Energy prices: UK Steel calls for government action

The UK economy will be seriously damaged without urgent action from the government over gas prices, a business group has warned.

The director-general of UK Steel said doing nothing could "strangle steel production".

The soaring price of wholesale gas is pushing up costs for energy-intensive businesses like steel.

Gareth Stace said the government should step in to avoid a steel crisis which would affect the wider economy.

Representatives from industries that rely on high levels of energy in their production, including paper mills, cement, chemicals and steel, are holding talks with Business Secretary Kwasi Kwarteng.

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.

There is no price cap to protect industrial customers from the soaring cost of gas, which has risen 250% since the start of the year.

While the price cap helps households, there is no such safeguard for businesses, which have to absorb the full impact of rising global energy prices.

They have called for government help to control costs and keep plants open.

The UK has lower levels of gas stored than many other European countries, making it more exposed to global price volatility.

UK households have felt the impact of higher prices, despite a price cap put in place to limit how fast bills can rise.

At the start of October the price cap was raised and 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.