Treasury denies holding talks with Kwarteng on energy crisis support
Hopes that companies could receive major packages of support to weather the energy crisis this winter faded as the Treasury flatly denied having been in talks with the Business Department.
Business Secretary Kwasi Kwarteng indicated yesterday that struggling manufacturers and energy firms will not get much more support but said he is working closely with Chancellor Rishi Sunak to help industry.
However, a senior Treasury source insisted that no such talks have taken place despite firms pleading for help to prevent further collapses as wholesale gas prices spiral.
Mr Kwarteng said he is certain the lights will stay on in the UK this winter as businesses warned they may have to reduce working hours to sustain themselves and industry body Energy UK warned more suppliers will collapse.
The minister guaranteed he will keep the energy price cap for consumers in place throughout the winter but said he will not “bail out failing energy suppliers”.
Asked if he has approached the Treasury about subsidies, he said: “No, I haven’t. We’ve already got subsidies in place and it’s very clear that a lot of those are working.”
Mr Kwarteng said he could not yet determine whether a price cap will be introduced for businesses but said there have been discussions over “what the nature of that support might be”.
He added that “of course I’m speaking to government colleagues, particularly in the Treasury, to try and see a way through this”.
Mr Kwarteng acknowledged it is a “critical situation” but denied he has asked for billions of pounds worth of support when asked whether he is considering a price cap for businesses or a winter package. He said: “I’ve not asked for billions, we’ve got existing schemes. I’m working very closely with Rishi Sunak, the Chancellor, to get us through this situation.”
But it was heavily disputed whether the Chancellor or his department have been involved in any talks.
A senior Treasury source
bluntly said: “The Treasury has not been involved in talks.”
With Prime Minister Boris Johnson having gone on holiday, Labour accused the government of having “put its ‘out of office’ on” while “in the teeth of a crisis of its own making”.
Shadow chief secretary to the Treasury Bridget Phillipson said: “The Prime Minister has gone on holiday, no-one knows where the Chancellor is, and this morning we understand the Business Secretary has entered the realms of fantasy.”
Some Conservative MPS are among those calling for additional help for energy-intensive industries, such as steel manufacturing, during the crisis.
Mr Kwarteng faced demands for a winter package of measures to prevent further interruptions to supply chains during a meeting with industry representatives on Friday.
The BBC’S Andrew Marr put it to Mr Kwarteng that it sounded as though he may give extra help to energyintensive industries.
But the Cabinet minister replied: “No, that doesn’t sound like yes at all. We already have existing support and we’re looking to see if that’s sufficient to get us through this situation.”
UK Steel director general Gareth Stace warned the government that a failure to act “may result in long-term damage to the future of the steel industry”.
He added: “Heading into the winter months, increasing prices could result in extended shutdowns, damage to equipment, loss of export opportunities and market share at home, and a loss of talent and employment.”
Energy UK chief executive Emma Pinchbeck warned that “exposed” businesses such as energy-intensive users and retailers will be the worst hit.
She said: “We are expecting more retailers to go out of business this winter. The issue is how many are failing at once and whether or not our mechanisms, which are in place to look after customers when that happens, are up for that many failures in one go.”
Pressed on whether he is sure the lights will stay on this winter, the Business Secretary replied: “Yes, I am.”
Meanwhile, industry bosses warned over the weekend that toilet paper and food packaging could be hit by soaring energy costs.
The chief of the Confederation of Paper Industries called for a “temporary winter cost containment measure” to help companies in the sector with costs going “through the roof ”.
And the UK’S ceramics sector said some businesses could be forced to shut down production due to high energy costs.
The warnings came after wholesale gas prices surged to a record high on Wednesday, although they dropped back after Russian president Vladimir Putin said the country would stabilise the market.
Andrew Large, directorgeneral at the Confederation of Paper Industries, said its members are being “affected very, very severely” by the cost increases.
He said: “They’re seeing their costs go up through the roof. It’s damaging their profitability and in some cases it’s causing them to manage their production rates so as not to expose themselves to the very, very highest costs.”
He said there is no cap on business energy costs and urged a “temporary winter cost containment measure to try and put a lid on those costs so that these very, very important industries for British society are going to be able to continue to operate”.