Treasury asked to step in to support struggling industries amid soaring energy prices

The Treasury has been asked to step in to support industries struggling amid soaring energy costs, after industry bosses warned that firms could be on the brink of collapse.

A view of electricity pylons in Cheshire (PA)

Business Secretary Kwasi Kwarteng is understood to have put in a formal request yesterday for Government support for businesses worst affected by the sudden increase in gas prices, amid fears that some factories could face shutdown or some firms could go to the wall entirely.

The bid for taxpayer cash comes as one Yorkshire figure has warned that small businesses could also be feeling the pinch from the escalating costs as their hit by a “perfect storm” of the energy crisis and pandemic recovery.

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In recent days, energy intensive industries such as steel have put pressure on Westminster to come forward with assistance, with the boss of British Glass warning that as many as one quarter of jobs in the industry could go without support.

There were similar sentiments from UK Steel director-general Gareth Stace who told the BBC: “We could see a serious and permanent impact on the steel sector, as I said, in weeks, not months,”

The industry boss also claimed that the industry delivers “100%” for Boris Johnson’s vision to level up the economy because UK Steel offers high wages in different regions across the country.

The news follows talks between Government officials and industry leaders last week and yesterday, which are thought to be set to continue throughout the course of this week.

Earlier in the day the Prime Minister’s official spokesman had said “we recognise [businesses] are facing a particular challenge at this point.”

He added: “We’ll continue to discuss that with them,” and also said that the Prime Minister was “closely involved”, despite being on holiday.

Mr Kwarteng has pledged to keep the energy price cap in place to help households struggling with rising costs.

Labour’s Shadow Chancellor and Leeds West MP Rachel Reeves said the state should be providing support through the winter months because “a temporary increase in energy prices risks destroying jobs and industries for the long term in this country, and that makes no economic sense”.

“If we end up getting into spring next year and seeing jobs destroyed and industries destroyed and never coming back, that’s not a price that’s worth paying for what is needed to get us through this.” she added.

Meanwhile, small businesses could also begin to feel the pinch soon, an expert has warned, as the clash of pandemic recovery and spiralling gas costs among other bills “has the potential to tip businesses over the edge”.

Firms are being “shocked” when it comes to their energy contract renewal, according to Carolyn Frank, Development Manager for the Federation of Small Businesses in North Yorkshire, and “obviously they’re finding those increases really difficult to absorb because there is a rising cost of running a business.”

This, in combination with the end of furlough and transport costs increasing among other things, means “it’s just one more thing that has the potential to tip businesses over the edge because they’ve taken on debt during the pandemic and they’re in a poor cash flow situation”, she said,

She thinks that the issue “does have the potential to be very serious, but we’re not feeling it in that immediate way that the bigger manufacturing businesses are feeling”.

However, “we are seeing those other rising costs biting already,” she added.

“I think what we’re seeing is just a perfect storm.

“Fuel crisis, energy price rises, the end of Covid emergency support, the repayment of debt that’s been taken on.

“And I think that really needs to be understood by Government and action taken.”