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Energy prices: Industry calls for government action - BBC News

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A Liberty Steel worker
Liberty Steel

Energy intensive industries, including steel makers and other manufacturers, have called on the government to provide more support in the face of soaring gas prices.

Businesses that consume a lot of energy have seen their costs rise sharply since January.

Some said they have had to pause production to save money.

The body representing energy intensive sectors has called for "prompt and preventative measures".

Representatives from industries including paper, glass, cement, lime, ceramics, chemicals and steel met Business Secretary Kwasi Kwarteng to discuss the challenges they have been facing.

The government should find ways to alleviate the impact of higher gas prices, the Energy Intensive Users Group (EIUG) said, to avoid production being shutdown, as has already happened in some parts of the steel and fertiliser industry.

After the meeting EIUG chair Richard Leese said the government had made "positive first steps to develop practical solutions".

"EIUG will work with government to avoid threats both to the production of essential domestic and industrial products, as well an enormous range of supply chains critical to our economy and levelling up the country," he said.

The director-general of UK Steel, Gareth Stace, speaking before the meeting, said if the government failed to act it could "strangle steel production" in the UK.

A crisis in steel production as a result of high energy prices would affect the wider economy, he added.

On Thursday Mr Kwarteng said the government's strategy to shift to "clean" power sources by 2035, including wind, solar and nuclear, would reduce reliance on fossil fuels.

"The volatility of the gas price has shown we do need to plan strategically and net zero helps us do that," he said.

Mr Stace said the government should consider taking additional action in the short term.

"If the government does nothing to help us, they could start to strangle steel production," he told the BBC's World at One programme.

He said the government should address the disparity in energy costs for UK steel makers who he said were paying 50-80% more for electricity than German producers.

Other countries, such as Italy and Portugal, had "committed billions of euros" to address the rising cost of gas, he added.

"If the government does nothing then tomorrow, there'll be a steel crisis, and given in terms of what impact that could have on jobs, then that wouldn't be good, not only for the steel sector, for those regions where steel is, but for the UK economy as a whole," he said.

The price of wholesale gas has soared by 250% since the start of the year. And the UK has lower levels of gas stored than other European countries, which could help cushion price volatility.

graphic: gas prices over last year updated

Domestic customers' bills are partly protected from these sharp rises by a price cap, managed by the regulator Ofgem, which limits how far and how fast bills can rise.

Nevertheless, UK households have felt the impact after the price cap was raised at the start of October.

Customers will see further "significant rises" in the spring, regulator Ofgem has warned.

The cap is revised twice a year and is next due to be changed in April.

It applies to households in England, Scotland and Wales this month.

Households in Northern Ireland have also seen a recent sharp rise in their bills, but they are not protected by the energy price cap for Great Britain.

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