Treasury denies talks with Kwasi Kwarteng over energy crisis
The Government’s response to the energy crisis descended into chaos today after the Treasury denied it was in talks with Kwasi Kwarteng over how to support struggling firms.
The Business Secretary said this morning he is working closely with Chancellor Rishi Sunak to help industries which use a lot of energy cope with spiralling wholesale gas prices.
But senior Treasury sources insisted that no such talks have taken place despite firms pleading for help to prevent shutdowns.
It came as Mr Kwarteng was unable to guarantee that there will not be gas outages in the UK this winter as rising energy costs continue to wreak havoc.
The Business Secretary said he is ‘convinced’ the nation ‘will have full energy supply’ in the colder months but he could not give a cast iron assurance.
He said he is ‘as certain as I could be’ that the energy supply will remain resilient but he warned the strain on gas is ‘global’.
Mr Kwarteng also said the consumer price cap on energy bills ‘will not be moved’ before April as he said it is the ‘biggest shield’ protecting consumers from a spike in prices.
Experts have warned consumers to brace for the next review of the cap in April amid fears soaring wholesale energy prices could push average annual bills through the £2,000 barrier for the first time.
Kwasi Kwarteng today was unable to guarantee that there will not be gas outages in the UK this winter as rising energy costs continue to wreak havoc.
The Business Secretary said he is ‘convinced’ the nation ‘will have full energy supply’ in the colder months but he could not give a cast iron assurance. Wholesale gas prices have spiked in recent months
There are fears an increase in the energy price cap next April could push average bills above £2,000 a year
Mr Kwarteng is under pressure to bring forward more support for high-energy industries as bosses warn some firms could be forced to suspend operations within days because they can no longer afford to pay their bills.
The minister guaranteed he will keep the energy price cap for consumers in place throughout the winter but said he will not ‘bail out failing energy suppliers’ – though he did not rule out introducing an energy price cap for firms.
Asked if he has approached the Treasury about subsidies, he told Sky’s Trevor Phillips on Sunday programme: ‘No, I haven’t. We’ve already got subsidies in place and it’s very clear that a lot of those are working.
‘On the consumer side we’ve got an energy price cap, and on the industry side we have measures where we support industries, heavy electricity users.
‘What I’m very clear about is we need to help them get through this situation – it’s a difficult situation, gas prices, electricity prices are at very high levels right across the world and of course I’m speaking to Government colleagues, particularly in the Treasury to try and see a way through this.
‘I can’t come on your programme and say we’re going to have a price cap because we’re trying to work out what the nature of that support might be.’
Mr Kwarteng acknowledged it is a ‘critical situation’ but denied he has asked for billions of pounds worth of support when asked about whether he is considering a price cap for businesses or a wider winter package.
He told the BBC’s Andrew Marr Show: ‘I’ve not asked for billions, we’ve got existing schemes. I’m working very closely with Rishi Sunak, the Chancellor, to get us through this situation.’
But a senior Treasury source said: ‘The Treasury has not been involved in talks.’
A Treasury source told Sky News: ‘This is not the first time the BEIS secretary has made things up in interviews. To be crystal clear the Treasury are not involved in any talks.’
The row will dash hopes of firms receiving a major package of support to help them weather the energy crisis in the coming months.
It came as Mr Kwarteng was asked to guarantee that the domestic supply of gas will not be interrupted this winter.
He replied: ‘I think supply is critically important and I have always said that we have never had a problem, certainly in the last many years actually with security of supply.
‘Just for the sake of the viewers, it is important that we look at what the elements of supply are.
‘If you look at where our gas is coming from, where it came from last year in 2020, 50 per cent of that gas was UK continental shelf, it was from the UK, 30 per cent was from Norway and I spoke to the Norwegian energy minister only a couple of weeks ago and they are increasing their production, and 20 per cent comes from energy which is around the world through freight.
‘I am very committed, and convinced, that we will have full energy supply.’
Told that his comments did not amount to a guarantee, Mr Kwarteng said: ‘I am as certain as I could be because obviously, you know, this is a global issue so we have seen right across the world real supply chain pressures.
‘You have seen the Chinese have power blackouts, they are rationing supply.
‘Here in the UK our job is to make sure there is minimal disruption and I am very confident…’
Mr Kwarteng said the consumer price cap will not be changed before its next review point.
He said: ‘I have been very clear about this. The price cap is the biggest shield in terms of consumer prices and I have said repeatedly that it will not be moved.
The surge in wholesale gas prices has already forced many small suppliers in the UK out of business
‘It was set in August for the six month period between the 1st of October and the 1st of April and it is not being moved.’
Asked if people should consider wearing more layers to keep heating bills down and reduce demand, the Cabinet minister said: ‘It is up to people. It is amazing how people’s cold threshold can be very different.
‘Some people feel comfortable wrapped up in lots of different clothes, others wear relatively little.
‘I think people should be sensible. I think people should do what they feel comfortable with.’
He added: ‘My job as an energy minister isn’t to tell people how many layers of clothing they should wear. That’s not really my job.’
Ofgem warned last week there will be a ‘significant rise’ to the cap on energy bills next year – hitting millions of Britain’s poorest people.
As the gas crisis escalated, industry analysts suggested the current energy cap of £1,277 would rise by as much as £800.
Ofgem chief executive Jonathan Brearley, didn’t put a figure on it, but said there will be a ‘significant rise’ in the price cap set by the industry regulator which helps to control the cost of gas and electricity in the UK.
He didn’t knock back claims that fixed and other deals could reach £2,000 in 2022.
Mr Kwarteng said it was not his job to advise people on whether they should turn their heating down
‘We can’t predict everything, and the wholesale market, as we’ve seen, has gone up and down extremely quickly so we can’t predict fully what that will be,’ he told BBC Radio 4’s Today programme. ‘But, looking at the costs that are in the system, we are expecting a significant rise in April.’
As ministers faced pressure to do more to solve the energy crisis, Boris Johnson reportedly flew to Marbella to holiday in a private villa on the Costa del Sol.
Downing Street did not deny reports he had travelled to Spain, and declined to say whether the Prime Minister was working at Number 10 or in Chequers, as is commonplace.