Kwasi Kwarteng submits formal bid to Treasury for help for industries hit by soaring gas prices

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Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng (Victoria Jones/PA) (PA Wire)
Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng (Victoria Jones/PA) (PA Wire)

The Business Secretary has submitted a formal bid to the Treasury for help for industries being hit by the rise in global gas prices.

Ministers have been facing growing calls from industry bosses for assistance as they feared spiralling prices could force businesses to go to the wall.

The boss of British Glass, which represents the industry, has warned that a quarter of jobs in the sector could go without Government support.

Kwasi Kwarteng held talks with industry leaders last week, and ministers and officials are set to continue speaking to businesses on Monday and throughout the week.

The PA news agency has said it understands that Mr Kwarteng has now put in a formal request for help to prop up the worst-affected industries.

Mr Kwarteng has pledged to keep the energy price cap in place to help households struggling with rising costs.

But no new support for businesses had been promised, despite bosses and some Tory MPs calling for help to prevent them going under as wholesale prices soar.

 (PA Wire)
(PA Wire)

Industries including ceramics, paper and steel manufacturing are thought to be among the worst hit.

Speaking to the Times Radio Drive show, Dave Dalton, chief executive at British Glass, said the glass sector alone employs 6,000 people directly and between 100,000 and 120,000 in the sector more widely.

He said: “I think we might find as much as a quarter of those are at the moment in the spotlight, and we would want some support to get over that.”

The boss added: “Our conversation with Kwarteng on Friday was ‘give us more detail, give us more data that we can go along and take as an ask to Treasury’.

“Now it came out over the weekend that that ask to Treasury is slightly different to what we’d anticipated.”

Gareth Stace, director-general of UK Steel, has called on the Prime Minister to “bang ministerial heads together” to avoid an industry crisis hitting his sector.

These unnamed sources stories come out from time to time

Damian Hinds

The official submission comes after the Treasury previously flatly denied having been in talks with the Business Department over any support- creating reports of a Government ‘rift’.

Mr Kwarteng indicated on Sunday that struggling manufacturers and energy firms would not get much more support but said he was working closely with the Chancellor, Rishi Sunak, to help the industry.

However, a senior Treasury source insisted to the PA news agency that no such talks had taken place despite firms pleading for help to prevent further collapses as wholesale gas prices spiral.

It led to Boris Johnson being urged urged to “bang ministerial heads together” after the clash between Rishi Sunak and Kwasi Kwarteng’s Whitehall departments over the energy crisis.

It comes as Tory frontbencher Lord Agnew of Oulton said soaring energy costs were nothing to do with supply shortages, but were due to a “geopolitical move” by Russia to put pressure on Europe.

The Treasury minister’s unequivocal comments appeared to go further than the Government has gone before in pointing the finger directly at Moscow for the current crisis.

And it follows claims that Russia had been limiting gas supplies in a bid to prod regulators in Europe into moving quickly to certify the controversial new Nord Stream 2 pipeline.

Last week, a suggestion by Russian President Vladimir Putin that his country could boost natural gas supplies to Europe led to a drop in prices.

Pressed in the House of Lords over rising energy costs and calls for increased intervention and public ownership of “vital utilities”, Lord Agnew said: “The current squeeze on gas prices is nothing to do with the quantity of gas available.

“It is a geopolitical move by Russia to put pressure on Europe and we are caught up in that.

“Public ownership of our own utilities would make no difference.”

Earlier, Home Office Minister Damian Hinds denied Mr Kwarteng lied when he said there were discussions between Government departments about help for energy firms.

Mr Hinds said: “These unnamed sources stories come out from time to time.

“The fact is Government departments, Government ministers talk to each other the whole time and of course with an issue like this, with these rising global prices and business having to grapple and deal with it to make sure they break even and can make a margin of course that is something that the Business Secretary – and, of course, the Energy Secretary – is going to be totally focused on.

“Something that the Treasury, of course, is also very focused on as the economic management department of the nation.”

Meanwhile, Labour MP Pat McFadden said ideology “must not get in the way” when the Government is trying to resolve the crisis.

The former shadow business secretary told Sky News: “We mustn’t let ideology get in the way because, having supported the economy through the pandemic, it would be tragic now if we stood back and let these key industries go to the wall.

“They’re asking for help and it’s really important that the Treasury and the Business Department stop fighting with one another and get around the table and get to the bottom of what these industries really need.”

Mr McFadden said a price cap for business energy use “could be considered” by Labour but “it might not be the only thing you have to do here”.

“You could look at some of the other costs that the industry has and maybe try and abate those during this current crisis,” he told Sky News.

“There’s more than one way to do this. The important thing is to talk to the industry and try to give them the help they need to get through this, because there are thousands of jobs at stake now, and the long-term costs of letting these industries go to the wall could outweigh the short-term costs of helping them in the here and now.”

Meanwhile Labour MP Darren Jones, chairman of the Business, Energy and Industrial Strategy Select Committee, urged the Government to put in place a windfall tax on companies that are making big profits from the surge in gas prices.

MEanwhile the Government has brokered a deal with the carbon dioxide (CO2) industry to ensure supplies continue to be available.

The rising price of gas forced a major CO2 producer, CF Fertilisers, to shut down its two UK plants last month, choking off supplies that are used across numerous industries including stunning animals for slaughter, extending the shelf life of food, aiding in surgical operations and cooling nuclear power plants.

Carbon dioxide is a by-product of fertiliser manufacture and the US firm supplies around 60% of the UK's needs.

The Government stepped in for a three-week period to prop up the firm in a move that was expected to cost "possibly tens of millions" of pounds, according to Environment Secretary George Eustice.

But now Business Secretary Mr Kwarteng, said a "more sustainable solution" had been found.

The deal means that until January 2022, those who buy CO2 from CF Fertilisers will pay a set price, which will allow the company to continue operating while global gas prices remain high.

And the Department for Business, Energy and Industrial Strategy (BEIS) said this reflected "the vital importance of this material to everything from our nuclear industry to hospitals to the food and beverage industry".

Mr Kwarteng said: "Today's agreement means that critical industries can have confidence in their supplies of CO2 over the coming months without further taxpayer support.

"The Government acted quickly to provide CF Fertilisers with the support it needed to kick-start production, and give us enough breathing space to agree a longer-term, more sustainable solution.

"I would like to thank all the parties involved in this agreement who have recognised the importance of avoiding supply disruptions and delivering for UK businesses and consumers."

Mr Eustice added: "CO2 is vital for our food and drink sectors. The Government has taken decisive action in these exceptional circumstances to allow a deal to be reached which will continue the supply of CO2 to businesses - including thousands of food and drink businesses - up and down the country."

Last week, Mr Kwarteng temporarily exempted parts of the CO2 industry from competition law to facilitate the agreement and provide further security of CO2 supplies to UK businesses.

Previously, Mr Eustice had warned that companies would have to accept a large rise in CO2 rates, with a possible fivefold increase from £200 a tonne to £1,000.

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