UK Chancellor Says It's ‘Not Government’s Job’ to Save Businesses Facing Bankruptcy Amid Gas Crunch
11:09 GMT 14.10.2021 (Updated: 18:40 GMT 19.10.2022)
© AFP 2023 / Lindsey Parnaby
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Prices on the European gas futures market more than doubled in recent weeks amid a supply crunch generated by last year’s unusually long winter, a failure by countries to top up supplies in the summer, market speculation and poorer-than-expected returns on green energy investments. Britain has been hit particularly hard by the jump in prices.
Britain’s chancellor has made it clear in no uncertain terms that the government will not help businesses struggling from soaring gas prices, suggesting that it’s not the state’s job to do so.
“We’re prepared to work with business and support them as required. It wouldn’t be appropriate for me to comment on a particular situation of any individual company. In general I believe in a market economy, as it’s served us very well in this country. It’s not the government’s job to come in and start managing the price of every individual product,” Chancellor of the Exchequer Rishi Sunak said, speaking to reporters from Washington, DC on Wednesday night.
Asked to comment on individual families struggling due to the energy price hike, Sunak said the government does “recognize that people have concerns about inflation,” and pointed to the creation of a 500 million pound ‘Household Support Fund’, which will offer grants of 100-150 pounds to provide vulnerable families with assistance for daily needs such as food, clothing and utilities.
“We’re doing absolutely everything we can to mitigate some of these challenges. They are global in nature, so we can’t fix every single problem,” Sunak stressed, referring to supply challenges which have rocked Britain and other nations – including the recent shortage of heavy goods vehicle drivers, which temporarily crippled Britain’s gas stations and caused nationwide fuel shortages for motorists.
Britain also faces a separate supply crisis related to the backlog at Felixstowe, the country’s largest commercial port, after global shipping giant Maersk elected to divert its vessels to other European hubs. When asked to comment on these problems, the chancellor emphasised similar issues have been faced by some US ports, including Los Angeles and Long Beach.
“These are things that many countries are facing and we’re looking at all the different elements of the supply chain and where we can make a difference, where it’s in our control then of course we’re going to do everything we can,” Sunak said.
Business Bankruptcy Fears
Sunak’s comments come amid warnings from UK businesses that soaring energy prices are putting them on the brink of closure, shutdown, work stoppage and bankruptcy. Last week, UK Steel urged the Johnson government to “bang ministerial heads together” to come up with a plan to help the industry, stressing that the sector didn’t “have that luxury of time” to save jobs, and warning that current energy rates were making it unprofitable to produce steel.
11 October 2021, 20:17 GMT
Smaller energy billing companies have also felt the pinch, with about a dozen utilities providers going broke since August, affecting hundreds of thousands of customers.
Last Friday, in a video call with representatives of energy-intensive sectors of industry including steel, chemicals, paper, glass, cement and ceramics, Business Secretary Kwasi Kwarteng was told that electricity costs were “not sustainable,” and that “irreversible damage” would be done if they were forced to shut down.
Kwarteng told business leaders that the government was “keen to help our industrial base,” but reportedly offered no form of concrete assistance or firm guarantees of support.
The government’s perceived inaction amid the gas crunch comes following comments by Prime Minister Boris Johnson earlier this month telling a reporter in a tense interview that it was “not the job of government to come in and try to fix every problem in business and industry”. The reporter politely asked Johnson to “stop talking”.
Britain and other European nations have faced a perfect storm of an energy crisis in recent weeks amid last year’s cold winter, intense competition for gas supplies with the Asian market, a drop in output of renewable sources such as wind and solar energy, and, in the case of the UK, a fire at a plant damaging a major cable supplying electricity from France. Other factors, including some nations’ preference for spot deals (one-off purchases for a fixed amount of gas) to of long-term contracts, have also played a role in exacerbating the supply shortages.
The supply crisis has led to a more than twofold spike in gas prices since January, with futures hitting about $1,150 per 1,000 cubic meters in Thursday morning trading.
Russia, which provides about 50 percent of Europe’s natural gas supplies, has repeatedly offered to deliver additional supplies. On Wednesday, Russian President Vladimir Putin said that Moscow has already increased supplies to Europe by 15 percent this year. On Thursday, Russian Deputy Prime Minister Alexander Novak said that European nations have yet to make any formal request for more gas.
