Downing Street publicly backs Kwasi Kwarteng in Treasury row over energy crisis talks

Row comes as UK Steel boss accuses government of ‘doing absolutely nothing’ to address crisis

Ashley Cowburn
Political Correspondent
,Adam Forrest
Monday 11 October 2021 19:42
Kwasi Kwarteng did not ‘tell porkies’ about industry support, says minister

No 10 has publicly backed Kwasi Kwarteng, the business secretary, after an extraordinary row with the Treasury over support for firms affected by the ongoing energy crisis.

It comes after Mr Kwarteng told broadcasters on Sunday that he had been involved in talks with Rishi Sunak’s department and the industry to work out ways to help it through the crisis – prompting a stinging rebuke from the Treasury.

One source at the department accused Mr Kwarteng of “making things up in interviews” and that the cabinet minister was “mistaken”.

But on Monday, No 10 insisted officials at the Treasury were involved in the cross-government work – appearing to endorse the business secretary’s account.

“This is a significant challenge, and there’s work across government to mitigate it,” the prime minister’s official spokesperson said.

Quizzed on whether the prime minister, who is currently on holiday, had spoken with either Mr Sunak or Mr Kwarteng about their “extraordinary falling out”, they replied: “It’s not how I would characterise it according to an anonymous quote.”

“As you would expect, ministers from BEIS (Department for Business, Energy and Industrial Strategy) are working across government, including with the Treasury on this important issue, the challenges that are currently facing industry in light of global gas prices and that will continue,” they added.

The spokesperson said the two cabinet ministers “continue to work very closely together, as the public would expect”.

Pressed on whether Mr Kwarteng was “making things up” – as suggested by the Treasury source – they replied: “Again I’m not getting into anonymous source quotes.”

The spokesperson also declined to say whether “mitigations” would include financial support, adding: “I’m not going to jump ahead of any future conversations – it’s right that we continue to listen carefully to what industry are saying and have talks across government about whether any action is needed to mitigate the challenges.”

Appearing on Sky News on Monday, the Home Office minister Damian Hinds, also publicly backed Mr Kwarteng when asked if he had been “telling porkies” over the weekend.

“The fact is government departments, government ministers talk to each other the whole time and of course with an issue like this,” he said said.

Labour also accused the government of “squabbling amongst itself” – but the security minister said both the Mr Kwarteng and Mr Sunak were both “focused” on the problems posed by rising global energy prices.

One-to-one talks between the government and industry were continuing on Monday, with manufacturing industries such as paper, steel and ceramics calling for an energy price cap to help avoid factory closures.

Mr Kwarteng said over the weekend that he is confident the lights will stay on this winter, but also insisted that the government is “not in the business of bailouts”.

But Energy UK chief executive Emma Pinchbeck warned that “exposed” businesses such as energy-intensive factories will be the worst hit by the rise in prices. “We are expecting more retailers to go out of business this winter,” Ms Pinchbeck said.

UK Steel director general Gareth Stace accused the government of “doing absolutely nothing” to help his industry and warned of “serious and permanent impact on the steel sector … in weeks, not months”.

He told LBC: “This is a critical time. The business secretary has also said it’s a critical situation, and therefore why is government just sitting on its hands and doing absolutely nothing at the moment?

“The prime minister now needs to bang ministerial heads together, take control and remember that if he does nothing, then his levelling-up ambition will be left in tatters.”

Mr Stace said he wants the UK government to follow the lead taken by the Italian government, who have “taken off” some policy costs applied to industry. “When government says, ‘We’re not going to do any bailouts’, that’s not what we’re asking for,” he said.

Dave Dalton, chief executive at British Glass – who revealed that industry leaders had used a meeting on Friday with Mr Kwarteng to ask for support – said he was “alarmed” at the apparent lack of interest from the Treasury.

He said: “It seemed to prick the ears of the secretary of state to asking a civil servant to work with us quickly and closely to build an ask to go to Treasury … we had rather hoped over the weekend and today that that dialogue would be extended.”

Mr Dalton added: “It’s very alarming to hear the Treasury are making denials over the approach, let alone anything else. We need immediate action.”

Unite general secretary Sharon Graham also called on the PM to “get a grip” of the crisis, saying industry chiefs and ministers should work with unions to ensure no jobs are lost.

“I call upon the prime minister to get a grip on this crisis and bang heads together,” said the union boss. “The stand-off between ministers and industry is irresponsible and threatens jobs and our recovery.”

Ed Miliband, Labour’s shadow business secretary, said the government was “squabbling amongst itself”, adding: “The government has nothing to offer businesses or consumers to help them with the crisis they are facing.”

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