Government loans a sticking plaster – steel boss

A TAXPAYER-BACKED support package for energy-intensive businesses hit by the surge in gas prices may be no more than a “flimsy sticking plaster”, industry leaders have warned.

Prime Minister Boris Johnson is reportedly backing a plan being developed by UK Business Secretary Kwasi Kwarteng for state loans to firms threatened with closure over the winter.

The move follows an extraordinary Whitehall turf war between Mr Kwarteng and Chancellor Rishi Sunak, which broke out over the weekend, with the Treasury denying there any plans for the UK Government to act.

Gareth Stace, director-general of the trade body UK Steel, said that while they welcomed Mr Kwarteng’s intervention they had yet to see details of the proposals he put forward.

He said that without adequate support the industry faced heavy job losses, with plants being forced to close as they could not afford to keep running.

“I can’t comment on that proposal because I haven’t seen it and therefore I can’t comment on whether it is enough, whether it will fix the problem or not,” he told BBC News.

“The key test in this proposal is are we now going to be on an equal footing with steelmakers in Germany?

“If this package results in us still paying 80% more for energy than our competitors in continental Europe, then this will really be a flimsy sticking plaster on what is really a major crisis that we are going through at the moment.”

Earlier, Cabinet Office minister Stephen Barclay confirmed that ministers were in discussion with businesses about what support they needed to prevent a wave of closures.

He stressed, however, that the taxpayer must be protected in any bailout as the UK Government had already provided “huge support” to business during the pandemic.

“We’re keen to work with them as we bridge the pressures that they currently face,” he told Times Radio.

“There’s a balance here between what support to give and also protecting the taxpayer, given that we have high tax rates, that we have borrowed a very considerable sum over the last two years.

“There are some specific issues around the energy-intensive industries and we’re working with them to understand those and to see what is proportionate for the taxpayer in terms of that response.”