PM expected to back loans for gas price-hit firms

Firms hit by a sharp surge in energy prices are expected to get government help worth hundreds of millions of pounds, the BBC understands.

Glass, ceramic and paper manufacturers have warned that rising prices may mean they have to charge customers more.

On Monday, business Secretary Kwasi Kwarteng submitted a formal proposal asking the Treasury to help such firms.

The Department for Business expects the prime minister to back its proposals, which could involve state-backed loans.

The government is reluctant to prop up companies which would normally be competitive, which is why support is likely to involve loans rather than grants.

The Treasury is said to be still analysing the proposal. Number 10 has declined to comment.

Businesses have said they hope for a “swift response” on the plans.

High energy costs have been forcing manufacturers in energy-intensive industries such as steel and chemical manufacturing to warn of higher prices for their goods as they pass on increases to consumers.

Other firms have said they may be forced to shut down their factories if the rising cost of gas and electricity makes it uneconomic for them to produce their goods.

Dr Richard Leese, chair of the Energy Intensive Users Group (EIUG) – an umbrella group for several manufacturers including ceramics and paper, told the BBC’s Today programme that a quick response from the Treasury to the proposals was “crucial”.

“We need preventative action to stop the issue spreading further.”

Dr Leese said firms in the sector faced higher tax and levies than European rivals. He said firms had put forward “practical and sensible” measures for help, and denied that government help would put any additional burden on taxpayers.

Gareth Stace, the director general of the trade body UK Steel, said he had yet to see details of the proposals put forward.

He warned that without adequate support, plants could close and jobs could be under threat as high energy costs bite.

“The key test in this proposal is are we now going to be on an equal footing with steelmakers in Germany?,” Mr Stace said.

“If this package results in us still paying 80% more for energy than our competitors in continental Europe, then really this will really be a flimsy sticking plaster on what is really a major crisis that we are going through at the moment.”

Source: BBC


Be the first to comment on this article

Leave a Reply

Your email address will not be published.

Go to TOP
track image