The Department for Business expects to receive hundreds of millions in financial support for energy-intensive industries hit by rocketing gas prices.
UK Business Secretary Kwasi Kwarteng has requested support from the Treasury for the industries who have been struggling the most with soaring gas and energy prices this week.
Recent high prices have forced manufacturers and suppliers to increase prices for their own goods, and firms have disclosed that the rising economic pressure in their industry will force them to close factories, putting tens of thousands of jobs at risk.
Businesses in this sector are already under considerably more pressure than their European counterparts, with British firms facing higher taxes and levies than those in Europe, and without further support from the government, we can expect a complete breakdown for British representation in this already competitive sector.
What support has been requested and does this affect me – the UK taxpayer?
A set of proposals have been put forward to the finance ministry, but Number 10 has declined to make any comments, following a string of public disputes about the status of the discussions.
The proposal has been put forward following Kwarteng’s rigorous talks with representatives of the Energy Intensive Users Group (EIUG) over the weekend. The group has asked for the prices of energy, fuel and network costs to be capped and reduced – the same way households currently are held under a price cap imposed by regulator Ofgem.
The EIUG do not expect this to have any effect on the UK taxpayer.
The proposal would need to remain objective though, as not all companies are affected to the same degree. The energy sector is highly competitive, and some businesses’ contracts protect them from the short-term increases in gas prices, where others’ do not. In this case, it is likely that the government’s support will be comprised of loans as opposed to grants.
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.