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UK industry hits out at government silence on helping big energy users

British heavy industry has hit out at the government’s “deplorable” silence after promising over three weeks ago to explore ways to help big users of energy cope with soaring gas and electricity costs this winter.

Executives from some of the worst affected sectors have become convinced that ministers have decided instead to play a game of brinkmanship and wait to see whether the UK is hit by a harsh winter that could push companies to the wall.

Although gas prices have eased slightly in the past two weeks, contracts for delivery over the winter remain near £2 per therm — a level that would push energy intensive businesses into the red. A year ago the equivalent price stood at about 40p per therm.

In early October, the heaviest industrial energy users were told by Kwasi Kwarteng, business secretary, that he would ask his officials to work with their Treasury counterparts to find “practical solutions” to protect them from further price shocks.

But chancellor Rishi Sunak has taken a tough line over any taxpayer support and the recent fall in energy prices has eased pressure on ministers to intervene. “Nothing is imminent,” confirmed one government insider.

Sunak said in last week’s Budget speech he wanted to end the Covid-era of massive state intervention: “Do we want to live in a country where the response to every question is: ‘What is the government going to do about it?’”

Energy intensive industries, including steel, cement and chemicals, said they made no progress last week at a meeting with Lee Rowley, junior business minister.

Government insiders said Sunak did not favour a sector-wide rescue scheme and that any help — if it came — was likely to be in the form of loans to individual companies. “We are not going to reward failure,” said one.

Such loans would normally come with strings attached, such as restrictions on executive bonuses and shareholder payouts, with creditors and owners expected to shoulder most of the burden.

Heavy industry has resisted the loans and instead are demanding emergency support measures, including a cap on prices, to protect them from further spikes in gas prices, which in turn push up the cost of electricity. Over the past year on average, gas was used to generate 40 per cent of the UK’s power.

Dave Dalton, chief executive of British Glass, said that the resistance to loans appeared to have “killed the conversation”. Dalton added: “After that we’ve heard nothing. That’s deplorable. We haven’t had a word.”

Richard Leese, chair of the Energy Intensive Users Group, said that talks with the government showed no signs of going anywhere fast after industry signalled that Covid-style loans would provide little comfort to manufacturers. “We haven’t been given any kind of reassurance we’re going to hear anything any time soon.”

Gareth Stace, director-general of UK Steel, said it was a “major disappointed” that the Budget contained no help on electricity prices.

Steve Elliott, chief executive of the Chemicals Industry Association, said businesses were proving resilient at the moment in the face of high energy prices but that could change as the country heads into winter.

“It would only take a sustained period of cold weather without wind to make life much scarier,” Elliott said. Kwarteng, however, recently said the Met Office was predicting a mild winter.

The Department of Business said: “Ministers and officials continue to engage constructively and regularly with industry to understand and to help mitigate the impacts of high global gas prices. Our priority is to ensure costs are managed and supplies of energy are maintained.”

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