Mon. Aug 8th, 2022

Kwasi Kwarteng is in a clash with Chancellor Rishi Sunak over a possible economic rescue for British companies struggling to cope with rising energy costs over the winter.

On Tuesday, the British business secretary said he was “working very closely” with Sunak after promising representatives of the heaviest industrial energy consumers at a meeting on Friday that he would explore “practical solutions” to protect them from further shocks in the coming months. .

But the tax authorities were quick to dispute the allegation that such talks had taken place with Sunak or his department. In an unusual intervention, an official insisted: “The Ministry of Finance has not been involved in negotiations.”

Some government insiders are concerned that Britain is on the brink of an industry crisis. Unless gas prices start to fall, some within the government fear that companies will struggle to get through the next few weeks without any government assistance.

Leaders from heavy industry users have warned ministers that continued high energy prices would force some factories to close and push up commodity prices.

Tensions are rising in the government as Sunak tries to hold a firm line ahead of a tight spending analysis later this month, as industry and consumers struggle with higher energy bills and food prices.

Twice weekly newsletter

Energy is the world’s indispensable business, and energy source is the newsletter. Every Tuesday and Thursday, directly to your inbox, Energy Source gives you important news, forward-looking analysis and insider intelligence. Sign up here.

However, Kwarteng denied a report in the Sunday Times that he had asked the Treasury for billions of pounds in support. He told the BBC Andrew Marr Show: “I have not asked for billions, we have existing schemes. I am working very closely with Chancellor Rishi Sunak to get us through this situation. ”

Gareth Stace, general manager of UK Steel, said the apparent disagreement between the two cabinet members reinforced his view that the sector should appeal to Prime Minister Boris Johnson to “intervene directly to ensure that the energy crisis does not become an industry crisis”.

“I am appalled that the business secretary says he is still looking for solutions,” he said, pointing out that the industry had met Kwarteng in late September and presented him with “fully cost-effective solutions”.

Steve Elliott, executive director of the Chemical Industries Association, who was among those who met Kwarteng on Friday, said that although none of his members should currently stop production, he could not rule it out for the next few weeks.

“If everything remains unchecked and [gas] “prices remain where they are today, I could not guarantee that no one would stop production or stop in two or three weeks,” he told the Financial Times.

Ministers have been urged to introduce so-called measures to contain winter costs related to gas, electricity and carbon prices to ensure that factories can continue to operate during the coldest months.

Specifically, the industry has demanded a price cap similar to that already in place for households, in order to reduce the impact of recent price increases. Leaders also want the government to reduce network costs for energy-intensive users, similar to measures taken by some other European governments.

In a speech to Sky News, Kwarteng did not rule out a price cap for companies, but warned: “I can not come to your program and say that we want a price cap, because we must try to find out what the nature of this support may be. . ”

He added: “What I am very aware of is that we have to get them through this situation, it is a very difficult situation.”

UK Steel has also proposed that the government provide a fixed amount of capacity at a competitive price for a temporary period, allowing large industrial consumers to buy electricity at competitive prices via a virtual cross-border trade if they invest in new interconnection capacity.

European wholesale prices for gas and electricity hit record highs last week due to lower-than-normal stocks, reduced supply from Russia and prospects for demand during the winter in the northern hemisphere.

Leave a Reply

Your email address will not be published.