BEIS sends Treasury demands for tackling energy crisis

Plan would support high-energy sectors including steel, ceramics, and paper
Business secretary Kwasi Kwarteng at Conservative Party conference 2021. Photo: Alamy

By Adam Payne

13 Oct 2021

Business secretary Kwasi Kwarteng has given chancellor Rishi Sunak proposals for protecting gas-reliant sectors from soaring energy prices as industry groups urge the Treasury to help stop factories going bust.

The Department for Business, Energy and Industrial Strategy submitted suggestions to the Treasury on Monday afternoon, a government source told CSW’s sister title PoliticsHome, after holding several meetings with representatives from industries including steel, ceramics, and paper.

These industries and others use gas to produce their goods and have warned that rising energy prices could force many businesses to halt production altogether, causing further disruption to supply chains that are already under strain due to lorry driver and labour shortages.

The same source said: "Without urgent support to help British industry manage high global gas prices factories will close, many for good, and thousands of jobs will be lost.”

Rising energy prices have resulted in ceramics manufacturers spending up to 65% of their production costs on gas in recent days, which is around double what they usually fork out, the British Ceramic Confederation's Jon Flitney told PoliticsHome today.

Some ceramics businesses are already looking at scaling back production and as energy prices continue to rise more will do the same, he warned.

"We urge the government to take actions to limit the impact of high market prices, whether to help members now or through the rest of winter," Flitney said.

Industry groups are now waiting to see whether Sunak, who is thought to be reluctant to provide financial assistance, will agree to give energy-intensive sectors funds to cover rising costs.

The government has been warned that failure to act in the coming days will see factories close — some potentially for good — and bring production of a range of goods to a standstill.

Sunak and Kwarteng were at the centre of a bizarre spat over the weekend after a Treasury source accused the business secretary of "making things up” when he said his department was in talks with the Treasury about ways of tackling the growing energy crisis.

A Downing Street spokesperson today weighed in behind Kwarteng's account, insisting that the Treasury and BEIS had been working "very closely, as the public would expect".

Adam Payne is a reporter at CSW's sister titles PoliticsHome and The House Magazine, where a version of this story first appeared.

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