Chancellor Rishi Sunak has been accused of “hiding” behind Business Secretary Kwasi Kwarteng as cabinet infighting intensifies over who is responsible for the energy crisis in UK industry.
Government sources said the only way to save factories from shutting down within days was to provide cash to help them pay soaring energy bills, as gas prices increase to record levels. But the Chancellor is dragging his feet and leaving Kwarteng to go and face angry industry bosses without any government financial support to offer, the sources continued.
“At the moment, the Chancellor is hiding behind Kwasi,” according to one of the sources who is sympathetic to Kwarteng. “All these companies are screaming for financial help. Kwasi is getting frustrated because he has been landed with the problem but he’s been given no money to deal with it.”
Another Whitehall source defended Sunak, saying the Chancellor was not in hiding and had given media interviews at the Conservative Party conference in Manchester, where he was asked repeatedly about energy costs. The Chancellor’s supporters would also point out that it’s not his job to have meetings with industry where another government department should be taking the lead, the source said.
The comments are likely to further inflame relations between Kwarteng and Sunak, two of the biggest figures in the cabinet, who are responsible for key parts of the government’s economic recovery plan.
With Boris Johnson away on holiday in Marbella, Spain, government unity is fraying. Kwarteng yesterday (10 October) described the country’s energy problems on the BBC’s Andrew Marr Show as “critical”, and that he was working closely with the Chancellor to find a solution, but Treasury sources denied this.
“I’m working very closely with Rishi Sunak, the Chancellor, to get us through this situation,” Kwarteng said. “I think he showed a great deal of flexibility when he allowed £500m to be dispersed by local authorities for vulnerable consumers, and we’re working to see what we can do in terms of protecting industry.”
Later, a Treasury source told the BBC that Kwarteng had been “mistaken” to say he was working with Sunak on a plan. Sky News cited a Treasury source as saying: “This is not the first time the BEIS [Department for Business, Energy & Industrial Strategy] Secretary has made things up in interviews. To be crystal clear, the Treasury is not involved in any talks.”
One source said that officials from Kwarteng’s department are in touch with their counterparts in the Treasury but BEIS has not yet put forward any formal proposals for resolving the crisis.
The international wholesale gas price has risen 250 per cent since the start of the year and 70 per cent since August, putting intense pressure on industries such as steelmaking, cement and paper factories, which require high-energy use. Companies in these sectors are now warning that factories will potentially be forced to shut down imminently because they cannot afford to pay the bills to keep operating.
Industry representatives are calling for the government to intervene and impose a cap on energy prices for their companies. Talks between BEIS and businesses ended without a breakthrough on 8 October and are resuming today (11 October). The Treasury and BEIS declined to comment.