Kwasi Kwarteng has been slapped down by the Treasury over emergency funding for struggling industrial firms, with the business and energy secretary accused of “making things up”.
Kwarteng said he was speaking with the Treasury about a solution to help struggling manufacturers that are on the brink, however the Treasury has anonymously briefed to Sky News that no talks are happening.
Gas prices have risen by more than 250 per cent since January, which has seen 12 challenger UK energy firms go bust this year.
This has put serious pressure on many industrial businesses that are high energy users as they experience soaring bills.
The Sunday Times reported that Kwarteng is set to ask the Treasury for billions of pounds to help bail out the struggling manufacturing firms.
The business and energy secretary reportedly wants to pump subsidies into industrial firms – such as those in the paper, glass, cement, lime, ceramics, chemicals and steel industries – that are struggling with spiralling energy costs and are at risk of going bust.
A Department for Business, Energy and Industrial Strategy (Beis) source told the Sunday Times that Kwarteng would give the firms subsidies today if possible, but that “it’s not in our gift…it’s down to the Treasury”.
Kwarteng this morning said he was in discussions with Rishi Sunak over ways to abate the crisis for heavy industry firms, however a Treasury source told Sky News that this was plainly untrue.
“This is not the first time the Beis secretary has made things up in interviews,” they said.
“To be crystal clear the treasury are not involved in any talks.”
Sources from Beis and the Treasury did not back down tonight on the respective claims made by each department.
Labour’s Treasury spokesperson Bridget Phillipson said “this morning we understand the business secretary has entered the realms of fantasy”.
“The two key government departments responsible for the current cost of living crisis have spent this morning infighting about whether they were in talks with each other,” she said.
“What a farce.”
Kwarteng has met in the past week with a number of bosses from large industrial firms, who have sounded warnings they could go broke due to surging natural gas prices.
Some manufacturers are calling for an energy price cap for businesses to ensure they can keep operating.
Households benefit from an energy price cap, which ensures that families are not overly affected by swings in energy markets, however there is no similar mechanism for the private sector.
Kwarteng said today that there were currently no plans to bring in a price cap for businesses.
Kwarteng told Sky News: “I can’t come on your programme and say we are going to have a price cap, because we’ve got to try and work out what the nature of that support might be. On the consumer side we’ve got an energy price cap and on the industry side we’ve had measures where we do support industries [that are] heavy electricity users.
“What I am very clear about is that we need to get them through this situation, it’s a very difficult situation. Gas prices, electricity prices are at very high levels right across the world and I’m speaking with government colleagues, particularly in the Treasury, to try and see a way through this.
“We’ve already got supports in place and we’re looking at ways we can help industry.”
The Energy Intensive Users Group (EIUG) chair Dr Richard Leese said three solutions were put forward at Kwarteng’s meeting with industrial leaders earlier this week.
Mechanisms to cap energy costs, the distribution of network costs and emergency measures to “prevent lasting damage to very expensive plants and equipment” if a factory has to shut down.
Steve Elliott, chief executive of the Chemical Industries Association, said today that “Kwarteng and his officials do understand the dilemma some Energy Intensive Users are in and we are working with them to develop a solution”.
“I hope there will be some more positive news in the coming days as a 900% rise in prices since the beginning of this year is clearly unsustainable,” he said.
UK Steel chief Gareth Stace told Channel 4 News: “What we’re asking Kwasi Kwarteng today to do on wholesale prices is just to step in, to alleviate that pressure in the short term, just like in, say, Portugal or Italy. Their governments are already investing many billions of euros, to help their industries and the UK government has yet done nothing.”