Industry set to get help as gas prices soar

Energy-intensive industries are expected to be offered a package of help as gas prices soar, according to BBC reports.

Business Secretary Kwasi Kwarteng has asked the Treasury to support firms hit by rising energy costs and is hopeful of receiving support from the Prime Minister. The proposals could involve loans worth hundreds of millions of pounds.

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

High energy costs have been forcing manufacturers 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.

The formal proposal by Mr Kwarteng follows days of conversations with leaders from affected industries, as well as a dispute with the Treasury about the status of talks between the departments.

There is reluctance to prop up companies which would normally be competitive, so a support package is likely to involve loans rather than grants, reports say.

Demands for support from energy-intensive industries have increased but some have long-term contracts to buy energy at fixed prices, protecting them from short-term increase.

Direct subsidies would add to the burden on taxpayers, at a time when Chancellor Rishi Sunak is expected to seek to curb public spending in his next Budget on 27 October.

Will Hargreaves (pictured), environmental policy lead at Greater Birmingham Chambers of Commerce, said: “Businesses are facing record high inflationary pressure, which many will have to pass onto the customer to remain operational, so this scheme can help prevent further costs to businesses within supply chains.

“However, further consideration must be made to how SMEs are being affected by the energy crisis. How the scheme accounts for already high pandemic driven debt, while deciding eligibility for the loans will be crucial.

“The scheme must account for the most vulnerable businesses, where financial obligations are already high from the pandemic and profit margins are squeezed even further by high energy prices.

“The Government must use this as learning opportunity and start driving investment in low-carbon domestic energy generation and storage technology. Although, the policy frameworks must be developed to protect businesses from potential volatile energy prices associated with some forms of renewable energy. ”

For businesses wanting to learn about how to more efficiently manage their energy to save costs and drive down consumption, you can view content in our Energy Week as part of our Sustainable Business Series: Net Zero campaign. “

See Energy Week here.

The Sustainable Business Series: Net Zero, aims to share best practice, guidance and knowledge to support business progress to net zero through four themed weeks (energy, circular economy, transport and sustainable business management). The campaign will close with an in-person Summit at the start of November.