Share

Boris Johnson is today preparing to sign off hundreds of millions of pounds in loans to help desperate steel, chemicals and glass factories meet soaring energy costs.

But the government has made clear that the support will come with ‘strings attached’, and firms face losing the help if they pay big bonuses to senior staff. 

The PM appears to have sided with Business Secretary Kwasi Kwarteng following his spat with Chancellor Rishi Sunak over the need for government support. 

A package is now due within days, but rather than handouts or a price cap on industrial energy costs, it is expected to come in the form of loans.

Cabinet Office minister Steve Barclay said there will be checks to ensure taxpayers get ‘value for money’ – with sources adamant there will be no possibility of firms profiteering or rewarding bosses too generously.

The move could raise concerns that the government is merely kicking the can down the road, as firms will have to repay the costs later when energy prices have settled down. 

The Treasury is said to have been alarmed at the prospect of doling out more cash, warning that ‘demands simply increase’ when sectors know the Chancellor is involved in the process. 

Mr Sunak is due to deliver a crucial Budget in a fortnight as he scrambles to balance the books in the wake of the pandemic.  

Prime Minister Boris Johnson is preparing to sign off a bailout worth hundreds of millions of pounds for major industries hit hard by the energy crisis

Business Secretary Kwasi Kwarteng was a strong advocate for the bailout

Business Secretary Kwasi Kwarteng was a strong advocate for the bailout

Chancellor Rishi Sunak advised against the extra funds

Chancellor Rishi Sunak advised against the extra funds

The PM sided with Business Secretary Kwasi Kwarteng (left) following his spat with Chancellor Rishi Sunak (right) over the extra funds

Job vacancies hit another record high amid labour shortages 

Job vacancies hit another record high of 1.2million last month amid post-pandemic labour shortages.

The number of posts available spiked again despite unemployment continuing to fall – down 0.4 per cent in the latest quarter to August.

The number on payrolls also rose by 207,000 in September to its highest ever level of 29.2million.  

The latest figures from the Office for National Statistics underline the pressure on the labour market amid the coronavirus recovery.

It will also fuel concerns about inflation, with average wage rises thought to be running at between 4.1 per cent and 5.6 per cent – even accounting for the warping effects of the pandemic and furlough.

In contrast the headline CPI rate of inflation was 3.2 per cent in August, although there are fears it will soon top 4 per cent and potentially go even higher. 

<!—->

Advertisement

Companies hit the panic button after wholesale gas prices rocketed amid the global recovery. The huge increases have had knock-on impacts across the whole economy – with energy suppliers going bust and shortages of CO2 after fertiliser plants temporarily shut down to avoid operating at a loss.

The situation has been compounded by supply chain disruption caused by Covid and spiking demand, with a shortage of HGV drivers in the UK leading to petrol stations and supermarkets struggling to get deliveries.

Panic buying has also been a massive issue, with petrol stations being emptied by frantic motorists even though there is no supply shortage in the country as a whole. 

Although many economists believe the disruption will ease over the coming months, there are fears Christmas will be blighted, food prices will rise, and inflation could spiral out of control if it gets embedded in wages.

That in turn would hammer home-owners by driving up interest rates and increase the costs of servicing the government’s £2.2trillion debt.  

Ministers have pointed the finger at Russia for escalating the gas price crisis, saying Vladmir Putin is controlling supplies to bully Europe. Oil prices are also now starting to rise as industry around the world awakes following the Covid shutdown. 

Mr Johnson is understood to have been convinced that sectors including steel, chemicals, ceramics and paper need short-term help. 

After officials at Mr Kwarteng’s department held emergency talks with industry leaders yesterday, the Business Secretary submitted a proposal to Downing Street and the Treasury. 

It is understood this stops short of a cap on wholesale prices – which a number of industry leaders have been asking for – but does advocate a short-term subsidy solution. 

Industry leaders had warned that factories could close within days without help to cope with spiralling wholesale gas prices.

But Richard Leese, of the Energy-Intensive Users Group that represents the industry, said that cash handouts from the state were not the best way forward. 

‘The Treasury taxes and levies our energy-intensive industries more than other European governments,’ he told BBC Radio 4’s Today programme.

‘So it is about providing relief from taxes and levies that are alredady being paid and not adding additional burden to the taxpayer.’ 

It follows an extraordinary public row on Sunday when Treasury sources accused Mr Kwarteng of ‘making things up’ when he said he was in talks with Mr Sunak about helping struggling companies. 

Last night it emerged that the Business Secretary has succeeded in making the case that many of the threatened firms are competitive – but face a temporary global spike in gas prices. 

As a result, he is pushing for a short-term solution to get them through the winter months. 

The Chancellor is expected to fall into line despite being sceptical. 

Explaining the department’s initial reluctance to admit bailouts were being considered, a source told The Times: ‘As soon as businesses know that the Treasury is involved then their demands simply increase. There was a desire to keep a lid on the discussions.’ 

The PM’s spokesman turned the screw on Mr Sunak and his team saying: ‘As you would expect, ministers from BEIS (Department for Business, Energy and Industrial Strategy) are working across government, including with the Treasury, on this important issue, the challenges that are currently facing industry in light of global gas prices, and that will continue.’ 

Pushed on whether Treasury officials had been involved, the spokesman said: ‘Yes, as you would expect, Treasury officials are involved in this, as are officials across government.’ 

Asked how he would characterise the relationship between the two departments, the spokesman said: ‘They continue to work very closely together, as the public would expect. This is a significant challenge, and there’s work across Government to mitigate against it.’ 

Experts at the British Ceramic Confederation, who have been involved in the talks, indicated that progress on a rescue package has been made. 

According to the ONS, the number of job vacancies in July to September was a record high of 1,102,000 – an increase of 318,000 from its pre-pandemic level

The number on payrolls also rose by 207,000 in September to its highest ever level of 29.2million

The number on payrolls also rose by 207,000 in September to its highest ever level of 29.2million

The number on payrolls also rose by 207,000 in September to its highest ever level of 29.2million

Jon Flitney, its energy and innovation manager, said: ‘We are glad to hear that the Government is considering solutions and we urge them to keep talking with the sector as the situation develops. 

‘We eagerly await proposals as to how they will help ceramics companies who are grappling with soaring costs.’ 

The scale of the power crisis has been likened to the collapse of banks and the financial crash of 2007-2008. 

UK Steel boss, Gareth Stace, said: ‘We welcome that Kwasi Kwarteng has put forward a package of measures to offer some support to energy intensive sectors.  

‘What must be clear is that these reforms cannot be the only action taken. 

‘We need an ambitious programme from government, a Green Steel Deal, to allow us to move towards lower carbon steelmaking. That needs to start with energy price reform, so that the UK competes on an even playing field with France and with Germany.’ 

Shadow Chancellor Rachel Reeves wrote to Mr Sunak yesterday, calling on him to support energy intensive industries. 

She wrote: ‘Our brilliant British industries are a crucial cornerstone of our economy, and we should be supporting them to boost our recovery. 

‘The Government should be protecting and supporting them through a crisis which has come about from their own lack of planning. They have a duty to get an immediate grip on this situation, and businesses need reassurance that this is happening. 

‘While working people worry about how they are going to pay the bills, the Prime Minister is relaxing in a luxury villa – missing in action once more.’

Source: Daily Mail UK

Leave a Reply

Your email address will not be published. Required fields are marked *