London may soon offer loans to firms hit by fast-rising gas prices

The United Kingdom's government is considering loans for energy-intensive industries hit by soaring gas prices, though any bailouts will have conditions, according to a senior minister.

Business leaders have warned that high energy costs, due to global shortages of gas as countries emerge from pandemic lockdowns, mean factories could close and thousands of jobs could be under threat.

After speaking with company chiefs last week, Business Secretary Kwasi Kwarteng asked the Treasury to support the worst-affected manufacturing sectors, including steel, ceramics, glass and paper producers.

The BBC said the Treasury is analyzing Kwarteng's proposals that could involve subsidies worth hundreds of millions of pounds, and which come at a time when the Chancellor of the Exchequer Rishi Sunak is seeking to keep control on public spending ahead of his next Budget on Oct 27.

BBC analysis said there is reluctance from government to support companies that would normally be competitive, and that loans are more likely than grants.

Following a dispute about the status of talks between government departments over the weekend, it appears the chancellor is now set to intervene, said the Financial Times.

The paper's Downing Street sources said ministers were looking at "what can be done to mitigate" the effects of rising energy prices and that the chancellor had an "open mind" on the issue.

The Daily Telegraph said Downing Street has put its weight behind the proposals, after Prime Minister Boris Johnson stepped in amid tensions between the Treasury and the Department of Business.

Any financial support for business had to take into account the impact on the taxpayer, said a Treasury spokesperson, quoted by the Telegraph.

Steve Barclay, the Cabinet Office minister, told Times Radio on Tuesday there would be conditions for any bailouts.

"It is right from a taxpayer point of view, as we are mindful of this huge amount of support, to look at that in terms of what is value for money," he said.

"We need to look at the businesses themselves - have they recently taken dividends, have they recently paid big bonuses?" he said. "We need to understand details rather than just have a knee-jerk response."

Richard Leese, chair of the Energy Intensive Users Group (EIUG), which represents some manufacturers, told the BBC Radio 4 Today program that a quick response from the Treasury was "crucial".

He said businesses had proposed "practical and sensible "measures for help. "We need preventative action to stop the issue spreading further," he added.