documents that would further elaborate on the role of specific sectors and outline specific actions needed – taken together policy and sector specific strategies would contribute towards the vision set out in the Industrial Strategy.

However, at the moment for the chemicals sector, little clarity has been provided since the publication of the Industrial Strategy. Policy strategies including on industrial decarbonisation and the circular economy have yet to be published. In addition, no specific action was outlined in the strategy regarding the ways in which the views of the chemical sector would be considered in terms of enhancing national resilience and critical supply chains.

Furthermore, we believe there is an opportunity for the UK to scale up and deploy R&D in the chemicals sector that has been developed in the UK and has been supported by UK Government funding. It is important that future policies and government initiatives consider the opportunities that exist and develop relevant policies. As the BASF/Imperial partnership or BASF’s work with Pulpex demonstrates, we are already active in looking at how innovations can be translated into the real world. However, in some cases, there is a specific need for government support if we are to unlock their transformative potential.

Given the chemicals sector’s critical role in enabling innovation, national security, and supply chain stability, BASF believes that detailed, long-term policy signals are essential to unlock investment and maintain competitiveness in the UK.

Better Regulation 

We believe that in line with our responses to previous questions, the absence of policy clarity, and relevant regulatory and legislative environment, are hindering growth and investment.

Risks and International Context 

Given complex and highly integrated supply chains in the chemicals sector, greater regulatory cooperation with the EU that facilitates trade should be prioritised. In addition, regulatory barriers that currently inhibit investment in the UK should be addressed particularly in the areas of energy and industrial decarbonisation.

Government Strategy and Coordination 

A number of government departments hold responsibility for the chemicals sector: in particular, DBT, Defra, DSIT and DESNZ. In addition, within those departments multiple teams and directorates may be in the lead on specific aspects, e.g. within Defra chemical regulation is in a different team compared to circular economy. This underlines the need for a cross-governmental approach to developing a vision for the sector given its importance for industrial growth.

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