Prove you really need help, energy crisis firms told

Sunak insists aid only for most urgent cases

FIRMS seeking help with soaring gas prices will be ‘means-tested’ after the Chancellor ruled out a blanket bailout.

Rishi Sunak has bowed to pressure from Boris Johnson to examine the case for helping firms struggling to cope with gas prices which have more than quadrupled in recent weeks.

Businesses in energy-intensive sectors such as steel, chemicals and paper say they need urgent help to stay afloat. Last night Mr Sunak insisted taxpayers’ cash is only handed to firms at genuine risk of going to the wall.

The move raises questions about whether firms with wealthy foreign owners will receive help just because they are in hard-hit sectors.

British Steel, for example, is owned by the Chinese giant Jingye Group – recently named one of the world’s biggest companies after recording global revenues of £24billion last year. Cabinet Office minister Steve Barclay suggested firms backed by

‘This is a hostile environment’

owners with deep pockets would not qualify for state aid.

He said: ‘Have they recently paid dividends? Are they paying big bonuses? We’ll need to understand the detail rather than just knee-jerk to a taxpayer response.’

A final decision on which, if any, firms should be helped is unlikely before at least the end of this week.

Sources said any help would be in the ‘low hundreds of millions’ rather than the billions sought by some.

Government intervention follows an extraordinary spat between Mr Sunak and Business Secretary Kwasi Kwarteng at the weekend. A Treasury source slapped down Mr Kwarteng on Sunday after he claimed bailout talks were under way, saying it was ‘not the first time’ he had ‘made things up in interviews’.

Whitehall sniping continued yesterday, with one Treasury source telling the Conservative Home website Mr Kwarteng ‘saunters in without having done his paperwork’.

But the Prime Minister sided with Mr Kwarteng on Monday, with No 10 saying it was right to look at the case for state assistance. A Whitehall source said the Government did not want ‘viable firms’ to be lost to a ‘temporary crisis’, adding: ‘There is a real danger of factories closing permanently and thousands of jobs being lost if we don’t do something.’

Treasury officials yesterday insisted the Chancellor accepts some industries faced ‘unique and acute’ pressures because of soaring gas prices.

Any assistance will be limited to ‘energy-intensive’ sectors.

Ministers are not planning any help for smaller firms in sectors such as hospitality, which have also been affected by the crisis. The limited response risks angering industry leaders who warn thousands of jobs could go unless they were helped with energy prices. Ministers have ruled out a cap on energy prices faced by businesses – the preferred solution for many firms. Other assistance could be limited to things such as exemptions from green levies.

Gareth Stace, UK Steel directorgeneral, said British producers had to be put on a ‘level playing field’ with competitors in Europe.

He added: ‘This is a hostile environment for industrial investment in the UK and for the Government’s levelling up agenda. Our message directly to the Prime Minister is please don’t just apply a sticking plaster to what is a significant longterm problem.’

BY any stretch of the imagination, the new employment figures are truly stunning.

Remarkably, more people are now in work than before the pandemic, while unemployment has tumbled to just 4.5 per cent.

This is a testament to the success of our world-beating jabs blitz and the determination of Britons to keep the country going by getting back to work (unlike civil servants who remain stubbornly at home).

But dark clouds loom. If soaring wages lead to spiralling inflation and interest rate rises, the cost of living could sky-rocket – hammering family budgets. Meanwhile, heavy industry – ranging from steelmakers to glass and paper manufacturers – says steepling energy prices mean some firms are struggling to survive the winter.

If a strong case can be made for taxpayerfunded bailouts protecting jobs, then ministers may reluctantly agree. But it must be via short-term loans rather than handouts – and with stringent conditions attached.

Occasional spikes in energy prices and interest rates are unpleasant facts of life. Families are expected to factor this in and budget accordingly.

Firms, then, can’t resort to holding out the begging bowl to government each time there is an economic shock.