Steelmakers Criticize ‘Hostile’ U.K. in Bid for Energy Crisis Help
(Bloomberg) -- U.K. steelmakers said there’s a “hostile” environment for industrial investment in the country as they put more pressure on Boris Johnson’s government to help them weather the energy crisis.
Large industrial energy users have warned of production halts without government help. Business Secretary Kwasi Kwarteng on Monday submitted proposals to the Treasury to help energy-intensive industries such as metals and chemicals after a sixfold increase in gas prices over the past year left them warning of plant closures over the winter.
“The key measure of success for this proposal is whether it places U.K. steel producers on a leveling playing field on energy costs compared to the European counterparts,” U.K. Steel Director General Gareth Stace said in a statement Tuesday. “This is a hostile environment for industrial investment in the U.K. and for the government’s leveling up agenda.”
He said a mechanism to shield producers from extreme wholesale price spikes will be key, and that there should also be measures to cut excessive policy and network costs for U.K. producers.
The impact of surging energy prices on heavy industry adds to a growing pile of demands on Chancellor of the Exchequer Rishi Sunak as he prepares his annual budget on Oct. 27 and a review setting departmental spending for the next three years. He’s also under pressure to ease the blow of the energy costs on households, and to fund catchup programs in health, education and justice in the wake of the coronavirus pandemic.
While the Treasury and Department for Business, Energy and Industrial Strategy declined to provide details of the proposals to help large industrial energy users, The Times reported that Prime Minister Johnson and Kwarteng favor state loans worth millions of pounds to last until the gas crisis abates.
Cabinet Office Minister Steve Barclay on Tuesday said ministers will consider any bonuses and dividends that companies receiving support had paid out, as well as their hedging positions, in order to ensure value for taxpayers.
“It’s right from a taxpayer point of view, mindful of the huge amount of support that has already been given to businesses, that we look at that in terms of what is value for money and what is proportionate for the taxpayer to do,” Barclay told Times Radio.
Kwarteng’s proposals to the Treasury followed an inter-ministerial squabble on Sunday when he said in broadcast interviews that he was in talks with the Treasury, only to be contradicted. The business secretary on Monday met representatives from industries such as steel, chemicals, cement and paper, amid calls to consider capping the price of energy and carbon, and reducing network costs.
British Glass Chief Executive Officer Dave Dalton told Times Radio that a quarter of the 6,000 jobs in his industry are under threat.
U.K. Steel’s Stace said that if British producers continue to pay more for energy than French and German counterparts, they’ll have to halt production, be less efficient and will lose margins and market share.
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