U.K. Considering Aid for Companies Hit By Gas Price
Kwarteng Seeks Treasury Aid for U.K. Firms Hit by Gas Price
(Bloomberg) -- Business Secretary Kwasi Kwarteng sought support from the U.K. Treasury for industries struggling to cope with the rising cost of energy, people familiar with the matter said.
His department submitted a set of proposals to the finance ministry on Monday, the people said, asking not to be named discussing private policy discussions. They declined to provide detail on the proposals. The Times of London reported that Prime Minister Boris Johnson has sided with Kwarteng and is backing state loans worth millions, with an announcement expected as soon as this week.
The move follows an inter-ministerial squabble on Sunday when Kwarteng said in a series of broadcast interviews that he was in talks with the Treasury, only to be contradicted.
Businesses and the opposition Labour Party are ratcheting up the pressure on the government to help manufacturers in the face of surging energy prices after a sixfold increase in gas prices over the past year. Labour’s finance spokeswoman, Rachel Reeves, on Monday wrote to Chancellor of the Exchequer Rishi Sunak urging him to protect businesses against a crisis that she said resulted from the government’s “own lack of planning.”
The government on Monday issued a statement saying ministers “recognise the challenge facing the energy sector, and energy intensive industries, and will continue to monitor the situation.”
“We continue to work closely with the sector and, as demonstrated during the pandemic, will ensure we protect the interests of both consumers and taxpayers,” the government said.
Kwarteng on Monday met with representatives of energy-intensive industries such as steel, chemical, cement, paper, ceramics and glass who have warned that the government must help or face factory shutdowns. It followed a previous meeting with the group on Friday. They’ve asked for the government to consider capping the price of gas, electricity and carbon, and reducing network costs.
Following Monday’s meeting, the Energy Intensive Users’ Group issued a statement welcoming Kwarteng’s “urgency” and saying it seeks an “equally swift” response from the Treasury. “EIUG is optimistic that its main request for cost containment measures addressing the increases in both gas and electricity prices will form part of a final set of proposals,” the group said.
Kwarteng also denied a report in the Sunday Times that he was seeking billions of pounds in support from the Treasury to prop up industry.
“I have not asked for billions,” he told the BBC. “We’ve got existing schemes. I’m working very closely with Rishi Sunak, the Chancellor, to get us through this situation.”
©2021 Bloomberg L.P.